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Written by Paul Higgs of Millbank Group | The Land Experts
After starting developing on a small scale over 30 years ago (refurbishing houses, gradually progressing to splitting houses into flats and then working on small new-build schemes) I eventually came to the realisation that the really clever money is made from finding sites, approaching (or being introduced) direct to situations and ‘creating’ the best off-market development opportunities. Understanding Land and Planning is the key.
Following that discovery, I’ve spent the last 25+ years learning exactly how to do this (Site Finding, Creating Value, Planning & Development) in the most effective way possible, both for myself and for some of the biggest developers in the country (I used to be Head of Land for Barratt Developments).
What follows is I hope some good advice, from my experience, about how to find the best off-market development opportunities (I only talk about Land, Planning & Development because that’s my expertise, but I think what I say applies to whatever you might be looking for – HMO’s, Flips etc).
So here it is:-
In order to find the best opportunities you need to look and think beyond the obvious. For example, many people are aware of the potential of pubs, petrol stations and office conversions … That means, everyone is after these things and there’s a lot of competition for them.
As a result, rather than give you a list of specific types of things to look for, I thought it might be more useful to cover some of the principles behind finding and creating off-market opportunities so that you can start spotting more of these for yourself, with less competition.
It’s a big subject, but here are some key pointers.
Focus on real ‘off-market’ opportunities. There seems to be a lot of confusion about what off-market actually means so it might be worth a quick clarification. Off-market does NOT just mean that something isn’t on with a directly instructed agent. Recently I’ve heard people suggest something is ‘off-market’ where an agent, sourcer or other individual might be talking to an owner (or their mate, or their mates mate, or their mates mates next door neighbour…. etc) and they subsequently punt it all over the place (effectively putting it ON the market).
An off-market situation is where you are talking directly to a land (or property) owner with very little or, preferably, zero competition. The best way to create real ‘off-market’ opportunities is to spot them yourself and go direct or, to have very good relationships with people that will introduce you (and only you) directly to potential opportunities.
Remember that the majority of ‘Land’ opportunities are actually sites comprising existing buildings (so ‘Brownfield’ Land) that can be either demolished or converted/extended and redeveloped. The key criteria to look out for is that it is ‘underdeveloped’, that is, the density of the site (saleable square feet) can be increased or the value of each square foot can be significantly increased (i.e such as replacing industrial or commercial space with residential). Usually it’s a combination of both.
Often this will be situations where lower-value uses can be demolished (in the majority of locations residential will be the highest value use anyway) and there is potential for increased height and/or site coverage.
Get yourself educated around planning. The simplest and cheapest way to do this is to attend local planning meetings where you’ll start getting a feel for what is being consented (or not) and why. Opportunities really are all around you everywhere, everyday. The more you understand planning the more angles and opportunities you will start seeing.
Get on your bike (or better still, walk). There are many potential sites that are off of main roads or behind existing buildings. When you are driving you’ll miss a great deal of opportunities because you’ll be looking forward most of the time (or you should be!) or going too fast. By cycling, walking or even on the bus (seriously, upstairs on the bus is great as you don’t have to concentrate on the road and you get a whole different perspective on things) you will spot much more.
On a similar note, I make a point of never going the same route twice if I can help it. The more different places you go to and the more different routes you take the more likely you are to spot an opportunity.
*Keep your ears open. It’s not just what you see that might indicate a potential opportunity. Every time you hear someone talking or a bit of news you should be thinking, ‘how might this/that create a potential opportunity’? You should go through the same thought process when you are reading the local newspaper (highly recommended) or listening to the local news. To give some obvious examples, if a building has caught fire, there are rumours of a factory or business closing or moving or someone has just been made redundant, these are all signs that land or buildings could potentially become available for development. Change, good or bad, equals potential opportunity.
Put the word out. Years ago, when people used to ask me what I did and I told them I was a Land Buyer, the usual response I got was this – ‘oh, do you drive around looking for land and buildings then?’. The answer, and the recommendation to you is this. No, I don’t ‘specifically’ go out and about looking for sites, but every time I’m out, anytime, anywhere (taking a different route) I’ve always got my eyes (and ears) open. What does happen just as much is that I know a lot of people, they know what I do and that I’m good at it so, if they bring an opportunity to me, if it’s at all workable then there’s a very good chance I’ll do the deal. It can be the same for you.
So, as well as always looking myself, I’ve got a whole load of people (agents, sourcers and other professionals) looking for me, because they know that I know how to ‘create value’ (and of course, they get paid very generous fees when I do). You should learn how to do the same. Get in touch with all of your contacts, friends and acquaintances (it doesn’t have to be just property people) and put the word out to everyone you know, telling them that you are in the market and exactly what you are looking for.
Finally, to contradict one of my opening comments slightly, although I wouldn’t advise making the most obvious sites your main focus, you shouldn’t totally ignore them either. The reason being is this – The market, and peoples circumstances, are constantly changing and there is therefore a big timing element as to what may or may not be a deal. You may approach what might look to be something that is too obvious at just the right time.
For example, I’m currently developing a site in West London that was one of the first things I spotted and approached in 1989. The site was stables (so underdeveloped in terms of both density and value) in the middle of a row of houses so it was a very obvious site. I got no response when I approached the owners at the time and no doubt tens, if not hundreds, of other developers and agents would have approached the owners over the years.
A couple of years ago (whilst taking a different route…) I passed the site again and was surprised to see that it still hadn’t been developed. I did a Land Registry search, wrote to the owners (there’s a very particular way that maximises positive responses) and on this occasion the timing was just right (the mum had recently passed away and the kids wanted to sell-up and cash-in).
So remember, you need to think laterally, be persistent and never give up. Deals are everywhere and the more your look and learn the more you’ll start seeing them.
Whatever you do, even if you just take on-board some of the suggestions above, you will definitely find sites and create many more deals.
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