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Learning From Investment Mistakes

Professional portfolio landlord and letting agent Adam Lawrence comments

The reality of property investment, development and trading is that things do go wrong. And this month I was asked to offer my thoughts on a subject that is generally underreported upon in the property world.

I’m a big fan of transparency and having reviewed the 250+ deals that I have done in the last decade in UK property, it was easy enough to find half a dozen that would fit in the bracket of having gone ‘wrong’. It is always a measure of any partnership when things don’t go as intended - everything is always easy while things are going well.

Rather than choosing the most difficult one or the one that missed its target and expectations by the largest margin, I have selected the one that I feel might be of the most use to PIN magazine readers as it is the sort of mistake I do see being repeated all the time in property.

The property in question started off, before my purchase, as a 4-bed mid-terrace with a floor area of just under 100sqm arranged over three storeys. The location was very good - a small walk into the town centre of Tamworth, a town with a population of c. 75,000 to the northeast of Birmingham.

The property was purchased in August 2012 in a flat market for £125,000 - the vendor had purchased it in August 2007 for £183,000 so it certainly appeared to be a bargain, although it was commonplace at the time for properties in and around Birmingham to be trading at below their 2007 prices. The vendor was motivated and the offer gave her the opportunity to achieve what she wanted, which was to move on. The property had been marketed at £150,000 on and off for a year or so and not sold, so reality had kicked in.

The property was purchased in a joint venture vehicle; at the time I was joint-venturing with some others for their expertise and this particular property was purchased to be made into an HMO, in a partnership where the other partners already had multiple HMOs up and running in the local area. They were comfortable that this property was suitable and in a better location than any of their other properties in the locale, which were delivering strong occupancy figures and good ROIs.

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