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The three top ways of acquiring investment property.

31/08/2010

Many new or in-experienced property investors aren’t sure how to get started in building their property portfolio. There is therefore a temptation to buy into a packaged deal or work alongside a portfolio builder or other such organisation.

These companies will employ one or more of the methods explained below, I want to share this with you briefly to enable you to learn the skills to enable you to build your portfolio on you own or with the help of a sourcer.

 1. Property Auctions

There are some great guides out there to help you on your way. My personal favourite is the blog written by Sam Collett entitled “What Sam Saw Today” Sam is a very experienced property investor, she has a ‘hands on’ approach and travels the length and breadth of the country seeking out auction bargains.

 For the serious auction buyer, it is worth signing up to one of the subscription sites available. By far the most highly recommended is the subscription service offered by the Essential Information Group ‘EIG’ , They can provide information in electronic and hard copy formats, and tailored to specific needs, they provide the information advantage that is essential to success. They  work closely with all the property auction houses around the UK giving you the advantage in property auctions.

 2. Estate Agents

I source a lot of potential properties via Estate Agents. However, it’s a fact of life that the better ones either don’t hit the open market or they do so almost at the same time as an offer is placed.

I’ve found that the most effective strategy is to build relationships with the local EA’s, the independents are the best as they are generally more passionate about their business. These relationships allow quality information to be gleaned at an early stage ie when new instructions come in.

The second point is to have the ability to deliver. If an EA offers property after property which is viewed and nothing ever comes of it then the relationship will fall flat. Personally, I tend to set aside the guide prices and value them up myself, this way any potential offer is based around what (on behalf of clients) I would be prepared to pay, not if the asking price is affordable.

3. Private Sales

I find that these can be divided into two distinct sub-catagories.

  1.  
    1. Distressed Sales; I avoid these if at all possible. Personally, I have issues with taking a person’s possibly only asset from them. The idea of buying is to obtain the best deal ie lowest price. This therefore potentially makes a bad situation worse. And could ultimately result in the transaction being over-turned if they were to be declared bankrupt. I therefore prefer to refer distressed vendors to a debt management expert.
    2. Motivated Sales; These are the private vendors who just want a quick sale of their property. Motivation can come for many reasons i.e. Probate, Relationship breakdown, Asset Realisation, Emigration, Relocation etc. etc. Vendors agree a price without feeling under pressure and are able to do so without being in a desperate state.

All three methods require a lot of dedicated investigation work. This process should be seen in a positive light however as each property that is deemed un-suitable or rejected adds a little more knowledge which in time, will allow you to make an informed decision based on a sound basis.

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4 Comments leave one →
  1. 04/09/2010 12:45

    What a great and insightful post Rob – this will help a lot of people who are looking to acquire new properties. Great advice as ever!

  2. 24/09/2010 01:29

    True that you can acquire property at auctions, but you will need to sink a lot of money into it before you can make it profitable. If there were any easy fixes it would have been done by the previous owner. Also, at auctions you run to other investors competing for the same property which may create a bidding war.

  3. andrewwebberproperty permalink
    24/09/2010 09:47

    Great post Rob – have been looking through your blog today.

    Particularly like your attitude to distressed sales – too many BMV types are hell bent on stitching up the vendor!

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