An almost proverbial statement from many property investors is “I would NEVER sell.”, along with the ritual chanting of “time in the market, not timing the market” and other truisms are often quoted as part of buy to hold.
Sounds sensible until you think about it for a minute or so. Like most absolutism, it works until it doesn’t.
To illustrate this, a commercial property that is due to be refinanced might have lost 20% of the value as interest rate rises have smashed valuation yields at a time when rental demand is flagging (not an uncommon scenario), if you aren’t prepared to stump up some additional equity you have to sell or the bank will do it for you. Of course, the higher interest rates against lower income as well as the loss in capital value also should be considered as part of the equation of whether to hold it.
In this article we are going to be talking more about sellers, their perspective and importantly their motivations, which are all important whether you are buying, selling or both.
I was recently chairing a property network panel discussion on deal stacking with an exceptional group of highly experienced panellists in Central London, representative of a range of both nationwide locations and property categories.
As you can imagine, there was a lively discussion on the current market, the outlook, liquidity, creative deal structures and how to profit while limiting your risk. It was at the heart of property investment, or at least growing your wealth by buying well and as importantly not buying badly (too often).
The four panellists included a young chap James Thacker (aged around 30) that has managed to buy 53 properties in just over three years. The majority of these have been in no money left in deals, thank you very much. His nickname could be no-one because no-one is perfect.
Note in all of these purchases there was a seller who agreed to sell for their own reasons. As investors there is a huge focus on the buying process, the stacking of a deal, funding a deal.