3 Going green: Why use gas when you can use air? With Brad McCouid

SOURCING FINDING AND SECURING THE BEST INVESTMENT FOR PROFIT PROPERTIES FOR YOUR BUSINESS

“Seek and ye shall find.” Unusual as it may be to quote Biblical texts in property circles (it’s from Matthew 7:7 in case you’re wondering), this one is particularly relevant to all of us involved in property investment and/or business.

Seeking and finding is more commonly referred to as sourcing in our industry. If we don’t source, we won’t get anywhere in property. End of.

While the above Sourcing for Profit title may prompt the thought of making a profit by sourcing property for others, it is intended in the broadest sense of the term. What does that mean? Well, I’d say there are two profit-making elements: 1. The afore-mentioned sourcing business, where you find properties and sell leads, deals and/or the properties themselves to clients for a fee. 2. Finding and securing properties for your own portfolio, with the aim of creating a profit either by buying at a discount to get built-in equity from day one, or by doing something to increase the property’s value after purchase – the “add value” model.

Many do both, sourcing properties for clients alongside building their own portfolio. If you choose to source for others though, be aware that regulations apply – see the YPN Says comment at the end of the feature for a summary. Back in my early days of property investing when I was new and green, I didn’t know how to find property apart from leafing through estate agents’ listings (believe me, this was way before Rightmove and all the other portals appeared on the scene). The notion of sourcing any other way felt like a black art or a magician’s secret circle. Members of the circle (I assumed) had access to a host of practices (rites even!) that the rest of us couldn’t hope to fathom.

I couldn’t have been more wrong, I’m happy to say. There’s no black art, no magician’s circle and no secret practices or rites. Sourcing is simply a matter of applying the best method of finding the properties that work well for your (or your client’s) investment model. It might be a bit confusing when you’ve only had experience of dealing with estate agents in the past, but you’ll soon get the hang of it.

In fact, many successful investors prefer to deal with agents as their main lead channel. By becoming a reliable buyer over a period of time, they build up a good relationship and level of trust with the agents in their area.

Other investors, and many who operate sourcing businesses, prefer to go directto-vendor. This involves marketing and advertising – there are lots of ways to reach your target sellers, including leaflet drops, local ads, online marketing and so on, though that’s a whole other feature in itself. In brief, you’re aiming to reach people who either don’t want to appoint an agent, or who need or want a fast and/or certain sale that you can fulfil. Yet others, often investors who have a demanding day job and very little time to search for deals, turn to sourcers to buy a ready-made packaged deal. For them, the sourcing fee is balanced against the cost of their time. If you choose this route, make sure you choose a reputable and compliant sourcer – again, refer to the compliance summary at the end of the feature.

Each method has its pluses and minuses, and the one(s) you adopt will be a combination of the way you like to work, the time and funds you have available, the type of properties you are looking for and what you find works well in your target area. In this feature, we talk to investors and sourcing business owners to get different perspectives on sourcing. As well as sharing their stories and case studies, they offer tips and information on how to buy well, working with letting agents to find rent-to-rent deals, establishing lead channels, and on operating as a business. I hope you will find some inspiration to get out there and search or to try a new sourcing method.

Because if ye don’t seek, ye won’t find! Happy hunting,