Today, property investing is a popular interest among different people but not everyone has the finances to do it. Bad credit scores, bank loan denial, insufficient personal funds are the main reasons why people give up on investing. You don’t have to give up but first, can I tell you the great news? It’s possible to invest in property without spending a single cent of your own money. Yes, you heard me right, and one way to do this is through sourcing deals. Let’s look at effective ways to source deals and raise capital to invest in property.
What does sourcing property deals mean?
Sourcing means obtaining something or information about something from a specific source. In property, sourcing deals entails finding and presenting profitable opportunities to other investors with access to finances. Although there’s always numerous properties listed, finding the right one takes time, skill and commitment. When you source deals for other investors, you need to be on the ground finding properties that will interest and profit them. You also need the time to find properties worth sourcing. However, if you’re tight on time you can still source profitable deals by planning your time strategically.
Finding the right properties
Some people enjoy searching for properties online while others want to view them physically. You need to strike a balance between the two, especially when you are finding deals for other investors. Searching for property online exposes you to properties available in the market. Physical viewings, on the other hand, provide a full experience of the conditions of the properties and their sellers. Here are steps to follow to ensure you get the right properties you can source:
- Go online and search for houses that are on-sale and the areas they’re in
- Check the trends and statistical information about properties in those areas
- Choose areas where there’s been growth over the years and months
- Zoom into each area of interest and potential by physically visiting the area, checking other properties, speaking with estate agents etc.
Zooming into an area is helpful in terms of getting as much information as possible. You’ll need this information to decide whether or not to continue looking for investments in a certain area.
Running the numbers
Investors want to make and save money where they can. So, you must make sure that the deals you present to them are profitable. Properties that are sold below market value or at auctions appeal to investors. With such, there’s room to negotiate and increase the purchase value and the profit potential is great. However, when doing your calculations do take into account all the associated costs of each property. These are the major costs you need to calculate: rates and taxes, water, refurbishments, insurance, security or levies, electricity etc. Calculating these costs is important because the investors’ profits and your sourcing fee are directly impacted by them. Of course, there are other costs to consider with auction homes, such as the 10% deposit.
Establishing a sourcing fee
Now that we’ve covered what you need to do to source profitable deals, you also need to consider your rate. At Riches and Beyond, we recommend charging a 5%-10% sourcing fee which can always be negotiated with investors. For example, if you source 3 or 4 deals to one investor then they may agree to pay you 7% for each instead of 10%. Also, bear in mind that ‘he who has the gold makes the rules.’ Though you shouldn’t accept being underpaid, you might need to adjust your fee slightly. Remember that the more property deals you source to investors, the more capital you can raise to invest, pay off debts or make a living.
Pitching deals to investors
Among the entrepreneurial skills needed to thrive, you’ll want to add business pitching to the list. There’s two ways to present deals – the right or wrong way. Finding the right deal is one part and pitching correctly is the other. Pitching in business involves presenting an idea or proposal to investors or customers with the aim of getting monetary rewards. When pitching property deals, consider the following:
- All humans (including investors) categorize people mentally upon meeting them irrespective of their ideas – we all make and leave an impression
- Be creative by getting investors to contribute in your pitch and let them shine by picking on their knowledge
- Strike a balance between expressing technical knowledge and being captivating (by raising something familiar)
- Be presentable and radiate confidence since you’ve done research to back your presentation
- Be flexible in case you need to adjust or improvise your pitch
Raising capital to invest
Everything that has been mentioned so far has led to this point – being able to invest in property even without having the finances to do so. Sourcing deals to investors as a way of raising funds to invest in property is powerful. Firstly, you need to establish how you’ll use the money you make from sourcing and set goals for yourself. Maybe you’ll pay off all your debt at first or immediately save up to buy an investment property. Whatever you choose, ensure that you have short, medium and long-term goals. Keep your goals in sight to maintain focus when the money comes in. Depending on your time and resources, you can at least find 1 deal to source each week.
How do you find investors? By attending seminars, webinars and networking events to meet potential investors. There’s a high probability that the people you interact with, in such communities, will invest or advise you because you’re like-minded.
Ready to take action?
Even though the application of knowledge is power, your chances of succeeding are much higher by just having knowledge. We have a network of interesting people you can interact with and valuable information about property investing. As you’ve read, property investing is possible even if finances are tight.
So, join us today. Register for our FREE property investment webinar and let our experts teach you about multiple ways of investing in property without using your own money and more.