Underwriting: what it is, and why you should care
For each and every property we list, we underwrite the transaction. This is Property Partner’s guarantee that every property will be fully funded, and it’s an essential component to securing the best deals, both for our investors and for the vendors we purchase from – but why? And how is it that both parties benefit at once?
Underwriting is key to the investment process for two reasons: it gives speed, and it gives certainty to transactions. In the unlikely situation of a fundraising target not being met, or a mortgage being delayed, Property Partner will meet the difference using our own cash. We also ‘exchange’ on each property before listing it on our platform for funding – meaning we’ve already completed the legal process, contracted to buy at a future date, and paid a non-refundable 10% deposit. This gives certainty to property sellers that the transaction will complete quickly, and on the date committed, and it allows Property Partner to deliver more value to investors by negotiating on price as a large cash buyer.
Helping vendors, while benefitting our investors
Property Partner’s ability to move quickly, and as a large cash buyer, means that we can secure attractive deals for our investors. Without the certainty of underwriting, this bargaining power would be lost, as it provides several advantages to vendors:
Buying in bulk
Being able to commit to the purchase of a large number (if not all) of the flats in a building saves on time. As it requires far fewer transactions, it also saves on the cost of estate agents and solicitors for a vendor. When securing Tower Mint Apartments in Tower Hill, we purchased the entire building from the developer, which enabled us to negotiate a discount of over 8%.
Speeding up processes
When working with small-to-medium sized developers, we can take a large amount of their stock at once, and off-plan if necessary. This reduces, or even removes, the burden of paying for selling agents and expensive marketing suites, enables them to clear debt more quickly, pay contractors, and move on to their next project. You can read more about this in our blog on helping Britain’s smaller developers. In the case of Finch Heights in Hastings, it allowed us to secure an 11% discount for investors, which was amplified to 18% by gearing.
Resolving difficult situations
Our ability to move quickly can often solve sticky situations for vendors; something helped by the expertise of our property team. You can read more about this in our blog on Specialist property investments. A prime example would be 11 Murray Court in Hanwell. As a cash-buyer with deep market knowledge, and solicitor and surveyor relationships already in place, we were able to move quickly and save a multi-party chain from failing – securing a discount of 10% for our investors in the process.
Belief in our investments
Importantly, underwriting shows full confidence in the quality of the investments we select. It means we have ‘skin in the game’. We handpick properties that we believe are excellent investment opportunities, a belief we back by the fact that we would be willing to put our own money into them. This helps give investors, like you, further confidence in each property that we list on our platform.
Take a look at the marketplace. At the bottom of every property’s description you’ll see our guarantee, and our commitment to you:
“Property Partner is underwriting the transaction: in the unlikely situation of the fundraising target not being met, Property Partner will meet the difference. Our policy of underwriting the fundraising process is a mark of our confidence of the investment case – we only put properties on our platform that we’re happy to put our own money into.”
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