The future of the UK property market is an uncertain one, to say the least, so with this in mind Sourced.co sat down with some of their current franchisees to get their take on the road ahead and how they feel about the world of property.
Sourced is one of the largest property investor networks in the UK, having transacted over £200,000,000 of UK property, ranging from simple refurbishment projects to flagship development, and everything in between. Sourced has created a community of over 70 franchisees and growing, providing the missing link for these developers – a database of investors. Sourced Capital, Sourced’s peer to peer lending platform, offers those investing returns of up to 12%, with all funding lent exclusively to Sourced franchisees.
The platform attracts a real mix of franchisees with different goals from funding to sourcing and Sourced talked to some of them about their thoughts on the current market landscape, the first of which you can find below.
David McLennan has been in the property business for 35-years, working in property management, development, estate Agency, mortgage broking, rent to buy and more and is a Property Manager Mentor and private portfolio owner.
What made you join Sourced?
“Sourced offers the missing link for most developers – the funding. The biggest difficulty would-be developers have is cash-flow as the usual 30-35% deposit eats into working capital available, making otherwise profitable ventures unviable.
So when I saw that I could effectively borrow up to 70% of the GDV, I immediately realised that many of the projects I came across would be effectively 100% funded – unheard of elsewhere.”
What challenges do you feel the current pandemic will bring, how long will they last and how quickly will the sector bounce back should it need to?
“The biggest challenge we are currently facing is uncertainty. The current pandemic will have as-yet unknown consequences, depending on the length of the lockdown and resulting economic impact.
At the moment, we are all champing to get back to “normal”, but the “normal” we once knew won’t exist at the end of this. Many businesses will fail, meaning there should be more property opportunities. However, the human cost also means that fewer people will be mortgageable and banks will probably decrease their lending or make the LTV smaller, 60-65% perhaps. In addition, certain parts of the country may see prices fall over the short-term.
`The underlying saver for developers is that there are still more people looking for houses than affordable houses available. This will ensure that any drops in value are momentary and will begin to reverse almost immediately once the operational restrictions currently imposed on the market are eased.”
Does investing via a platform like Sourced provide more security during uncertain times, if so why?
“Investing via Sourced provides more certainty during these times as all projects being invested into have been stress-tested by the team to ensure that liquidity is available to overcome any short-term downturn.”
What other benefits does a platform like Sourced provide over other avenues of development, particularly now?
“Sourced also has the benefit of an Investor bank, so selling projects, already vetted and approved by Sourced, into this internal market almost guarantees funding for the developer.”
Is investing in property still a sound move now, or should you wait until later in the year/next year?
“The biggest fear at the moment is how long this pandemic is going to last. There will almost certainly be some impact on the housing market, but it’s too early in the economic cycle of the pandemic to tell what that will be. However, if it’s a deal, it’s a deal…”
What other advice would you give someone thinking of investing in the UK property market by seeking funding for a development?
“Sourced has the capability of being any developer’s saviour. 70% GDV loans are few and far between without jumping through hoops. You also have the benefit of the initial franchise fee being repaid after the first deal and the internal investor market means that there could be little delay in cashing out at the end of any development. Add to this that the management oversight from the Sourced team stops anyone getting too ambitious with their project funding and you have a pretty solid recipe for success.
Overall, I wish I had discovered this business twenty years ago!”