How to Become a Profitable Deal Sourcer

We are always talking to you about what deal sourcers shouldn't do - especially when our focus tends to lean on the compliance side. If you're unsure, you can find a whole range of resources right here. 

Instead, this time we are focusing on what you should be doing to become a profitable deal sourcer, and make your business more successful and happier for you to run!

What We've Learned While Sourcing 12+ Years 

What we're sharing is strategies and key points from our own learnings taken over the last 12 years running a property sourcing business.

As the years have moved on, we've progressed how we work to be far more efficient, logical and profitable vs time inputted. 

We've probably faced every obstacle you can face as a sourcing agent, and certainly come across big learnings along the way - including losses. The largest fee we lost was about £24,000...we'll leave that one for another day (it's still a bit raw, even all these years later!). 

Expect Not Everything To Go As Planned (or as quickly)

Not everything goes right, it isn't always roses around the door, however, despite the ups and downs we haven't been put off and continue to source today - albeit part-time now to fit alongside compliance training and running the National Association of Professional Sourcing Agents - NAPSA. 

The reason we're adding this in there, is we see and hear sourcing agents - or those looking to get into the sector - talking about earning £30k in just a couple of months, or even weeks after starting.

Now, call me cynical but how many sectors can you name where you can suddenly flick a switch and have revenue like that come to your door? Please let me know what they are if you do!

Sourcing CAN be profitable, if you're realistic about it and give yourself the time for the cash to flow through the door. The average property took around 6 months to complete in 2023 + finding an investor and sourcing a deal they like - so you should get a realistic idea  of time-frames we're looking at here for some deals.  

What You Should Be Doing

So what SHOULD you be focusing on to build that strong, profitable, for the long-term deal sourcing business? 

I thought we'd go through a bit of a breakdown of some of the things, and there's a lot of them, that really you should be focusing on, and you should know in great detail, and have a really, really strong plan around each of these as to how you're going to understand them, learn them, how you're going to control them.

1. Your Deal Sourcing Location

Firstly, do you know where it is? You'll be surprised how many people we speak to who don't know where they would like to source. Our very quick tip - make sure it's somewhere you know and have visited many times.

The reason we say this, is for engaging investors, you should know every nook and cranny of this area. i.e. every street and amenity.

Do you know which areas on your patch are relevant for Buy-to-Let (BTL), HMO, or potential service accommodation? Which properties in your area could be for the people who are downsizing, the people who are retiring, the first time buyer market? 

Do you know your sourcing area that well? 

2. Deal Sourcing Strategies

We hear an awful lot about sourcing agents wanting to do every strategy in every area as they feel this will get them more investors, sellers and ultimately deals over the line. This is a mistake.

Firstly, have you selected the strategies that match your area and work well on your area and you understand them fully? 

By understanding fully I mean that you know all of the ins and outs of them, how they should be operated, what the rules are around them, what information your investor is going to need to be able to assess whether the deal works for them or not. 

Are they really relevant to your area? It's no point advertising deals for service accommodation if there's no market for service accommodation in that area. So I underline again, do you understand your area? Do you know it street by street? 

Secondly, are you up to date on that information? How often are you monitoring the changes in sales prices, rental prices, demand, changes in demand?

Do you understand them fully and are they relevant on your area and which part of your area? Not all areas will be HMO or service accommodation, or student let or a first time buyer, or those older people who are 'empty nesters' looking to downsize. 

Investors will hugely thank you for your knowledge, your expertise and they will respect your understanding of your patch. 

3. Understand Your Property Investor

It may be that you come across an investor who is looking for a strategy you don't focus on. Our advice, is to politely walk away from this investor. You can't work with everyone or every strategy, and you shouldn't  be trying to. You'll only end up causing yourself headaches (and the investor) which is bad for business and sanity. 

You're more likely to get repeat business if you focus on that smaller area, with one or two strategies and know them very, very well. No investor comes to the market just wanting one deal. If there's a market in your area for your selected strategies, there will be investors. 

Investors tend to have short, mid and long term goals. Whether it's a 12 month plan, 5 year plan, 10 year plan, 15 year plan, it doesn't matter. Make sure you understand their intentions and how they break down their workings. 

You don't want an investor looking for a particular objective, and you bring them any deal that comes your way.

Imagine asking Google to find you red coats and they just keep showing you blue ones - after a while you would stop using Google for your searches and go somewhere else to find your red coat!

So be honest, upfront and realistic on those strategies, your knowledge on them and the information that you're passing on to investors. Don't just send them anything and everything!

4. Honesty Builds Credibility 

 Most complaints we receive from investors relating to sourcing agents is around fees. You obviously want repeat business with an investor, so honesty is absolutely vital in this process. 

Make sure you are clear from the start whether your fees are refundable, deductible or non-refundable. Please don't announce this part-way through when you send them a deal and they say yes I want it and then all of a sudden there's all sorts of expenditure and invoices and all sorts coming out of thin air and they're not expecting it. 

If you are completely up front and open with your property investor when it comes to the bit that no-one really enjoys - fees and compliance - you are far more likely to gain their trust further down the line. 

5. Estate Agents & Sourcing

Make friends with estate agents. Make good friends with estate agents because they are your biggest asset as far as finding deals is concerned.

Everyone talks about off market deals. But if an investor is truly serious and just wants a deal that matches their criteria and wants somebody else to do the legwork, estate agents in the UK have the biggest market for you to go to. So make estate agents your friend, but do it in the right way - the last thing you want to do is annoy them!

6. Compliance (yes we are getting it in there!)

Compliance, compliance, yes we know. We have to add it in, even in passing.

Compliance is not just about ticking boxes. You can use processes, procedures, risk assessments, documents to enhance your business. 

If done correctly, all of the above will make you more streamlined, they'll certainly make you more organised, and they will give yourself a bigger chance of success. 

6. Sourcing Trends Are Temporary. Stick to What You Know.

Be a leader and not a sheep. Don't follow what everybody else does out there - just because BTL is out this year but SA is back in...or Rent to Rent is the must strategy. Please, please, stick to what you know. 

You will be far better off attracting investors that meet the strategies and location you know best, building the relationships with them and cutting out the industry noise. 

7. Plan For Sourcing Success

Get your business organised to meet everything we've covered - strategies, location, compliance - and you will be going a long way to success.

Planning is absolutely key. Make sure you know what you're getting into before you start sourcing (we have a handy Introduction to Sourcing - £49 down to £9.99 course right here which can help!)

Know how long you can go for without bringing a deal in. Or if you're working full-time, how you will split between other commitments to communication with your investor, view potential property opportunities etc. 

Essentially, get your business house in order before moving forwards. You will be much better for it in the long-run. Please don't put yourself on a pressure cooker needing to get cash in quick to survive. Sourcing should be a long-term strategy for future goals (retirement, investing yourself etc.)

Quick Recap 

So, we've reeled off a lot of information for you to ponder over. Let's cap it off with a very quick check-list for you to takeaway: 

1. Know Your Patch - Where are You Sourcing? 
2. What 1-3 Strategies Are You Focusing On?
3. What Information Do You Need From Investors to Understand Their Needs?
4. Do You Know Your Fees / What Contracts You Have? Can You Confidently Talk About Them?
5. Do You Know Estate Agents In Your Area? How Well Do You Know Them?
6. Is Your Property Sourcing Compliance In Order?

If you'd like to view more of our Compliance Over Coffee videos with Tina Walsh, you can visit our YouTube Channel - or join our Facebook Group to view live every Thursday at 8.30am.