How To Get Started Deal Sourcing and Packaging

Deal sourcing and packaging can be a very effective way of capitalising on your property skills and generating extra profits. Here are some tips on how to get started as a professional deal sourcer or packager.

What is a deal sourcer?

In simple terms a deal sourcer or packager finds property deals or investments for investors to buy in return for a financial reward.

Why do deal sourcing?

Many individuals or companies are interested in investing in property – and have the money to do so – but lack the know-how or time to find and put together their own deals. The deal sourcer or packager offers this as a professional service.

If you are involved in property yourself it is likely that you will not have the time and resources to pursue all the property projects you find out about. Doing deal sourcing and packaging means you can still benefit from these projects by passing them on to other investors.

Ways to work as a deal sourcer

You can either simply find deals and pass them on to your client, which is deal sourcing. Or you can work as a deal packager and bundle together all the services and processes that are needed to make the project happen. For example: Making an offer/negotiating. Organising finance. Organising renovation or refurbishment where needed. Selling or letting the finished property.

There is no single way to charge for your service as deal sourcer or packager. You can work in any way that suits both yourself and your clients. You might charge a flat fee. You might charge a commission based on the final value of the project. Alternatively you could operate projects as a joint venture with your clients.

How to get started as a deal sourcer

Be aware of the legal issues

If you are acting as a property agent when sourcing deals you’ll need to abide by similar rules to those which apply to estate agents.

You may need to participate in an official redress scheme, such as the PRS or The Property Ombudsman. You may need to register with an anti-money laundering or AML scheme or with HMRC. It may also be advisable to have professional indemnity insurance.

Decide what type of deals you will offer

Tip. If possible aim to specialise in a type of project in which you have experience and a track record.

You can source or package deals for:

Build useful contacts

Get to know other property professionals who can help you to package deals for your clients. For example: Surveyors who can value and survey properties. Finance brokers who can offer bridging finance and mortgages to your clients. Solicitors who can advise on legal issues and carry out conveyancing efficiently. Builders who can carry out repairs or refurbishments. Letting agents who can advise on asking rents/letting potential, and find tenants for buy to lets.

Do marketing to find clients

You could advertise your services as a deal sourcer and packager both offline in newspapers/magazines and online using a website, blog and social media.

Networking is another way to find clients. For example, by joining clubs and associations, joining property meets and landlord groups or participating in online forums aimed at investors.

Stress the benefits to the client of using a deal sourcer and packager. That is, that you can find them better deals than they can find themselves, save them time and make them more money.

Get to know your clients’ requirements

This will help you source and package the very best deals. For example, what is their investment budget? What type of project/areas do they prefer, if any? Are they investing for income or for growth? What is their investment timescale, eg. 1, 5, 10 or 20 years?

Tip. Aim to build a long term relationship with clients. That is, clients who will take your deals on a regular basis, rather than just one off deals.

Carry out extensive research and due diligence

Research and collect information which shows clients what they are investing in, what they will need to invest, what the project will involve and what return they can anticipate. This not only shows that you are professional but helps add maximum value to your service.

PaTMa Property Prospector is an invaluable tool for professional deal sourcers and packagers. Amongst other things Property Prospector can: Indicate where the best yields are to be had from around the country. Help you find properties for sale. Show properties that have recently been reduced and which could be bargains. Help with research on local market values. Help with local area research.

Most important of all, Property Prospector can analyse the financials behind any prospective property project. It can help you estimate all costs including fees, taxes and finance costs. It can project likely yields, profits and ROI.

Property Prospector also enables you to automatically prepare an extensive professional report, in PDF format, providing your clients with all the information they need on a prospective deal.

Explore extra income opportunities

As well as sourcing and packaging deals you might also offer to manage buy to lets or HMOs which you source for a client. This could generate a regular income in addition to your deal sourcing or packaging fee. This could be a good option if you are already managing your own or other clients’ properties.

PaTMa’s Property Manager is an invaluable tool that helps makes property management easier, quicker and more efficient.

Example: Deal sourcing

You have a client who wants to invest up to £200,000 (cash plus mortgage) in high-yielding buy to lets (8%+) within a given postcode area. You search property for sale listings using PaTMa’s free browser plug-in to find properties which fit the criteria, then prepare a report on each of them using PaTMa Property Prospector.

Example: Deal packaging

You have a client who wants to invest up to £300,000 in buy, refurbish, refinance, rent projects which will produce a capital gain of £30,000 minimum for each project. You find such properties, estimate costs and returns utilising advice from surveyors, builders, finance brokers and estate agents. With the assistance of PaTMa Property Manager you show your client how the required return can be achieved and what needs to be done to achieve it.