It’s no secret that the world of banking and lending has gone through something of a transformation in the last two years. Especially as far as property investing is concerned. If you are searching for funds to buy property as a full-time “property person’ – whether that’s for a single buy-to-let, an HMO, for serviced accommodation or even to do a commercial conversion – you are probably very aware that access to funding is being touted as “easier than ever”; yet your personal reality might be anything but.

Getting the actual cash ready to complete a deal can be extremely time-consuming, frustrating and downright annoying.
Even with our massive database of lenders and Angel investors, getting that first deal (or that great deal) across the line can be a right nuisance.
Getting an actual offer can take time, but what about the people who get offers but then don’t do anything?

Take the last two months of 2016 as an example. They were very interesting for a number of reasons, but one thing that stood out for us was an inordinate number of people who had applied for property related funding…and were given actual terms…but failed to make a decision to accept the terms on offer.

This stood out because it was an anomaly.

If we get 40 applications for property development funding in any one period for money from our huge network of property business angels, be it a week or a month, the stats are usually the same in terms of percentages.

About a third will fail for various reasons (poor credit history, insufficient information to complete, refusal to pay a final survey fee…that sort of thing…)

A third will have made a decent application and will get a survey and then will procrastinate and the final third will be successful in that they do everything on time when asked and get an offer relatively quickly.

That offer for property development funding might be from a lender who will fund all or 80% of the amount requested…we then go on to find an investor or Joint Venture (JV) partner who will fund the balance…and bingo…deal done.

Usually when terms are offered, the borrower draws down the money as soon as they can. So in 40 applications for property development funding we would expect 13 or 14 to close pretty quickly.

This time though, we had 13 offers of funding and one close.

That meant that 12 were sitting on the fence…. and that’s unusual.

That led us to question why.

I looked at the previous periods and the figures were ok. Roughly a third had closed…except for…guess what? The same period last year!

This was not an individual thing, this was seasonal.

I had to ask myself. Were crowds of human mindset affected by the end of year, by Christmas and the “holiday season” or was it something else?

Hours later I stumbled across an online article about successful morning people and how they create routines to make decision making simple.

The article stood out at me for one thing. It said that “…many successful people limit their decision making by automating some of their daily choices e.g. always dressing the same way…”

I dress the same way every day…have done for years.

The article went on to say that “…to limit procrastination and make the most of your morning minimise decision fatigue by limiting your choices….”
Decision fatigue? I’d never heard of such a thing.

This led me to think “Could the people who had applied for property development funding in November and December be suffering from this …decision fatigue?”

Decision fatigue, apparently, is a real thing; I even found another article online about it, which says “In decision-making and psychology, decision fatigue refers to the deteriorating quality of decisions made by an individual after a long session on decision-making. It is now understood as one of the causes of irrational trade-offs in decision-making.”

There is a paradox here in that people consciously like choice and seem to want more of it and will often fight for more choice, yet at the same time people find that making too many choices can be psychologically aversive.

A person who is mentally depleted becomes reluctant to make a choice at all – or if pushed, could make a very poor choice.

Decision fatigue can lead a lot of people to avoid decisions entirely; it’s a psychological phenomenon called “decision avoidance”.

Researchers found that people who have more choices to make at the end of a “decision making period” were often less willing to decide at all.

Could it be that the end of a calendar year was simply, unconsciously, accepted as the end of a “decision-making period”? Was it therefore easier to simply make no decision at all rather than make a decision that could be deferred until a new decision-making period known as the New Year?

Interestingly, there was a slight upswing in excepted offers for property development funding in January, February and March last year. Could the same thing happen this year?

I mooted this idea off my greatest supporter and harshest critic…my wife. Who immediately restores balance into any of my theories!

Her response was “…don’t get ahead of yourself…it’s Christmas…too many things to think about and easier to delay something like that until the New Year…besides, it’s an expensive time of year’.

All very well, I thought to myself, but we are looking to give people property development money not take it from them.

Maybe she has a point?

I think I might take a look at the stats of the people who endure and make the decision when everyone else is delaying theirs.

Maybe that’s one of the strengths of uncommon thinking, contrarian thinking?

After all, if 90% of a crowd make one decision simply due to the tie of year and 10% make another, does that not make the 90% a herd? Is this an example of herd mentality in action?

Or does my wife really have a valid point?

One thing that is absolutely clear though is that in the world of property, time waits for no man. If a vendor is selling, they want to know that you can complete and exchange at the appointed time.

If you’re given reasonable terms by a lender, either a commercial lender, a joint venture (JV) partner or an Angel investor, then accept them and move on.

We can help by letting you know if the terms are reasonable as we can compare them to others that we have; and as long as the deal supports it and you can make a reasonable profit, the accept them quickly and close the deal.

Don’t suffer from analysis paralysis and when it comes to property, definitely don’t suffer from decision fatigue.


Ray McLennan
Ray McLennan

Trainer at Progressive Property & author at Raising Angel Finance. Ray McLennan is a keynote public speaker and former corporate solicitor from Scotland who no longer practices law but has many years of experience owning and operating a variety of businesses in the UK and Ireland.He co-formed the Copyright Protection Agency in Dublin (1996 – 2011) and blogs and tweets regularly on legal and property investment issues.