If you are new to investing, looking to buy properties in an area you aren’t familiar with or just can’t find deals that stack up for your investors due to the current market conditions and difficult agents; then you have probably thought about using a deal sourcer.
Taking advantage of a professional’s experience and their relationships with agents, tradespeople and local area knowledge can be invaluable if you are looking to grow your portfolio. You will pay a sourcing fee for buying a deal from them, which is a small price to pay for leveraging their time and knowledge of an area and in turn avoiding buying a bad deal.
What should I be aware of?
You must do your due diligence. A lot of newbies to investing start with deal sourcing as it can be a good way to build an income without a significant upfront cost. You need to ask all the right questions in order to establish trust and build a relationship.
Also, deal sourcers must be registered with HMRC as an Estate Agent, with the ICO to comply with GDPR and with a property redress scheme to comply with the law. Ask for a sourcers credentials and if they don’t have them, you should walk away.
A good deal sourcer will want to build long term lasting relationships with investors so make sure you take the time to understand each other’s goals to see if you are in alignment. You will want to make sure that they are running a professional business and they are active in the market and the area you are looking to invest.
How does it work?
After making contact, we would advise that you have a meeting, which now that we all know how to use Zoom has made that easier to do and less formal.
If you think that you would like to work with a sourcer, you will be added to their investor database and will receive any deals they have secured; these could either by through an agent or off-market direct to vendor.
Normally at this point you will be asked to sign a Non-Circumvention Agreement (NCA) that protects the sourcer’s deal. At this stage, if you wish to, you should be able to arrange to view the property for yourself and make sure all the numbers add up, particularly the expected refurbishment costs.
If you wish to purchase the deal, normally you would pay an upfront consideration or deposit so that the sourcer knows you are committed and makes it unavailable to other investors. The remainder of the fee would then be paid upon completion of contracts.
Do deal sourcers do anything else?
Not all sourcers provide the same offer so you will need to establish this in your first meeting, or even before you agree to meet.
We can provide a full deal packaging service which includes the use of our power team of legal professionals, property finance experts, tradespeople and build team and our own lettings service to find and manage a property for you once its ready to tenant.
Anything else?
If you are looking at investing in property in the North West and would like to find out more, please contact us at hello@northwestpropertyinvestments.com to arrange an informal chat.
댓글