Applying the wisdom of my own counsel

Crazy or Genius?

A few years ago, we purchased a fire damaged commercial property in the East Midlands, right in the town centre and spent years trying to obtain planning permission to demolish the property and develop it into a block of flats.

The Genius Part

Being able to see brass in the muck is something my husband is great at. Someone else sees a burnt-out shop, my husband sees a block of flats. Crazy but genius!

After having to deal with probably the most useless council (and I really mean that. As I write, we are awaiting the same council to respond to applications for discharge conditions which was made over 6 months ago) in the UK, we finally obtained planning permission after two years and two attempts.

The property was developed into a block of 24 flats (a mix of 1 and 2 beds) and we had no problems letting it out, the demand was good due to its location.

I took all my advice when choosing the location such as:

• Good transportation links: The property is close to major bus stops and to the main train station with links to Kings Cross in London.
• Near shops and restaurants: The property is well located, right in the town centre near to shops, cafes and restaurants.
• Affordability: The property has a good rental return and cashflow and because demand is high, voids are low.
• Property types: We have chosen to have a mix of flats and HMO. The HMO attracts lots of staff from the hospital nearby looking for somewhere to stay.

The Stupid Part

The part I missed and failed to check is security and anti-social behaviour.

Unbeknownst to us (and I guess we could have found out had we done our research), there is a high incidence of anti-social behaviour in the town centre. This means we are constantly dealing with homeless people breaking into the bin store to spend the night, recreational drugs users hanging around the building, leaving their paraphernalia around the building and much more.

The location of the property means the rental demand is high, but the anti-social behaviour has led to us spending most of our cashflow on security, clean ups and repairs. The amount of time also spent managing the property is twice as much as other properties we manage as we are constantly trying to ensure issues are addressed as soon as they occur. This has also affected the quality of tenants we attract.

Lessons Learnt

In my defence, this happened a while ago and I am a lot wiser now, but I learnt to never be carried away by all the other good points that you fail to notice the little things.

We are all born ignorant, but one must work hard to remain stupid.

Benjamin Franklin

Having been aware of this will not necessarily have affected our decision to proceed with the property but that knowledge would have informed the design of the and in particular the security design (gates and fences) and the materials used (anti-vandal materials).

Always remember that whether you have one property or 20, property investment is a business and you have to ensure you tick all the boxes or at least have a mitigation plan for issues that cannot be easily ticked off.