- Introducing Robert Weaver
- Which Property Asset Classes do Property Partner Work With?
- What is Geared Property? Investing in Property with Debt
- How does Property Partner Select their Properties?
- What Due Diligence does Property Partner do when Selecting a Property?
- Do Property Shares Require Ongoing Management?
Rob Jones: Today, we are going to be looking at how Property Partner chooses properties. Obviously, that is going to be key to any properties you are looking at. So, how does your team and yourself, Rob, sniff out a potential opportunity?
The Residential Property Market
Robert Weaver: You have got to look at the market. Where we operate, the residential market is the largest market in the UK, of all the assets. It’s 4.7 trillion, I might be a bit out of date, it might be 5 trillion now. It is absolutely massive.
The commercial, property market is close to a trillion. That is looking at all the shopping centres, all the offices, high street shops, industrial estates, add that all together, that is only just under a trillion.
The residential market is much, much bigger. That’s the owner-occupied market. We are only operating in a very, tiny part of that which is what I call the investment market. These are let blocks, income producing, which I can buy at a discount, for the whole thing. It’s a tiny segment.
So, I don’t get much choice. What I’m doing is monitoring the entire market for that. We have some, what we call, scrapers, where we can look at portals. We look for keywords like income, yield, investor and that pulls them out, automatically for us. So, we look at those.
Generally, the bulk of our stock comes from our market knowledge, where we know that the main agents. Having been at Alsop, Savills and Knight Frank, I’m known to the market.
Rob Jones: And they have got a good feel for what you want.
Robert Weaver: Absolutely. They know that if I make a decision, I’ll follow it through. You have got to have that track record.
Robert Weaver: Also, we have, what I call, runners or introducers, who know their own patch really well. They know everything that moves and know the people that are maybe thinking about selling but haven’t made the decision and they can say, let me talk to these other people and connect you.
We did the fort on the Isle of Wight. It came through a local introducer who was born and raised on the Isle of Wight.
So, that’s how these things come about. It did go on the main market, eventually, but we had a big, head start. It was a very difficult property to get to understand and we had the time to do that because we had that head start. The bulk of it comes from that.
And then also, on the other hand, you have research saying where the good markets are. Actually, I don’t look at that because if I got a slower market, that just means I want a deeper discount, I want a higher yield.
Buying Property With A Discount
Robert Weaver: So, my pricing, in the investment world, levels out the nuances of where there is growth. Because if a market is racing away, they are not going to sell to me for a big discount. So, it levels it all out.
I know, if it is a weaker market, I’ve got to drive a harder bargain. In a stronger market, I won’t get such a good bargain. I have access to the entire marketplace and then I have got to decide what to do and how I operate.
Rob Jones: It’s the metrics at that time that make it interesting. You’ve touched on discount a few times so that sounds like it is a core part of how you look at yield and value.
Robert Weaver: It is a typical rule of thumb, a year or two years ago, a typical discount would have been 10% to 15% from the individual sale prices of the flats or houses. Now, I’d be looking to 15% to 20%, to compensate me for the lower level of growth I’m going to be receiving and it gets me a higher income or a higher level of return.
It’s a balance between what I can get in and where the vendors are because they still might be thinking, a year ago I could have got this price and it will take them some time. We’ve seen blocks coming back to us, six months later at the same price and said, well, no, we know what it’s not worth now. That’s our standard line, “We know what it’s not worth” and that’s the starting point and then, what is it really worth?
Rob Jones: There is a lot of work that goes into this. It’s not straightforward. A lot of investors, certainly, would want to buy at a discount rather than at full value. That’s the holy grail. But to go out and do it yourself would take a heck of a lot of time.
Robert Weaver: And there are investors who don’t really know the market and will pay full VP value (the aggregate vacant possession value) because they don’t know what they should be doing.
Robert Weaver: With us, you are getting 30 years of specialist knowledge, being in the residential investment market, over that time, through two recessions. Having seen it, bought it, sold it, managed it and operated it. And my right-hand man, who I’ve been working with, since my days as a fund manager and RBS and eventually here, has the same level of experience and between us, we have got a really good feel of the market.
Something, the other day… I looked at something, very quickly, it came up with a value of 14 million and he just looked at it in more depth and came up with 14.5 million. Now, that’s very different from the valuation we had on the table, in front of us.
Rob Jones: So, a lot of due diligence, a lot of research that goes into selecting these properties. Thank you.