This entrepreneur reveals his decades-long strategy
James Sinclair is no ordinary clown.
This British entrepreneur started his first business at 15 after leaving school. He made over £120,000 a year as a children’s entertainer.
“The magic began when I delivered parties and magic shows.
“My grandad was employee number one. Well, he was more like a volunteer as he never wanted paying!”
This wasn’t enough for the ambitious teen. He added staff. He got better at marketing. He invested in himself.
Today, his family entertainment business has become The Partyman Group. It consists of:
- Partyman World (9 soft play centres)
- Twizzle Tops (7 daycare nurseries)
- Lazer Kombat (3 laser combat arenas)
- Marsh Farm Animal Adventure (a 70-acre farm park)
- Teddy Tastic (a manufacturing brand that’s produced over a million teddy bears)
- Lee Valley Animal Adventure Park
- Rossi Ice Cream
- Magic Makers — a registered charity for seriously ill children.
The Partyman Group has clocked over £100 million in sales. It employs over 500 staff and welcomes over a million customers through its doors every year.
Running a company of this scale isn’t without its difficulties.
The pandemic forced James to shut down his businesses — at least temporarily — and he faces challenges every day:
“Cashflow, payroll, staff, marketing, sales… They all consume my working day.”
This is the “brick-and-mortar” side of his business.
There’s also an educational side.
James:
- Has a digital membership platform called Entrepreneur’s University. It gives members access to proven business strategies, blueprints, and tactics. (New members can get a 14-day free trial.)
- Has published three business books, including The Millionaire Clown
- Hosts an annual, two-day business masterclass event in London
- Has published over 600 videos on YouTube (19K subscribers)
- Posts regularly on Tik Tok about business (123K followers)
- Speaks at business conferences around the U.K.
- Hosts a weekly podcast, The Business Broadcast
James’s growing property portfolio supports it all. It’s currently valued at over £10 million.
“It should always be business first, property second…
“Build the property portfolio on the back of the business.”
In short, James is crushing it!
Here’s how this entrepreneur has built his £10 million property empire.
Commercial vs Residential Property
James has over 30 properties in his portfolio.
There’s a mix of residential properties (homes & apartments) and commercial properties (warehouses, offices, etc.)
Some of his properties are worth lots of money. Others, not so much.
James began with residential properties.
Now, he prefers commercial ones:
“There are a number of reasons I prefer commercial property over residential property…
“Number one, all the people I’ve met that have made lots of money out of property have all got commercial interests…
“[Number two], I think the government is more pro-commercial than they are residential. They keep putting in tax changes to deter buy-to-let landlords…”
Another benefit of commercial property is the flexibility it affords him. If James needs extra space for his company, he can rent the commercial properties to his other business.
The sweet spot for James is small commercial units.
“I do easy-in, easy-out leases…
“I give small business owners the comfort that they can really scale up their business…”
James’s Six Property Buying Rules
Here’s what James looks for in every property deal:
Rule #1: Location
“Areas where the properties are going to rent out easily and there’s a demand for tenants.”
Rule #2: 10% Rent
“I want at least 10% rent on the total capital deployed.
“That means if I buy a house for £100,000, I want at least £10,000 in rent coming back each year.”
The total capital deployed includes money borrowed from the bank, not just his own.
Here’s another example of how he thinks about this:
Option #1: There are two coffee shops available to buy for £500,000 each. Each includes the freehold (i.e. the property and the land on which it stands). Together, they could bring in £1,000,000 a year.
Option #2: There are ten coffee shops available to buy. Each costs £100,000, but the deals only include the leases. These could bring in £5,000,000 a year.
The second option would be a more effective deployment of capital.
But with option #1, you control the freeholds. This means you can control the overheads and stop the rents from increasing. The value of the properties will also go up.
With ten coffee shops, you could sell them all (as long as they’re profitable) and use this money to buy freehold properties.
Your choice depends on how risky you feel.
Rule #3: Below Market-Value Properties
“This protects me in case there’s a downturn…”
Rule #4: No Refurbishments
“I don’t want to buy any fixer-uppers. I want to buy a property, rent it out, and get a cash flow as fast as possible.”
Rule #5: Return on Investment (ROI)
“I want at least 20% for the cash I’m investing.”
This gives you “plenty of fat in the game” if interest rates rise.
To calculate this, James takes these inputs:
- A: The positive cash flow from a property (i.e. rental income after mortgage payments & agent fees)
- B: Your total cash in — not the banks (i.e. the deposit, tax, legal fees)
And puts them in this formula:
(A/B) x 100
If this is over 20%, James is happy.
Higher yields tend to mean housing appreciation is lower.
Rule #6: Catching the Right Bus
“Properties are like buses. There’s always another one coming along. I want to make sure I get on the right bus.”
Lastly, James bears this in mind when buying property:
“Properties are a long-term investment plan.
“Hopefully, they’ll double in value every ten years… and you’ll always be able to rent this stuff.”
Making Deals Happen
In this challenge, James builds a property portfolio in 60 days using lease-option agreements. What’s clear is just how hard it is to source good deals.
Lots of deals don’t work out. You have to put in lots of work to make them happen.
James was completing the challenge with his friend Nathan who does deals like this for a living. One tip Nathan gave was advertising where others don’t bother:
“We’ve put some basic advertising out on things like the National Landlord Association… (This is for) landlords who want out or retire early…
“(We) spend about £1,000/month to find these deals.”
Once you find the deals, you want to identify the current landlord’s pain points. Are they planning to retire? Do they need the income now?
This will help you put together a deal that works for both parties.
Once you’ve got this information — either by speaking with an agent or directly with the indoor — act fast. James recommends sending a proposal on the very same day.
You also want all the finance details close to hand.
Here’s a proposal James put together for a £500K property deal:
Every Entrepreneur Should Be Building Four Companies
So why does James buy all this property?
In this video, he explains:
“As a business owner, I create these sites so I can give them back to Partyman as security for banking… (We can then) borrow more money to put into the main business…
“When we have pandemics and stuff like that, I know I’ve got chunky amounts of real estate around us….
“We can weather any storm.”
James goes on to say entrepreneurs should be building four companies — not one.
Here’s how he explains it in his third book, Getting Customers:
“Company one is the company you are today. It’s not there yet. It’s still climbing the slippery slope. It’s got to win market share. You can’t have the perfect team yet or get the prices you really want. You’ll make decisions to grab turnover. You’ll make decisions that’ll keep you surviving.
“Company two is the company you really want to be — the business that’s finished. Armed with a target date for when this will happen, and a detailed document outlining what the company will look like, you’ll be on course to build company two.”
Company three is a media and marketing company. That’s why James posts videos and content across multiple platforms. It gets Partyman out there.
Finally, company four is a property investment company.
“So you extract the profits out of your operating businesses. Take 50% of those profits and shove them into real estate.
“As time jogs along, you build a strong real estate portfolio… Your [operating] business can always survive.”
James’s $10 Million Property Portfolio in Detail
In June 2021, James revealed his property portfolio. (The numbers have likely changed since.)
Here are the headlines.
His monthly rental income is £32,500. It would probably be £40,000 at market value. For some of the properties, his companies are the tenants, so he charges below market value.
“This doesn’t matter. All the money ends up in the same pot.”
Monthly mortgage payments come to £18,102. A lot of this is on commercial property, so they’re paying down the money borrowed — not just the interest.
The total (conservative) value of his properties is £10 million.
The total mortgage debt is £3.75 million.
As his properties rise in value, they provide security for his businesses. He can borrow more money against them to grow The Partyman Group.
It then cycles back around:
Protect the fast pounds and chuck it into property or other slow pound building assets…”
“Take the cash out of property to fund the fun in life, or reinvest the cash back into buying more property… Eventually, you’ll want to treat your family to a nice holiday and stuff like that.”
Most people don’t do this:
“What most people do is pour their profits out of their business to fund their fun…
“Really, you want to push it into property.
“This will generate cash forever.”
James also makes the point that it’s easier to manage a property portfolio than a business portfolio:
“Think about it.
“If I die, my family can manage a property portfolio much more than a business portfolio.
“Business needs an entrepreneur. Property needs an asset manager…
“Most people can look after a property portfolio. Not everyone can run an ice cream company, a farm park, a zoo, a chain of day nurseries, an indoor play center, and make teddy bears.
“Those are just some of the things I get up to on a daily basis.
Buying property protects his business and his family.
Win-win.
Takeaways
From everything I’ve heard, read, and seen, this much is clear to me:
James Sinclair is the real deal.
He’s built a successful business with annual revenues of £13 million. What’s more, The Partyman Group continues to grow in an industry that’s been pummelled by Covid, rising energy prices, and other external factors.
Can everyone build a business like this?
Probably not.
However, you can learn his principles. More specifically, you can learn his rules for buying property. These underpin his business success.
Although James is an entertainer, don’t be fooled.
There’s a method behind his magic.