Posted by When you’ve been working in property for as long as I have, it can be quite easy to lose track of the number of deals you’ve worked on. Large, small, or somewhere in between, there are a few that are bound to slip your mind.
However, as with everything in life, there are some deals that I’ll never forget. They’ve helped to shape who I am today, whether that’s because they’ve gone better than I could have imagined, or because they’ve given me a kick up the arse I didn’t know I needed at the time, they’ve all taught me things it’s essential to know if you’re going to have any kind of career in real estate.
So without further ado, here are my 5 most memorable property deals!
The first deal
Whilst my first purchase was a tiny mews house in the centre of Dublin, my first proper deal was a slightly bigger house further out of the city.
I really loved this house when I went to view it. It was an interesting space with loads of potential, but it also had this massive, overgrown garden – because I was the only one who made the effort to explore it, I was the only one at the viewing who knew about this enormous garden with all this room for expansion.
It was an executor sale and the family had put the house in the hands of an auctioneer. This was back in May 1999 and it was my first auction. I sat up the front wearing my jacket and tie – wanting to look respectable and be taken seriously because I was still a youngish guy. I was so new to it all that I made the first offer – something more experienced bidders wouldn’t do!
The price quickly went up and up at breakneck speed, but in under 60 seconds I found myself the winner – it was quite scary, but at the same time exciting because now I owned this property, without having to go back and forth with estate agents.
It ended up being my family home, so any increase in the value was completely tax-free. I probably spent around £200,000 on improving that property but I sold it seven years later in 2006 for 1.9 million – so not only did I enjoy living there, financially it worked out really well too!
The Albatross
This is the one where I learned that you should never take anything for granted.
This was a relatively small deal: a property in Dublin which I bought with a business partner. It was a new development with a retail unit on the ground floor; we agreed to buy it, we already had a tenant lined up, with terms agreed that would have made us a nice profit – a total no-brainer.
So, we had this tenant lined up and had an outline agreement of rent, subject to a formal lease being signed, which (all things considered) would have made us around a 600k profit. We’d not put any money in ourselves and instead had borrowed the entire purchase price from the bank.
Now, in an ideal world you would make sure the tenant had signed the lease before closing the deal… but we don’t live in a perfect world. Our vendor was having none of our delays and said that if we didn’t close the deal by the end of the week, he was pulling it.
Although we didn’t have the agreement signed with the tenant, we were confident that it was all going ahead, so we closed the sale, and thought about how to spend our huge profit.
Which is when we got a call from our solicitor saying the tenant had just returned the lease contracts unsigned with a letter saying that regretfully they must withdraw from the deal.
It was panic stations as you can imagine – we tried everything we could do save the deal, and even talked about taking legal action. Of course, because they hadn’t signed a lease, there was no case.
The long and the short of it is that the unit effectively sat empty for 12 years until we exited at a financial loss, but having gained the knowledge that you should never assume a deal is done until you have a contract in your hand, that you should never be blinded by your potential profits, and you should never, ever call a deal ‘a no-brainer’!
The dream come true (kind of)
As a child, I had zero interest in school – I was flunking everything because I just wasn’t engaged and had no focus. Then, on a family holiday to New York when I was about 15, I was looking up at the skyscrapers and completely blown away by them. I was just obsessed with the incredible views from the top of the Empire State Building, and the original World Trade Centre.
Imagine being a 15 year old Irish teenager, when the tallest building you’d been in till then was 4 storeys high. Our hotel room was on the 36th floor and it blew my mind!
Just walking the streets as well made a huge impression on me, and I knew that I wanted to live in New York one day. I don’t think my parents were too happy with that idea!
But it was that trip to New York, and seeing those skyscrapers for the first time that turned me onto the idea of being an architect. I got focused at school and ended up studying architecture at university.
After my dad died, I started getting involved in the family business a lot more. And the family business is based in Ireland. So that was basically the end of my dream to go to New York, because I had to roll up my sleeves and take care of matters at home.
Now, a few years passed by, I started doing quite well, and I was having breakfast with a friend, who mentioned that there was an apartment building being built in Manhattan right in the middle of Rockefeller Centre, an iconic point in New York. He told me that they were starting to sell these apartments, and that if I bought something, he could earn some commission.
The commission was pretty high, so he said he’d split it with me: I remember thinking to myself, that’s great! I’ll get an apartment in my dream city and I’ll get some of my money back on the commission.
So I went ahead, and started making my payments. The building was under construction, so how these things are done is that you pay your deposit, then you pay another amount, and another… so I was a few years away until completion (and a final big payment).
And I couldn’t believe that I was going to own an (almost) penthouse apartment in New York, with a view out over the Empire State Building!
But of course, life never turns out how you think it’s going to. I had planned to go over and use the apartment on regular basis, but when the building was completed the developers said they had a tenant who was ready to move in, so I immediately rented it out – the only times I set foot in it was the day I got the keys, and then when I sold it a couple of years later.
So even though I never got to live there, it was still kind of a dream come true, to own a beautiful apartment right in the middle of Manhattan.
The one that nearly broke me
They say that buying a house is one of the most stressful things you can do, but what about when you’re buying an entire retail development in the south of Spain?
Back in 2006 I had a lovely holiday apartment and would travel on a regular basis. Behind my apartment building was a huge big piece of land with works going on, which was a going to be a big promenade, with residential and retail units. Retail was an area I felt I really knew my way around, and I had this incredible vision of what it could be: the most spectacular luxury fashion location.
The developers weren’t really into my vision and told me that if I wanted to create something like that myself, they were happy to give me an option to do it.
I went off on a big international roadshow, meeting with major luxury brands, and needed to raise total project funds of €42 million. I structured the funding with 12 million of equity capital from investors and myself, and 30 million of debt from the Royal Bank of Scotland. I ended up putting in three million myself for a 25% stake, and nine million from investors.
In the week that the actual agreement to buy the place was signed, to purchase this centre (which was still under construction, don’t forget) Lehman Brothers collapsed and financial markets around the world started to implode.
It was like a domino effect: all of the luxury brands I was in talks with started to pull out, and within four months, every one of the tenants I’d spent months assembling had pulled out, leaving me with an amazing 500m long waterfront retail centre with 42 units… and not a single tenant for any one of them.
I had moved my entire family to Spain, so that I could put all my attention into pulling this deal together rather than trying to juggle my Irish projects with this one, but needed to find alternative funding, so I started spending weeks at a time abroad, trying to recruit wealthy investors in Dubai. Not only did my health start to suffer, but my wife was struggling, on her own overseas with a young family and a husband off trying to save the day. When the bank pulled their loan and took my home back in Dublin, it was the end of our marriage.
In the end, I spent about a decade trying to salvage the deal and eventually, the Spanish commercial courts made a judgment that the property was to be handed back to the original developer, with a 100% loss of the 12m capital that we put in (3m of it my own).
This deal in Spain almost broke me, but taught me a number of valuable lessons: never allow your ego and your emotion to rule your decision making; don’t spread yourself too thin across deals and jurisdictions; never go all-in on a deal and paint yourself into a corner; and most importantly, know your own capabilities. I was way out of my depth, I had too much confidence, and it cost me dearly.
The one-in-lifetime deal
I often hesitate to tell people about this deal because I don’t want to give anyone the impression you can just click a finger and make profit like this in the property business. It’s really not that easy: it requires rolling up your sleeves and working hard. Occasionally you get lucky, in the same way that occasionally you can get unlucky, but in this particular case it was just extraordinary.
I’d heard that a bank was closing in part of west Dublin, and started putting feelers out, trying to figure out what was going to happen to the site. I started brainstorming the different configurations with an architect –it was a very high-profile site and I thought we could either convert the building, or demolish it to build something new.
After a bit of a bidding war with another buyer, I was told that I’d been successful and was the winner, that the building was mine for 1.25m.
A few weeks later I got a from an agent pal of mine working in the commercial retail space, who asked me out of the blue if I’d bought that old bank building. When I told him that I had and asked why, he said ‘I’ve got good news for you’.
A financial institution had been looking at that building and wanted to buy it, but didn’t get internal approval in time to make a bid. Now they had approval and my friend had been instructed to come to me and try to buy the property back for them.
After a bit of back and forth (and me playing hard to get!) we eventually agreed on the sale of the property at 3.75 million. We closed in about four weeks, leaving me with two and a half million profit in the space of six or eight weeks of gaining ownership of the property – absolutely mindblowing!