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Helping investors make more informed decisions | Online

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Few would deny that the changes in our working and social lives brought about by advances and innovation in digital technology over the past couple of decades have been anything other than revolutionary. From social media to takeaway food delivery via transportation and online shopping, old ways of doing things have been turned on their heads.

Indeed, it is interesting to consider quite how we would have coped during the Covid-19 pandemic without the digital revolution. Could the services industries have coped as well as they did without the advent of the likes of Zoom and Teams? Probably not.

The deployment of both the test-and-trace and generic NHS apps, the former albeit somewhat belatedly, helped stop the spread of the virus and provided a quick and secure way of demonstrating our vaccination records, thereby allowing foreign travel far more quickly than would otherwise have been the case.

For all of this, we have much to be grateful. And yes, there are certain things that apps, however clever, cannot do. To take the most immediate example, they cannot get vaccines into arms. What’s more, they may be able to facilitate your journey to the vaccination centre, but they cannot physically get you there.

In both these examples, you ultimately need a human being to deliver the core service. There is an interesting parallel with my business, PropertyData. The difference is that in our case it isn’t a medical professional or a driver required – it is a postie. Let me explain.

PropertyData is basically a tool to help property investors make better decisions when purchasing land or residential property in the UK. We generally divide that process into three distinct phases. First comes research, which involves deciding which area best matches your individual investment strategy. Then comes sourcing opportunities and then, finally, doing your due diligence, so checking out everything from boundaries and ownership to valuations.

We can help with all three stages, but the exciting element that we’ve launched this year is our off-market sourcing functionality. Everyone knows how to source on-market opportunities, either by talking to agents on the ground in the area you have identified or by running searches on the likes of Rightmove or Zoopla. This, however, has severe limitations.

After all, what percentage of the potential market is on the market at any one time? It isn’t a particularly easy question to answer with certainty, but let’s say 1%. That means 99% of properties out there are apparently inaccessible. However, that isn’t necessarily the case. Just because something isn’t officially on the market doesn’t mean that an owner wouldn’t be interested in a conversation or an attractive offer.

So, how do you go about sourcing those off-market opportunities? Once one of our clients has established their strategy and identified an area and property type that fits their criteria, we use our technology to produce, typically, a list of around 300 target properties. This is where the analogue world comes in. At the present time, there is no national record or an email address, mobile phone number or social media profile for every address in the land.

Numbers game

What there is, however, is a physical address. Armed with those 300 addresses, you can then do a letter campaign. It is a numbers game. Naturally enough, the conversion rate from letters sent to interested parties isn’t high – as we all know from personal experience, most unsolicited mail gets dumped in the recycling – but the point is that it doesn’t need to be. A success rate of 2% or 3% means six to nine opportunities to at least have conversations with owners that wouldn’t otherwise have been possible.

I find the juxtaposition between digital technology we have built with the ultimate need for a letter to be physically delivered rather pleasing. Of course, it would be amazing if at some point in the future we were able to digitise the communication element, but for now that simply isn’t possible. In some instances, mobile numbers or email addresses can be identified, but not so in the majority of cases. We also have to have one eye on data protection issues. Physical addresses keeps things nice and simple.

But the simplicity of the ultimate delivery can serve to underplay the sophistication of our platform. Because what we have done is pull together as many different data sets as possible in order to make that list of 300 addresses as targeted as possible. This is very different to those letter drops we all get from local estate agents asking some variant of ‘have you ever wondered how much your property is worth?’.

For instance, we pull in Land Registry data covering information such as the size or land titles and whether a property is owned by an individual or company. On top of that, we layer on Ordnance Survey data, as well as information on the internal area, the number of habitable rooms, when the property was last sold and for how much and its energy efficiency rating. Putting all of that information together is incredibly powerful.

Just think about how the regulation of energy efficiency is changing. At some point soon – soon, at least, from a property industry perspective – properties with low Energy Performance Certificate (EPC) ratings will be essentially unlettable. The

point of that legislation, of course, is to pressure landlords into investing in their properties to make them more energy efficient, something that most of us can get behind.

Investment opportunity

But the fact is that there are a great many landlords out there that simply don’t have the funds or the inclination to upgrade their properties. The majority of buy-to-let landlords only own one or two homes in addition to their own. That creates a big opportunity for investors to acquire such properties – provided that they can be identified.

Presented with, as it were, a get-out-of-jail letter delivered out of seemingly nowhere, those landlords are a potentially valuable customer base for a savvy investor. That investor can potentially secure the property at a competitive price and invest in the appropriate upgrades, thereby increasing both capital and rental values. The investor can then either hold the property or sell it on at a profit and roll the capital on to their next investment once they can achieve their required margin. The planet wins in such a scenario, too.

Using PropertyData to search for properties that have secured planning permission for upward extension is useful in a similar way – investors can’t know for certain, but they can be pretty confident that other properties of the same type would be allowed to do the same thing. Again, those with the cash at hand to enhance value can source opportunities to do so.

We are also continuing to innovate. Right now, we are testing a new search functionality that would allow investors to look for properties owned by companies in some form of financial distress. It’s still in beta mode, but you can just imagine how powerful that will be in terms of identifying property owners that have a very strong motivation to become sellers.

So, the opportunities to use our platform to enhance any given strategy are multiple and we are constantly looking at how we can add value. We may still need postal companies for that last-mile delivery, but strategic intelligence is all digital.

https://www.propertyweek.com/pw-perspectives/helping-investors-make-more-informed-decisions/5122019.article

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