For a property development business, the benefits of buying land off-market can outweigh the various barriers and risks involved. Buying land off-market means actively sourcing more sites than are publicly listed on land portals; a great way to build your portfolio and improve your ROI.
Sourcing land off-market means locating more sites than are actually available on the open market. The net result is having access to more, and often better, opportunities for your development pipeline. If successful, this also means being able to enter into negotiations earlier on in the planning process, but for the medium to long term, and ultimately own more of the supply chain.
Anyone in property development knows that buying land off-market is not for the faint-hearted. Not least, is finding the time to search for land, alongside running your business. You need the knowledge and tools to find suitable sites and (if effective) negotiation skills to secure them. If successful, there may be financial implications, all against the risks of changing planning and building policy and regulations.
Whilst the challenges of buying land off-market are not to be taken lightly, for property businesses looking to grow and maximise their long-term return on investment, the benefits of buying land off-market can far outweigh the drawbacks.
Moreover, you might be missing out. Strutt & Parker reported an increasing trend of private sales in 2021, including farmland being taken out of agricultural use. Finally, with the rise of off-market site-finding software, property businesses are allocating more and more time to proactively look for sites.
Here are our top tips for building your off-market pipeline…
When forming your search strategy, our advice is to first define what you are looking for. Questions, which can be incorporated into a search, include:
Searchland makes it incredibly quick and easy to carry out your land due diligence, and even save searches so you can be alerted about new opportunities.
Nowadays it is possible to source off-market sites using free online resources, from a Google search to local authority planning portals. The chances of success, however, are significantly lower when compared to using an all-in-one solution like Searchland.
Buying land off-market can mean reaching out to landowners who may not even be “in the market” to sell. Research confirms that direct mail is increasingly effective in generating a response. Physical letters also have a tangible presence that can hold your sellers’ attention and (importantly) they can be kept for future consideration.
Did we mention that Searchland has a direct-to-vendor letter-sending facility? To find out more about our TV letter service click here.
The benefits of liaising with landowners directly include more purchasing power, often avoiding third-party agents’ fees or even a competitive bidding scenario. This also opens up the possibility of medium to long-term land deals, so great for forward planning.
This is the most important part of the plan, and where a lot of off-market searches can falter. Execution is about finding enough leads to follow and acting on deals when they come your way.
As part of your land search strategy, set yourself targets with specific objectives, including what type of land, how much, and within what timeframe, and be both realistic and consistent in your approach to this.
That said, this doesn't need to be perfect, that’s what the next stage is for. Out of every 100 letters sent, you will likely hear back from 5 prospects. Don’t lose faith!
Execution is about setting achievable targets and hitting them without failure consistently.
Iteration is about refining your process.
Not finding enough viable leads? Refer back to your list of “must haves” and try varying the types of searches that you do.
Look at past unsuccessful and successful planning applications in your target locations. Carrying out this due diligence early means being able to anticipate planning barriers before you approach your sellers.
Another form of iteration is improving your outreach to vendors.
For more detailed tips on letter writing, have a look at Hugh’s feature on “perfecting your letter sending strategy”.
One of the biggest blockers to off-market site finding is losing faith or motivation to continue the exercise. Problems we’ve seen first-hand:
Let's say you spend 30 minutes sourcing and reviewing each site. This means you will send 20 vendor letters out over a typical 10-hour working day. Assuming a 5% response rate, that is 10 hours of input with the likelihood of only one “bite”. With a refined process, this can be cut back to 5 minutes per site (and, hence, 120 letters a day, and 6 times the rate of return).
Remember, if you get a response to your letter, you can - and should - allocate a lot more time to liaising directly with the landowner.
Letter sending is about personalisation, and landowners will appreciate the extra effort in including an accurate land map. The £3 fee should increase your response rate to more than justify the investment.
We’ve alluded to using specialist site-finding software like Searchland – did we mention why? By combining all the necessary data on one platform, Searchland lets you more easily source and validate more sites with your criteria, faster, and better.
Moreover, Searchland is the only platform that fully automates the site-finding process, making it the fastest sourcing tool available.
(Hint – we’re the best, but of course, we would say that. Discover how we compare to one of our main competitors).
Buying land off-market is hard work, but the rewards include locating more, and often better opportunities, building a longer-term pipeline of sites, and ultimately owning more of the supply chain. Wouldn’t that be good? Get in touch to discover how the right tools, including Searchland software, can help you to get started.
One of our experts can walk you through the platform in a live session, one-to-one.