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How does British Pearl select which properties to buy?

25 January 2019 • British Pearl

This is a question we get asked a lot, and rightly so. Buying property well means our investors receive higher returns and our business can continue to grow. One of the core beliefs that British Pearl was founded on is that property investment needed to be revolutionised. On the back of that belief, we have worked to bring an institutional investment management approach to property investment which everyone can benefit from. Reflecting this, our core team not only has a strong background in property but also extensive experience in investment management. The property acquisition process itself can be broken down into key steps, but if I was going to use one word to describe it, I would choose: rigorous .

First, a bit of background. The Property Team brings over 50 years’ experience from the UK’s most recognisable firms including Allsop, Grainger PLC and Knight Frank. In the property world, this is incredibly important as good contacts and relationships are required to source great deals. So, while we use sourcing channels available to all of our competitors (such as estate agents) we also receive a lot of exclusive investment opportunities that most people do not have access to.

Then the real work begins! As a team, we review all potential purchases against our robust investment criteria which include income, capital growth, condition, location and kerb appeal to name a few. While the experience of a trained eye can speed this process up, it is still time-consuming as we carry out reviews against a very large number of possible properties. For every investment that gets past the first hurdle, often more than 100 possible properties will have fallen by the wayside, with only the very best making it through to the second round. If a property looks viable it will go forward for more detailed due diligence involving financial modelling, legal review and comparable research. Our financial modelling, which you can read about in a blog by our Investment Manager, James Newbery on LoveMoney, is extensive, detailed and proprietary.

If our model indicates strong returns and the due diligence does not highlight any concerns, then we will arrange a property viewing. This could be a block of flats in Lincoln one day, an auction lot in Cardiff the next day and a new build flat in Hampshire the next. As cash buyers, we offer speed and security to sellers and this, combined with often buying multiple units, secures a price discount that we pass on to our investors. If the viewing goes well, the financial model will be reviewed to include anything we gleaned from the viewing. We want the model to be as accurate as possible and the devil is in the detail. Once the team is fully comfortable with the property and the estimated returns, the Investment Manager presents a formal proposal to our Investment Committee. Once signed off to buy and the offer is agreed, the next stage of the process is not really any different to most people’s property buying experience. We instruct solicitors and surveyors and their expertise is combined with ours to conclude the purchase.

We aim to use our contacts and expertise, supported by a bespoke financial model and further leveraged by a cash buying position to secure the very best property investments for everyone, whether or not they have the time, knowledge or contacts to do it themselves. The challenge is to build a diverse portfolio in terms of property type and location whilst not straying from our strict investment criteria.

It may sound like a rigid set of rules to follow that requires laborious implementation. That’s because it is. This rigorous approach means we identify the best returns available while minimising the risk to our customers’ capital.

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Your capital is at risk Investing in property involves risk. The value of your investment can go down as well as up and historic performance is not a guide for future performance. Any projections of future performance are based on all information known at the time of share investment or loan, and internal calculations and opinions of British Pearl. These are subject to change and are not guarantees and should not be relied upon as such. Risks include the total loss of your share investment or loan, variable rental income due to property not being rented or a depressed rental market, and inability to sell your share investment or loan due to lack of a buyer. Investing with British Pearl falls outside the remit of the Financial Services Compensation Scheme. Please refer to the Key Risks section of this site for a more comprehensive description of the risks involved.

British Pearl ® is the trading name of British Pearl Limited (Company No. 7151774), a company authorised and regulated by the Financial Conduct Authority (Register No. 674693) and British Pearl Finance Limited (Company No. 10575280 and Register No. 770867), which is an appointed representative of British Pearl Limited. Both companies are wholly owned subsidiaries of British Pearl Group Limited (Company No. 9701436) and all are registered in England and Wales at 4th Floor, 7-10 Chandos Street, Cavendish Square, London, W1G 9DQ