Below we have revealed several tricks and tips that property investors can use to save money on their next purchase. In this case, we are not assessing the asset class or overall property investment strategy, it’s more for once you have a specific development that you’re happy with, now it’s just a case of achieving a slightly improved deal ensuring your funds are working as much as possible for you.
The points below are based on our experience of UK developers/vendors, investment agents and the parties involved in the transaction, so different rules would apply to purchases on the secondary market. Some of the below points may be obvious, but I can assure you the majority of investors don’t use them to their advantage.
So, read on for 5 ways to save money on your next property investment deal, remember saving money here and there could drive up your yield a percentage or two for the first year making it far more attractive and turn it into a market leading investment.
1. Solicitors/Mortgage Brokers
In most cases when investment agents such as ourselves, work with developers and third parties to structure deals and bring them to market, a lot of thought is given to make the full experience as convenient as possible for investors, particularly as most property investors are time poor and many are based outside of the UK or travelling frequently. Therefore, with most developments on the market, there will be a ‘recommended’ solicitor who will act for the majority of buyers, and potentially the same for mortgage brokers.
Whilst it will often save time and be more efficient to use the contract-ready companies, you are always entitled to use your own contacts. Therefore, if you wish to shop around and find a cheaper legal representative to process the transaction or use a mortgage broker that will charge a lower fee or even secure you a better interest rate, then it could save you hundreds of pounds from the outset. It seems obvious but most buyers don’t do this, you should weigh up if you’ve got the time to make a few calls in return for a cash saving.
The UK housing market is in great need of new stock; therefore, developers are building to meet this demand which provides property investors with a wide range of options and means the agents/developers face plenty of competition. As a result, in most cases, the offer the investment agent presents to you from the outset will typically be the lowest rate they can secure from the developer. However, in some situations, it is possible to secure a discount but to be successful in doing so, you need to incentivise the developer/agent to give you one. You can do this in a few ways such as the following:
– Explain you’re able to progress the transaction quickly, completing the legal process and moving to the completion stage promptly
– Tell the agent you can pay the reservation fee the same day if you can secure a discount
– Complete the reservation agreement immediately to show you’re committed
– If you have anyone within your network that may be interested in property investments then, with their permission, provide the details to the agent
Completing the above in a genuine manner and being transparent with the agent/developer will put you in the best position to secure a discount, hopefully creating a win-win scenario.
3. Management Options
When it comes to property investment, property management is an essential aspect of the ongoing ownership which can save you money or cost you money, it can also be the difference between owning a property that’s stress-free or a complete headache.
You can shop around for letting and property management companies that are cheaper than the one quoted in the brochure, it may only be a small difference but over the course of a few years it soon adds up. This comes with a warning though, tread carefully because a good management company should have access to reliable contractors who are good value, so although the management fee may be good value, it isn’t always the most important factor. Also, consider ‘let only’ or different management packages if you’re in a position to do so, it doesn’t always have to be the fully managed package.
4. Agent Bonus – Cashback
If you have a good relationship with your agent, even if you haven’t invested before and they know you’re a genuine buyer reviewing options, it is sometimes possible to secure cash incentives for moving forward with a purchase immediately.
This is typically in the form of cashback and will be paid once the business in question has received the fee from the client e.g. the developer, once the purchase is complete. This can range from a couple of hundred to thousands of pounds. It isn’t always possible and will depend on the product in question but it’s always worth asking.
From personal experience, I know how investment agencies recruit in the UK, often they look for confident young members of the team to work hard calling investors, so be sure the person you’re dealing with has the authority to authorise such incentives.
5. Furniture Packs
Like the other points, recommended furniture pack providers are typically marketed in the development brochure for residential properties. Whilst, as with most options they are typically competitive, again sourcing your own can save a few hundred pounds. So, take the time to do a quick online search and find relevant providers who will supply and install furniture in your new property.
You can see from the above that it is relatively easy to shave a few thousand off your property investment purchase if you are willing to invest a little more time. Even if time and convenience are paramount for you, hopefully, one or two of the points should still be relevant. Any agent worth their sort will be able to work with you to maximise your returns.
Get in touch with any enquiries or simply tell us what you’re looking for in your next property investment – locations, completion date, budget, asset class, yield etc. Not sure exactly what to invest in? View the pros and cons of each asset class here or get in touch to discuss what strategy would be best suited to your personal objectives.