So we are in week 5 of lockdown and like many other property investors right now we are knee deep in a development.
This project is different to any refurb we have worked on before for a few reasons;
1. This is our first HMO conversion
2. This is our first time being completely hands off - we have a whole team of builders and a principle contractor working on this project
3. Converting a HMO means we need to comply with much more rigorous legislation and requirements that don't apply to Buy-to-Lets or Serviced accommodation.
4. We are working with bridging finance for the first time
Rewind to the beginning of 2020 - we were making strong strides in our property investment career, feeling confident about our strategy, juggling multiple deals with cash flowing into the business and setting our sights on at least two, maybe three more projects in the first half of this year.
A trip to the Philippines and three weeks later, everything changed....
We returned back to the UK (ignorance is bliss when you don't watch the news, little did we know we were a matter of days away from being stuck in Manila as the airport got put into lockdown) to the reality that things were changing very quickly; self isolation and social distancing were becoming very real at home and we began to see the impact COVID-19 was having upon our country.
Now here we are and our fantastic holiday to the Philippines feels like a seriously long time ago. We can only describe the past few weeks as an emotional rollercoaster....
a continuous mix of positive and negative news has come our way - from securing a long awaited project in the thriving Bristol property market, to a few sources of capital in a short period of time including having our SA income (temporarily) wiped out, among quite a few other variables it has been a very unpredictable and at times unsettling period.
What we know is that through all of this we need to maintain momentum at the HMO development, as well as focus on future opportunities.
We feel lucky that we have a fantastic project manager and build team who have continued to work safely - abiding by the social distancing guidelines meaning that despite less bodies on site progress is pushing on.
We funded the deal with bridging finance and are currently 2 months into a 12 month term so have sufficient time to assess the options and remortgage off this loan. We're keeping in regular contact with our trusty broker who is keeping us updated on any changes forecasted and constantly re-assessing our exit strategy and therefore we feel comfortable in this area.
However, what we have lost financially is the additional funds we had lined up prior to COVID which would be used to complete the refurb and the finishing touches. This has left us marginally short and we have had to look at the very fine detail in ensuring we can spin all plates whilst not compromising our position.
We have been lucky enough to secure additional private investment from an investor we have worked with on previous projects. We achieved this by talking said investor through what we consider to be a balanced and realistic view of the property market and what may or may not happen in the future (credit to Rob and Rob from The PropertyHub for their excellent informative podcasts, as well as our local estate agent who has a practical and sensible view on the local market). On top of this, we have provided virtual tours of the work we have undertaken, demonstrated our plans and exit strategy and can happily confirm that our private investor is on board with getting involved in our project at this crazy and uncertain time.
In any other circumstances we would be feeling pretty gutted to be having to source additional finance mid project and having what feels like relentless hurdles thrown in our way. However, in light of the current circumstances we are feeling so grateful for what we have, and re-addressing our goals and shifting the timescales of some feels like a very small compromise in a world of unprecedented change right now.
We would love to hear your story, compare notes and share a laugh or a tear right now! anything goes so please get in touch.
Stay safe and take care !