Research methods used by successful property investors
To ensure you buy in the best places to invest in UK property, research is key. In my last article, I described the property investment research framework that works for all. Read that article, and you’ll learn about our due diligence framework. We have used that framework to source hundreds of millions of pounds of property in the UK, Europe, Asia, and Australasia, helping hundreds of clients build profitable property portfolios.
In this article, you’ll find out the methods we use to conduct our property research. Methods that you should use when doing your own research.
Property investment research – the ‘legwork’
When you put top-down property research into action, you must know how to uncover the facts and fundamentals that will underpin profitable investment. There are three research methods that successful property investors use. Each has its strengths and weaknesses.
1. Online research
Always start with online research. It’s the easiest to do and helps you get a general feel for the area, development, and property. Online data is easy to digest, and there is plenty of it readily accessible in a short amount of time. If you’re nervous about speaking to people, online research removes this fear. However, all data needs to be checked and double-checked; there is a lot of misinformation on the internet, and using the wrong information will waste your time.
2. Phone research
The next stage of research is telephone work. Again, once you are used to asking the right questions, you can get a lot of information and specific data about the target area/development/property.
On the downside, you’ll often find yourself speaking to a salesperson. However, knowing this, you’ll understand that the picture painted will be perfect. You’ll be able to allow for this, but also ask the questions that drive more deeply into the information you need.
Speaking to people even over the phone can be nerve-racking, and many find it an embarrassing task. If you’re armed with the questions to ask and the information you need to discover, the process becomes easier. And each time you repeat, it becomes easier. All you need to do is write yourself a ‘script’, covering the questions you must ask.
3. Site visit
The last stage of research is the site visit. The challenge most investors face at this stage is that they focus solely on the property. Instead, you should drive around the area. Get a real feel for the place. Look to see if you can confirm everything you have discovered during earlier research on the internet and telephone. You are buying an investment, not a home, and nothing can beat a site visit.
The secret to successful due diligence is asking the right questions
Most people lack the systematic structure to assess a property correctly. They prefer to be guided by the salesperson, who rushes across many of the salient points. Thus, I developed my systematic process for assessing a property and the opportunity it presents.
It’s simply 89 questions that I ask of every property before I am content to buy it for myself or source it for investors. It’s at the heart of my business, and if I am truthful it is one of the things that frustrates me to no end about most, if not all of our competitors.
What research shouldn’t you trust?
I see many properties offered for sale where the due diligence consists of one page of figures. One page! That’s it! If you are lucky you might get three pages, but half of these are photos. It isn’t only legitimate property companies that do this. Putting together a small, but glossy and professional ‘brochure’ is a common tactic used by scam merchants, too.
Our usual due diligence runs to 30 pages, and only around four of these are photos (and even then, these are for comparable valuations and rentals purposes).
Stop and think for a moment or two. You are about to invest perhaps a year’s wage into one property (by way of a deposit). Are you really content with between one and three pages of research? Of course not. No sane-minded investor would be. Doing so is the reason why most people fail to create a large and thriving portfolio of properties. Instead of buying, most unsuccessful investors are sold to.
Knowing this is important, essential even, and that’s why every property you buy should be backed with comprehensive due diligence. This is what our 89-question due diligence checklist provides. There is a downside though…
Comprehensive property investment research takes time
Researching a property using this tried-and-tested method takes about five hours. Now, this is a small price to pay for such a large purchase. Get it right, and you’ll invest in a ‘box that makes you money’. However, I also understand that you’ll want to know whether the five hours is likely to be worthwhile. It’s a long time to spend to discover that the opportunity you are considering isn’t the opportunity you thought it might be. This is why I’ve also developed a 10-minute checklist that will tell you if the five-hour research is worth progressing with.
In my next article, you’ll learn how to assess a property investment opportunity in 10 minutes. In the meantime, to discover how our research methods could help drive your investment success, contact Gladfish on +44 207 923 6100.
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