The Goliath Sourcing Academy is the podcast for everyone who is into property investing. Listen to Mark Dunsmore as he talks about a variety of different property sourcing related strategies, tactics, hints and tips. We go deep into various innovative and advanced strategies for sourcing better and more property deals.
When going direct to vendor should we be sending letters to vendors where on the portal its says ‘sold stc’ ie. sending in quantity to every vendor we can get to? Or should we be picking and choosing who we send letters to? So in essence ‘cast the net wide and catch what gets caught, or go fishing with a rod and wait’ – Saj Altaf
Sourcing With Mark:
Mark has recently noticed a number of deals from ‘reputable’ property deal sourcers that just don’t stack up. Surprisingly (or not!) many are from sourcers who actually train others which is the main impetus behind this Sourcing With Mark. Mark goes into the basics of what needs checking before any deal is bought from a sourcer and also what level of work should be expected from that sourcer to justify their fee.
In The Lab With Brad:
Recent ground breaking events in property circles have really highlighted the power of personal online branding. The property developer Nicole Bremner crowdfunded a recent development deal to the tune of £1m in under 24 hours from 28 individual investors. How was she able to attract 28 investors and fund the deal in such a short space of time? A VERY strong personal brand, that’s how. In this In The Lab with Brad, Brad he outlines the power of a personal online brand and how it can supercharge your progress as a property professional.
Get the free resources mentioned in this show at http://goliathsourcingacademy.com/session18
“Sourcing With Mark” – How To Appraise For Sale And How To Appraise For Rental Videos + Paperwork Required To Secure A Deal From A Sourcer
“In The Lab With Brad” – Nothing!
Full transcript available for download at http://goliathsourcingacademy.com/session18
12:29 Facebook Q&A
13:10 Marketing Budget
14:26 Identify a Strategy
17:04 Follow Up
19:00 – Sourcing With Mark – Working With Sourcers; The Good, the bad and the ugly
22:02 – Incorrect market appraisals
22:15 – Rental Valuations
23:10 – Local Knowledge
24:11 – Has the deal been secured?
25:01 – Do your own due diligence
26:05 – Legislation
28:20 – Direct to Seller
29:12 – Paperwork
29:38 – High Fees
39:20 – In The Lab With Brad – How to build your online personal property professional’s brand
42:30 – Attracting Partners
43:35 – Personal Online Presence
45:19 – What does Google show?
Mark has recently noticed a number of deals from ‘reputable’ property deal sourcers that just don’t stack up. Surprisingly (or not!) many are from sourcers who actually train others which is the main impetus behind this Sourcing With Mark. Mark goes into the basics of what needs checking before any deal is bought from a sourcer and also what level of work should be expected from that sourcer to justify their fee. You’ll learn:
Recent ground breaking events in property circles have really highlighted the power of personal online branding. The property developer Nicole Bremner crowdfunded a recent development deal to the tune of £1m in under 24 hours from 28 individual investors. How was she able to attract 28 investors and fund the deal in such a short space of time? A VERY strong personal brand, that’s how. In this In The Lab with Brad, Brad outlines the power of a personal online brand and how it can supercharge your progress as a property professional. You’ll learn:
So, this week’s Q and A. Saj Altaf from the InsidersCircle Group has asked ‘When people are going direct to vendor are people sending to vendors where the portal says sold subject to contract? i.e. are they sending in quantity to every vendor they can to get the basic analysis done or are they picking and choosing who they send letters to? In essence, cast the net wide and catch what gets caught? Or go fishing with a rod and wait?’
We thought this was a very good analogy. Yeah, I like it. That’s something Brad will probably use again.
When you first start sourcing one of the main barriers to getting going, is your marketing budget. So a lot of people explain how sourcing is this great way of getting big deposits built up for houses and you can make £2000 – £5000 a deal. But what they don’t tell you is that to get to that you’re going to have to spend some money on marketing.
Now if you simply sent letters out to every single property on the market in your area or you bought 50,000 leaflets or whatever it is, the reality is you want to know that the marketing spend that you have is going to give you the best chance of results. And ultimately, results are the phone ringing with a vendor or landlords asking about what you do, how you can help them, how can you solve their problem.
So with this particular question, with Saj’s question, the main thing with direct mail and portal scraping (which is the term that we use for it), we want to be targeting properties that are specifically related to what we are looking to achieve. As part of your sourcing set up, part of what you should do when you start sourcing is identify a strategy that you’re going to source for. Then for that strategy that you’re going to source for, you’re going to need to identify an area in the town that you are sourcing, which is perfect for that strategy.
For example, if you’re looking for HMOs you’re going to be looking in an area where there’s high room demands, there’s going to be a high demand for the rooms that you’re going to let out. That’s going to limit you to the areas that you can target, therefore you know that certain areas in your town are perfect for HMOs and that’s where you’re going to go after. So, already what we’ve done is we’re limiting down the properties that you’re going to look for.
You’ve then got a budget, so you’re going to narrow it down by budget, so you can spend up to x amount on the property in order to achieve the yields that you are going to get. The yields based on what rental you can estimate you’re going to generate on a room-by-room basis.
We’re just narrowing that list down. Then what we’re going to do is to that list is we’re going to write a letter specifically targeting the pain that we think that landlords, or the landlord in this example, is experiencing. So HMOs – are you experiencing increased void periods? Have you experienced increased maintenance? Are you experiencing a reduction in rent? Would you be interested in a guaranteed rental?
All these things are part of the message that you send to that very targeted list. So of course a highly targeted list, with a highly targeted message is going to get you the best chance of results. And already people have seen this work. There was a post in the Facebook group where someone had sent out some letters and got a very good response back just from literally sending a handful of letters to a highly targeted list. But the message was right (a letter from the 20 Ways course may we add) and she got results.
I think there were about eight people that responded which is great because you’re not always going to convert them on the first phone call.
But the point is once they communicate with you, once they contact you, you are now in contact with them. And remember those of you that are avid listeners to the podcast and followers of the Goliath method, we are all about follow up. The deals will come with your follow up not with the initial contact. The initial contact is where we information gather.
Get all the relevant contact details, so that they can then go into a follow up process in order to achieve the best results. So, I hope that answers the question, Saj.
It’s all about highly targeted letters, with a highly targeted message, to a highly targeted list and then get them to contact you.
Explain the offering, extend the service, get their contact details most importantly and then work them into the follow up. Depending on the strategy you are sourcing for great stuff.
Excellent. Thank you Saj for that question. If anybody listening has a question please do post it in the Facebook group.
Just go to GoliathFBgroup.com. That’s a direct link, which sends you through to the free Goliath Sourcing Academy Facebook group. Join up there, join in on the conversations. I think we think we are touching nearly 2000 members in there.
So, there’s lots of great conversations going on in there and you know, post a question in there and it may be on the next podcast!
Hi everyone and welcome to this session of Sourcing with Mark.
This week’s session is about buying property deals from sourcers. Recently, I’ve come across a number of property deals on the forums and the Facebook group threads and the deals just don’t stack up. They are so far off being a deal. It’s embarrassing to know that these people are calling themselves property sourcers and deal packagers.
Now what’s even more concerning is that there are people advertising deals out there who actually train property sourcers. So there’s not much hope when the people who are training deal sourcers are not able to get the basics of deal sourcing right. It’s quite embarrassing to be perfectly honest. What I wanted to do in this week’s Sourcing With Mark is run through how to work with a deal sourcer.
So we’re going to go into the basic information of what you need to check as an investor before you buy any deals, so things such as market values etc. Then what we’re also going to do, is go into the sorts of questions you need to be asking the property deal sourcer/deal packager, whatever they want to call themselves, in order to make sure that they are legally able to package and sell that deal.
Because actually there are some requirements of a deal sourcer before they can package and sell deals for a fee and that’s not a minimum amount. Even if they only ever package one deal, they still have to be registered with all the things I’m going to go into later on in this segment.
But before we do that what I want to do is just quickly run through some of the main mistakes that I have found when I’ve been looking through the deal threads out there so that you can look for these as well.
Then what I’m going to do is run through what you need to do to check both the deal and also the deal sourcer. And then I’ll let you know what the content upgrade is this week, which is a triple whammy. So you’ll get a triple whammy of content because I really do feel passionate about this. There are sourcers out there giving us ethical, good deal sourcers a bad name. And we just need to make sure that we’re doing all the checks that we can do first and before really wasting time on deals that aren’t deals.
So first of all the biggest mistakes I’ve encountered:
Now a deal recently that I saw from a reputable sourcer (I use that term in lightly inverted commas, whatever it is I’m doing the fingers in the air as we speak) and this deal was advertised at 15 percent over. So the offer that had been agreed with the seller was 15 percent over actual market value. So he’s trying to package a deal up that is over the actual market value of the property but you can imagine my disgust when I saw this in a forum, it’s absolutely terrible.
The other thing is rental valuations. I have seen so many rental valuations over-egging what they think they’re going to achieve and they’re just nowhere near. Of course rental valuations, if you don’t know how to work these out for yourself you can end up buying a deal that looks good on the surface, looks great on the numbers that you’ve had presented to you. Unfortunately a survey is not going to come back and give you a rental appraisal so you’re going to take deals on face value of what you’re going to achieve in rent.
Suddenly you try and rent that property out and agent comes along and tells you there’s no way you’re ever going to achieve close to this. Your gross yields are all off and you’ve just suddenly found yourself with a dud property. So rental valuations are a really, really important element of deal sourcing.
And the other thing is local knowledge. Now there are a number of sourcers, ourselves included who source properties all over the UK. So we cover the whole of the UK but one of the most important parts of the process is our area research. We need to know the areas of a town or a city where there are good rentals, bad rentals, the demographics. Is it white collar workers? Blue collar workers? Is it LHA? Is it a good multi-let area? All these areas of research are essential to assessing if it is a good deal or not so there’s a website called streetcheck.co.uk. And you can go on there and just have a look and see the homeownership statuses of the postcode area, the employment status. All this sort of thing is really important to gauge an area for the type of property that you’re going to buy. These are really, really important things.
And of course the other thing when you’re buying a deal from a deal sourcer is, has that deal actually been secured? Has that been secured with the right paperwork? So whether it’s a lease option, whether it’s an outright purchase, has that sourcer got the right paperwork in place in order to avoid you getting gazumped, or the seller pulling out the last minute or terms changing last minute? These are all really important things to bear in mind. The list goes on but I’ve only got 10 minutes in this episode of Sourcing With Mark. We’re already six minutes in, so I’m just going to wade through the rest and obviously get to the Facebook group if you’ve got more questions.
We’re always happy to get to advise investors and help you make sure you don’t get stung. So the other really important things to consider when you’re sourcing deals through property sourcers:
An investor that doesn’t carry out their own due diligence on deals is really crazy. Even with us as reputable sourcers, we would always recommend that you do your own due diligence just to double check and make sure you’re comfortable with the numbers that we have presented to you.
It’s really important to do your own due diligence and we are going to help you with that. So as an investor the main things you want to be checking are, as I mentioned above the sales valuation the rental valuation and the area research. Now it’s not an exact science.
What we’re going to do is give you the basics of the content upgrade. Sorry I’m speaking really fast this time but I know we’re running out of time so the content upgrade in this session is a video on how to do a sales valuation and a video on how to do a rental valuation or appraisals. So those are two of the three. I’ll come on to the third content upgrade in a bit.
And now the other thing is you’ve got to make sure property sourcers comply with certain legislation. We are considered as estate agents and that means we need to comply with certain legislation. Things such as property miss-descriptions, we’ve got to comply with ombudsman membership, we’ve got to be registered with the ICAO for data protection.
We’ve got to have the relevant insurances; professional indemnity, public liability. We’ve got to be registered with HMRC for anti money laundering regulations, so all of these things are really, really important parts of being a deal sourcer.
But not only are they important, they are legally required. So if the property sourcer is not all of what I have just mentioned they cannot package and sell a deal to you for a fee legally. Most importantly, if anything was to go wrong with that deal and you wanted a recourse, so you can go back and challenge things like the numbers or if the deal didn’t stack the way that that was promised or there’s an issue with how the sale was progressed you can go back to the ombudsman. Now of course if there is no ombudsman membership then they’re not going to be able to step in which means that you can still go to court. But of course that becomes incredibly costly and it takes a lot of time. So the really important things to remember are membership of ombudsman schemes, data protection, money laundering, insurances and property miss-descriptions.
So that’s really important about the sourcer themselves. But then when it comes to the deal, what we want to do is make sure that the sourcer is direct to seller or direct to the agent. If the source is not direct to seller it’s not a bad thing, it’s not a deal breaker.
What you’ve got to bear in mind is that the more people that are involved in a deal, the more likely there will be issues that are going to arise. And if issues arise there’s going to be complications. If there’s complications, the deal might not go over the line. If the deal doesn’t go over the line you’re going to waste a lot of time trying to get it closed and you’re going to waste a lot time. You’re not going to get a deal at the end of it and you could incur legal expenses. So the reality is that the closer that sourcer is to the source of the deal i.e. the seller or the agent, the better.
Obviously if there are multiple parties we just need to make sure that there aren’t lots and lots or that the deal isn’t being plastered all over the Internet either, because again you could just get gazumped to the last minute.
And one really big thing is making sure that that deal has been secured properly. Now what I mean by secured is that the correct paperwork has been used direct to that seller in order to commit that seller to the transaction the sourcer has agreed.
It’s a big, big topic and one that I’ve commented in on Facebook groups recently about. So part of the content upgrade this week is an extract from one of my posts, which just tells you the different types of paperwork that are required for the relevant strategy types. It just gives you a heads up again to know what sort of paperwork to expect and so forth.
The last thing I want to go into, which is it a topic that I’ve come across a couple of times is actually sourcers can charge what would seem very high fees. So our average fee is between £3500 and £4500. But what we do for that is we merit that, we justify that in the work that we put into each deal.
So sourcing fees, if the sourcer is progressing your deal from start to finish, they’re involved with chasing solicitors, they’re involved with getting surveys done, they’re involved with the process for getting planning sorted for change of use for HMOs. All of these things that the property sourcer does in order to get the deal from start to finish is what justifies their fee.
Now there are sourcers out there who simply pass a lead on to you. If a sourcer passes a lead on to you and you then you do all the leg work, you do all the negotiating, you do all the conversation between all the progression and all of that. Then as far as I’m concerned that’s not a package deal, that is an introduction and the fee should relate to what level of involvement there is.
So an introduction or a finder’s fee in effect that would be low. That might be £1000 it might be £500. But for a sourcer that fully packages and sells that deal and progresses it right through to completion, the same as you should as a property sourcing business, they justify the full fee. And you will see why and because there’s a lot of things that can go wrong and a property sourcer’s job is to make that experience as pleasant for you as the investor as possible, while we’re there being the duck’s legs under water, frantically getting everything sorted so that you can get that deal over the line.
I’ve gone over my 10 minutes I’m actually at 12 and a half now, so I am sorry for dragging this on but it’s something I really feel passionate about and there’s a lot to consider when buying the deals from property sourcers.
So just remember all the key points that I’ve gone through today. The content upgrades are going to be the sales appraisal and the rental appraisal and the paperwork needed for any different deal types.
There are a lot of property sourcers being churned out of two-day training events and then they’re going out there and packaging and selling deals with very little experience and very little property experience, which can leave the seller and you the investor burnt if the right due diligence isn’t done. So hopefully this goes a little way to helping you get the first bits done; make sure the sourcer is correctly regulated and registered with all relevant places, that they’re doing the valuations the appraisals correctly and you know the right paperwork to use and hopefully that gives you a good start.
But as always if you are interested in finding out more, if you need more help or you want to check over some documents or paperwork from a deal that you’re looking at, feel free to drop comments in the Facebook group. As always, I hope that’s been useful and happy sourcing.
Hello and welcome to In The lab With Brad. This episode is on how to build your online personal property professional’s brand. Now this is the first of what is likely to be a two part, possibly a three part, on how to build your personal property professional brand. So, why this topic, and why now? Well the whole area of personal branding is something that has always really interested me. Recent events that I’ve been following in property circles have highlighted the power of what a personal brand can do for your success. And it sparked my motivation to cover the topic in this podcast.
Now the recent event that I am referring to is the property developer Nicole Bremner raising one million pounds for a development opportunity in Hoxston in London. Raising a million from investors is not that unusual but the way that she did it I think broke some new ground. The opportunity was listed on a crowdfunding website and that one million pounds was raised in what I think was actually under 24 hours and that one million came from 28 investors, the crowd.
So how did she do it? Well she built a very strong personal brand. She had built her reputation and what I call know, like and trust in an audience of people who were looking to invest their money in the high returning property deal opportunity. So when the time came and she presented the opportunity to them, they jumped at the chance to invest. Now I think it’s important to understand that they were not just investing in the deal but they were investing their trust in her.
Many of these investors may have never even met her but she had built her personal brand to the extent that they trusted her enough to hand over their hard earned cash. Now it used to be that in order to build a personal brand like this you would have needed to spend big money on PR agent maybe in getting out onto the speaking circuit, that type of thing. It’s become so much easier to get your message out online, anyone can build a personal brand.
But why bother building a personal brand? Well we increasingly live in what is really called a peer-to-peer world. People want to deal with people rather than companies. There’s no better way to gain a competitive advantage or get industry recognition and enhance your credibility within your niche than building a personal brand. There is no other industry I’ve ever worked in, or that I know of, that is more peer-to-peer than property. Building relationships is everything.
Now the explosive growth of property networking events and the massively high engagement levels in Facebook groups really demonstrates this. So let’s drill down and see how building an online personal brand can help you as someone making their way in property.
Well one of the most obvious benefits of having a strong personal brand is your increased ability to attract JV partners or joint venture partners. Now imagine a scenario where you found a deal but you need cash to make it happen. The traditional way to attract partners would be to spend evenings at networking events meeting people then maybe you get their card and you follow up with a coffee meeting.
Let’s jump ahead to that actual coffee meeting. Think about what is actually going on in a situation like that. Yes you are getting to know each other on that meeting and see if there’s some sort of rapport there. But the bottom line is that the investor is trying to suss out whether you have enough experience and you know your onions enough to trust you with his money.
There’s a lot to achieve in an hour’s coffee meeting. What happens if they do all the talking? You may only have 20 minutes to communicate your experience, knowledge and understanding if that’s the case. Now we’re not saying that you shouldn’t go to networking events or meet people for coffee, far from it. In fact, what I am saying is that by building a personal brand you can leverage yourself. You can get your message out to a lot more people online than you can offline.
Imagine you had a really solid personal online presence. I don’t just mean having a Facebook profile or a LinkedIn profile. I mean that you had some solid content online that you created and that clearly demonstrated that you were an expert authority in your field.
Now let’s go back to that networking event scenario that I’ve just mentioned. Let’s say you meet an investor and you chat. You give them your business card, on your card you have your website address and you tell them to go and check out your website where they’ll find a detailed case study about a project you worked on where the investor received a 25 percent return on investment. When you now meet for that coffee they will have read that case study.
So before you’ve even sat down and uttered a word to each other you’ve already got some authority in their eyes within your own niche. In other words, due to your strong online brand presence you’re in a way better position than you would have been without it.
Let me just take one more example, as I really want to get you to understand how powerful an online personal brand can be for you. So let’s say that you’re looking to source a deal and you’re sending direct mail letters. On the letter it’s likely that you’ll sign off with your name or at least you should sign off with your name on that letter.
Now it’s highly likely that anyone who responds to that letter is going to Google your name. What do you want them to find? Well what you don’t want them to find pictures of you at Ritzy nightclub downing tequilas. That sounds obvious but you’ll be surprised the number of people that I speak with who just don’t know what comes up when they Google their name.
What you do want them to find is top notch content showcasing your expertise and experience in helping homeowners sell their property. Now imagine a scenario where that homeowner receives three letters all with offers of help to sell their home. They Google each of the sender’s names. The search results for the first to return nothing that gives them any reason to believe that those sourcers could help them. Whereas your search results fill them with the confidence they need that compels them to pick up the phone and call you. That’s the power of a personal online brand at work.
Now I know I’ve spent this episode just outlining the case for building your personal online brand. But I thought it was important to clearly show you how the landscape has changed and the opportunity that exists for those who want to take action on this personal branding strategy. So in the next episode, that’s episode number 19, I’ll be taking you through some of the steps that you can go through that will show you how you could actually build your personal online property professional brand.