flat in Clapham, in south London, and I paid £73,000 for it in early 1998. At that time I was working as a pharmacist and earning around £32,000 a year, so the flat cost just over twice my annual salary. To put this into context, a similar flat in Clapham now, at the time of writing (February 2016), would cost you upwards of £500,000 and the top pay rate for a pharmacist is around £55,000; so, while the top pay for a pharmacist probably hasn't even doubled, property prices have more than quadrupled; the price of that Clapham flat is almost ten times what a pharmacist can earn today. This is a staggering gulf and does make you wonder who on earth can afford to buy property in London these days!
Of course, I bought my flat at the bottom of the market and we were about to watch prices soar like never before. Indeed, when I decided to sell the flat in 1999 in order to finance a business idea I'd had, I made a total profit of £36,000. The impact of making so much money in such a short space of time stayed with me and resonated with me for a long time.
For a while my life was full of ups and downs. I trained and worked as a pharmacist and, while I enjoyed the contact with customers and felt I had a good “bedside manner”, I'd become frustrated with the glass ceiling in terms of pay. I had decided to study for an MBA, believing it would be my ticket into a fancy high-paid city job. However, I'd failed to get so much as a second interview for a single job. “Over-qualified and under-experienced” was how I was described over and over again. My next move was to set up a website. This was during the height of the dot-com boom and I seriously believed I was going to make millions from it. The idea was great; it was a dating website for Asian people. I thought I'd have a huge market considering the population of China and how difficult I assumed it must be for men and women to meet. However, I'd failed to take into consideration the fact that China was way behind the Western world in terms of the Internet and, in reality, my potential customers had no way of using my service. I had to close it down with losses of over £300,000, and to make matters worse, I'd raised all that money through my parents and parents’ friends, i.e. within a very close-knit Chinese community – not the most forgiving of people when it comes to losing face!
Finally I sat down and looked at everything I'd experienced. It was like seeing the pieces of a jigsaw finally come together in the right order. I merged the results of all my experiences together and finally made sense of them. First of all I noted that the most money I'd ever made was not by working a set number of hours for anyone (myself or an employer); it was by buying and selling property at the right time. Secondly, although my website had failed because I didn't have the customers to populate it, I knew it had been a good site and I'd gained a great deal of experience in developing it; given the right product and audience, I was sure I could still have a successful Internet-based business. Finally I thought about what a good “people person” I had learnt to be, after all my days working in the pharmacy business. What if, I thought to myself, I could build a website to help people sell their houses quickly and without hassle by connecting them to investors. And thus my business idea for NetworkPropertyBuyers.co.uk was born. I later went on to build NetworkPropertyInvestments.co.uk to attract investors for the sellers.
My website was a database of property leads. I basically “match-made” investors and sellers who were particularly motivated to sell their properties. People were able to make direct deals, cutting out the estate agent middleman. Of course, these deals were struck at a lower price than the seller might have received on the open market with an estate agent pushing up the price, but they gladly paid that price for a direct and fast sale. These were people for whom a quick sale, for whatever reason, was paramount.
As the business grew, I began to build my own property portfolio by making deals with some of the leads I found. I also started to come up with more and more inventive ways of doing property deals, so much so that my name became quite well known in the property business and I was sought after by various organizations to speak at conferences and teach what I knew to other property investors. I'll never forget the moment I believed I'd really made it; it was when the BBC asked me for an interview. The BBC wanted my opinion. I was understandably flattered!
My Property Business Niche
I think I was the first person to hone in on Below Market Value (BMV) deals, and actually systemize the process. Nowadays everyone knows about BMV deals, but back then no one had heard of them. I used my networking skills to find cash-rich investors who were looking for property deals; then I used my marketing skills to find the people who were particularly keen to sell their properties quickly. I introduced them and took a fee for it. In effect I became the middleman myself, but I took my cut from the investor, not the seller. And the sellers always got what they most wanted: a quick sale.
In the couple of years before the Global Economic Crash of 2008/09, my business was booming. I had really carved out a great little niche for myself. However, with my knowledge of economics and general instincts about the way things felt in the property business and other related industries, I could tell a couple of years before the crash happened that the bubble was going to burst, as bubbles always do. We had been watching the subprime mortgage business get quite out of control. It was clearly only a matter of time before it all imploded. In any case, the whole credit/debt culture couldn't last forever. And, unfortunately, the higher you climb, the further you have to fall!
As devastating as the crash was for some people, any savvy entrepreneur knows that in times of economic instability there is always plenty of money to be made. As I saw the crunch coming, I realized that this was going to mean some pretty desperate home owners were going to be needing to offload their properties, some of them might even find themselves in negative equity. The traditional methods of selling through estate agents were not going to help these people, and investors were going to find it harder and harder to get the financing that, to be honest had been a bit of a walk in the park to get up to that point.
This is the Chinese word for crisis:
I love it because it is made up of two characters. The first character means “danger” and the second character means “opportunity”.
As the property market started to collapse, I worked harder than ever, coming up with ever-more inventive ways of structuring deals. As a result I, and the many others who followed my lead, survived the crash and actually thrived during these so-called bleak economic times. So I feel I am living proof of the fact that there is opportunity within every crisis.
Lease-Option Pioneer
Of all the strategies I have developed to structure property deals, the most pioneering was the lease-option deal structure. Lease-option deals had been used in commercial property but, before I tried it, no one had used such a deal in the purchase of residential property. To me it seemed like a very viable – if unconventional – way of structuring a residential property deal. Working with my lawyers, I set the precedent for using lease-option deals for residential property. I ensured the first deal I did was legally sound and paved the way for any other investor/buyer to use this method.
I like to think I had a small hand in revolutionizing the way property is bought and sold using this particular deal structure! I certainly found myself in great demand after I'd started using this method regularly. People came to me, eager to learn how to structure deals this way. It was a method that allowed me, and many other investors, to carry on investing in property through the credit crunch because it cut out the need for a conventional mortgage. I was soon being invited to speak at international property conferences and receiving more requests for interviews from national television channels. I have continued to teach my unique methods (including lease-option deals and others) to this day, and these strategies form the heart of this book.
Property Revolution
If you can read this book with an open mind, if you can put aside all your preconditioned thoughts about property – what your parents
