In this blog, I will describe what Deal Sourcing is, how it differs from Property Flipping, along with the pros and cons of Deal Sourcing.
So, let’s get to it!
Deal Sourcing involves finding a good property, negotiating its price with the owner, and then passing the deal on to an investor that may be willing to purchase that property for a commission.
Property Flipper vs. Property Sourcer
Property flippers are very different from property sourcers.
Property flippers buy a property, invest in it to make it better, and then sell it off to somebody—they ‘flip’ it on to somebody else.
Property sourcers, or deal packagers, or deal sourcers all mean the same thing.
Deal sourcing means that you find a deal for a property—you don’t buy it—you find a set price for the property, you negotiate it, and you pass it on to someone interested in the deal for a fit. Therefore, you act as a broker in the process.
The Pros Of Deal Sourcing
There are various pros of being a deal sourcer. These are:
Deal Sourcing Has Less Risk
The risks associated with buying a property is that you can't rent it out; it goes down in value over the years, the tenants can trash the property, etc.
The only risk with deal sourcing is that maybe you won't be able to sleep properly for a couple of nights passing on a bad property, which is also in the worst-case scenario. However, financially speaking, you will have ZERO risks.
It Is Very Lucrative
I'm talking about VERY lucrative. When you find a deal and pass it on to an investor, they may pay you as much as two to five thousand pounds!
Now, you may be wondering why on earth someone would want to pay you thousands of pounds for finding a property. Well, the truth is, the most expensive and valuable thing you may ever buy in your life is your house. It may be followed by a wedding, your child’s education, your car, etc. but the most expensive thing will be your home.
Consider this; if somebody suggests us a good restaurant; someplace we can have a great time with our loved ones and have fantastic food and drinks, and where we may spend a couple of hundred pounds, it is only our etiquette that we give the person who suggested us the restaurant a couple of pounds as a gesture of thanks or a tip.
Deal sourcing works in quite similar ways. When a deal sourcer suggests you a great deal for a house where you'll spend most of your time for many, many years with your loved ones, and for which you are willing to pay fifty thousand pounds or five hundred thousand pounds, you are likely to give the deal sourcer a couple of thousand pounds for the deal, as they are not only suggesting you the deal but have already negotiated the sale to a great price!
Find The Best Deals
Another great thing about being a deal sourcer is that you will find some of the best deals in town! Imagine finding a great property for two grand and knocking down the price to a hundred and fifty grand, and keeping five grand for yourself. Now, during your deals, you may find a house for a great deal and may think of keeping it for yourself! You may need a group of investors to pitch in, but that’s beside the point. You get to keep a beautiful house for yourself and that too for a very, very good deal.
The Not-So-Great Things About Being A Deal Sourcer
Here are a few cons of being a deal sourcer:
It Has A Lot Of Responsibility
Deal sourcing comes with a lot of responsibility. You’re finding properties, negotiating the price, and suggesting them to investors; that is naturally a job filled with responsibility.
However, to always have the upper hand at this, I suggest you:
· Get educated in the field, learn about the market, and do your research.
· Maintain the terms and conditions of your own for your investors. They should know that even though you are suggesting a property, it is not your responsibility forever and ever. They have to do their research as well.
It Is Not Passive
Another con of deal sourcing is that it won’t give you a passive income. For example, if you rent out a property, you will get a monthly rent on it—a passive income. On the other hand, in deal sourcing, you have to continuously work to generate income.
That being said, you can use the income generated in deal sourcing to invest in something that may give you a passive income. Therefore, even though deal sourcing may not be a passive-income-generating job, it is a massive-income-generating job. You can get hefty amounts of money by closing a deal in one week or so that will get you all set for the month.
There are many people out there who call themselves deal sourcers but haven't closed a single deal. These people spam Facebook groups and even ruin deals for their investors. Because of these incompetent people, deal sourcers face a bad reputation.
However, there are deal sourcers who have learned how to do it step-by-step, and are experts at their work, and have a good network of investors. When you get in the field, you would have to fight the bad rep and work your way towards a lucrative career.
A Final Word
Deal sourcing is a highly lucrative career when done properly. If you want to learn the step-by-step procedures of deal sourcing and how you can create a good network of investors, you can sign up for my free webinar at www.property-investors.co.uk/s
Moreover, subscribe to my YouTube channel https://www.youtube.com/Samuel