Bricklane’s property buying strategy
Using a combination of data analytics and industry experience, our property team has created an innovative property strategy that aims to provide investors with strong returns over the long term, through a combination of rental income and capital growth.
Let’s have a look at how we buy properties.
We use data to identify properties with strong investment potential
Using Compass, our property team evaluates properties that come onto the market in our target areas each day. We identify areas of interest in our target cities by analysing key data points including past price and rent trends, planned supply, demographic shifts, length of commute and customer demand indicators. This enables us to rapidly screen thousands of listings and identify the top fraction of properties relevant to our criteria.
The system examines all on-market opportunities in our target areas every day, surfacing the most promising ones for our team to examine in closer detail, in order to produce an anticipated net yield per property. This involves estimating rental value by comparing them to other properties, as well as estimating any repairs, maintenance or capital expenditure required, in addition to any further ongoing charges like service charges and ground rents that apply for some properties.
Using these criteria, we establish a projected net rental return for all properties in our target area.
Our team conducts detailed due diligence before purchasing
Before any purchase, our property team conducts comprehensive and rigorous due-diligence to confirm a property’s valuation, its alignment with our investment strategy, and suitability for the broader portfolio.
Each property is visited in-person by one of our viewing partners, who provide us with cross-country coverage. A detailed property report is generated and analysed by the property team and advisory board before we make a final decision. At least one member of the advisory board oversees every property purchase to ensure they are in line with our overall strategy.
Thanks to our scale and strategy, we can secure discounts for our investors
Once we decide to purchase a property, we can transact quickly.
As a chain-free cash buyer, we are able to bypass hurdles surrounding mortgage approvals, speeding up exits for vendors and incentivising lower priced purchases. As dispassionate investors, we do not fall in love with individual properties, and do not look to win every bid — when a property meets our criteria, we bid, if the price grows to a level that makes the numbers no longer work, we are happy to walk away.
Embedding data at the heart of our strategy has enabled us to drive down many of the standard overheads of acquiring properties and we will often purchase at a discount in order to mitigate or eliminate the transactional costs of investment.
By analysing, bidding and buying at scale, we are constantly adding more data to our knowledge base, which means that every transaction increases the speed and accuracy of our process.
We work with property management partners to limit voids and maintain strong yields
Once purchased, each property goes through an initial ‘stabilisation’ period, during which any light maintenance work is undertaken, and the properties are tenanted. The associated costs and expected void periods are taken into account pre-purchase when assessing the five-year estimated annual rental yield for the asset.
We aim to ensure a property is occupied as soon as possible once we have acquired it. From June 2019-December 2019, we maintained occupancy rates of 97.1%.
Our properties are managed by Touchstone, a leading property manager, who focus on providing tenants with a great experience and ensuring that costs deducted from rental income are kept to a minimum. Along with the day-to-day management of our portfolios, Touchstone provides us with detailed weekly updates — generating high quality reports on operational activity to support the accurate valuation of investors’ holdings.
Every month, all of our properties are independently valued by Allsop LLP, a leading consultancy to the residential property industry, with an in-person inspection once every 3 to 5 years.
Our property strategy is reviewed on a quarterly basis by the advisory board to ensure it is delivering for investors.
By investing with Bricklane, you are able to benefit from our specialisation and focus. We monitor the market every day, at a scale most individual investors would find difficult to replicate. We’ve seen our process get smarter as we grow, and growth enables us to access better and better opportunities (for instance our recent acquisition of the British Residential Unit Trust). We are continuously monitoring and optimising the management and performance of our investors’ portfolios.
For more information go to bricklane.com.
As with all investing, your capital is at risk.
Your investment may go down, as well as up. Although the shares are listed, if you want to sell them, there is no guarantee that you will find a buyer within a time-frame or at a price, acceptable to you. The REITs invest in residential property, which are not highly liquid assets. Rental yields and dividends may be lower than estimated.
Tax rules and allowances depend on individual circumstances and may change. The opinions contained within this blog do not constitute investment advice. Bricklane does not give advice. If you are unsure about whether investment is right for you, you should seek independent advice before investing, including tax advice.
This promotion is issued by Bricklane Investment Services Ltd. which is an appointed representative of Gallium Fund Solutions limited (reference number: 487176), which is authorised and regulated by the financial conduct authority.
