Property investment deals

What's our research process?

We don’t take on any old property investment deal. As we mentioned here, we reject around 90% of deals because they don’t stack up for us.

Our research process is lengthy – and for good reason.

You’ve all heard the horror stories: “the developer has gone bust”, “the developer has used my money to fund the build and now has no cash left”, “the development doesn’t even exist”… the list goes on.

We don’t launch deals every week like some property investment companies, and that’s because we take our time. Proper research is something that just can’t be rushed.

This is a list of the checks we make – and if you’re sourcing your own deals, you can use this as a checklist to base your own research on.

Researching property investment deals

The majority of the deals we launch are off-plan, new build properties. This is for a number of reasons:

  • It’s easier to negotiate a discount either at the very start of the project (again, read here to see why), or at the very end when the developer wants to leave the site
  • New properties are rarely problematic
  • Likely to be in high capital growth areas

Naturally with off-plan property investment deals, the research process is heightened because there’s not a physical property yet.

Here are a few key things we undertake as part of our research process:

Review the fundamentals

We start by looking at the key fundamentals of a property investment deal.

  • Is it an area with high tenant demand?
  • Does it have good public transport links?
  • Is it in an area with future capital growth prospects?
  • Are there good amenities in the area?

Planning

We check whether the developer has planning permission. It might sound like a no-brainer but you’ll be surprised at how many potential property investment deals have come across our desk without it.

Site ownership

Again, a simple check that shouldn’t be needed – but it is. We check the ownership of the site along with all the necessary permissions.

Funding

We don’t want any of our clients to fall victim to any developer using their money to fund the build. That’s why we make sure our client deposits are protected, and that we’re aware of how the developer is funding the site.

Lease checks and service charges

Lease checks are necessary – even more so with the media attention many developers have got over the past few years. We check who the freeholder is, the terms of the lease, and we also make sure that any lease charges are reasonable. These are also reviewed by our solicitors.

Again, service charges need to be warranted and reasonable – and also fall under our research process.

Warranties

Warranties are also checked – NHBC is a common one, but others are available.

New home warranties are essentially an insurance policy that protect you as a landlord from major defects that may affect your property. It gives you peace of mind that should something happen to your new investment property, you’ll be covered for up to 10 years.

Site visits

Site visits are an important part of the process and we don’t launch any property investment deal without seeing the site with our own eyes.

Even when there’s little to actually see, a lot can still be gained from a site visit and speaking to those working on the project. It gives us an idea of scale, progress and also confidence that we’re launching a site that’s not sat stagnant.

Solicitor handover

At this point, we’d hand all our findings over to our solicitors to check thoroughly. They’ll go through everything with a fine-toothed comb, including conducting a full legal review of the lease and ground rent.

Mortgageability

We check the mortgageability of every property investment deal we launch. While cash buyers do exist, the majority use leverage to purchase investment property. This means that the ability for our clients to obtain a mortgage is a pretty important part of our research process.

Luckily we have Property Hub Mortgages who can handle this research and give us honest opinions on whether clients will have issues with any particular site.

Build completion date

Nobody wants an open-ended, never ending build. So we make sure developers give us a build completion date and also a long stop date.

Issues can come up from time-to-time which might push a developer off course with the build completion date. This is why a long stop date is given.

A long stop date is a firm date whereby if you reach it and the build is not yet complete, you can withdraw from the contract and get your exchanged funds back with no financial penalty. This essentially stops a developer from keeping your money and never finishing the build.

So there you have it…

This isn’t an exhaustive list of all our checks, but this covers the main ones you’d need to do if you were sourcing your own property investment deals.

If you’d like further information on our property investment deals, give our Invest team a call or book a strategy meeting to get started on growing your property investment portfolio.

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Property Hub Invest Ltd is a company registered in England and Wales with company number 07495608

Lower Ground Floor, 1 Naoroji Street, London, WC1X 0GB