11 essential questions to ask a property investment company

Tips for finding the best investment company to work with

Most beginner investors make mistakes when they first invest in property. The first is to go it alone. By working with a good property investment company and taking their advice, you should be able to avoid expensive rookie mistakes. You’ll invest profitably and successfully from the off. But how do you tell a good property investment company from the bad and the ugly?

Ask these 11 essential questions of the property investment company you are considering. If the answers are better than satisfactory, then the service, advice, and help you receive should be also.

1.      How old are the properties that you sell?

Existing properties tend to have higher maintenance costs. The older a property is, the higher the cost is likely to be. It could destroy your cash flow, and make what should have been a profitable investment a poor investment.

Off-plan and new build properties come with full guarantees. If you purchase early in the off-plan timeline, you’re likely to get a bigger discount from market value and choose the finish that will appeal most to buyers and tenants.

2.      Who do you act for?

The property investment company should be acting for you, the investor, and not the property developer. However, the best companies will work extensively with property developers, fostering close relationships to be able to strike deals for the best properties on a plot. The distinction between working for you and working with a developer is important.

3.      Have you got exclusive rights to sell a development’s properties?

Some larger investment companies will ‘buy’ an entire development, and then sell on to investors. This type of company is not selective in the properties it chooses on a development. You could find that you are buying the least attractive, poorer apartment, for example, after all the quality stock has been sold.

Ask the investment company why they selected the apartment they have the rights to sell. Have they handpicked the very best, or are they selling the least tenantable on a development?

4.      Do you charge investors and clients ‘add-on’ fees?

The investment company you choose to work with should offer you a range of services other than simply acting as a conduit for your investment. For example, they may offer investment mentoring services, investment education, cash flow projections and reports, and so on. Never deal with a company that charges add-on fees for these add-on services.

Work with a property investment company that provides free investment education, mentoring, and property investment research.

5.      How do you earn your money?

Understanding how the company earns its money will provide a valuable insight as to how they work. Sales agents get paid by the developer, and so work for the developer. Always ask the company to show how they work for you, especially if they tell you that they get paid by the developer.

6.      Do you provide cash flow projections and reports?

A major mistake made by beginner investors is failing to project their cash flow correctly. Even in a market where prices are temporarily falling, positive cash flow will see you through a difficult period and increase your portfolio’s strength when the market picks up again.

A company that doesn’t provide a cash flow projection or help you with calculating your own either doesn’t understand this fundamental of investing in property, or is trying to offload an investment property which they know will perform poorly. In either case, you shouldn’t be dealing with them.

7.      What do you consider to be the factors that make a good property investment?

You want to know if the investment property company is considering the property fundamentals when selecting the development and properties on it. Have they researched the presence and strength of shops, schools, transport links, major employers and major investment? Have they researched prices and rents in the local area? Have they calculated potential cash flow?

8.      What type of properties do you sell?

You want to work with a company that sells different types of properties, suitable for local markets. A company that sells only one type of property isn’t providing you with access to the full potential of a location. You may not be buying the every person property you should be.

9.      Where do you sell properties?

Many property investment companies are limited in their geographical presence. They’ll only offer properties in the North East, or Midlands, or Scotland, for example. It restricts your potential to profit from localised economies. You won’t have the scope to buy in the best places to invest in property UK, and that could seriously damage your future wealth.

Over time, the property and economic cycle evolves, and it evolve at different times and speeds in different locations. If you are limited as to where you can invest, you are limited as to what profit you can make.

Look at the property investment company’s research for proof that they are searching nationwide for the best investment opportunities.

10. Do you provide rent appraisals backed by rental guarantees?

The property investment company with whom you work should be carrying out extensive rental appraisals, searching local markets to where you are investing and performing rental searches. If they don’t do this, how do you know your cash flow projections are correct?

The rent projection should be conservative, and if backed up by a guarantee, all the better.

11. What research do you do?

Research is the cornerstone of profitable property investment. Ask about the company’s research capabilities, the guidelines it uses, and how it analyses data.

Will you be working with the best property investment company?

Whatever your financial and lifestyle goals, it’s important that you construct the right investment strategy to achieve them. Investing in property has proved to be a great vehicle to financial freedom. But, if you don’t avoid expensive errors when you first start out, you may have to wave goodbye to your planned early retirement.

Working with a good property investment company is essential, and even seasoned professional property investors do so. Work with a poor company, and the results could ruin your financial future.

Contact one of the Gladfish team today on +44 207 923 6100, and ask us these 11 essential questions and any others you can think of. Get the ball rolling – the sooner you do, the sooner your dream lifestyle will become a reality.

Live with passion,

Brett Alegre-Wood

Brett Alegre-Wood
September 26, 2017

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