I have had a question from a young lady called Val. I’ve known Val for a while. She purchased my Quick Start Guide To Buying Your First Investment Property and The Accelerator Plan for building a portfolio, so I’ve been giving Val a little bit of advice and help. I hope she wont mind me using this as a post, but I think the points that came out of her latest email to me are of interest to a lot of people.
What Val said is that she has now taken a job overseas, she is actually working in Scandinavia, but she wants to invest in the UK. The difficulty is that she doesn’t have a lot of ready cash resources of her own. So, she’s emailed me saying ‘Peter, what can I do about that?’.
This is a really interesting problem that she’s got because in property there is really 2 variables. There is time and there is money. If you don’t have much money but you have a lot of time you can usually do deals in property.
How? Because you can use your time to find deals, you can use your time to be able to encourage people who have got the money to invest in you, so that you can do the work and they can provide the finance, you can do some sort of JV around that. Even if you don’t have money but you have time, that can work.
The alternative, on the other side of the equation is, that you might have money, but you don’t have time. Again, you can find somebody who has got the time and you can encourage them to find the deals and to do the project management, to do the bits and pieces, to do the donkey work, and you finance the deals. So, that could be a workable JV.
But, what can you do if you don’t have time or money? I’m saying that Val doesn’t have any time because she’s over in Scandinavia and she wants to invest in the UK. Yes, there are things that she can do so it is not strictly true to say that she’s got no time.
She could potentially be working her way around Scandinavia looking for JV partners. I’m sure there are people in Scandinavia who would be interested in investing in the UK.
Or she could be using her time to contact people who she knows in the UK who could potentially become JV partners.
Or she could be using her time while she’s in Scandinavia to go onto Rightmove and Zoopla and Onthemarket.com and start sourcing deals, so that could work.
It’s not like there is nothing she can do but being very general about it, it looks like in terms of time and in terms of money she is limited. So, what can she do?
I do know of people who are in a very similar position who have managed to make this work by standing in the middle. What they’ve been able to do is that they’ve been able to find people who have got the money and they’ve been able to put them together with people who have got the time or with people who have got the deals and the properties.
A classic example of that could be that you have a number of JV partners who you know have got the money and have got aspirations to invest in property. Perhaps they haven’t got the time, or they haven’t got the knowledge, or they haven’t got the experience to do it for themselves, but you could put them together.
You could front their operation and perhaps then deal with property sources in the UK, for example. If not property sources, then perhaps potential JV partners who could source properties.
What is the difference? In terms of property sources, I’m using the term ‘a firm of deal packagers’, somebody who’s business is actually sourcing properties, but it may be more fluid than that. It may be that you find other individuals who are investing in property and they find deals for themselves, but they can’t buy every deal for themselves. Maybe they will then pass deals to you. Certainly, that could be a way of doing it.
The objection that comes back quite often in this scenario is ‘why wouldn’t the people who have got the money just get in touch with the people who deal with the properties direct and circumvent you?’.
Well they could but the reality is that a lot of people are every cautious and one thing that Val could offer is the ability to be able to do due diligence on the people who are sourcing the properties and then do due diligence on the properties themselves in order to give the people who have got the money comfort.
Although you might think ‘why couldn’t they do it themselves?’, potentially they could do it themselves if a) they have got the time and b) if they have got the knowledge and the experience but if they haven’t got the knowledge and the experience and the time, they may feel as though they can’t do it themselves or they may feel nervous about doing it themselves. They may glad to pay somebody to do it for them or instead of paying a fee just to include them in the deal. So, they are all sorts of ways and means and opportunities.
Of course, what this fundamentally comes down to though whoever is standing in the middle has to be able to push themselves out their comfort zone if they feel nervous about doing that themselves. If they are thinking ‘what can I bring to the party, what value can I bring?’, then they are probably not going to do anything. You have to believe in yourself that you can bring value.
Being able to research the people who are providing the properties or research the properties or maybe offer other types of services. Maybe you help research finance, additional finance. Maybe you help research putting together a team so that when whoever’s got the money buys the property you can be in the middle helping them to make sure that the project actually runs smoothly by researching the team, by researching what needs to be done, and adding all the bits and pieces and they value which they can’t do for themselves. So, it absolutely can work, it just needs to be structured correctly.
Here’s to successful property investing.
Peter Jones B.Sc FRICS
Chartered Surveyor, author and property investor
PS. By the way, I’ve rewritten and updated my best-selling e-book, The Successful Property Investor’s Strategy Workshop, which is an account of how I put together my multi-property portfolio, starting from scratch and with no money of my own, and how you can do the same.
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