Sourcing your Site: A Deeper Investigation

Our ‘sourcing and selling’ series is ready for its second instalment. We started off by looking at the basics around how you source a site, now, we are ready to dive a little deeper and look at some of the more niche options for site selection.

Runners/Introducers/Buying agents

This is a type of property agent that acts for the buyer and seeks out the best asset opportunities for the best prices. The quality of a “runner” can vary and so it can be useful to go to a professional buying agent who works on retainer plus a further success fee on completion (e.g.  Tracey Kellett or Henry Pryor).

Pros of Buying Agents

  • Deals come to you. Agents do the legwork including booking the inspections or appointment
  • In some instances, agents will do the upfront analysis
  • There will be some filtering done for you
  • Agents may have a relationship with the seller or the seller’s estate agent which can give an advantage in competitive bidding situations
  • A good buying agent will negotiate the deal points

Cons of Buying Agents

  • Many “runners” will “punt” a deal to everyone in their contact book, you may not be the only person that has had the deal introduced to them
  • Information can be misleading or limited. Some runners may provide misleading information in their summaries which inflate the asking price
  • There may be fees involved. Some introducing agents find opportunities from another agent on what is known as a “runner chain”. If all the “runners” want 1% for their introduction, beware of being demanded a 5% fee on the purchase price. Limit the fee to 2% to your introducer direct.

Summary: The most valuable thing an introducer can do is send you a deal. If that deal is something you would want to buy and would not have otherwise known about it, then their contribution is invaluable.

Ease of access: 4/10

Effectiveness: depends on who – can be anywhere between 4/10 and 8/10

Commercial Agents (& Auctions)

Commercial agents are slightly different to residential agents. Many commercial agents are also RICS qualified Chartered Surveyors, which is important to deal with the more specialised nature of commercial property.

Commercial agents can act as both selling and buying agents, although unlike “runners” RICS members have to adhere to ethical rules that ensure they do not act with a conflict of interest. Many commercial agents also have their own auction departments, although these do not boast the depth of stock of the residential auction houses. Accordingly, competition and/or risk can be much higher than for residential and prior due diligence is essential.

Pros of Commercial Agents

  • Generally professionally qualified
  • Transparent and honest
  • Can act for buyers as well as sellers (although not at the same time)
  • Can be a good source of opportunities, particularly for change of use deals (e.g. office to residential)
  • Commercial agents are likely to have commercial development land opportunities (some of which may be suitable for residential). Sites without planning may sell for £10,000 per acre but secure planning for that site and you can sell for £1m an acre
  • They are able to provide detailed advice and carry out appraisals and valuations
  • They can do ongoing management post-purchase including L&T, property management, lettings and surrenders
  • They may also have a planning department which can evaluate the planning potential of a target site and assist with applications for change of use or redevelopment
  • They may have a fixed charge receivership team which sells commercial properties that have been repossessed (i.e. potential for good value deals).

Cons of Commercial Agents

  • Commercial agents do not have the same “flow” of opportunities as their residential counterparts. You may need to spread the net wider geographically to find a steady stream of deals and foster strong relationships with the agents
  • Commercial agents still have a deep well of buyers in the current climate so competition will be strong for certain deals (e.g. offices with PD rights).
  • Selling commercial Agents are more likely to recommend buyers that can offer them repeat or follow-on business, (i.e. lettings, sales, management etc) and so you must be aware that your overall goal could both enhance and worsen your chances.
  • Commercial investments are generally far more complex and difficult than residential properties. Initial yields that look attractive on paper can quickly become negative once the properties fall vacant and business rates become due. You cannot seek to buy a commercial property without paying for local market advice from a commercial surveyor unless you are willing to take a serious financial risk or know your market intimately

Summary: The risks of commercial property are greater because there is a smaller pool of buyers and tenants for commercial assets. However, once you understand the market then commercial can be a good hunting ground for buying good opportunities, particularly if you want to convert to a higher value use in the future. As with most things property-related, relationships are key so take the time and effort to build up.

Ease of access: 3/10

Effectiveness: 7/10

Professional Referrals i.e. Solicitors, Accountants and Architects

Direct referrals from a solicitor, accountant or architect can be an excellent way to source leads. Particularly off-market opportunities. Getting to know local solicitors can be extremely useful as they may act for local land owners looking to sell their properties or specialise in probate and so offer unique opportunities for sale

Accountants/Tax Advisors can also be a useful particularly if they represent a client looking to raise funds quickly due to some sort of financial distress. Furthermore, they cannot accept introductory fees as this is not permitted by their professional regulator.

Architects are helpful because they may have secured planning permission for a client on a property, but the client may not wish to build the scheme out. The architect will seek out a developer who will instruct them on the development phase of a project. They also may have a client who has instructed them to do a planning feasibility study on an off-market project, but for some reason, the previous client chose not to proceed with the purchase. In this instance, the architect/planner may wish to put their original work to good use introduce the deal to another client.

Pros of Professional Referrals

  • Genuine opportunity to pick up reasonably priced properties off-market.
  • The introducer generally has direct access to a seller

Cons of Professional Referrals

  • Referrals from professionals can be sporadic. You will need to have a wide network of professionals to benefit on a regular basis
  • To benefit from a professional referral, you need to be a client of one of them to make the most from an introduction
  • The referral may come at a cost, even if you are not successful with the purchase. An introducing lawyer may want you to use their services (and possibly pay an intro fee too) as will an architect
  • You also must be wary of paying introductory fees to solicitors instructed on probate sales. Aside from being a conflict of interest, this can be construed as bribery, which is not a good way to operate

Summary: Professional referrals can be an exceptional means of securing excellent deals with favourable terms. However, it is important to break into the referring professional’s “circle of trust” which is challenging. If this is achieved, you are likely to do well.

Ease of access: 3/10

Effectiveness: 8/10

Planning searches

Although this is perhaps not ideal for the first-time investor/developer, planning searches represent an incredible source where the owner is either applying for planning permissions or has already received planning permissions. Usually, applicant details are listed on the local authority’s planning portal. This means you have a way to contact the owner of the land directly to enquire about purchasing their site (you can also search the title on Land Registry for £3 if you want to find the owner’s details).

Pros of Planning Searches

  • Planning portals are free to access.
  • The portal presents off-market deals many times
  • Property owners or representatives are registered (i.e. you have a phone number to call).
  • Sites with fresh planning offer sites prepared to build out
  • Refused planning sites offer good deals if the vendor is willing to sell

Cons of Planning Searches

  • Many owners plan to deliver out schemes themselves
  • Most owners who are refused planning will want to resubmit rather than sell
  • Planning consents are often listed on subscription-based portals (designed for builders and contractors) which means that you will not be looking at the deals exclusively
  • Often schemes that are consented will be sold in the open market to the highest bidder, so there is no guarantee your early approach can be successful.
  • This method requires a lot of legwork

Summary: This can be an effective source of potential development options, off-market. It is more suited to more established developers but even smaller developers will find the occasional opportunity. The upsides can be large if you pick up a site cheaply from a vendor who is keen to sell under-value. However, a lot of work needs to go into the process before finding success.

Ease of access: 2/10

Effectiveness: 7/10

“Shoe Leather”

Last on the list is the method we call “shoe leather”. Named as such because you have to wear a lot of it out before you finally make a deal stick. The premise is fairly simple: you identify a site (independently) that you think has planning potential. You enquire with the owner about a sale, prepare an offer, work up a planning consent, develop and sell for profit. Except this is much easier said than done.

Pros of ‘Shoe Leather’

  • These are off-market situations
  • Deal terms can be tailored to the situation (subject to planning, delayed completion, deferred payments, overages)
  • There is potential to acquire below market value
  • This is potentially very profitable

Cons of ‘Show Leather’

  • It is labour intensive and time-consuming to find and negotiate sites
  • There are no guarantees vendors will sell to you
  • Vendors may steal ideas and run with your business plan
  • It can be difficult to agree deal terms
  • Planning may be tricky to achieve on some sites (so purchase does not go ahead on STP deal or deal underperforms if it is STC)

Summary: This is a method for full-time investors and developers in property. As approaches go, this one is exceptionally speculative and can take a long time to yield results. Even when you find the right site, there’s no guarantee the vendor will sell to you. It is important to ensure that you don’t overshare your ideas to avoid them being taken away. However, should one of these options deliver, the pay-off can be handsome if you get them right.

Ease of access: 1/10

Effectiveness: 10/10


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