As a planner for most of my career I have found the art of adding contingency something of a second nature approach to all plans which I build.

So going into the next project this was no exception, I drafted a rough project plan for our ground up, back to brick HMO refurbishment from a 7 bedsit with shared bathroom property to a 8 bedroom all ensuite with shared kitchen and living space. The design was high spec and the project was a big one tanking the basement, new connections for utilities, new layout and 8 bathrooms to find spaces and pipe work voids for. Showed the plan to a few local builders and priced the job up, gave the timings a tweak based on the information the builders had provided and settled on a plan to do this refurb which would take about 8-10 months (builders quoted 6). All good, let's do this.

So the project started and all was going well, we ran into the usual issues and found ways around them, something you are not told in property development before you start is the strangest of issues will crop up, most of which have never happened before and unlikely to ever happen again. The strangest for this project was we had a water mains pipe coming into our basement which had connections to both the neighbouring property, so when we cut the water supply, so were there water supplies cut, who ever thought this was a good idea when this was originally done was smoking something special.

We were mostly at the point of back to brick when we hit our newest issue which was not for-seen. COVID-19. Yeah Coronavirus this thing that started off as a problem half way around the world suddenly stopped us in our tracks. We were in lockdown and despite everyone feeling OK for the most part and some people happy to carry on working the biggest hurdle we faced was supplies, If someone had told me at one point in 2020 I would be bartering on bags of plaster like it was water in the middle of the desert I would have laughed in there face, but I was, I needed 30 bags of the stuff just to keep the project moving and it was sold out across the country for WEEKS. You can't plan for everything.

We finally managed to aquire bags of plaster in dribs and drabs to keep things moving along slowly but in the middle of it all we had an issue with the builder and then found ourselves mid lockdown with no ability to move anything forward. We were already running into our contingency but at this point we were looking at months and months of delays beyond our worst case scenario.

We pushed ahead leaning on contacts and people we knew locally, This project is 300 miles from my house, so not one I can pop to every now and again but when the times are tough you have to do what's needed, so as soon as things were looking better Covid wise we had deployed a new team onto this.

As with everything, new team means new issues, mostly as they all want to tell me how the last person didn't do things the way they should (meaning the same way they did) and everyone wants to start from scratch and rip out what's been done so far. Trade after trade, all the same.

We carry on, finding people and materials where we can despite people being massively busy now and supplies limited, but what are our options? Stop, Never, we are more resilient than that.

Anyway Long story short, a year and 9 months after purchase we have a completed HMO, it looks AMAZING!

Blood, sweat, tears, covid but it has all been worth it in the end. 

How do I know?

We have 6 happy tenants already and viewings daily

We have refinanced the property to pull out as much as we can

We have moved onto our next project.

What was the net impact?

1 Year longer than expected

and 50% over budget...

We learn from our lessons, they make us stronger, more informed next time, never give up...

Good luck for you and your projects. Fingers crossed for no more nation wide lockdowns impacting our projects...

Unless you live on Mars and potentially even if you do live on Mars you will have noticed our latest pandemic across the globe. Covid-19 or Coronavirus. At first it was this thing in China which looked bad. Then it started spreading, Europe and the US and eventually the globe with a few exceptions (apparently).

Tough times

If you are in property you will have undoubtedly been affected in one way or another through the property business, if not personally as well.

Investors have had tenants not paying due to low or no income.

Investors would not have been able to evict tenants even if unrelated to covid.

Investors would have had developments grind to a halt.

Investors would have had income lost

...Serviced accommodation sitting empty

...finance pulled

...down valued properties

and much more.

Investment opportunities

The positives, yes there were some positives.

I've seen property prices increasing in certain areas mostly fuelled by the Stamp Duty giveaway.

Tenants who would have traditionally been in houses would have moved to flats or even rooms in HMO's pushing up demand in some areas

Tired investors looking to offload properties have hit the markets with some competitive pricing to move before the stamp duty giveaway ends.

Mortgage rates dropped, crept up a bit, and then dropped again for certain investment types.

and again much more.

So what does this all mean?

As you can see above and as Warren Buffet has said

“be fearful when others are greedy, and greedy when others are fearful.”

As you can see there are issues to be fearful of, however there are also lots of new opportunities, cheaper properties with demand in set areas and cheaper financing means you can get into property now and ride the wave when it is climbing again, of course it might not climb straight away and this is why due diligence and your investment calculations on ROI are so important, the deal needs to stand on it's own two feet regardless of the market conditions as much as possible.

There are absolutely people out there who are hurting in property right now, most people in Serviced accommodation who didn't lock in long term contractors or health workers will likely have taken 6+ months of losses if not completely empty properties. This is why it's so important to ensure you are aware of the downsides but positioning yourself to succeed, using multiple strategies to spread the risk would help here, with hindsight I'm sure a few will be kicking them selves who are 100% committed to SA but others would, pre covid be kicking themselves for not being in SA as everywhere you turned people were sharing massive profits from their SA portfolios, most of which are no money down meaning higher rents to pay now with no equity to lean on. This isn't about downplaying SA, more to say reduce risk where you can by diversifying.

Stay safe out there.

Why, right now, there is opportunity in the Property Market, whilst everyone is concerned with a crash.