What's A Finder Worth?
What value do you get from using a property finder? Peter Ambrose explains the advantages.
1 August 2019
I wake up every morning and look through Trade Me or realestate.co.nz to see what new offerings have hit the market and I can do my own due diligence and make the deal happen. Sounds like you? Depending on your strategy that may be all you need, but if you want your weekends back or are tired of not having the numbers stack up, having a property finder or two in your “kit bag” may just be the ticket. Here are some reasons why:
Access Other Property Markets
When you look where you live, you limit yourself to markets you can visit and open homes you can get to. Maybe three to four on any given day? You also restrict yourself to rental yields achievable nearby. A property finding agency that covers different locations gives you access to multiple property markets, each with different price points, demographics, rental yield ranges and more.
Individual property finders tend to specialise in a small area and are experts in their local market. A good property finder will be a successful investor and experienced in many forms of investing including “buy and hold”, renovations, trading and sub-dividing. They know a good deal in their market when they see one and can also recognise problems that might not be obvious to someone new to the market.
Over the years a finder will have built up a good network of professionals and tradespeople that they leverage on your behalf to help you find a good deal and then take care of subsequent renovations and manage the property.
Property finders usually have an extensive network of investors that may be wanting to sell. They will have great relationships with real estate agents in various companies that will proactively contact them with any opportunities, including “off market” deals.
It is extremely difficult to obtain a good yield in the current market without adding some value to your purchase. This is generally in the form of additional bedrooms and/or bathrooms or maybe even a second dwelling. Identifying suitable properties where this can be done and the property rented out for a superior rental yield takes real skill.
Avoiding Problem Properties
Frequently, out of town investors wind up purchasing properties local investors won’t buy. The property may have problems that can be masked by a rental appraisal. They may lack something necessary for the target market, attract the wrong kind of tenants, have more deferred maintenance than is obvious at first, or all of the above. Identifying possible issues is an acquired skill and your property finder will point out items you need to be aware of before making the purchase. They will recommend suitable due diligence for the property and this could include visiting the council for more information from the archive files.
The real value you get from your property finder is their local knowledge, network, and understanding what value looks like in the current market. Their ability to identify what value you can add and what it should cost to turn an average investment into a good one is acquired over many years.
In the last year, some of my clients have purchased deals that didn’t sell at tender or have been on the market for months with no offers. By presenting the total opportunity to them, they have turned these properties into great “buy and hold” rentals that will return a fantastic passive income until they are ready to sell.
If you have decided on your investing rules yet and are struggling to find the right properties to make them a reality, chat with a local property finder to get feedback about how achievable they are in today’s market. Property finding agencies do charge buyers a fee, but if they weren’t beating the market after all is said and done they wouldn’t exist (and you can’t be lucky forever).
Knowing what you want and working with property finders means that you can be confident to invest anywhere in New Zealand and have the team around you to find you a great deal.