Being a finder / sourcing agent is one of the best ways to get started in property. The reason for this is two-fold:
- Firstly, you get to take a finder's fee. This fee is normally set by you and varies depending on the amount of work you have had to put in to the deal.
- Secondly, you are getting invaluable experience in learning how to analyse deals and put them together.
As a property finder you can charge anything £ 75 upwards from. A lot of property finders charge a flat fee between £ 1000 and £ 2,500. Others charge between 1% – 2% of the price of the property. As you can imagine, this can be quite lucrative if the property is worth £ 750,000.
Most property finders would consider being flexible with the fee, depending on the sort of service they had to provide. For instance, they would charge you more if they had to source a property and find out how much work was needed to renovate / refurbish it, go out and get quotes from builders and then negotiate a suitable discount for you, than if they just went out and found a property below market value in an area of your choice.
The fantastic thing about being a property finder is that, as a beginner, you do not really need any start up capital and you are learning all the time about how to analyse and put deals together. You will be sourcing for investors, so you will learn very quickly about the criteria they use, and, because they are most likely successful themselves, you will be able to analyse their buying criteria and use them as potential criteria for the properties you plan to buy in the future for yourself.
By sourcing for investors, in the beginning especially, you will be bringing deals to them that they will reject. But they will normally tell you exactly why they are rejecting them, so that you will not be bringing them the same deals again. Hence, there is probably no quicker or better way for you to learn about what deals are profitable and why, and what deals look good on the surface, but once you dig deeper are better avoided.
There are two potential ways to set yourself up as a property finder:
- Just start looking out for potentially profitable properties that you think investors or developers will be interested in. Once you find them, do your homework on them, and analyse the deal as if you were going to buy it yourself. So this includes details of the local community, any regeneration planned for the area, shops and transport links, crime, rental prices etc. You are going to be approaching professional investors, so they are going to want to know all the in and outs. Once you have got all the relevant information, try to contact investors and say you have a potentially very profitable deal. The best way of contacting investors is by posting messages on property forum pages, and by meeting them at property clubs and networking events. If you have done your homework correctly and have a good deal, you should not find it very hard to find investors willing to consider the deal you are offering.
- The other alternative is to post messages on property forum or chat pages, and network with property investors, telling them that you are a property finder and finding out what their individual criteria are. You need to get as much information as possible from them, build up a database of each investor and their specific criteria and strategy and then source property according to their specific needs. If you do this well, they will find it difficult to resist the deals you put before them, because you will only put deals before them that you already know match their strategy.
One thing to keep in mind as a property finder, especially as a beginner, is that it's a lot easier to source property near where you live. So, if it is possible for you to come up with profitable deals near where you live, do that as your first priority. But if you are struggling to make the figures add up for Buy to Let near your home, you might have to look further a field: some times much further a field.
But do not forget that, just because the figures do not add up on a Buy to Let basis, does not mean that they will not add up for a developer that just wants to buy a property do it up and sell straight on. So do not write off the area you live in straight away, because, no matter where you live, there are bound to be a few really good quick flip (buy, do up and sell straight on) opportunities that come up from time to time.
Being a finder goes hand in hand with contract trading, where you can make thousands of pounds from property without every really owning it. So, if you fancy making money from property, but you do not really want to be an investor or developer, you could consider one or both of these ways to make money. You would need to become fairly skilled at either of them and be able to access the property market well, but there is potential there to start up a business as a property sourcer / finder and have regular clients who would normally be investors or developers. You would know their buying strategy inside out, know exactly what they are looking for and just go out and find these properties for them. In the short term this is definitely something you could do in addition to your normal daytime job.