When Property Deals Go Wrong: The Three Rs of Resilience

If you’re in property long enough, something will go wrong and I’ve been there more times than I can count. Builders have disappeared, finance has fallen through at the eleventh hour, planning has thrown me curveballs, and valuations have come in soft. The truth is, these challenges aren’t the exception… they’re the rule.

In this episode, I’m sharing the simple framework I use to deal with setbacks without letting them knock me off course: the 3 R’s of Resilience - React, Reframe, Recover. Over nearly 20 years in the industry, this approach has helped me turn problems into lessons, lessons into systems, and setbacks into a stronger business.

If you want to build a serious HMO portfolio, resilience isn’t optional - it’s essential. Tune in and I’ll show you how to put it into practice.

-

👉 This episode is sponsored by Tide Business.

Sign up to Tide using this link and enter the promo code ROADMAP to get £50 cashback when you spend £100 on your new Tide card. T&C's Apply. #TideBusiness #TideBanking

-

🔥 Feeling overwhelmed? Join The HMO Roadmap Premium Plan at 20% OFF and access 400+ resources to help you start, scale & systemise your HMO business! Hurry! Offer ends on September 30th! Get started here.

-

Did you find this episode useful? Please leave us a quick review on Apple Podcasts or Spotify!

Got any questions? Join The HMO Community on Facebook!

If you want to join my 1-2-1 mentoring program, you can enquire here. 

Connect with me on Instagram or Linkedin for daily HMO tips and advice! 

Transcript

Andy Graham (00:02.67)

Hey, I'm Andy and you're listening to the HMO Podcast. Over 10 years ago, I set myself the challenge of building my own property portfolio. And what began as a short-term investment plan soon became a long-term commitment to change the way young people live together. I've now built several successful businesses. I've raised millions of pounds of investment and I've managed thousands of tenants. Join me and some very special guests to discover the tips, tricks and hacks, the ups and the downs, the best practice and everything else you need to know to start, scale and systemise your very own HMO portfolio now.

Andy Graham (00:40.622)

Here's the truth. If you're in property long enough, then something will go wrong. A builder will disappear. Your finance will fall through. Planning will throw you a huge unexpected curve ball. And I'm afraid that it's not if, it's when. And it's how you deal with these moments, these challenges, these difficult things that in my experience really will define how successful you can be as a property investor. In today's episode, I want to share with you an approach that I use when things do go wrong.

It’s where I've been able to stop problems from knocking me off course altogether and instead try to use them to build a better and stronger business. Over the nearly 20 years I've been doing this now, this has honestly been one of the most important things that I have learned. And today I want to share it with you. Please sit back, relax, and enjoy today's episode of the HMO Podcast.

Hey guys, it's Andy here. We're gonna be getting back to the podcast in just a moment, but I wanted to very quickly tell you that we have got a huge sale on the HMO Roadmap. For a very short space of time, you can take advantage of a massive 20% discount off our premium package, and that gives you absolutely everything that we have got. And trust me, there is more than you can possibly imagine. We are by far the largest vault of training and education and content and resource for HMO investors anywhere in the world. And it's not just built by me, it's built by you guys, our community. It's unbiased, it's transparent, and it covers absolutely everything. And it is so incredibly rich in detail and value. Just head to thehmoroadmap.co.uk right now, grab yourself that 20% discount and start scaling your HMO property business today. Let's get back to the show.

Andy Graham (02:26.884)

Welcome back. Today we are talking about resilience because I think that this is one of the most important things that as a property investor, you need to learn. And I really do believe that you can learn it. Property gets sold as a glamorous, easy way to make money, right? But the reality is it's messy. It's stressful. It's difficult and it can be very, very expensive. In my opinion, behind every polished Instagram post, and that includes mine, there's usually a trail of chaos, planning delays, spiralling refurb costs, valuations that come in soft, sleepless nights, whether a deal is about to collapse, all of that. And that's the part that no one really wants to show you. But here's the thing. Those moments, they are the rule. I've been doing this for nearly 20 years and I can tell you honestly that they are not the exception. If you want to build a serious property business, you've got to learn how to deal with this stuff.

And that is what today's episode is all about. It's about resilience. What is it? Why it matters so much? And most importantly, how can we build a business so that when things do go wrong and they will, we don't just survive, we don't just get through them, we actually come out better on the other side. Now, the reason I'm talking about resilience today is because I've been reflecting on my own business recently. The last few months, if I'm honest, have been really frustrating, very slow.

Nothing overly dramatic, but lots of things in a sequence of events that have slowed projects down, that have cost more money, that have been difficult from a technical perspective to resolve. These are the sorts of issues and problems that can crop up. The sort of stuff that you really wish didn't happen, but just seems to continuously, like a conveyor belt, happen one after the other. But I found that I'm far better at dealing with this sort of stuff now than I ever was.

And I've been reflecting on that. Why is that? Well, I honestly believe it's because I have learned over the years how to deal with this sort of stuff. And more importantly, actually expect this stuff. As a business owner, we sit at the bottom of a funnel and at the top of that funnel, dropping lots and lots of problems. And some of them get sorted along the way to the bottom. But those that don't tend to fall with us, we are at the bottom of that funnel. And we tend to find as business owners that we have to deal with

Andy Graham (04:48.579)

The most frustrating, the most difficult to resolve, the most frustrating, the most expensive problems. And because of the nature of the industry we're in, real estate in the UK, there can be an awful large number of problems. There are so many moving parts to this type of business model. And I found over the years that practice has really helped hone my skills and my ability to deal with this sort of stuff. Very rarely does anything keep me awake at night anymore. And when I was younger, it didn't take much at all to keep me awake. 

And I see this regularly with my mentees as well, the people I work with the closest who don't yet have that experience that I have. When things happen, some small things, some large things, they really struggle. And the way that they react to them can often be the determining factor. And I have found that there is certainly a pattern. Those with less experience tend to react worse and those with more experience tend to react better.

Now that sounds obvious, but in reality, actually, the problem is the same. Everybody is a little bit different and we all react to things in a different way. But I think it's pretty clear that with a bit of practice and knowing how to deal with this stuff, we can all be better. We can all deal with these challenges and these problems that our businesses will inevitably throw at us in a better way. So resilience for me, first and foremost, is not about avoiding problems. It's not about bulletproofing your business. That's not what we're talking about today. It's about what you do when the wheels come off. It's that expectation that things will break. The wheels will come off. 

Now let's just take a moment to think about some of the things that can and will go wrong. Depending on how many deals you've done, this or some of this stuff may or may not have yet affected you. First of all, finance will fall through at the 11th hour, whether it's a private investor, whether it is a bank who's already offered you terms.

Things will change at the 11th hour. I'm going to share one story at this point. A couple of years ago, we were buying a large building from a lender that we've done a lot of business with. They wanted to do the deal from the outset. It was a building with planning. We wanted to amend that planning. We were very clear on what that objective was and the bank initially were quite happy with that. It was all valued up on that basis. Anyway, 11th hour.

Andy Graham (07:09.873)

The bank decided that they wanted to change the measure on which they were going to lend against the building on. Now, when you get a commercial building valued, you'll often get a valuation based on the proposed planning, taking all things into consideration, your development costs, the end values of residential accommodation, et cetera. You'll also get a 90 day valuation and a commercial valuation, what it would actually be worth as a going concern as a commercial asset.

And Lempthow, this particular bank changed their mind. They wanted to lend against a reduced amount. They wanted to lend against the commercial valuation as opposed to the kind of value set against the gross development value that would have been converted into residential. And that was a huge problem for us because it meant that there wasn't enough to actually available to actually lend and therefore buy the deal. And we're talking, we're within a week of having to complete.

And the vendor is screaming at us. And this is somebody who doesn't necessarily need to sell, very difficult negotiator. And the whole thing nearly fell over. And we managed to recover this because we were able to deal with that problem very, very quickly. We brought in another lender and we kind of resolved that scenario, but that was a really, really big deal. And looking back, have been disastrous had we have not been able to figure out a solution, but this stuff really does happen.

Builders, builders will disappoint you. Builders will not turn up on site. Builders will duck and dive. Builders will just vanish. Some of them are pretty good at disappearing. And there'll be all sorts of challenges that you might have with builders. And I'm afraid to say it, but the reality is the smaller your projects, the smaller the budgets, the less professional your build team is likely to be. With that, you do tend to get more of the issues with people perhaps telling porkies, people trying to inflate bills and put margins on things that weren't necessarily agreed and taking shortcuts and cutting corners, that sort of stuff. Just the refurbishment costs themselves. Even if you've got a good builder, I can almost guarantee that on every project you will use your contingency and more because there will just be more than you anticipate. Things will come up and you want to improve this back. You want to move this.

Andy Graham (09:33.621)

on suite to the other side of the room or whatever it might be and things start to rack up. Valuations will definitely come in soft. A lot of people talk about down valuations. Sometimes it is a genuine down valuation. Sometimes it is just a resetting of an expectation that was probably wrong in the first place. But that sort of stuff will absolutely happen. Joint ventures, partnerships, relationships, they will break down because expectations aren't aligned. Tenants can cause utter chaos. That was one of the things probably more than anything that used to stress me out and I used to lose sleep over. I certainly don't anymore. I've got a very, very, very thick skin. But these are the sorts of things that almost certainly will go wrong in your business to varying degrees. 

Now, when they do happen, you've got two choices. You can either let the issue crush you, get the better of you financially, emotionally, maybe even reputationally or you can grit your teeth, you can be decisive, you can take affirmative action and you can put a solution into place. Now it might not be the perfect solution, but just doing it and making progress is the ultimate priority. And that I think is what so many people struggle to do. They are so worried about making a decision that potentially makes the scenario worse. They sit on things, it tends to fester, it rots, it makes things worse. 

So resilience, is that ability to take this sort of stuff on the chin, make a decision, move forwards with it. And no matter what the consequences, suck it up and keep going. And when the next thing happens, do the same again. And again and again and over time, what happens is you grow a thicker skin, you become experienced in dealing with these sorts of challenges and problems. You see a lot of it ahead of time. So you reduce the risks of various things happening in any case and over time, what that does is it molds your business and it shapes you as an investor. And it's the ability to do that, that shapes great businesses. 

So with that in mind, the real question that I want us to answer today is how do we handle this stuff when it's actually happening? Now for me, the best way to think about this is through the three Rs of resilience. React, reframe and recover.

Andy Graham (11:53.695)

Quick one. I think that you'd agree that finding and doing deals is the most important part of property, but it's everything around the deal that can slow you down. Keeping track of rental income and refurb costs, paying contractors and bookkeeping. That's the stuff that needs time and energy that you should be putting into your deals. That's why I'm glad Tide are sponsoring today's episode. Tide is more than just an online bank. It's your all-in-one toolkit for running a property business. You can open a free business account in a day, send invoices, accept payments and track expenses automatically.

And even give contractors or your team members their own cards with limits. Property is complex, but your finances don't have to be. You can sign up to Tide today with my link in the show notes and get £50 cashback when you spend £100 on your new card. Let's get back to the show. 

So let's talk about React. First of all, the first step is speed. Remember this. Things move very slowly in property, but we don't have to let that always be the case. When things go wrong, the worst thing you can do is bury your head in the sand. Wait for problems to fix themselves because they won't, they will just grow. I've had investors pull out days before completion. Panic sets in quickly, but the key is to react. 

For me, it's finding the bridging solution, renegotiating deadlines, bringing in a fresh line of capital at the last minute, getting on the phone, making something happen. None of those are ideal, but they can be the difference of losing a deal or keeping a deal alive.

Like I said, builders walking off site midway through the refurb as well. At that point, you can either sit around blaming them while your costs mount, or you can react. You can get new quotes. You can bring somebody else in. You can reshuffle the program. You can have difficult conversations with your lenders and investors if things are going to be delayed. It's messy, but the project can move forwards. Reacting doesn't mean that you always make the perfect call. Like I said, it just means that you make a call and that is what I really want you to remember here on the first bit of the three R's, the React. You just need to do something that keeps that momentum. Perfection, that can wait. Speed is what really matters in a crisis. 

Now, the second step, the second R is reframe. This second step is all about mindset because when something does go wrong, it's easy to think that I failed, I'm not cut out for this. Maybe I should quit. I don't know enough to be doing this.

Andy Graham (14:17.948)

Not the right person to be doing this. But reframing means choosing a different perspective. It is quite literally a choice. Instead of seeing things as a disaster or the end of the road, treat it as part of the process, a down valuation, an overrun on a refurbishment, a tenant trashing a room. They are not signs that you're failing. They are signs that you're actually in the game. These things do happen to everybody. The difference is how you interpret them and how you deal with them. 

Now, if you can reframe the problem, if you can say this is painful, but it's showing me where I need to improve, then setbacks stop being reasons to quit and they start being proof that you're moving forward and they are learning experiences. They will make you better at dealing with these sorts of things in the future. This mental shift was huge for me. It keeps you from spiraling. It gives you the confidence to keep going. And what you learn over time is that actually you build an armor.

You do grow a thicker skin and that is incredibly important because that immediate reaction and that method of reframing problems then sets you up to make sure that as you move forwards as a business owner, you are able to handle these sorts of things so much more efficiently. And that brings us onto the third R, the third step of the process, which is recover. This is where you turn these experiences, these difficult experiences into something useful, hardwiring lessons into your business so that the same problem doesn't hit you twice. 

Now, after a downvaluation, for example, I changed how I approached the first one that really hurt, the one that really disappointed me, the one that forced me to go and have some tough conversations. What do I do now? And I've fact just done this very recently on a scheme I'm about to start developing out for the third time. I've gone back to gather stronger data, more comparables, speaking to local agents early, paying for a private valuation and not building my whole plan on optimistic numbers. That's just one method, one strategy of building a contingency and learning from past mistakes so that I'm much more less likely to have to deal with a down valuation.

Andy Graham (16:36.221)

in the future, but also if I am, the gap is going to be much smaller than it might otherwise be. Refurb overruns, I started to put in bigger contingencies and be far more realistic about programs. I also made sure that I used the right paperwork on my bigger projects. I use a contract administrator, someone to actually generate the paperwork between me and the contract and then administer, oversee that contract just to help protect my interest. I do an awful lot, huge amount of due diligence on the contracts as well.

And this is all because I have learned the painful lessons. One of the reasons I like to do slightly bigger projects than I used to is also because I get to work with higher tier contractors, contractors who are a bit more professional, contractors who have management internally, contractors who tend to give me less problems. Now, when they do have problems, the problems can be bigger because we're working on a bigger scale. So it's not like problems disappear altogether.

But these are all the sorts of things that I've dealt with previously. I've looked at methods of improving and making sure I can deal with better in the future. And I put these sorts of things into action. If an investor pulls out, and this has happened to me before, I like to make sure that I have got alternative backers. Okay. I like to make sure that I've got contingency for that. A different lender that I could go to. Private or the bank. Maybe even some savings or some cash stacked away myself that I could draw into a deal if I needed to. 

There's nothing worse than being caught out at the 11th hour with not quite enough to make something work and then having to beg, borrow or steal. Ideally, you want to know that these sorts of things are in place and sometimes it's not until this has happened to you and you really feel the pain that you then realise, right, I need to make sure that this never happens again. I need to recover from this and I need to make sure that I am better equipped to deal with a similar problem in the future. 

That's recovery. It's not just about getting over the emotional sting, but it's about turning those scars into systems. Every time you do it, I promise you will make your business harder to knock down. So there we go. The three Rs of resilience. React, reframe and recover. Look, I know that this sounds simple, almost arbitrary, but I promise it works. These things will happen. Some of them will be really testing. Some of them

Andy Graham (18:58.601)

will make you regret getting into property in the first place. But I promise it's how you deal with these things, not the fact that they happen that should concern you more. And if you follow the steps that I've outlined today, I can almost guarantee you will be fine. Now, if you can move quickly when these problems hit, if you can shift your perspective so that setbacks become lessons and then you can recover by building those lessons straight back into your business, I promise you'll find every disaster will make you a stronger and a better investor that is what resilience looks like in practice. And that's the difference between people who last in property and the people who flame out at the first site of a problem. 

That honestly is the difference between actually making it a success, building a portfolio in this game and not doing the majority of people who never get past their first or second or third deal. Don't because they encounter these sorts of issues. They're not able to deal with them very well. And they're never able to recover. 

If you can do that, if you can get from that first to that second to that third deal, you'll get to the fifth and to the 10th, then to the 20th to the 50th. I promise you that is how it works. And yes, there are levels and yes, some of the problems are on different scales, but the method behind dealing with these problems is exactly the same. So if you're in the middle of something messy right now, someone's pulled out of a deal, someone's disappeared, someone's done a vanishing act, you've run well over budget, just take today's episode as encouragement. You're not failing, you're learning. It's resilience. And if you stick with it, you will come out of this better. You'll come out of it sharper, stronger, and far more capable as an investor. 

I would love to hear your stories guys. If you've had some tough setbacks recently, anything you've faced in property, how have you dealt with it? How have you bounced back? Please let me know. Come on over to the HMO community on Facebook. That's our free group and share it with us.

You will not, I can almost guarantee, be the only person who's dealt with that problem. But we would love to hear it because that is the sort of stuff that keeps us honest, it's transparent, and I think we can all benefit from the challenges that we're all facing in our community. That's what we're there for, to help each other, to encourage each other, to motivate each other, and to learn from one another. And if you want to try and get ahead of a lot of this sort of stuff, these things that can happen, if you want to get better at raising finance, if you want to get better at

Andy Graham (21:25.673)

dealing with tenants. If you want to get better at understanding valuations, if you want to get better at managing refurbishments, then head on over to thehmoroadmap.co.uk. We've got a huge sale on right now for a very short time only. It's going to be ending in a few days. So if you want to go and bag yourself 20% off everything that you can get your hands on in our premium package, and it will blow your mind how much is in there, head to thehmoroadmap.co.uk right now and take advantage. 

But I promise, digest that absorb all of that information and then keep it at hand for when you might need it. And I guarantee it will just help with so much of this. It'll save you hours and weeks and even months of time and save you tens of thousands of pounds, if not more. That is it guys. Thank you so much for tuning in today. If you have enjoyed today's episode, if you found some value in there, then please, please, please leave a really quick review. You can do that on either Spotify, Apple podcasts, whatever platform you like to listen to.

It really does mean the world to me if you guys share the episode and tell us what you think. It helps us to reach more people. It helps us continue bringing great guests onto the show and slowly but surely it is helping change the narrative around HMOs. 

That is it guys. Thank you for tuning in and don't forget that I'll be right back here in the very same place next week. So please join me then for another installment of the HMO podcast.