Photo by Wilson Finch Properties
As we begin the new year, it’s a great time to reflect on what went well last year and what could be improved. This month, I want to focus on the importance of choosing your property power team. A strong power team can truly accelerate your growth in property – speed is essential, and receiving solid advice from the right people is key.
Recently, I’ve received numerous enquiries from clients who’ve had disappointing experiences with their current brokers or solicitors. At best, this has meant they’ve had to invest more money into deals; at worst, it’s led to losing the property or having to restart the process with a new application. Many of these issues were preventable, which is incredibly frustrating.
To help you avoid making the same mistakes, here are my top tips:
1. Find a Broker Who Takes the Time to Understand Your Deal
A good broker should take the time to understand the nuances of your deal – whether it’s an HMO with a small communal area, a low outside income, a complex company structure, or a tricky property. Most situations require more than simply inputting basic details into a system and sourcing a product.
I often see clients who are fixated on finding the lowest-cost option, without considering whether it will actually get them across the finish line. Remember, valuation and admin fees are typically non-refundable, so don’t waste money and time on an application that’s unlikely to succeed.
A professional broker will give you one quote based on your specific requirements, with a clear rationale for why they recommend it. I’ve seen many cases where brokers send a range of lender options without explaining why one is more suitable than the others. This is lazy broking.
2. Your Broker Should Challenge Your Numbers
A good broker will challenge your assumptions, particularly when it comes to your purchase price or the projected Gross Development Value (GDV). While we can never be 100% certain, I’ve seen cases where the projected GDV was far too optimistic. Clients ended up wasting money on architects, valuations, and solicitors before they realised their numbers weren’t realistic.
For instance, I recently worked with a client who based their GDV on the aggregate value of a small block of flats. This approach was only relevant if the flats were likely to be sold individually, but in this case, the property was a converted house likely to be sold as one unit. The correct approach would have been to adjust the GDV down by 10-15%, which can make a significant difference. Once we understood the true value, we took a different approach with a new lender and made much better progress.
3. Choose a Broker with a Strong Network of Solicitors and Insurance Brokers
An experienced broker will have a trusted network of professionals, including solicitors and insurance brokers, who can support your transaction. A good broker will work with your other team members to ensure everything runs smoothly, saving you time and helping you focus on growing your business.
4. Look for a Broker Who Completes Deals on the Terms Given
Ideally, you want a broker who generally delivers on the terms they initially present. While issues with valuations or legal matters can occasionally arise, you shouldn’t be jumping between multiple lenders for every deal. A knowledgeable broker will understand lender criteria and know which one is the best fit for your needs, even if they’re not the cheapest. Trusting your broker to guide you to the right solution is far more valuable when building your portfolio than simply chasing the lowest rate.
Choosing Your Solicitor
It’s always best to work with a solicitor you’ve collaborated with before or one who’s recommended by your broker. Having someone you know and trust will ensure smooth communication and collaboration with your team. It also helps if your solicitor is willing to reach out to your broker if things don’t go according to plan, as this can save you weeks of delay in the conveyancing process.
Again, it’s not just about cost. A solicitor’s experience and ability to resolve issues swiftly are invaluable. Building a good relationship with your solicitor means you can rely on their expertise to identify and solve problems early, saving you both time and money in the long run.
Some lenders have specific requirements for solicitors or offer a panel to choose from, so be sure to check whether your solicitor is approved before instructing them or ordering searches.
I hope you find these tips useful and that they help save you time and money in the future. If you have any specific questions or would like to discuss anything further, please don’t hesitate to get in touch with me here.
About the Author:
Ellie Broadhurst is a specialist mortgage broker working at Baya Financial in partnership with The HMO Roadmap. She works with HMO property investors throughout their journey, from clients starting on their first project through to experienced portfolio landlords and developers. Learn more about Ellie here.