Inspiring My Students to Greater Heights of Property Development They Bought a Castle
“The mediocre teacher tells. The good teacher explains. The superior teacher demonstrates. The great teacher inspires,” — William Arthur Ward.
Samuel Leeds here. I was recently in Wales to handle some business and visit a development property owned by three former students of my Property Investment Academy. Anthony, David, and James invited me to see their latest project but kept mum on what type of property it was exactly. So I had no idea what to expect.
As we approached the property, the entrance road gave me the feeling there was a grand building at the end of the road. And then I saw it. The three had gotten themselves a castle! I couldn't hide my excitement, “that is absolutely awesome … they've bought a frigging castle … they remind me of me.”
Shortly after I arrived, the guys welcomed me warmly. “The only reason we found this project … is by meeting you, coming to the training … We do really appreciate it,” Anthony told me as he handed me a gift and a thank you card from all of them. Following the greetings and niceties, it was time to learn as much as possible about their newly acquired 19,000 square feet castle!
In 1983, a fire broke out in the castle and what stood there today was what was left. The owner moved away, and for a long time, could not be located. At some point, people even squatted in the abandoned castle for seven years.
“What are you gonna convert into?” I asked the fellas. ” … Apartments,” answered Anthony. The state of the castle made it hard for me to visualize it in any other way. At least with mine, as someone else put it, “there's room.” So I can envision it.
Benefits of the property
- It has a gorgeous surrounding, including a view of the sea.
- The castle sits on 2.3 acres of land.
- The land value is significantly worth more than what they paid.
- Capable of being converted into either regular residential flats or serviced apartments.
- In case of development limitations in the planning process, say legal restrictions, they have various exit options, including auctioning the property for a profit.
- Purchase price: £500,000
- Gross development cost (GDC): £3,500,000
- Gross development value (GDV): £ 7,000,000
James revealed that the actual buying price was £420,000, and their GDC and GDV estimates were lower than mine. “I think your GDC is going to be more than you think, and I think your GDP is going to be more than you think if it's anything like my experience,” I said in response.
How did they finance it?
James went on to tell me they paid cash for the property using money from investors. Some investors opted for a fixed return investment, while most chose an equity investment, where they're entitled to a proportionate share of the profit.
And get this, they managed to raise finance for the property without land and property valuation, plans, drawings, tenders, you name it. It pretty much took making phone calls and sending emails to potential investors.
I wasn't surprised that people invested in Anthony, David, and James that easily. For one, their property portfolio makes them appear trustworthy as it proves they have experience developing properties. And two, who doesn't want to own a castle?
What are their roles?
James: site acquisition, where his role includes finding investors, getting funding, structuring joint ventures, and buying the property. And whether they refinance and rent or resell the property, he'll handle that as well.
Anthony and David: refurbishing the castle or, as Anthony puts it, “bring it back to its former glory.”
Samuel: “So James … what possessed you to buy a castle?”
James: “It was a bit crazy … You always used to say … if your dreams don't scare you, they're not big enough … There's an element of nervousness or fear in this … And I looked at it and went, if this stacks … this is gonna make millions.”
Samuel: “Anthony, this isn't the only project you got going on … would you have thought that this three years ago would be the case?”
Anthony: “No not at all. Three years ago if you had said to me, ‘oh, you know in three years time you're going to be buying a pub to convert into apartments' I'd have been like … I can't see it happening … ‘To buy a castle?' No, now you're talking dreams …. So to be in this situation is just unreal.”
Samuel: “It's like a fairy tale. What do you think David? … I know you've been doing big deals for a long time, but …”
David: “Yeah, but again, when I went to the crash course, it totally changed everything … doing multiple developments, things like that, for ourselves as individuals and not for other people it's been … it's fantastic.”
“I'm so proud of you guys … having you guys now as people I can bounce ideas off and talk to … it's a really good thing … you're definitely gonna learn a lot … hopefully gonna make a lot,” I told them.
“I bought a castle, my students bought a castle … How am I going to lead the way now. Do I have to buy an island or something?” I asked as we part ways. “We'll buy an island if you buy an island,” said James in response.
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