Property sourcing is the process by which property investment opportunities are found, negotiated, presented, and sold to Property Investors for a fee. Property sourcing involves strategic marketing and networking which gives you access to properties which are available. The properties will be on or off-market. The best investment opportunities come from off-market direct to vendor leads which come from a well-developed marketing plan. It is worth considering the properties on the market make up less than 20% of the UK market so there are plenty of property opportunities off-market.
A property sourcer’ s network is an area where properties are found. A property sourcer will have built up a network of contacts who bring properties to them that are suitable and have the potential to make money for investors.
Time and knowledge are key factors why Investors use property sourcing. They have the money to invest but do not have the time and some may not have the knowledge to find properties but they know it is one of the best asset classes for return of investment. The investor does not have to find the property, undertake the viewings, conduct the due diligence to work out ROI and go through the conveyancing process which all takes considerable time.
Most properties sourced will require some element of refurbishment or upgrading. This is another service which can be offered but will be dependent on the interest of the investor. This is a specialist matter so we will cover this in a future blog.
Due diligence is the major ingredient to the success of an investment opportunity. A good property sourcer will present the property investment with all the important elements of the investment. These are listed below although these are not exhaustive: –
- Property description
- Location
- Current market price
- Purchase Price (normally below market value)
- Acquisition costs
- Refurbishment Costs
- End Market Value
- Investment Required
- Return on Investment
When you engage with a property sourcer they will have an introductory meeting to go through what they can offer. If you are happy with their service offering, you will be asked to sign their terms of business and provide proof of funds. This is to show the sourcer you are a serious investor, and you will not be wasting their time. You will also need to pay the agreed sourcing fee. A professional property sourcer will require their fee paid upfront. Some investors will think they pay when deals are presented but they need to remember the value of a property sourcer is their marketing, networking, and the time it takes to find the properties and undertake the due diligence. This is the service for which they are paying. If a property sourcer works for no fee, then I would say they are either beginners or lack quality.
Once this is complete then the property sourcer should arrange a “Know Your Investor” meeting to go over and agree with the investor their investment criteria so they can find investments which suit their requirements.
Once the property sourcer finds they property investment and presents the opportunity and the investor wants to proceed then the property sourcer will arrange the conveyancing through to the completion of the purchase.
If you would like to know more about property sourcers or have any questions about how they can help you, then get in touch with a member of our team. We will be happy to help by talking you through the process and answering any questions you may have.