How To Become Trusted To Get Distressed Property Deals
This article was originally mentioned via Property Investor Today – click here to read more
Context
At a time of scarcity in being able to get good property deals, over the years I have picked up a good number of distressed properties directly from distressed sellers, perhaps a disproportionately larger number than average. A friend asked me recently, ‘how do you do it bro, how do you always end up doing deals with distressed owners of properties?’
To answer these questions, I started by listing all the deals I have been involved in, past and present, deeply analysing how those deals came to me, one by one and the reasons those deals came to me and not others.
I concluded that there were four main traits which allow me to attract great property deals and they are listed below:
Becoming Trusted
I am fascinated by the science of being trusted in business, and have spent good time over the past year studying the two main thinkers of trust in business on this subject area, Frances Frei of the Harvard Business School and Charles Green a consultant advisor in trust, and here is the most simplistic model of how trust is built in business…
If you sense that I am being authentic, you are much more likely to trust me. If you sense that I have real rigour in my logic, and I can communicate my logic well, you are far more likely to trust me. And if you believe that my empathy is directed towards you, you are far more likely to trust me. When all three of these component parts are working we have great trust. But if anyone if these parts are shaken, trust is jeopardised.
Once one is renowned for being trusted in business, it is a wealth beyond all monetary value.
Showing Up
Being present and persisting have opened opportunities for me over the years. I’ve built friends and business partners at auction viewings, property training events, LinkedIn, business dinners, social and religious circles, other business engagements, family members and work colleagues. Solicitors, accountants, financial advisors, my teachers, mentors and coaches have all afforded me opportunities because I showed up.
Another definition of showing up is persistence. Buying from the hands of receivers and distressed sellers can be an emotional (for the seller), lengthy and complicated process, requiring skill in negotiation, deal structuring – legal and financial solutions. At times, it has taken in excess of 12 months to get a single deal over the line, persisting with patience and creating wins for all concerned will seem impossible at times, and at any stage the deal may be lost even if a lockout agreement is in place with funds. The solutions will arrive when one keeps showing up.
Having Financial Capacity
The chicken or egg scenario:
Inexperienced property investors often ask me: ‘what is more important, having funds first or having a deal first to attract funds?’
Having financial capacity to be able to do a deal is an important aspect to attracting deals, some would argue THE most important – I disagree. When I select the financial partners I work with, I select them on the basis of their values, their expectations, their experience and whether they are more interested in me or the deal. When partners see me as their biggest deal, I am positioned correctly to be able to strike a deal both with the vendor and my investor partner. If they are only interested in the deal, it is a relationship with weak foundations and one I avoid.
Fund raising is a science of its own right and during 2020 and beyond, I intend to deliver training, masterclasses and coaching for small groups to raise finance within Islamic frameworks.
Past Performance
I have done deals with the same distressed seller more than once! I have done deals with the same investor more than once. It is perfectly humanly possible to screw up the relationship with a distressed seller and investor partner alike in sensitive dealmaking processes. I have learnt to stay sincere to my values, and even if things turn sour for some time, my sincerity will prevail and most relationships can be repaired or even strengthen beyond imagination after damage.
As well, it is immensely important to continuously improve as a person and as a professional, to learn from mistakes and build prolifically proficient teams to deliver well. Much emphasis is placed on building a public profile in the modern age, building an outward image without being able to back it up with real delivery will only serve up success for a short period of time.
Once a team is built and deliver seamlessly from inception to closure, one can begin to be regarded as a true investor. And as the saying goes: ‘for a true investor, the deal of once in a lifetime comes along every other day.’
Bringing It All Together
Attracting great property deals and in particular distressed property deals is possible despite facing scarcity and short supply in the current market. It is necessary to go through a four step process of becoming trusted, showing up, having the financial capacity and deliver with great performance. Once these foundations are laid, there will be a constant supply of great property deals.
ABOUT THE AUTHOR:
Babrul Matin is known as the ‘Islamic Investor’, he is best known for Real Estate development in the UK market. Babrul’s mission is to combine ethical performance with profitability, and drive shariah compliant investment and business practices in real markets across the Globe. Babrul is a specialist trainer, coach, consultant and public speaker in Islamic property development and is the host and founder of the UK Islamic Property Investors Network.
Babrul has written for, or been covered by, The BBC, The British Council, The Red Money Group, The Office for Standards in Education, The Specialist Schools and Academies Trust, Islamic Finance News, as well as various councils and local newspapers.
