Creating selection criteria and process
My view is that making property work is knowing when to say no, which is almost all of the time, and knowing when to say yes, with certainty. The best way to do this is to develop a rigid criteria, selection and offer process.
I will share ours. As an ex-military chap, I love a process and I love a phased operation. Our selection process has 3 phases, each one more complex than the last.
Firstly our SELECTION. What we are looking for. We only deal in certain locations. For the High Yield properties we hold, it is central Brighton, Hove, Portslade, Worthing and Littlehampton. These are defined on a map, down to the street. The type, mixed-use, single let and HMO. Any other issues, article 4, listed or conservation, flood areas. If it doesn't fit it is deselected at first sift. We don't even view.
Secondly is the CRITERIA. Price per square foot, rooms sizes and ratios, number of windows, parking, garden. All are defined. Some are must-haves, some are nice to haves and effect the OFFER process below.
The final phase is the OFFER process. This only takes place once the property is viewed and the CRITERIA logged. This process is very similar to valuing land. It starts with grading the property by location, A, B, or C for its location and then by using known sales and revaluation data to create end value per sq ft, which in turn allows us a justified GDV. This is real value, not hope value. We then allow for a 20% profit minimum. From here we assess the price of the work on a sq ft refurb price and any other costs and fees. All of these figures create a BUY price, which we try to beat. If we don't beat it we move on!!!
If you are interested in getting a copy of our spreadsheet then get in touch below
Empowering Ambitious Property Professionals to Systemise, Scale, and Succeed | Off-Market Deal Specialist | Revolutionising Real Estate Businesses
4 年Hi Andy, thanks for sharing this and I would love a copy of your spreadsheet please.
Property Professional & Advisor
4 年Great article, showing where the value of having a professional, experienced eye is so important when looking for an investment. It is often surprising to many when we take them through the selection process, how what looked like a great opportunity initial perhaps isn't as good as first thought. Hidden costs, listed buildings and various other variables need to be considered. Follow the selection process, the numbers wont lie to you.
Digital Strategist & Consultant | Program Consultant | Delivery Specialist | Agile Coach | Provider of Property to Families & Professionals
4 年I am glad I am doing my criteria this way also. Good to know and cheers for the pointers