Property development has got to be one of the world’s most highly leveraged business models, however there are a few key elements that the part-time property developer will find difficult to outsource to someone else. Deal sourcing (a.k.a. finding development projects) certainly falls into that category. This month I want to tell you about the best places to find deals and the common mistakes that I see new and inexperienced developers make when it comes to bagging new projects. Let’s run through the key places where you should be looking, and I’ll mention the common mistakes as we go.
Online property portals:
One of the attractions of modern property development is that it can be a spare-time enterprise in the same way that owning rental property can. The arrival of the internet made a huge difference to the way we find deals, heralding the appearance of the property portals. The likes of Rightmove, Zoopla, Estates Gazette, and your local estate agents’ websites suddenly made it possible to look for deals twenty-four hours a day, seven days a week. Enter your search criteria and scan thousands of properties and plots from the comfort of your own laptop, tablet, or phone. Register for free, and you can save your searches and get email alerts when new deals arrive. For those already busy between nine and five - namely most of us - the portals are fantastic news. But while they’re hugely convenient, they’re also convenient for your competition. You’re going to be seeing the same opportunities as every other Tom, Dick, or Harold that has an internet connection. These portals have another downside; they’re not the first place agents would choose to sell properties. And if the portals were your only source of leads, you’d likely only see around half of what’s for sale and will almost certainly be missing out on the best opportunities, as I’ll explain shortly.
These are my favourite people from whom to source deals, and arguably represent your best bet for finding a good project. Let’s first understand why agents don’t always automatically put every property straight on Rightmove. Imagine you were looking for a commercial building to convert into flats and a nice lady called Donna was selling precisely the building you were looking for. As luck would have it, Donna is talking to her friendly local commercial estate agent and has agreed to put it on the market. Now, as you watch yourself sitting there in your pyjamas, glued to Rightmove, you might have thought it’s only a matter of hours before the agent’s team has measured up, taken photos, and listed it on the portals. Any time now, surely a Rightmove alert for Donna’s property will pop into your inbox?
Unfortunately for you, that’s not what happens. Instead, much to your horror, Donna’s estate agent digs out her list of hot buyers (a.k.a. her ‘black book’) and calls a handful of people she knows that will almost certainly be interested; a list on which you're conspicuous by your absence. She tells them that if they get their skates on, she can get them in to have a look at Donna’s property first thing in the morning before it’s gone on the open market.