Beginners' pluck

It took cash from friends and family, 'balls of steel' and a lot of luck, but Alex Mattis's group of friends turned their dream of a Shoreditch factory conversion into a reality. She explains how it was done
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The Independent Online

Five years ago my boyfriend Misha and I were in the same position as many young couples in London. Property prices were rocketing while our salaries were doing anything but. Our chances of buying a flat were slim to none.

Five years ago my boyfriend Misha and I were in the same position as many young couples in London. Property prices were rocketing while our salaries were doing anything but. Our chances of buying a flat were slim to none.

But Misha, being a resourceful sort, refused to accept we had no options. He had already renovated a derelict warehouse in Shoreditch which, initially, had no roof, water, electricity or heating. "Back then, Shoreditch was considered so undesirable I was given six months' free rent to take it on," he says. This gave him a knack for DIY and a suspicion that doing up a building couldn't be that hard.

He was 25, had no money and even less experience of property development. But this didn't put him off. He persuaded his friend and film-making partner Josh Appignanesi, then 23, to get involved and the two began to trawl Shoreditch for other potential sites. "We spent a lot of time writing down the addresses of old buildings in Shoreditch, then making applications through the Land Registry to trace the owners," says Misha. But it wasn't entirely straightforward. "The area was becoming increasingly developed and it looked like we'd missed an opportunity."

Misha and Josh eventually found a four-storey former textiles factory for £410,000. It was roofless, derelict and home to several dozen pigeons. "The floors were rotten and there was no staircase," says Misha. "But it was in a quiet, convenient street and I liked the front." The idea was to convert it into three flats, as well as a penthouse and a commercial space. Then came the small matter of getting the money. A specialist property lender was prepared to stump up 60 per cent of the costs, which left £200,000 to find.

This was more feasible than it sounds. The property boom had given homeowners access to capital they would never have had otherwise. Josh was prepared to borrow against his mortgage. Surely other people would do the same if they knew they could make serious money? "We saw an opportunity and turned it into a business proposition," says Misha. "It would be a way for our family and friends to make a bit of cash with minimal effort on their part."

He and Josh worked out a deal. Anyone who invested would share the - at this point, vast - profit. For overseeing the development, Misha and Josh would be paid a small percentage. Misha would use his share as a deposit on one of the flats. Hey presto, everyone would be a winner.

"We put together a 50-page business proposal and had the whole thing evaluated by a cost consultant," says Misha. "We weren't inundated with people offering cash," he admits. But they convinced seven individuals among our friends and parents, each of whom invested between £10,000 and £50,000. Naturally, this brought its own pressures. "People weren't doing it as a favour," says Misha. "No one could afford to lose the money. If the scheme had gone even a bit wrong they would have had to sell their houses."

It's this risk that stops most people embarking on similar projects. But Misha is by nature an optimist. "I always felt it would work out fine," he says. Josh was less confident. "I'm glad Misha didn't lose any sleep," he says. "I remember constantly tearing my hair out. I was always imagining worst-case scenarios - it was a nightmare." To add to the stress, they also had to fit the development around their day jobs.

Fortunately they employed talented people. They chose Sarah Featherstone as architect. She is a friend and had done a superlative job on her own house. Her sense of style would prove invaluable. "Most developments are bland, with poor attention to detail," says Misha. "The advantage of doing it yourself is that you get to decide everything about the look of your flat." This even applied to the communal hallway, where Misha persuaded artist friends Natasha Law and Alice Bogaerde to paint a mural.

If choosing fixtures and fittings was the fun bit, keeping the budget under control was not. "We did our figures as adequately as possible but, of course, they turned out to be complete bullshit," says Josh. "There are all sorts of factors you can't account for."

The contractors' first estimates were twice what the cost consultant had allocated. It also took much longer than they'd thought to get planning permission, during which time the interest payments were racking up. Their biggest mistake, however, came halfway through the project. "Someone offered us £740,000 for the building," says Misha. "If you took off the £100,000 we'd already spent, that's still £230,000 profit, and we hadn't even had to do it up."

The temptation to bail out proved too much. The architects and builders downed tools and the project was placed on hold for several months. Then the offer was withdrawn. "Initially, we should have said, 'If you're serious, give us 40 grand. It took months to get back up to speed and cost thousands," says Misha.

The project ended up taking two years, rather than the anticipated nine months. This caused tensions with the investors. "Unfortunately, it's hard to be confrontational when it's your mates you're dealing with," says Ben Levine, one investor who ended up buying the penthouse.

But thanks to no small amount of luck, it ended happily. While costs had spiralled, so had property prices, which meant Misha and Josh could recoup most of the profit. Our friends and parents doubled their investment. Misha's fee meant we could buy one of the flats. We've now been living here for two years and love it dearly. "Despite the pressure, I really enjoyed it," says Misha. "I'd love to do it again."

Josh is less convinced. "You need balls of steel," he says. "It's scary because there's so much money at stake."

In the end, their inexperience worked to their advantage. "Had we known how long it would take and how much it would cost, we probably wouldn't have gone through with it," says Misha. "But our naivety served us well."