This article appears in the January edition of our Creating Wealth through Property Newsletter.
We all know that ambition is important, but it is not sufficient. In the words of the great Jim Rohn: “Motivation alone is not enough. If you have an idiot and you motivate him, now you have a motivated idiot.” This applies as much to property entrepreneurship as it does to personal fitness. Massive action in the wrong direction or without the right legal foundations, can kill your chances of achieving the financial rewards you deserve for the risks you are taking.
Property is one area in business where small teams – and even individuals – can make a huge impact, and can earn very significant financial rewards as a result. There are countless examples of people who have done exactly that, including many of our own clients. People who have made the transition from working for other people, to creating their own businesses and completing their own high quality development projects. The ability to pay off their mortgages is just a small part of their reward.
We’ve chosen the theme of 1980s fitness icons to help celebrate the New Year … and to celebrate the annual surge in gym membership which takes place every January. The ‘body beautiful’ is also an analogy for the health of a ‘body corporate’. The legal structure of a property venture may not be its beating heart or its muscles – but it can be likened to its circulation system, bones and ligaments: the conduit for interacting with the outside world, and the means of transmitting life blood around the body.
Unfortunately, we come across a lot of ‘bodged jobs’ when it comes to legal structures and legal arrangements … often committed by people who should have known better than to ‘wing it’. Investment structures which unwittingly create collective investment schemes, therefore requiring an FCA authorised operator. Unlawful financial promotions. Messing up the share structure / directorships and losing the benefit of entrepreneurs relief. Striking off companies which still have significant assets (even a shopping centre). The list goes on and on.
Our job at LCN is not just to protect you from making costly mistakes. It’s to help you to achieve the next level in your ambition, by giving examples of what can be done, showing how it can be achieved, and providing practical tools and connections you can use on the way. To show how easy it can be with the right guidance, we have included on page 2 an outline of one structure (there are many) which can be used for funding property development structures, namely loan notes with a security trustee.
We’re here to help with the process of getting you fit and healthy for your property entrepreneurship journey, so that you can face 2018 in the best possible shape – and to invite you to join us in celebrating the exuberance of some of our favourite fitness icons from the 1980s. Enjoy!
Paul Sutton is co-founder of LCN Legal and a corporate lawyer with over 20 years’ experience of helping clients to create effective structures for property projects. He is the author of the Lexis PSL Practice Note for Property Lawyers on Buying Property SPVs and regularly writes for publications such as Estates Gazette, Tax Adviser, Tax Journal and our blog at lcnlegal.com.