Investment News – UK pension changes: Property investment due diligence 101

Whatever your plan, you’ll have to work with partners, mentors, suppliers and service providers.

That means you need to take the time to find the right people. You need to build a team around you that you trust, one that’s made up of people who’ve been proved competent.

A quick reminder: before jumping into bed with anyone, get online and search for their name. Putting it in quotes like this ‘Mr X’ will filter out people with similar names and get you better results. Add ‘+ scam’ (‘Mr X’ + scam) or ‘+ complaints’ to your search and have a read. Check out the claims they’re making and what other people say about them.

Do your due diligence on companies you will work with

You don’t have to dismiss a company just because of the odd complaint or negative comment. The world today is full of people who’ll whine about anything. Things don’t always go to plan in property.

Deals fail, people are gazumped, and it isn’t necessarily the company’s fault. However, if there are a lot of complaints, it might be worth steering clear. Just remember that few companies get to the top without some detractors.

Don’t trust the claims on the company’s own website – or any website they’re closely connected to. Potential scammers can often be found on mysterious sites that have ‘real’ investors talking about how great the company is. It’s wise to put more faith in comments from independent sites.

Over half of the start-ups in the UK fail within five years

I place a lot more trust in companies with a good track record, especially those that have been around for over five years.

Most scams burn out within one to three years, many less than this. Five or ten years is a great benchmark for good companies. It’s unlikely a company will keep going for this long and be a scam. But you still need to do your investment research and due diligence, because they may have changed their business model.

Get educated. Create a strategy that meets the current market and research the companies you want to work with. This will increase your chances of a successful investment.

Do your due diligence on the area and property

If the company you’re thinking of investing in only deals with one area or one development, you need to check out and research the area and its properties first.

Do this before the due diligence into the company. There’s no point in researching what looks like a great company if their only product is rubbish. And there’s no point in buying a buy-to-let property that isn’t going to be occupied by tenants and occupied on a regular basis, regardless of turnover.

You need to ensure that your property is a desirable place to live.

Otherwise, once you’ve checked out the company, and you’re satisfied with what you’ve found, you then focus on the area and property you’re thinking of investing in. The best approach is to go to one of the many research websites that will give the information you need.

These property investment fundamentals include:

  • Major investment
  • Major employment
  • Transport link
  • Schools
  • Shops

For example, the estate agent Savills conducted research that found in 2014 52% of UK tenants live within five minutes of their nearest transport links and just under half of respondents to their survey stated that being near to work or university was important when looking for a new rental property.

Is a cheap property a good investment?

Ignore the words ‘cheap, value, discount, below market’ unless they refer to a comparable property in the area. Usually, an area is cheap because the fundamentals aren’t as good as a more expensive area.

Some people associate ‘cheap’ with good investment. Not me – I associate cheap with a bad investment. You need to find up-and-coming areas where returns are likely to be greater.

How do you find the places to research?

Set aside a particular amount of time, say one hour.

Go to Google and begin by searching the area keyword (for example, Islington London), and then more onto the various keywords about fundamentals in the area (for example, Islington shops, Islington schools, Islington transport and Islington investment).

Check out whether major infrastructure improvements are being undertaken. Once you’ve done that, work your way through all the other things you can think of about the area.

You’ll soon get a good indication of what an area is like. Next you can jump on the phones and call local agents to ask them about the area and the property. Then it’s time to go and see the area and property.

If you can’t get to the place, or you’re buying sight unseen, add some extra due diligence as you go along to make sure you’re buying what you think you’re buying.

You can also check my website for the material my research department has produced. My Hotspots Algorithm identifies potential hotspots and my Property Investment Guides are full of detailed research about each area.

UK pension changes 2015

The UK pension changes in 2015 actually give you much more choice in where your pensions are invested. You have a variety of options on how to invest your pension fund.

I’m very interested in these changes. My business teaches people how to invest in property – something that was off limits to many people before the changes. And I’ve been saying property is the new pension since 2008.

There is no better timing than now for you to start your investment plans. Just make sure you do your due diligence on companies you will work with, on the area and property.

Happy researching!

Live with passion and fun,

Brett Alegre-Wood

 

 

About the Author

Brett has over 20 years experience in all facets of property, he owns various companies centred around property and is the driving force behind the education and training at Gladfish. His companies have sold over £850 million in UK and London property and he manages over 1200 properties through his estate agency chain. Today he shares his time between UK, Australia and Singapore. He is married to Arlene and together they have 4 kids.

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