What is a Property Investment Company?
CategoriesInvestor Advice

There are two types of property investment companies. The first is an established consultancy company, with services that help buyers find and purchase investment properties. The second is a company set up by a buyer for the purpose of purchasing and owning property through the newly-founded company.

These are two very distinct types of companies, each with entirely different structures and purposes. To cover each properly would require two separate guides, so in this particular post, we’ll focus solely on the first type given it’s our area of expertise (find out more about us here).

What does a property investment company do?

In short, a property investment company helps people interested in investing in property to find and purchase a suitable residential or commercial property. Most property investment companies focus on the buy-to-let market, connecting buyers with new and pre-existing rental units, but others may facilitate other strategies, such as buy-to-sell.

Regardless, they are involved at every step of the purchase journey, acting as a consultant for the buyer. This typically involves:

  • Learning about the buyer’s budget and objectives
  • Source appropriate properties to fit the budget and objectives
  • Present options to the buyer and choose one
  • Communicate with the property developers (or whoever else is selling) to arrange the best possible deal for the buyer
  • Provide support and advice on reservation fees, deposits, solicitors, mortgages, and property management
  • If the chosen property is off-plan, provide construction updates

A property company’s involvement then typically ends with the completion of the purchase, i.e. construction is finished, the property is ready for tenants, and all funds have been deposited with the seller.

Who do property investment companies work with?

A property investment company will work with a wide variety of clients.

Given the increasing popularity of property investment, more first-time investors are entering the market. With little experience and know-how, many first-timers will turn to a property investment company to benefit from the end-to-end support on offer.

But they aren’t just limited to new, inexperienced investors. It’s common for those with extensive portfolios to work with a property investment company, especially if they want to access exclusive, off-market properties or have particular demands.

They’ll also work with overseas investors wishing to diversify or enter the UK property market.

Why use a property investment company?

There are several key benefits to using a property investment company.

Access

Property investment companies often have access to projects and properties that aren’t publicly available. This is because they work directly with property developers, meaning they can offer their clients exclusive, direct access to some of the newest and best developments in the UK.

Deals

Due to their close working relationships with property developers, a property investment company can often secure great deals for their clients that would not be available to a regular buyer. This might include the first choice on a unit, discounts on the purchase price, free furniture packs, legal fees or stamp duty paid for by the developer.

Professional advice

The expertise and market knowledge offered by a property investment company is a major draw for many investors. Being able to lean on a consultant with the latest industry data, insights and projections can be invaluable.

Safety

For most buyers, their number one concern, especially when they’re investing in an off-plan property that’s still under construction, is the safety of their funds.
A property investment company can help alleviate this concern by conducting extensive due diligence. They’ll check the track record of a developer and ensure there’s a protection scheme in place for deposited funds before recommending the developer’s project to a buyer.

Time

Another benefit of working with a specialist company is the time saved.
The steps involved with purchasing a property require hours of your time. The level of research, planning, negotiating, and administration required is demanding. If you have a regular 9-5 job, finding the time to fit in all of this work is tough.

Meanwhile, a company does this type of work day-in, day-out. They do it on your behalf so you don’t have to, saving you time and making the process as stress-free as possible.

How much does it cost to use a property investment company?

Some property investment companies will charge their clients a fee for their services. This may range from a fixed fee to a percentage of the purchase price.
However, many investment companies do not charge their clients at all. Instead, they receive a commission from the developer of a project if one of their clients purchases a unit from the developer.

The commission-based model is how we work at Track Capital. This saves our clients from further expenditure in an already-expensive process and allows us to build relationships with some of the biggest and most experienced developers in the country, which is beneficial to all of our clients.

How to choose a property investment company

Unfortunately, almost anyone can set up a company and call themselves a property investment consultant. There are no exams or qualifications required, and there’s no specific regulatory body (although there is the Property Ombudsman Scheme, which we are part of).

This means an investor needs to be careful when choosing a company. You want to work with someone who knows their stuff and can help you achieve the best possible results.

Do your research by:

  1. Reviewing the company – who is it owned by, and what’s their experience and background in property?
  2. Reading their reviews – are they generally positive or negative?
  3. Review their portfolio – it’s not a given, but a larger, more diverse portfolio means more choice and better matching with your requirements
  4. Review the developers behind the projects in their portfolio – do they work with big, established developers (indicating they have strong industry relationships), or small, inexperienced developers (which are higher risk)?

Summary

Understanding the role of a property investment company, and being able to pick the right one, will be key on your path to building an extensive, successful property portfolio.

We hope the information in this guide helps you along your way. And if you’d like to discuss your property investment plans with our team, feel free to get in touch.

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