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Simple Property Deals That Make You Millions | Money Matters | Touchstone Education

– Hello. Today, I’m going to talk
to you about single deals to make you millions of pounds. Very often, people ask me, “Paul, well, how did
you get into property?” So, what I want to talk about today is I want to give some really good insight into single deals to make
you millions of pounds for people that are already in property and they want to take that next step. I think this should be
interesting for everybody because whether you’re in
property or not at the moment, I’m sure you want to
know what happens next. After you’ve done your first five, 10, 15 deals, many people don’t carry on doing the relatively small 50-,
100,000-pound deals all the time. Many people will go upper level. So, let me tell you first about a 60,000-square-foot warehouse that I took on in Hillington, which is just outside Glasgow,
round about 10 years ago now. Now you might be thinking,
how big is 60,000 square feet? Well, I don’t know if this helps, but an acre is 80,000 square feet. So, it’s kind of three quarters
of an acre of building. So, that’s a relatively large
building by some standards. Hopefully, when you get far
enough on in your journey, you’ll think, oh, that’s
quite a small one. So, it’s a 60,000-square-foot building. What was it used for? Well, it was a failing business. It was a business that was breaking even. So, what did I do? I got involved with that business. And as soon as you start talking about buying a commercial property, as soon as you start talking
about buying a business, it’s not about the bricks and mortar. It suddenly becomes about
the value of the books. So, you need to move on from just bricks-and-mortar
valuation on buying to let, and you need to start to
learn about balance sheets, and profit and loss accounts, because that is the basis on
which a business is valued. Now, this particular business
wasn’t making any money. It had turnover, but it
wasn’t making a profit. Now, I could see how it could
make a profit, but it wasn’t. It was an old business, and to explain a little
bit more detail about it, it used to be called
Bottle Recovery Scotland. The basis of the business was, do you remember there used to be like, returnable beer bottles,
returnable soft drink bottle? So, this business would drive around the pubs and clubs of Glasgow, collect up all the empty
bottles, clean them, and then sell them back to the bottlers that would refill them. And that was a great
business for many years, and it still had the bottle washers, but over the years, as
it became less normal to have a refillable bottle, because what do we have these days? Too much plastic and cans
and all that sort of thing, so the old glass refillable bottles are just not used anymore. But I could see that a warehouse
that size, where it was, in the middle of the industrial heartland, then more specifically, the spirit bottling industry of Glasgow could have a great future
servicing the drinks industry, but just in a different way. It still had the context
of all the businesses, ’cause in a small way, we’re
still working with them. So, how could you take
that business relationship and grow it? And one of the things that I knew was there was a shortage of
contract bottling in that area. So, that means, I don’t
know if you know this, but if we pick spirits, for instance, and I’m sure you’ll know
that an awful lot of whiskey, and vodka, and products like
that, are bottled in Glasgow, but specifically in that area of Glasgow. I don’t know if you know this. The average person consumes
two bottles of spirits a year. One of those is at Christmas. So, you’ve got 50% of your demand in like eight weeks of the
year because people don’t, people tend to get their stuff, get their drinks in before Christmas, and that means the demand for bottling isn’t like that all year. It goes massive spike and
then it falls away again. So, in the busy times,
the big bottling plants want little bottlers to help them out with special runs of this,
or, you know at Christmas, you’ll get like a bottle
in a tin or something, or it’ll be in a cardboard box, you’ll have a couple of glasses with it, that sort of thing, and that, in the industry called
contract packing, or repacking. Now, you need specific
niche industry knowledge to be able to do deals like
this, but almost always, there’s an opportunity
to leverage the property. So, how did I leverage that property? Well, in order to purchase the business, I got a Regional Selective
Assistance grant. So, that’s not cheap money. That’s free money. So, I got an RSA grant, Regional
Selective Assistance grant, and you need to know
what you’re doing here, but I got an RSA grant,
it cost me nothing, a 415,000 pounds. I was then able to go to, at the time, the Royal Bank of Scotland, but
any bank would have done it. They could see that I had
the grant of 415,000 pounds, so then they gave me match grant funding for another 415,000 pounds. I then went to rent-through-your-council, and got another 35,000 pounds. So, one way or another, I’d have a 900,000 pound of grant money, or really cheap money from the banks. And that is what I used to buy the business with the building. We then ran that business. I didn’t; I put in a
manager, guy called Andrew, and Andrew ran that business
for me for three years. Three years later, it was profitable, and when a business is profitable, you can sell it for
multiple of its profit. Typically, for a business like that, it’s between two and three times. That business was making a roundabout a million pounds a year. So, it was sold for two to three times. So, would you like to go and
buy a business like that, it’s got a whacking great warehouse, and bottling facility by the
time we finished with it, it makes a million pounds a year, sell it for two and a half million pounds, but it has not actually
cost you one penny? Neither, neither have you
had to spend any of your time doing it after the end of your analysis, because you’ve put a manager in there to do the business for you. Now, I appreciate that this
isn’t your first property deal. Now, why do I feel drawn to
talk to you about this now? Because this is the elite
level of property deal. This is the Formula One
level of property deal. And I’m out here, in Italy, near Monza, and I’m actually going off
this week, so Saturday morning, I’m going off this
weekend to spend two days in the Paddock Club, hanging out with the people
at the top of their game. I’m an engineer. There is no other sport for me that comes close to Formula One, in terms of the amount of
money that gets spent on it, the technical excellence,
the human excellence, in terms of what those drivers do. So, for me, it’s the absolute
pinnacle of man and machine working together in perfect harmony. They have to have systems. They have to have big teams. And it isn’t the first
thing you’re going to do. As many people that get into Formula One would have started off by racing
go-karts, the little thing, the cheap thing, the
few-hundred-pound thing. So, if you want to end up doing big, multi-million-pound deals, like I’ve done, you’re going to need to start somewhere, and that somewhere is very
often your first 50,000- or 60,000-pound buy-to-let,
but many people don’t do it, because they want that first
50- or 60,000-pound buy-to-let, Louis Hamilton didn’t get into kart-racing because he wanted to be a kart racer. He always wanted, always wanted
to be a Formula One racer, and specifically, he always
wanted to be a world champion, which is what he now is, five times over, and hopefully this year, six times. But I want to give you a
couple more examples of how you can take relatively
small amounts of money, ’cause this is the thing. The bigger the deal that you do, you don’t actually often need more money. What you need is more contacts. You’ve heard this before, I’m sure. Your network is your net worth. What you need is more knowledge. What you need is more support. What you need is more mentoring. And that’s why I’m so
passionate about helping people that want to do these big deals. So, if you’re looking to do big deals, you need to get yourself
involved with people that have got a knowledge of doing that, and they’ve done it before. And I want to give you some insight into some of the biggest
corporate deals that I’ve done. The biggest corporate
acquisition that I’ve done, the biggest brand
acquisition that I’ve done is I’ve bought Malibu from Diageo. Now that was an
850-million-pound transaction. The biggest disposal I’ve
done, I was part of a team that sold Allied Demac to a consort team of
companies that bought it, and that transaction
was almost 18 billion. So, I’ve got the knowledge, I’ve got the insight at the
very top level of the game. And I’m delighted to
share that information and that knowledge with everyone
that’s watching this video. So now, I want to give you a
kind of a medium-sized deal, to give you a feel for the
kind of deal that you can do with some money, not no money. And then, I’m going to finish up with one that I’m looking at right now. And you’ll appreciate,
I can’t really give you the full details of the one
that I’m looking at right now, because I’m in the middle of buying it. Happily tell you about it afterwards. So, and now I want to tell
you about a four-acre site. See how I’m moving from
square feet or square meters to acres and hectares? Well, as you do bigger deals, they physically get bigger, often. So, this one was getting
disposed by a pension fund. It was four-acre site, and on it, it had over 100,000
square feet of buildings. It was light industrial. It was warehouses, it was workshops. Let me give you a feel for
the kind of property it was. I’m sure there’ll be ones near you. There was quite a lot of parking. It was kind of an industrial site that was past its hay day. The anchor tenant was Howdens, the kitchen people. Kitchens and bathrooms. So, they had about 30,000 square feet, which is kind of one corner,
if you can imagine it, of the building. But then, the rest of the
building was little units. There was a guy doing MOTs. There were two guys that were doing alloy wheel refurbishment. So, all little bits and pieces, and there was a couple of burger vans. So, I’m sure you can visualize the kind of property that it was. Now, the sale price for this property was just 400,000 pounds. That’s a lot of property, that’s a lot of real
estate for 400,000 pounds. Now, why did the pension
fund want to get rid of it? They’re too small. They’re little itty bitty thing, ’cause pension funds will
very often not touch anything that isn’t in the millions. And they bought this portfolio, and then, they were getting rid of
the little bits and pieces. So, they wanted to keep the
big, multi-million-pound things, ’cause that’s what pension funds like, but they wanted to get
rid of the smaller things. So, many of you, many
of you will see houses. Many of you have probably got houses that are worth more than 400,000 pounds. So, this was an entire, almost an industrial
estate for 400,000 pounds. What was the income from this
complex of industrial estate? Well, it wasn’t fully let. This was the other scary thing. But even though it wasn’t fully let, it was about 75, 80% let, so
there were a few vacant units, it was still bringing in, still bring in 125,000 pounds a year. So, imagine that. 400,000 pounds to buy it, and bringing in more than
10,000 pounds a month. So, what was the additional complexity? What was the additional
difficulty in this case? Well, the tenants, apart from Howdens, weren’t on proper leases. So, you needed to go in there, and you needed to sort out
the tenancy agreements. So, they’re on things
called licenses to occupy. Now I know I’m getting
a little bit technical, and that’s not really
the point of this video. The point of this video
is to show you a pathway where you can go from deals that maybe give you a few
hundred pounds a month, to a few thousand pounds a month, to in this case, ten
thousand pounds a month. And you can do this with
the right knowledge, support and education. But we are now moving
towards the elite level, the Formula One level of property. The final deal that I wanted
to share with you today is a deal that I’m looking at, and this is an office complex. It’s got five office blocks. Five individual office blocks,
all of which are quite big. So, one of which is let to the BBC. So, they’ve got four of them that are let to big institutions like the BBC. The purchase price, well, the advertised price is 3.2 million. So, we’re going up the grades here. We’re going up the pay scales here. Now, how much money do
you think you would need to do that deal? You can’t possibly tell me because I’ve given you nowhere near enough
information about the deal. The income from it is more
than 400,000 pounds each year. The challenge, because
there’s always a challenge, which is an opportunity, the challenge is that
the fifth office block, you’ve got four that are let
out to good, strong covenants, to good tenants. The fifth one is a bit of a mishmash. So, you’ve got a constituency
MP’s office in there, you’ve got all sorts of
little bits and pieces. Now, I don’t know if you’ve ever seen a tenancy agreement out
to a constituency MP, but it says this. It says, “A five-year term
or a general election”, and who knows when the next
general election’s going to be, “or the death of the MP.” Because if the MP dies, obviously he doesn’t
want the office anymore. If there’s a general election, he or she might lose their seat. So, there’s a complexity in this deal. It’s sorting out those tenancy agreements. But if you sort them out, and
you can with the right help, you can move that 400,000
a year closer to 450. Now, if you’ve got 450,000 pounds a year coming off a good select of
good covenants, long leases, the value of that property is going to be between four-and-a-half
and five million pounds by the time that I finished with it. So, if I get it for anything like three, but I’ll make it worth five, well, that’s a two-million-pound deal. So, if you like the idea of creating chunks of millions of pounds by doing single deals,
you need to look up a bit. You need to look at bigger deals, and you need to consider
that elite Formula One level. I hope you’ve enjoyed this video. It’s been my pleasure
recording it, as always. You been wonderful, I being Paul, and I’ll see you very soon. Bye-bye for now. Watch out for next week’s addition. If you’ve liked it,
please literally like it, subscribe to the channel, get
your friends to do the same. You been wonderful, I being Paul. See you next time, bye-bye. (upbeat music)

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