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I own my own home and a single let BTL both mortgaged and I am considering my next investment property purchase.
I would like to scale my property portfolio as efficiently as possible so have looked at taking on properties where I can refurb or add value to create equity then rent. I work full time so it would be a significant additional commitment.
I have come across an alternative that is interesting but would like to get an opinion on the opportunity.
The opportunity is a joint venture with an investor who has built a significant property portfolio and industry credibility, he is looking for a cash investment to purchase and renovate a property into a 5 studio HMO then commercial refinance it so I would get my money back out. I would own the property in my name and be responsible for the finance and he would own 50% of the property via land registry. He would manage the property via his lettings business and take a fee for that.
I think it looks like a good deal on paper although I need to view the property and do further due diligence.
There is doubt in my mind as I feel like it is quite ‘advanced’ and there is a lot of moving parts on a deal like this.
Providing the deal stacks up, is there any reason I shouldn’t do this deal?
due diligence.is so important
But It not just picking the right property or tenant
You must factor In the Govt ???
Do they really want to to expand
I fear not and they will do every thing in the future to stop you or make you sell
You and I own Property which the Govt would prefer us not to have
Factor that issue into your plans
Learn Change and Adapt ?????
All comments are for casual information purposes only. If you wish to rely on any advice I have given please ensure you obtain independent specialist advice from a third party. No liability is accepted for comments made.
This immediately caused me concern:The opportunity is a joint venture with an investor who has built a significant property portfolio and industry credibility, he is looking for a cash investment to purchase and renovate a property into a 5 studio HMO then commercial refinance it so I would get my money back out.The "industry" you refer to ... is that the "wealth creation" industry or the property development industry? How did you come across this individual to be exposed to such a proposition?A couple of things to consider:1. If this individual is so successful, why can't he borrow money from the banks and keep the profit for himself? Why would they risk their financial well-being (see the below video) by partnering with you?2. You are attaching yourself financially to another person. What happens if they get into financial difficulty?You really must watch this video as it contains importance insights for you:You need to do intense due diligence on this individual imho. What is his name? How much money is he putting into the deal? I am going to guess that you will answer "He's not putting any money in, he's just contributing his experience and contacts and managing the development".Personally, I would never dream of getting involved in such a "stranger JV". It could very likely end in tears, as so many of them have.
Vanessa Warwick Landlord and Co-Founder of PropertyTribes.com **If you have got value from Property Tribes, find out how you can support it in remaining a free to use community resource**
Some JV`s work .
I always worry though when you get a vastly experienced person who wants to JV with someone whose not
Grooming / taken for a ride / predatory behaviour is what comes to my mind
But likewise there are also good guys out there
And a joint vision can be stronger sometimes for numerous reasons rather than always working in isolation
Put yourself in his shoes. If you were him why would you want to JV with you specifically
So do your DD on the person like there is no tomorrow
The deal may stack up but does the person .
If the person doesnt then any deal however attractive - is built on sand and will likely get washed away
Jonathan Clarke. http://www.buytoletmk.com
Not sure who to attribute this quote to, but it has often proved to be the case:“When a man with money meets a man with experience, the man with experience leaves with money and the man with money leaves with experience.”
I think I am right in this quote
90% of all partnerships end with a fall out
I would never go into partnership. It never lasts - just ask Marks and Spencer
you can't have two captains of a ship
Thanks for all the input some good points to consider here. The gentlemen’s name is Jim Haliburton, I’m sure you will know of him, he has around 140 properties and been around the industry for a number of years.
The reason he is looking for the money is that he has a significant number of deals available that require a significant amount of capital.
I believe he would structure the deal as so to ensure he has 0 downside as I am solely responsible for the finance, however rental profits are split 50/50.
If he is that good and experienced why is he wanting you to join him
Why is he wanting your cash ????
Mate you havent got a clue what you are doing.
Have you bever seen the TV programmes with Mr Haliburton.
Do you know about ICTB possibilities?
Are you aware there will more enforcement of room sizes for HMO.
HMO are being sold round my way.
What does that tell you?
Avoid this alleged HMO investment like the Plague.
Just buy a 4 bed house and let to individuals.
No licensing required.
I wouldn't lend a penny to Mr Haliburton!!!
For 2 reasons I have been told.
1. He has 5+ deals right now that require cash purchases requiring £1m+ in cash to execute on.
2. He can build his portfolio with £0 risked.
At least Mr, Haliburton is honest. He can build his wealth with zero risk, so you are taking 100% of the risk.Do you really want to get involved with low end HMOs and all that is associated with them, especially when you are taking 100% of the risk?People with no skin in the game are nowhere near as committed to something than if they have their own money tied up in it. It is a recipe for disaster imho.I am surprised you are even contemplating this after the video I posted.