Top tip: Always pre-qualify your deals with a free MyPDA Quick Deal Analysis BEFORE going to view a site. And here’s why…
Imagine this. An agent calls you with an exciting opportunity, you immediately make plans to view the site. You’re excited as the site looks really promising, it’s even got planning permission (thumbs up).
You’ve got loads to do but the site isn’t far so you free up your morning to go visit. Wow what a site! The agents talks you through what it has planning for and everyone agrees it looks good. You discuss the price the vender wants and you come away feeling positive after shaking hands and telling the agent you are very interested and will pull together your offer.
Full of enthusiasm, you and your business partner (who also took out 3-4 hours of their day) go back to the office to appraise the deal. BUT…
You can’t believe it… horror! You can’t get the deal to stack. What are you doing wrong? You can’t lose face. This is going to be so embarrassing (sad face). You wish you’d appraised the site first. But wouldn’t it just take way too long? Not with our Quick Deal Analysis. Scroll down to keep reading.
Now imagine this…
Your agent calls and tell you there is a deal they think will work for you. You get the details. You run the numbers with the Quick Deal Analysis feature in MyPDA Lite (free) & Pro (paid) editions.
Now you quickly identify that the deal doesn’t stack with the current planning scheme. So you get creative and re-run the numbers on a different scheme.
What if you could get more houses in the same space but slightly smaller? Costs around the same to build, Gross Development Values (GDVs) are lower per unit but overall a higher GDV. You could even keep the smaller units as Buy-to-Let (BTL). Then maybe you could pay nearer to the asking price, maybe more, and would make the profit you need to secure development finance. There are options that work!
Now you’re thinking “wow, what a site!”. There is lots of enthusiasm all round, you start to discuss the current planning and explain that it wouldn’t be feasible to build that out, unless the vender was prepared to accept a much lower offer.
You show them your appraisal of the deal and everyone understands where you are coming from.
Then you start to discuss options. If you could go back to planning for a few more units then you think you could make the deal work. Again, you show them your evaluation of the site. And you ask them how they valued the site. You use your numbers as an example and you agree on an appropriate analysis of the value backed by calculations.
After more pre-qualification, you’ve now identified the site works IF you could get more units. So you ask a professional planning consultant if they think your proposed scheme is feasible. They give you the news you want and it’s back to the agents.
You gauge the vendor’s possible interest via the agent, and then finally, you and your business partner spend some time visiting the site. Now it’s got potential.
How are you managing your site sourcing, prospective deal appraisals, site visits, agents and vendors, planning consultants and offers?