The Property Unleashed Podcast

The Path to Success in Property Deal Sourcing & Compliance

• Mark Fitzgerald • Episode 295

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Unlock the secrets to becoming a successful and compliant deal sourcer in the competitive property market! What if mastering compliance could set you apart and lead to lucrative property deals? 

Join me, Mark Fitzgerald, on Property Unleashed, as I guide you through the essential steps to stand out and thrive. From crafting a compelling company name to the crucial registrations with HMRC and the Property Redress Scheme, discover how to build a solid foundation for your property sourcing business.

This episode is your comprehensive guide to mastering the tools and practices needed for success. Explore the importance of professional indemnity and public liability insurance, and navigate the complexities of anti-money laundering protocols with resources like MoneyShield. Whether it's securing the right legal contracts or ensuring data protection with the ICO, these insights are designed to empower you to secure the best deals for your investors while remaining fully compliant. Don't miss out on setting your path to success in the property investment world.

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Speaker 1:

What do you need to be a compliant deal sourcer? Hello and welcome to the Property Unleashed with me, mark Fitzgerald. So a lot of people have been asking me recently, actually at networking events and things what do I need to become a compliant deal sourcer? I want to get out there, I want to find the best deals for my investors, but I also want to make sure that I am compliant and I am doing everything correctly. Well, first and foremost, you should make sure that you are compliant in whatever it is that you're trying to do. You should also look to set yourself up as a business, maybe a limited company. Look serious, you know. Show people that you want to be here for a good amount of time. You're not just here for the here and now. You know, and that's what you can get. When you look at people that are sole traders, it's very easy to say, well, I'm a deal sourcer and you're just testing the water, you're going to these networking events and you're trying all of these different things. But really set yourself up as soon as you possibly can. Why? Because you'll start to give yourself a bit of a track record and a bit of credibility as well, and then look to separate yourself from the crowd.

Speaker 1:

It is a very, very busy market when it comes to deal sourcing. Fundamentally, we are all deal sourcers. Surprise, surprise, yes, even I'm a deal sourcer, but I just source the deals pretty much for myself, but I have been known to pass the odd lead on. I've never packaged up and sold any opportunities, but I have obviously a very big network and I'm quite happy to pass on deals that aren't right for me for the right people, and sometimes they might give me a little thank you in exchange. But, of course, if you're doing this and you want to be legally compliant, there are some things that you need to make sure that you have in your business. So, firstly, I would say it goes without saying that you need a company name. You need to set yourself up as a limited company. For me, that's my personal preference. Maybe it's not yours, but this is just what I would do. Obviously, that name should really incorporate the type of things that you're going to be doing in that business. So you know, no good just having a company name as per se, your name. But don't overthink it. You know it could be a deal finding solutions or something like that. We buy houses or have a look and see what's available. Have a good name that, as soon as you say that name, people understand what it is that you do. So we find deals for investors and make sure that they're the best deals possible.

Speaker 1:

You need to make sure as well that you have some compliances. So you need to be registered with HMRC, okay, you need to have a PRS, which is property redress scheme. You need to make sure that you're a member of the ICO, which is your data protection, because if you're going to be holding people's data, you want to make sure that you are registered for doing so. And make sure as well that when you are storing people's data, you have it hidden behind a password protected system. Okay, no, good, just having it on something that anybody can access. It needs to be password protected. You ought to have some insurances as well, so you'll want professional indemnity insurance and, potentially, you'll want public liability insurance as well, as you're walking around other people's homes, just in case. Always a good thing to have. Now, some of the serious things that people don't always get stuck in because it's difficult and it is going to cost you a few pounds as well a few pennies is the anti-money laundering compliance, which is a must. You need to make sure that you have this in your business. It could be done by a company called MoneyShield. You also want to make sure that you have the legal contracts to be able to use in your business.

Speaker 1:

If you're securing deals, you want to make sure that you have heads of terms which you can draw up yourself. But equally, if you're doing purchase options on a property and this is where you basically agree a price with the owner of the property and you have the option to buy at that price or you can make that option assignable. Now you might have heard of purchase lease options, which is the same, but you pay a lease fee to the owner each and every month. A purchase option is just that you've agreed a fee. You've agreed a set time for you to sell that property at that price, so it's all locked in and legally binding. And then, of course, you can make that option assignable to somebody else. So you find your investor. You make it assignable to them to be able to buy at that price. That means that the owner of the property cannot sell their property to anybody else. You have a legally binding agreement to say that you have first refusal in a set amount of time.

Speaker 1:

You want to have some terms and conditions drawn up as well Terms and conditions of your business. You know non-disclosures, potentially that you're gonna be sending out. If you're gonna take deposits, how much will your deposits be? And make sure you've worked all of this out before you start going out there trying to sell deals. Make sure you're fully compliant and you understand how your business will operate. What will people be paying fees for? What will they get? What is the service that they will get?

Speaker 1:

A lot of people think they can just go on Rightmove, zoopla, find a deal that's potentially on the market. Say to an investor I've got a great deal here, I can get this 25% below market value, yet anybody else can still buy it. And if they went on to Rightmove, they'd find it themselves. Don't be that person. Go and do the legwork, and it is hard work. Deal sourcing is hard work. Property investing is hard work, particularly when you start out. You need to know what you're doing. You need to know these things, which is why it's always great to get yourself educated so that you can follow a proven roadmap and a system to be able to help you to not make these mistakes. But this isn't just as. I've found a property, I've negotiated a price, here we go.

Speaker 1:

You should, either you or people in your team, be following through with the owner of the property, with the vendors, with the investors, making sure that solicitors have everything that they do and everything that they need to get the job done and, of course, making sure that you're helping to push this through, because a lot of deals fall through and a lot of the time it's the lack of communication that will cause deals to fall through. So you have to constantly be communicating with both sides to make sure that everybody is on the same page, and you will find that if you do this and you do this successfully, a lot more of your deals will go through. And, of course, more deals go through. You're getting paid Now if deals fall through. That's not good for you. You shouldn't be holding onto people's money if transactions haven't happened. But that's why you need a good terms and conditions which says to maybe your investor unless financially or something's proven with the property that isn't correct, you are legally binded to buy this property Okay, or I don't have to give you a refund.

Speaker 1:

You want to make sure you've got terms and conditions in there like that. Now, you might still be happy to give people a partial refund, maybe just paying for work that's done, but this is on grounds that mean that they're just changed their mind. I'm just pulling out. I can't be bothered with this. I'm going to pull out. I've maybe got scared or something like I got cold feet. Okay, if people are doing that, then yes, they should pay you for your time and things. But if they have a genuine reason maybe the price of the property is still too high, maybe there's structural or something's come up in some surveys that just means that all of a sudden, now this deal isn't a deal anymore. You want to have the terms and conditions. What happens in those instance? Because you can't always expect investors to pay you a fee if something is uncovered. Okay, I know it's not always fair on us if that happens, but that's why you want decent and good, set out from the beginning terms and conditions. I hope I've said that enough.

Speaker 1:

You also need to get yourself a ring-fenced client account. Okay, now, sometimes you can piggyback off of solicitors' client accounts. If you get on with a solicitor and you're going to get them to do some of the work for you. They're more than happy, sometimes for a small fee, to let you use their client accounts. And, of course, there are deal sourcing businesses out there that you can actually piggyback off of their client accounts ie, you can pay them a fee to use their ring-fenced client accounts and operate under their umbrella. The other thing though obviously the most cost-effective way is to bite the bullet, because you're going to be a professional deal sourcer is to get yourself a client account set up. It can take a bit of time, but that's what you want to be doing, so that you've got those things in place.

Speaker 1:

Now, all in all, this isn't going to be a particularly cheap startup. It's not going to be as expensive as buying properties and deposits and everything, and it's not as expensive as a lot of businesses to start out. But what we like to keep things is real, particularly when it comes to people starting out thinking well, I could do this really really cheaply. You can, on the grand scheme of things, but setting all of this up is going to cost you a good few thousand pounds, okay. Now you can systematically do this in stages, okay. Or you can pay one-off fees and join other people's accreditations and there are different companies out there. The Compliance Vault is a very, very good one for you to take a look at, and I believe now that SiteFinder are doing this as well. So, again, another place to look at the compliances to see whether you can go in there and piggyback off of those. They will cost you money, but at least you can get started, probably a bit quicker than if you're doing this all yourself. And, of course, whilst you're a member of those, you can, of course, put into action finding and sorting and sourcing these for your good self as well.

Speaker 1:

So do make sure that you set yourself up and you are compliant. You are managing and running your deal, sourcing business, in the best manner, and it can be a very lucrative, profitable and very enjoyable business to run because you're meeting lots of people. If that's what you like to do, you get into negotiate deals those two things that I absolutely love doing, which is going out there, meeting people, negotiating deals and things like that. So you will be going out there. You will be doing those things. If that's something that you enjoy. Of course, you can hire a virtual assistant to help you with the admin side of things anything that's online to data scrape for you to help you find leads and deals. You can use systems like Property Filter to help you obviously target the right properties at the right time and, of course, you need to build up an investor portfolio as well, and that will mean that you've got to get out there and build up the know, like and trust. And one of the things that I always like to say to anybody who I'm chatting about when they're getting into deal sourcing and of course, we've helped a lot of people build successful deal sourcing businesses is make sure that you understand what your clients want.

Speaker 1:

A lot of the mistakes that I see from the amateur deal sourcers out there is they'll go and they'll find a couple of deals and then they'll just try and sell those deals to anybody who wants to buy this. Let me show you this deal. This is a great deal, rather than actually taking the time to go and sit down with the investor and say what is it exactly that you're looking for, how much do you want to pay, what is the criteria, what is the ROI, that you want the return on investment? So if I go and in these areas I find you these opportunities at this price, would you be happy to pay my fee for those deals, and if they say yes, then that's what you want to be focusing on. You want to be focusing on finding those deals and if you do that, you will set yourself apart from a lot of the amateurs out there.

Speaker 1:

I hope this episode's helped you, and if you need any other further help or assistance, then check out thepropertyunleashedcom for all help and support there. I do work with some deal sources on a one-to-one level as well and really help them supercharge their results. So if you'd like to find out more, just reach out to me. So I hope you've enjoyed this episode and I look forward to you joining me in the next episode very soon. Take care and bye for now.