Finding attractive investment opportunities that are below market value or have the potential to provide a lucrative return is arguably the most difficult and most important aspect of building a successful, profitable property business. While some deals come by easily, others can be arduous and extremely time-consuming to find, especially when there is a lack of stock.
Having a pipeline of deals allows you to have a consistent flow of opportunities to build momentum and keep growing your portfolio. Here are some of the ways you can find property investment or development opportunities:
Auctions can be a great way to find a wide variety of property deals, from development opportunities, to ready-to-go tenanted properties and speculative land sites. Most areas will have an auction at least every six to eight weeks, and if you are looking to save yourself time, analyse the auction catalogue in advance and shortlist the properties that meet your criteria based on your area, price range, and property goals to reduce the time involved in finding a deal.
While most auction purchases tend to be below market value, not all auction purchases are necessarily a bargain, and some auction properties will not make great investments. There could be a problem with the title, the property, the location or the neighbours. As with any investment, doing your due diligence before purchasing is crucial - more on that below.
- Property Portals
If you have the luxury of plenty of time to spare, Rightmove, Zoopla and other property platforms are great tools for helping you find potential investment and development opportunities. You can also set alerts for your specific investment area to notify you when new properties become available and quickly book viewings. Rightmove, and the likes, are also a good way to keep an eye on what’s coming onto the market and what’s selling quickly to establish trends and demand in certain areas.
- Deal Sourcers
Across the UK, there are many property investment companies or property sourcers who are able to provide you with great local opportunities.
If you are not time-rich and you have the funds ready to invest, working with a property sourcer is a good way to grow your portfolio quicker than you could have done alone. More often than not, an experienced deal sourcer will have property deals that are ready to go and, providing you have the right skills and experience, you can assess the available opportunities to see what is right for you. Property sourcers and investment companies charge a fee, which needs to be established in your overall costs and investment projections.
- Property Crowdfunding
This is a great way for people with a smaller investment pot to get started in property investing. Instead of spending time trying to source your own deals, crowdsourcing companies will search the market and condense investment opportunities into one platform. You can then use crowdfunding platforms to invest in property a lot quicker than the traditional property purchasing cycle and even with very little startup capital.
- Repossessed Property
Working with receivers and repossessed property stock is one of the quickest ways to grow a portfolio. The sale might be through an auction, by the receiver or by an estate agent and these are usually motivated sellers that have to sell the property within a set time frame. Given this, the sellers are often able to offer the property at an attractive below-market price. However, there are risks with buying up repossessed properties, and gazumping can be common.
- Estate Agents
Many investors turn their noses up at the idea of finding deals through estate agents and believe that the “good deals” are reserved for their best buyers, but this can be rather short-sighted. Around 90% of vendors consider agents as their first port of call when selling their properties, so naturally, they can provide access to the highest amount of property stock.
Unfortunately, many deals with an estate agent are not marketed as below-market value - so more hard work is required when it comes to making offers. While making low offers is the norm in order to secure a good deal, making ridiculously low offers does not go down well with estate agents and can result in them not coming to you with opportunities in the future.
Establishing a good relationship with the agents in your area by being clear on the exact type of property you are looking for and proving you are in a financial position to make a purchase will mean they are more likely to consider you when great deals become available.
Following the 100/10/1 rule
Many property investors apply the 100/10/1 rule or a variation of it. The simplified 100/10/1 rule means looking at one hundred properties. Out of those hundred properties, ten may be of interest and meet most, if not all, of the requirements for the deal to work. The investor then decides on to offer on three that get accepted but generally speaking, only one of the offers will be accepted and go through to completion. This is a very general rule of thumb but the idea is that, from an abundance of looking for deals, you will eventually uncover one.
Finding a suitable investment opportunity can be a very time-consuming process, but the effort is absolutely necessary to find the right property that will produce a solid return.
Offering all cash means you can complete the deal quickly, and this is generally appealing to a seller and puts you in a good position. However, tying up a large portion of your capital in one property may prevent you from being able to act quickly on another opportunity around the corner. Additionally, you may require cash to carry out work on the property or to keep as a reserve fund.
While an offer with a mortgage or alternative property loan isn’t as strong as an offer with all cash, it can be the next best thing. While mortgages can be slower to secure, alternative finance can still allow you to make an offer and complete a deal quickly - while keeping more cash on hand.
Stress-Test Every Deal
Each property has several characteristics that must be examined, and one particular issue with the property may end up being a deal-breaker. Simply overlooking one detail can turn the projected profit into a sizeable loss; therefore, carrying out thorough due diligence on every deal is vital.
Failure to secure a deal after a substantial amount of time and effort invested in finding quality opportunities can be disheartening. However, all it takes is one great deal to make a return. Like any other business, property is very much a numbers game and the more properties you see and the more people you speak to, the more deals you can do - within reason.
Build Strong Relationships
As mentioned above, having strong relationships with estate agents and deal sourcers will provide you with access to more investment opportunities, but without the required funds, acting on deals is not possible. If you don’t know anyone, it’s going to be incredibly difficult to secure funding for your deals and even harder to obtain the best rates.
Essentially, you need to build up a list of valuable contacts, including people you can trust who are deeply engrained in the industry and have good connections with decision-makers that can help you when you need them.
Our most valuable commodity is time, and working with a specialist finance advisor to broker your deals means you can unlock all the benefits of a strong contact list and focus your time and energy on other areas of your business and life.
The Merryoaks team possess all the skills, experience and contacts required to make your property business dreams a reality. Whether you are new to investing or looking to grow your portfolio, our team not only help you secure funding for your deals, but we can also help you build a pipeline of deals to grow your business.
To find out more about how we help, speak to our Funding Specialists today.