CONTENTS: 1 - RESIDENTIAL OWNER (RENT-A-ROOM), 2 - RESIDENTIAL OWNER (BED & BREAKFAST), 3 - PROPERTY TRADER (FLIP), 4 - PROPERTY TRADER (ENHANCE), 5 - PROPERTY TRADER (OPTIONS), 6 - PROPERTY INVESTOR (SHORT TERM LET), 7 - PROPERTY INVESTOR (BUY TO LET), 8 - PROPERTY INVESTOR (STUDENT/HMO LET), 9 - PROPERTY INVESTOR (PENSION), 10 - PROPERTY INVESTOR (LEASE OPTIONS), 11 - PROPERTY SOURCER (CLIENT FACING), 12 - PROPERTY SOURCER (PROPERTY FACING)
I Vital Statistics
|Earning potential before tax||£5,000 to £1m per year|
|Capital Required||£nil to £10,000|
|The Business Model in a nutshell||To assist investors building their property portfolio|
|Potential gaps in the market and suggested USPs|
How To Become A Property Sourcer
- What is a property sourcer
- Finding the right clients
- Finding suitable properties
- Presenting the deals
- When you get a match
- Keeping hold of your client base
- What is a property sourcer?
A property sourcer is someone who:
Finds an investment property for an investor matched to the investor’s requirements.
A good property sourcer will:
- understand the level of the investor’s knowledge
- identify the client’s needs and objectives
- create a medium term strategy for them (if required)
- plot the first 12 months of the working relationship between you and the investor
- identify the type of investment properties the investor needs to fulfil their objectives
- source these investment properties from property finders, estate agents and/or packagers
- See the property purchases till completion and introduce the investor to a property manager or letting agent
In essence you are like a marriage bureau. You are finding properties that you hope will have a long and lasting relationship with the owner!
There are 4 ways you can set your business up:
- Specialise in the type of client you have and let them dictate the properties you find for them (specialised client, non-specialised property)
- Specialise in the type of property you find and allocate across your client base (non-specialised client, specialised property)
- Specialise in the type of client and property (specialised client, specialised property)
- No specialisation (non-specialised client, non-specialised property)
So examples of specialised clients and specialised properties are:
Self employed only
Location specific (i.e. London)
Escape rat race
Low value high yield
No money down
HMO (house in Multiple Occupancy)
Location specific (i.e. London)
There are many other specialisations other than the above. It is key you get this bit right. You have to make sure your specialisation is specific enough to attract a decent number of clients but not too specific as not to appeal to anyone other than you!
- Finding the right clients
The right clients are based on two factors:
The right clients depend on you. What type of clients do you feel you best work with? Now before you say anyone or everyone who is willing to pay me think again!
People come in all shapes and sizes and they have different needs and wants. You need to think about:
- Your skill set. If you choose to work with clients who need a lot of hand holding and education then you will need a fair degree of knowledge and be able to deliver this information in a way which they will understand. Your skill set must match what is expected from your target client base.
- Your personality. There are some clients who need someone to chat to. They need to feel like you care. There are other clients who have no need for small talk and will get annoyed if you engage in such talk! Be aware of personality types and home in on the ones you know you click with.
- Your presentation. Certain clients want a certain degree of professionalism. This varies widely. Some clients are ok with a phone call, a nod to say the the property is fine and everything is done on trust and by word. Others want everything in writing, tip top manners at all times and a professional presentation every time. These are the extremes but there are all the in betweeners also. How you present yourself will hopefully attract the right clients for you. So if you are a bit jack-the-lad do not set up a classy flashy website attracting etonian types as you will be unable to keep up the image.
- Your peer group. You offer a personal service. Personal services work best when empathy levels are highest. If you come from similar backgrounds then a positive working relationship will probably follow.
These are not hard and fast rules but are worth considering. The most important thing is you deliver to the client what they want which you need to understand. But don’t forget it is the exception that proves the rule!
Clients can only be clients if they actually buy property. For a potential client to buy property they MUST possess the following features:
- They are ready to buy. If they have no investment properties but have been looking to get in to buy to let since 1996 then you best stay away from this client. They will take up all your time and not buy. Paralysis by analysis they say. Your client base must be made up of property buyers.
- They can get a mortgage. They must have buying power. This can be in the form of cash (very rare) or be able to get a buy to let mortgage. You should see evidence that they can buy like a recent credit score an existence of a buy to let portfolio.
- Right mindset. If a client is stating that they are using you to find the perfect investment property so they do not lose any money then their expectations are misguided. A property sourcer never takes on a client’s risk. The client takes 100% responsibility for the risk. Your job is to present property deals to them for the client to make the decision. The right mindset is knowing that a property sourcer can provide you deals not ensure you do not lose money.
Based on all of the above you can find these clients by incorporating what you have learnt above and using the right wording on your marketing materials.
If you want to deal with self-employed clients only you can state that. If you want to deal with only wealthy clients you can state that also. Whoever you wish to gun after make sure it is obvious by the way you market. This will work wonders for generating leads.
The methods I recommend to use to get clients are:
- Internet. This is where I get most of my leads. I created a website, drive traffic to it by Google Adwords, capture their email addresses and market to them regularly. I can build all this for you or you can read my Book How TO Make A Fortune On The Internet.
- Referrals. You set up Joint Venture or Introducer agreements with businesses or people who might know of potential clients. Mortgage brokers, solicitors, accountants, other property investors, estate agents etc. Whoever comes in to contact with people who want to buy investment properties can refer to you clients.
- Your competitors. This is quite unique to this kind of business. You will find that some potential clients will want to work with certain type of property sourcers. If you can get a competitor to refer your business for a fee then it an work both ways. This way everyone wins. I often do this with other property sourcers.
I have tried to do offline advertising such as magazines, exhibitions and newspapers but it just hasn’t worked for me. Online advertising is just so effective that the internet brings in enough leads for my organisation to deal with. When I have ideas to expand even further will I look at perfecting offline advertising.
3.Finding suitable properties
Properties can be found from the following sources with their respective market share:
Estate Agents (91%)
Property Finders (<1%)
Lead Providers (<1%)
Private Ads (<1%)
Rightmove has 90% of the Estate Agency market. Therefore roughly 80% of properties for sale can be found on this site (91% x 90%).
The rest can be found on other sites such as:
Then you have more localised sites in Scotland such as:
A full list of estate agents via area can be found at www.ukpropertyshop.co.uk
There are some estate agents who do not advertise on the internet (yes there really are!). These can be gold mines. They are found in very small towns where one agent pretty much deals with all the transfers of property in that town and surrounding villages. These agents are one man bands and they keep the crème to themselves. However you can get a look in if you strike up a rapport with them. Keep these gold mines to yourself.
You can find deals from people whose profession is property finding. They hunt their local area to find deals. They advertise locally (sometimes nationally), leaflet drop and buy at auctions. If you come across their marketing give them a call! They might have some deals which he or she does not want and your clients could lap up.
These businesses generate leads via the internet. They get leads of varying quality from people who want to sell their property quick for whatever reason.
These leads, apart from having the normal property data such as address, postcode etc., have data such as:
- the likely price they are willing to take
- the owners estimated market value
- the owners outstanding debts
The owner usually makes multiple enquiries to other lead providing companies and it is not uncommon to see the same lead being offered by the two or more lead providers.
To do well this way is to buy many and quickly. You want to get the first bite of the cherry so speed is everything.
You can find plenty of cheap properties at auctions. Now depending on your client base will determine which auctions you go to:
- Local auctions. These specialise in properties which are local to the area (surprise, surprise!). If you have specialised as a local property sourcer then these will be perfect. You can alert your client base to these properties and charge a fee.
- National auctions. These come from all over and you can get a lot of repossessions as the big banks use the big auction houses to sell. Bargains can be had here. Localised properties are put in national auctions. So a little market town property finds itself listed next to a large commercial portfolio in Central London. There are very few buyers hence you can get these properties at bargain prices.
To get alerts of EVERY auction in the UK you can subscribe to www.eigroup.co.uk
People are refusing to pay estate agents fees. You can sell your property by simply placing an ad in a local or national newspaper or on a website and save thousands. Just do a quick search in google for “sell house privately” and you will see all the sites that come up. Real bargains can be found this way. Also give www.ebay.co.uk a try. You never know!
Wherever there is a classified section you can find deals. Other publications you could try are:
Solicitors come across deals due to:
- Aborted sales. Sometimes sales fall out of bed and the purchaser cannot buy however the deal is still a good deal. A solicitor can give you a call and you could put in place your willing and able client.
- Death. Beneficiaries to a will sometimes inherit a property. They do not want to own or co-own property and want a quick sale. This is where you come in with your army of clients!
- Entrepreneurial Solicitors. Some solicitors make as much money placing deals as they do doing the conveyancing! Try and get to know these sort of solicitors. However do not let them act for you!
4. Presenting the deals
There is no such thing as too much information when it comes to presenting a deal. As a minimum you should supply:
- Picture of outside
- Full address and post code
- Size of property
Any professional investor can make a decision based on the above. Some can decide on even less. I have bought properties knowing just the size, location and the price.
Other details you can include are:
- Rental price
- LHA rental price
- Calculated yield based on both rents above
- Estimated Value
- Potential selling price in “x” years
- Calculated mortgage cost
- Monthly profit
- Capital required to purchase
- Description of features i.e. double glazing, gas central heating
- Pictures of inside the property
- Crime stats for the area
- Neighbourhood profile
- Recent sold prices of similar properties in the area
- Comparable properties on the market
We do a lot of this for our clients. We try and include as much info as we can to help them make a decision. You want the client to have all the data they need to make a decision. It is when they make a decision is when you make money. If they never have the info to say “Yes I want that property!” you will not make any money.
We provide our deals on a pre-made template designed by our graphic designer. This is converted to a pdf and sent to the client via email. We find this works well. However there are many ways you can present a deal:
- Word document
- Video uploaded to Youtube
- Printed out and posted
- Graphic images
- SMS text message
- Facebook, Myspace or Twitter
How you send out will be based on your client base. You will quickly see what works as a well presented deal will sell presuming you have met the clients requirements.
5.When you get a match
There will be appoint where your client says:
“I want this property! What do I do now?”
Now you should be prepared to put the wheels in motion as quickly as possible. The reason I say quick is usually a good property deal does not hang around for long so you have to act fast. We sometimes lose deals as we simply weren’t quick enough. I am always emphasising this to my staff. Speed is everything in this business.
You need to do this in order to secure the deal
- get a commitment from your client. The way we get a commitment from our clients is by taking the sourcing fee upfront. If you are uncomfortable with this you can ask for some of it upfront or getting them to sign or confirm something via email. It is important however that the client feels they are committing to the deal otherwise they are not vested in the deal.
- Inform your source from where the property came from as soon as you get a commitment.
- Introduce the client to the source.
- Introduce the client to the mortgage broker to get an application under way.
- Introduce the client to the solicitor acting on the purchase.
You will also need to see the following happen over the next 4-8 weeks:
- the client gets approved for a mortgage
- a survey gets instructed within 2 weeks of accepting the deal
- the solicitor receives all documentation from the client to cover themselves against money laundering
- contracts for exchange go out to vendor and client
- survey results come back in
- mortgage offer gets issued
- contracts get exchanged
- property completes.
I employ a facilitator to do this. I make sure my facilitator irons out any problems that arise and prevent problems arising. It is quite a stressful job and takes a certain degree of persistence however it needs to be done. There is many a slip between cup and lip. It is too easy for a client to say “yes I will have that” and nothing else happening afterwards. Remember your fee is only really earned once purchase happens.
- Keeping hold of your client base
There are many property sourcing companies out there to lose business to. What will set you apart from the rest will be:
- Getting them the exact deals they want. Try and get the client to be as specific as they can. The more you match a deal to their requirements the more pleased they will be.
- Being at the end of a phone. No one likes answer phone messages, endless ringing tones or even worse a dead phone line! You have to be responsive in this game. Answer the phone and act. Even if all you have to do is reassure them that the property you have found them is right for them. Clients need love!
- Make regular contact. If you can do a newsletter which keeps them informed of their market they will appreciate this. It lets them know you are on the pulse and aware of what is going on in the industry. They are relying on you to bring their attention to anything significant in the industry.
- Having good third parties. Your client base will call upon you for recommendations for services like letting agents, mortgage brokers etc. Make sure they are good! Even though you are not liable for their actions they do reflect heavily on you. “Show me who your friends and I’ll tell you who you are” rings so true.
Once you have mastered keeping hold of your client base only then should you think of expanding it. A very small client base can provide you with a significant income. Say for example you have chosen to go for wealthy clients who only want portfolios and you are earning 1% of the sale price then you can effectively live off one client doing one deal a year! There really are sourcers in this and other industries who broker very few but very large deals.
Property sourcing is a growing industry. Once the property boom takes hold again we will see quite a few springing up. If you want to get in before the rest I suggest you start now.