Short Stock, Rising Rates: Move the Patch, Keep the Product
The best property sourcing strategy when stock is short and rates are rising is usually not a new product. It's the same product in a new patch. Your investors already understand what you sell. Change it and you start their trust from zero. Change where you find it, and you keep the trust and get the stock.
I'm George Samoila. I run Manchester Sourcing and Guaranteed Rent Hub, and I mentor sourcers, landlords and investors. This is what I'm seeing this autumn, and what I'd do about it.
What's actually happening in the market?
Three things at once.
Mortgages got dearer, fast. On 5 October the average five-year fixed rate hit 6% for the first time in about three years, according to Moneyfacts. At the start of September there were nearly 1,500 fixed deals under 5%. By that Monday there were nine.
The Bank of England is leaning towards a rise. It held Bank Rate at 3.75% in September, but three of the nine members voted to raise it. The next decision is on 5 November.
Prices have flattened. Nationwide's September index put annual UK house price growth at 0.8%, down from 1.6% in August.
And on the ground, across the North West and the North East, I'm seeing far fewer houses come to market than a normal September. That's my own view from our viewings, not a statistic.
Why do sourcers change the product, and why is it a mistake?
When deals dry up, the instinct is to change what you sell. Chase deeper discounts. Add flips. Pivot to "capital growth". It feels like action.
The problem is your investors. They bought into a product: one sentence, with numbers in it, that they could say yes or no to. If you haven't nailed that sentence yet, start with what's the product?. Swap it for something new and you're asking every investor to learn you all over again, in a market where they're already nervous about rates.
A yield investor doesn't become a growth investor because your patch ran out of houses. They just stop opening your messages.
What property sourcing strategy works when stock is short?
Keep the product. Move the patch.
That's what I did. As Liverpool prices rose, the numbers on our standard product got thinner. Rather than change what we sell, we started sourcing in the North East this year: Durham, Newcastle, Sunderland, South Tyneside. Same product: an ordinary house, leased to a provider, with the rent covering the mortgage. Different streets. Our investors didn't have to learn anything new. They just got more deals.
It fits the rule I gave in running three property strategies at once: one strategy, one patch, and when the market moves, change one thing deliberately. Moving the patch is that one thing.
How do you move a patch without losing a year?
A new area is a new set of agents, trades and streets. Done badly it costs you a year. Done properly, a few months.
Re-run your product at today's rates. If the sentence only worked at a 4.5% mortgage, fix the numbers before you fix the map.
Find patches that still move. On Rightmove, compare listings with and without sold STC. Over half under offer means a fast-moving area.
Write a one-page area pack. Five reasons the area works, plus the honest downside: the streets to avoid, the licensing, the mortgage limits on cheaper houses.
Partner with someone local. A trusted viewer or partner who already knows the agents and the good and bad streets saves months of learning. I run ours from my phone, but only because that team was built first.
Tell your investors why you moved. Say what changed and what didn't. "Same product, new streets, here's why" is a message that builds trust.
This is part of Module 3, your patch, one of the 12 modules in the Field Manual every mentee gets.
What's the catch?
Moving a patch isn't free. The first few deals in a new area take longer, because you don't yet know which agent answers the phone or which street floods. Cheaper areas can bring cheaper-house problems: some lenders won't lend below a minimum property value, so the cheapest stock may need cash. And if rates keep rising, no patch fixes a product whose numbers don't work. Re-check the sentence first.
What this means for you
If you're a sourcer, write down your product sentence and test it at a 6% mortgage. If it still works, the problem is supply, and the fix is a new patch, not a new strategy. If it doesn't, fix the numbers first.
If you're a landlord or investor, ask whoever sources for you what changed in their area this year and what they did about it. "Nothing" is a worrying answer.
FAQ
Should I switch to capital growth areas now that rates are up? Only if your investors want growth. Most who buy from sourcers want income and hands-off, and they chose you for that. Switching to growth means new buyers, new numbers and new trust. If your yield product still works somewhere else, moving the patch is usually quicker.
How far should I move? Close enough that you or a trusted partner can view, and where the same product still works. For us that meant from the North West to the North East, still in the North of England. Moving to an area where you know nobody and nothing on the ground is a much bigger job.
Do I need to live in the new patch? No. You need people there you trust: a viewer, a builder, agents who call you back. With those in place, most of the work runs through calls, video and WhatsApp. Without them, distance becomes the problem. Build the team before you send a single deal.
Will rates come back down? Nobody knows. In September three of the nine Bank of England members voted to raise, not cut. Build your product so it works at today's rates, and treat any cut as a bonus. For your own borrowing, speak to a broker.
Talk it through
Not sure where you're stuck? Take the 3-minute quiz: what type of property operator are you? If rates are the conversation you're dreading with investors, my free guide Read an investor in 5 minutes helps.
If you're already sourcing and want help moving your patch, or tightening your product for this market, book a Mentoring Call. Places are limited.
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