Property development companies typically partner with property investment companies to sell their properties on their behalf. They rely on the investment company’s knowledge of the market, marketing reach and capabilities, and above all the close and trusted relationships the investment experts have with their clients.
Why investors love property investment companies selling on the developers’ behalf?
Developers fundamentally develop and concentrate on bringing every planning, build, funding, contractor and legal element together on a project – this is a mammoth job in itself.
More often than not, direct sales and marketing (B2C) is just not an area a development company has experience in, so they leave this crucial part to the experts, the property investment specialists, who attract investors looking for great returns from stable investments. The investment companies have carried out project and developer due diligence – which is fundamental for the investor – and are able to match investors with a suitable property investment and developer.
Investors prefer having a brokering agent, it’s an extra layer of comfort in many ways, because investment experts can often be impartial between one project and another that is within their portfolio.
From a property investment experts’ perspective, comprehensive due diligence is fundamental when selecting a property developer partner or becoming one of several companies/agents selling on behalf of a developer.
What to consider when a property investment company is in a joint venture with a developer?
In some cases, developers joint venture with a property investment company, where the company has a financial investment in the project too.
If the property investment company is the JV partner, or a master agent for one developer/project, this means the agents will and can be less impartial about the project. When there is a target of pre-sales to hit before a spade can be put in the ground, that will be the property investment company’s mission. In this situation, it’s wise to do due diligence on not just the developer, but the property investment company too.
Property investment companies cover the Due Diligence fundamentals
One of the most important aspects for a client when investing such a large amount of capital, is knowing a deep level of due diligence has been carried out on the developer and the project. REW, as a property investment company, is here to make life easier for its clients, to tick those due diligence boxes, to answer the various questions and concerns that naturally come up, and importantly if the client is brand new to property investment, we explain and educate them on the entire process from start to finish.
As David Coates, MD, explains. “Even if we have worked with a developer before and seen their other projects complete, every project has the same suitability process to understand the means to delivery, who the contractor is and the schedule of works – along with ensuring there is demand in the area, the return is sustainable, and the purchase contracts are all in order.”