Property Sourcing: The Old Way vs The New Way
Property sourcing - tracking down and purchasing properties with good investment potential - is often a lengthy process for buy-to-let investors. At least, it used to be; before something new came along. We thought we’d break down both methods of sourcing properties. See which one you prefer…
The old way of sourcing investment properties
Step 1: Speak to a broker
Before you can even start looking for properties, you need to know whether getting a mortgage loan for your property budget is even feasible.
Plus, many estate agents won’t even give you a house viewing unless you already have a mortgage agreement in principle in place.
Reach out to a broker as early in the process as you can; it’ll make the property sourcing process much smoother in the long run.
Step 2: Search property listings
The next step is to jump on Zoopla, Rightmove or another property portal, sift through the properties listed for sale, and start building a shortlist of properties you’re interested in.
Unfortunately, this is also where we hit our first snag.
Almost all property portal sites are designed to serve homebuyers, not investors. That means the listings you’ll find there simply don’t provide enough information to help you assess whether the property is actually a good investment.
They can tell you how much you’ll pay to purchase them, and how long they’ve been on the market (which can highlight which areas are in high demand and which ones are struggling) but that’s about it.
That means you’ll need to do some homework…
Step 3: Research the market
It’s time to figure out what kinds of rents you’ll be able to charge for the properties on your shortlist. You have two options here.
Option one is to speak to the estate agent offering the property for sale. They’ll be able to shed more light on rental figures, as well as things like upkeep costs.
Unfortunately, this takes time; especially as you’ll need to individually call up each estate agent for each property on your shortlist.
Option two is to head to Google. Thankfully, the web does offer tools which can give you rental estimates based on the postcode, although the accuracy of these estimates can vary from one tool to another.
It can also be useful here to search for the local council’s development plans in your property’s area. This can indicate whether a particular postcode could be an up-and-coming area, where you can buy cheap now and charge higher rents later thanks to new local businesses and amenities.
Step 4: Build your spreadsheet
Once you have all your cost and expected income figures, it’s time to manually type in all that data into a spreadsheet and calculate how much profit you’ll actually make.
Again, you’ll need to do this for each and every property you’re interested in; plus, it’s best to build your spreadsheet to accommodate your entire portfolio, so you can see how a new acquisition will impact your total income.
Experienced landlords will know just how quickly these spreadsheets can get out of hand; particularly as the number of properties in your portfolio increases.
By the way, don’t forget to factor in your ideal LTV and deposit; and be prepared to adjust it if you can’t get the profit figures you’re after first time around.
Step 5: Speak to a broker (again)
Of course, if you’ve completed all the steps so far and you find none of the properties on your shortlist are actually worth investing in, it’s back to square one.
But let’s say you’ve decided on a property which looks like a great investment. Now, you’ll need to return to the broker to secure a mortgage offer.
You’ll likely be completing more paperwork, which swallows up even more time. You might even find at this stage that the property fails the lender’s stress tests and criteria, although a good broker will likely be able to find you an alternative deal.
Once you’ve tied down a mortgage, it’s time to…
Step 6: Talk to the estate agent (again)
The final piece of the puzzle, as it were, is to call up the estate agent and place an offer.
If they accept first time, great; but you’ll probably end up getting a few rejections and having to negotiate with the seller.
That’s assuming the property hasn’t already been sold, of course.
Unfortunately, that’s often the case. You spend so much time putting in the research and crunching the numbers, that by the time you’re ready to buy, another investor has already snapped up the property you were interested in; and then you’re back to square one again.
The new way of sourcing investment properties
As you can see, the traditional property sourcing process can be time-consuming, tedious and frustrating; but there is another way.
With the BTLPlatform, it’s as simple as;
- Filling in a few simple mortgage preferences
- Selecting a deal you’re interested in from the suggested top three real-time SPV mortgage deals
- Browsing property listings designed for investors, with all the data already there for you (including acquisition costs, stamp duty, mortgage payments and net rental yields)
- Messaging your chosen property and mortgage deal to your broker, so they can check lender eligibility on your behalf.
Imagine how much time, effort and money you could save!
You can even add your existing portfolio and see instantly how a new property acquisition will impact your finances; or build a virtual portfolio from our current property listings to see how much you’ll make by purchasing them all.
Want to give it a whirl? Sign up to the BTLPlatform today and start enjoying the new way of property sourcing.