Property sourcing or property finding is another of those killer property strategies which property investors can use to fast forward their property careers.
It is one of the most popular and easily accessible strategy in my killer property strategies series.
It is a strategy which does not require vast property experience or large capital sums. In fact it is a strategy which can be pursued without any capital at all. It does not involve the purchase of property – therefore a good credit record, deposit or mortgage is not required.
Property sourcing is a strategy which has high appeal to property investor newbies. It is not really property investment in the strict sense, but the fees earned from sourcing properties can be used to purchase properties and engage in regular property investment.
It is a good way to start on the journey to become a property owner if you need to raise capital before you can buy your first property – be it a home or an investment property.
1. What is property sourcing?
Property sourcing or property finding is simply the process of identifying a property for someone who wants to buy that particular property or that particular type of property.
As a property sourcer you are a middleman, an agent – standing between a seller and a buyer – making a seller’s property available to an interested buyer in return for a fee or commission.
The fee charged will of course be negotiable but, as a guide, 3-5% of the property’s value is fairly typical. The actual charge will depend on the level or quantity of service you are providing.
Your role is similar to a regular estate agent – with the main difference being the likelihood that you will be identifying specific types of property for a specific group of buyers (usually investors) who have retained you in some way.
Basically you will be providing a more bespoke service than a typical estate or sales agent serving the general public.
To be successful, you need to be able to identify the specific property requirements of your buyer clients and then carry out the work, research, due diligence and negotiation to find properties meeting those specific requirements.
2. What do you need to get started in property sourcing?
An advantage of property sourcing is its simplicity and the ease and speed at which you can be up and running.
If, however, you intend to operate as a business you should seek professional advice and assistance prior to start up in order to identify and act on the legal and regulatory obligations which will apply to you,
At the time of writing (September 2018), there are no formal educational requirements or qualifications needed to sell property. However the government has made it plain that it intends to more fully regulate the sector and it is likely that minimum qualification requirements will be introduced in the not too distant future.
Clearly the more knowledge you have, the more you are likely to source properties suitable for your clients; the more deals you are likely to make; the more money you are likely to earn.
If you come across as a knowledgeable, experienced, professional operator, potential clients are more likely to trust you and retain your services.
Before you start sourcing, you should ensure that you have complied with the steps set out in this table:
3. Two key decisions for property sourcers
You have two fundamental decisions to make when deciding your direction as a property sourcer:
- What types of property are you going to specialise in?
- What types of investor buyer are you going to target?
As a newbie, it would make sense to target regular residential properties unless you have knowledge or expertise of other types of property such as commercial or semi-commercial.
As you gain expertise, you may find it less competitive and more lucrative by targeting specific types of property such as shops, offices, retail or industrial.
You may wish to specialise by focusing on a specific goal – such as finding large houses which will convert to HMOs or flats.
As you become more accomplished, you may be able to offer not just a property but also useful, additional information – such as the likelihood of planning permission, the expected cost of works, rental values and return on investment (ROI).
MUST KNOW PROPERTY STRATEGIES
Option to purchase (profit from your control of a property)
Lender finance (money from lenders to buy their property)
Bridging loans (a temporary loan which can make a lasting impact)
4. Buyers are key to your success as a property sourcer
If is important to find great properties which are a bargain and offer great scope to add value by building works or to appreciate in value over time.
But it is probably more important to your business success to have buyers to snap up the deals you are able to identify.
It makes sense therefore to start your business by:
- Identifying the serious, capable, reliable potential buyers you aim to work with and
- Perfecting ways to contact, cultivate and sign up such buyers.
There are of course countless ways in which you can find potential buyers.
A quick, simple way is to print up some business cards and hand them out to everyone you know, explaining the types of property you will be looking to find and the types of buyer you hope to sell to.
Attending property meet-ups and making use of social media platforms such as Facebook, Instagram, Twitter, LinkedIn and YouTube are also relatively inexpensive ways to increase your profile and market your services.
It would also make sense to set up a simple website where you can explain things such as the nature and type of service you offer – plus the clients you work for, your terms & conditions, your typical contractual documents, your system of working, your fee structure and testimonials from previous clients.
5. Giving yourself the best chance of succeeding in property sourcing
You will doubtless want to give yourself the best chance of succeeding as a property sourcer.
You can seek success by self-education followed by trial and error which, with time, may or may not work.
To maximise your chances of success, it is probably best to seek advice and assistance from people who have successfully practiced property sourcing and can help you to avoid the risks or pitfalls you may face.
You can seek such assistance in one or more of several forms including: courses, workshops, training, mentoring and partnerships.
Does property sourcing appeal to you? Perhaps you have been involved in property sourcing informally by telling someone about a property going for sale and not earning anything for your involvement? Please leave your comments below.
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Rebel Property Coach
My website is: www.rebelpropertycoach.com