It has become apparent in the current property market that more and more people are getting into the business by sourcing investment opportunities. We wanted to have a look at the pros and cons of getting involved in this business and give a fair reflection as to whether you should be getting involved in this market.
We have seen a number of people online advising people with no property background that you can make money from property with no initial investment. Put simply, they are advising people to source investment opportunities. However, how you go about this is where it becomes more difficult so let’s take a look at the way they are suggesting you find these properties and how to make them work for you.
Firstly, find a property that is in a distressed situation. This sounds easy to do right? We have to look at this and say that distressed situation doesn’t mean run down but also includes situations where vendors have to sell due to personal or financial reasons. So how do you find the properties? The advice given includes trawling through Rightmove or Zoopla, leafleting your local area for properties, checking court listings for bankruptcy hearings or advertising in your local paper or through your own social media.
The issues with most of the above revolve around a small number of problems – cost, time, likelihood of success and most of all; competition! If you consider just looking through Rightmove there are over 130million visits every month. With 90% of properties being sold by estate agents (and a further 5% by auction houses) you only have a very small pool to find that one property that works. This means that even if you find a property in a distressed case from all of the properties that are being marketed, you will be up against any number of other sourcers, direct investors or homebuyers all vying to try and buy a property at the best price.
In all likelihood, the vendor will only agree to the price with you if they believe that you are going to purchase the property yourself rather than sending it onto other agents to sell for you. This can affect your credibility and in the long run can blow any chance of you being able to agree prices with vendors if your reputation precedes you. Another thing to consider is that a distressed vendor might request some form of deposit from you to secure the deal at an attractive price. This is, again, at odds with the view that sourcing properties is an “investment free” pastime.
If you have been lucky enough to agree a price for the property, what price do you agree this at? Fundamentally you are going to be reliant on someone else selling the property for you so what if they don’t agree with your valuation? One of our previous blog posts was about the fact that every property now has two valuations – one for investors and one for homebuyers and there can be a big difference between the two.
If you have managed to get to this stage of the process then you are doing well given you have found a property and agreed a price that you believe will be of interest to an investor. So now you just have to find a serious investor to purchase the property which is the hardest part of all.
This is where the business of being a property sourcer comes under the most pressure. As Choices Investments have been in business for over 25 years, we have come across an endless supply of people that claim to be serious investors who have subsequently disappeared when asked to financially commit to a purchase. This is why we insist on taking our Retained Client service joining fee in order to separate “the wheat from the chaff”. This may sound almost arrogant however years of experience have taught us that a payment is the difference between a conversation and commitment (to paraphrase Warren Buffett).
In summary, if you have managed to walk through the minefield of property sourcing and have properties that you are looking to sell, then we have the buyers for you. However if you want to skip the difficulty of doing this and just purchase pre-checked properties, then we have the properties for you. We are able to assist with your property needs, whatever these may be, so please get in touch with us on 01342 840050 or emailing enquiries(Replace this parenthesis with the @ sign)choicesacquisitions.co.uk