by Dan Trivedi
17:29 PM, 14th September 2015, About 6 years ago 7
I’m 31, based in Norwich, married, have two lovely children and have been involved in Property for 10 years.
In the early days I pretty much followed the book of ‘things to do wrong’. My first property purchase was 40 miles off patch in an area I didn’t know. I thought I’d purchase £20k below market value but actually paid £10k over the odds. I decided to refurb to my own spec which was not what the market wanted. I went over the top with solid oak kitchens, whirlpool baths, slate tiles, walk in showers etc, in a 2 up 2 down Victorian terrace. I paid for the refurb up-front, no contracts or paperwork in place. Guess what happened, a six week refurb actually ended up at week 16 with myself, grandfather & mum travelling every day to finish it. I was only able to sell and turn a small profit because we were entering the 2006 rising market. That was my baptism of fire into property.
Fast forward to today and leaving a trail of learning experiences (mistakes) behind me, I now buy and complete two or three refurb to flip or retain deals every month. I only work in my goldmine areas and have systems in place which bring sustainable returns.
I do as many deals as my funds allow for myself but I also have a small group of investors that I work with. I help them to buy the property in their name, I deal with the refurb and we split profits 50/50 when the property is sold or based on the uplifted value if it is remortgaged for retention as an investment.
To give you an example of what I do am I happy to share the details of a recent property flip.
I sourced a 3 bed end of terrace which was tired inside, had bags of potential and managed to negotiated a very realistic price (£135,000) due to lack of desirability from typical buyers for the area. Within a stones throw of the University of East Anglia, this house was crying out to be converted into a 4 bed, 2 bath student house. The market in this area is facing increased competition so we needed to bring this house up to a better than average standard. My team of builders quoted me a price to compete the work in six weeks, but I gave them four weeks and a decent incentive to achieve these timescales. We had a very short window of slippage time (just four days) between the scheduled refurb completion date and a group of students moving in. In the available time my team replaced the kitchen, built the stud walls, replaced the bathrooms, re tiled using travertine tiles and high gloss ceramics in the kitchen and completed all the necessary safety elements for a 4 bed student house.
My refurb team worked day and night (including weekends) to hit the deadline. The entire refurb cost came in at just under £10k. The project was completed on schedule on Friday afternoon and the students were checked in as planned the following Tuesday.
This was a project I did for a gentleman who was experienced in property investment but wanted to spread his wings and do some deals in order to turn faster profits. He leveraged my experienced and we split the profits equally. It was a win/win scenario. The initial purchase was funded on a student specific BTL with no early repayment charge. This allowed us to buy, refurbish & sell quickly, but also provided an option to hold with a strong return on investment, and release equity by refinancing six months from purchase if needed.
Pre-marketing for sale commenced during the refurb and we had arranged an “open-house” for the Saturday, thus no potential for overrun whatsoever. That’s why incentivising the team to complete on time, and to work day and night, was so important.
At the open house we achieved two offers of £220k. We accepted one offer with a 28 day exchange and just 12 weeks after we have purchased we completed the sale. Even after paying me my half share of the profit the investor had doubled his money (based on cash invested).
If he had decided to retain the property the £1,400 a month rent achieved would have provided an 11.2% yield on cost, excluding my share of uplift but including professional fees. Instead, he chose to take 50% of the gross profit immediately and we are now completing the purchase of two more deals. The new purchaser was very happy with his investment too, a tenanted property, newly refurbished and yielding 7.64% on cost. He too is an armchair investor, cash buyer and has appointed me as his agent to manage the property. We may well do another deal together, this time from the very beginning.
I hope that gives you some insight about me and what I do.
By all means post questions in the comments section below or if you prefer to chat offline you will find a contact form on my Member Profile page.
Note from Mark Alexander – founder of Property118.com
I invited Dan to start this discussion thread on the basis that he is one of just a handful of property traders I’ve met who really does walk the walk and not simply talk the talk. Usually, when I hear the phrase ‘property sourcer’ or ‘joint venture’ my guard immediately goes up. Within 10 minutes of meetig Dan I realised that I was sitting in front of the next generation of property investors. I’ve since investigated his business model in more detail and it makes a lot of sense for both himself and the investors he work with. It is a refreshing change to meet somebody who has genuinely found a workable alternative business model and is building a successful property business in current market conditions.
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