Property Sourcing Profits – PART 1

By John Stokoe

It’s well known that investing on property provides solid returns and financial security for many people around the world. Potentially the most important factor in generating these returns is an education. A lack of education can be devastatingly costly in an investment and a lack of education is also the reason why many feel they may not have enough funds to profit in the industry. That’s where they are wrong.

Put simply, property sourcing is the process of finding, negotiating, and ‘packaging-up’ property-related business opportunities or ‘deals’, to sell on to investors for a fee.

A property ‘deal’ is simply a pre-negotiated agreement with a vendor, who has agreed to sell their property at a negotiated price. As a sourcing agent, your job is to package this deal into an investment grade opportunity and sell it on to investors.

Examples from real UK investments

In the UK for example, these opportunities are typically sold for between £2,000 and £5,000 per deal, so just one deal a month could comfortably replace the income or salary of most 9-5 jobs—with far less time invested!

When starting out, a realistic expectation is that you could expect to secure a deal for every 20 properties you view. As you get more experienced this will improve to 1 in 10, or even less. So, simple maths says that if you view 10 houses a week (which is achievable even when doing this part-time) you should see 40 properties in a month, which would result in 2 deals. At an average of £3,000 per deal, that’s a possible £6,000 income per month from property sourcing.

The beauty of property sourcing is that you can, very quickly generate large sums of monthly income without even owning a property, by leveraging market mechanics and becoming an intermediary between buyer and seller. At the lower end, property sourcing can make you £3000-6000 per month, but when systematised for volume, some people are sourcing upwards of 4 deals a month making in the region of £12,000, and that’s before even considering the experienced sourcing agents trading commercial and land opportunities. At the upper end of sourcing, some agents are making in the region of £50,000 on single development deals where an investor can build 50-100+ houses! That’s a little way off for those just starting out, but the point is… the sky is the limit.

Property is a reliable and robust wealth building strategy relied upon for decades. The reality is that many investors are cash rich and time poor. They want to invest in property, but lack either the time or expertise required to find and secure ‘investment grade’ property deals themselves. They are, however, willing to pay a sizeable fee for the opportunities to be packaged and delivered to them.

There are three main reasons why investors utilize sourcing agents:

• Time – Some investors simply don’t have the time to invest in finding and securing new property deals, so instead they partner with a sourcing agent who can do that on their behalf.

• Expertise – For some investors it’s about expertise. Many landlords are not professionally trained and therefore lack the skills required to build systems and processes that consistently produce high-value property deals. By partnering with a sourcing agent, they’re able to leverage the agent’s education and expertise to secure property deals which they may otherwise be unable to access; such as off-market and direct-to-vendor opportunities.

• Area Knowledge – Finally, for some investors, partnering with a sourcing agent is simply about accessing different investment areas with the least amount of effort. Time is money, and some savvy investors would rather partner with a sourcing agent and pay a fee for each opportunity, than invest the time in travelling to and understanding a new town or city. By leveraging the expertise of a sourcing agent, investors are able to capitalise on the agent’s local knowledge & network.
Come back next month and I’ll go through the 1st of 5 easy steps on how to generate profits from sourcing property.

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