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001) Never sign a JV contract without having it first checked out by a solicitor. I made this beginner’s mistake. As a solicitor told me afterwards; it was a murky contract, heavily weighted against the investor, with their own obligations left so vague as to be unenforceable.
002) Do not be rushed. Procrastination is obviously not helpful to investment, but having only 30 minutes to decide on a property purchase does not give you enough time for due diligence. In which case you better trust your JV partner’s advice.
003) Do not trust those purporting to be experts. This is an unregulated industry and anyone can claim to be an expert. In my case, the 3 bed family house with no garden or parking that was recommended to me by TGPC as a great deal, was later described by the estate agent after months with no offers as ‘ a quirky property with limited appeal ’. A flop!
004) Hold your JV partner to their marketing promises. If they tell you they will produce 3 build quotes, make sure they do. I was given 1 build quote and was encouraged to use these builders as they worked on many TGPC projects, so what could go wrong? In the final mortgage valuation under “Matters Affecting Valuation” it said that the price "reflected the fact that there is wear and tear to some items and that maintenance repair or upgrade will be required” I had just spent £29,500 on refurbishing the same house, but it was valued £15,000 less than the valuer's top figure.
005) Don’t worry about being anal. Check and double check any invoices and unexpected requests for extra payments and demand to see invoices before you pay them, not after. The result is that I paid for duplicate work and work that wasn’t completed to the sum of £7,900.
006) Don’t leave your project manager un-supervised. Over the course of my project I had 3 different project managers, each one leaving without warning, explanation, or any hand-over. They dropped so many balls I couldn’t catch them all myself. This meant the build went wholly unsupervised, and also resulted in long delays to the marketing post build.
007) Make sure your JV partner is actually paying the builder and if possible pay the builders directly yourself. I was called by the builder two days before the build was due to complete to be told he was ‘downing tools’ as he hadn’t been paid. I had by that point paid all build costs in full upfront and on demand by BACS to TGPC. I was given no explanation at the time.
008) Make sure the house is rentable if the worse happens. We were unable to sell the house, and for the same reasons it was un-saleable, it was also difficult to rent out. Ms. Cole did finally find time at this late stage in the project to call me and give me a personal LESSON on how to rent out individual rooms, but sadly even her expert advice couldn’t create a multi-let in this particular area and I am stuck with an average yielding single-let which is not part of my investment strategy, and will now affect my investment path over the foreseeable future.
009) Do not put an expensive bridging loan on a property based on figures and time scales given to you by your JV partner. Ms Cole accepted that 3.5 weeks of the 5 months of delays were TGPC responsibility, and most generously offered to cover 7 weeks of my financing fees, but the original figures given were misguiding and irresponsible.
010) Expect sleepless nights - it is your money not theirs. Ultimately you care way more than they will ever do about your investment. Yours is only one deal amongst many for them.
011) Keep smiling and accept your financial losses as the price of your education.
From a foolish and gullible investor
Property Investor & Creative Director
A good overview for any prospective JV. I could write a book and indeed may do on JV disasters.
But don't beat yourself up Lisa; anyone who says they haven't lost money when investing and/or starting a new business is either a liar, a fraud or has done nothing!
This is just the price of education - real education and by far the best way to learn.
The learning however comes from ensuring you don't make the same mistake twice ;-)
Onwards and upwards...
Lisa All comments are for education and information purposes only and do not construe as advice or a financial promotion. No liability is accepted for comments made. If you wish to receive information in an advisory capacity then please contact me about becoming a client. www.keys-mortgages.com
Lisa I will PM you very intersting subject, am doing my very first proper JV and learning a lot from this
Thanks for sharing your story Lisa W.What do you think TGPC bought to your JV? Did they input any money or did you take all the financial risk?Lisa Orme says put it down to education, but that raises the question of what exactly you paid for? People lacking education and experience will often be willing to pay to leverage other people's. Nothing wrong in that, if the company deliver.However, in this case, it sounds like a catalogue of disasters starting with a dog of a property.BTW - as a novice investor, I am surprised that you were able to secure bridging finance.It sounds like you learned a great deal (at considerable financial cost and probably a lot of stress) and it is very generous to share what you learned with others, as hopefully they can make your hindsight their foresight.
I believed I was paying for their expertise and was happy to do so. It was my first investment and I was concerned that going it alone would result in expensive mistakes so felt this was a good first step.
Their sales pitch goes against the regular grain of shiny suited property investment presentations, which appealed to me personally but fairly quickly into the project I could see that their backend was not on a par with their marketing strategy.
I mean put the experience down to education as no point beating yourself up about it; I have no time for the education itself!
Ok, here is how I see the truth in it. Any sourcing business that focus on one area is going to get to the point where they over saturate the market with their own product, the business model is totally unsustainable, there will come a time when the company either has to start taking underhanded measures to show a consistent return, or they have to consolidate and trade as a lettings business. When that happens your property will be one of many others that sits in line and unless really well managed, your property will, over time become less and less productive. As the potfolio becomes older and more tired the agency will become less able to competiently manage the assets under thair care.
I really cannot see sourcing in one location as sustainable, it's like drilling for oil in the same spot day after day, year after year, one day the well will dry up and all the investors will be left high and dry. Their properties worth far less than they originally paid.
I may be totally wrong on this and I am sure that there will be plenty of argunments both for ang against and I am sure there are some sourcers who are totally professional and who understand their market so well that they can judge the best time to buy and when to stop and consolidate so that their clients are well looked after as their portfilio matures, A doubt there are many.
I think this is a fair prognosis. Interestingly, my property was in Portishead, an area they hadnt worked in before, as the auction properties in Bristol were going for too much and we couldnt not find a deal. But Portishead has its own idiosyncrasies that I/TGPC did not fully understand.
Yea, it looks like they had staff and bills to pay and they didn't do their due dilligence as they were under pressure.I guess it falls back to professional standards and accountability to a professional body. I quit sourcing as it didn't take me long to realise that it was a dead end business.
Thank you for sharing your story.
Aside from the sourcing, did you pay for Ms Cole's educational training? If so, did you find the training useful/applicable and what was the most important thing the training taught you (excluding the concerns you have raised in the post)?
Your post is good advice to anyone considering a JV deal. Can you give us some specifics of your deal - type of property, the plan for it, how it panned out against what was expected?
I notice Nottingham PIN have Ms Cole as an up-coming speaker, so i guess it will be Kit-Kats and fluffy cushions all round. I assume you would be advising attendee's to be very cautious ?
Stewardson Developments Ltd.
Burson Land Ltd. & Jennings & Gilchreaste Ltd.
Follow me on twitter - @philstewardson