How to Replace Your Income By Selling Property Deals Part Time

One of the best ways to profit from property, is to make money the day you buy. This is instead of having to wait for the property market to go up. Buying at the right price is really important. Ideally you want to buy at below the market value, which means you have equity locked into the property the day you buy.

The best way to do this is to find motivated sellers. These are people who need to sell their property quickly. They may also believe speed and certainty is more important than the cash amount they receive. This means they might be flexible on the price and/or the terms of the sale.

Now you might think, why on earth would I want to sell a good deal? Surely, I want to keep them myself. Well, when you learn how to find great property deals in your area, you will find more deals than you could possibly do yourself.

There's only a certain capacity of deals you can do in terms of the time and effort it requires. Also in terms of the money you need for deposits and the ability to get mortgages.So you won't be able to do every deal you find, but you need to know what makes a great deal first of all. So what are you actually looking for?

Let me give you a couple of criteria to think about.

The first characteristic is being able to pay less than a property’s worth, being able to buy Below Market Value. The way we do that, I’m going to cover later on in this blog. But as an example, let’s suggest a property is worth £200,000 and we buy it for £150,000, it means that’s a 25% discount. This is £50,000 instant equity the day we buy.

You might be sitting there thinking, hang on a minute, why on earth would someone sell a property for 25% off the market price? I'm going to share that with you later in this blog. It took me 11 years to work this out and to realise why some people would do that. But first of all, if you buy at a discount, that's a good start.

Secondly, we want to make sure that the property is in an area where we can easily rent it out. It's important that we can quickly and easily put tenants into this property who can cover all of the bills and make us money each month. If you have an empty property, it's called a void period and you have to pay the mortgage. You’ve got to pay the council tax, the gas and electric standing charges. It's going to cost you money. Now, that happens occasionally, but if we buy in an area with strong rental demand, it minimises those void periods. It means you're putting money into your pocket more of the time. Now, a mistake that many people make when looking for property deals, one of the biggest mistakes people make, especially if they're looking for deals for other people, they think, well, the rental doesn't really matter 'cause I'm not going to rent it out. I'm selling it to someone else. Well, that's a big mistake. Whoever you're selling it to they want to make sure they could rent it out. So if it's not in an area of good demand, you might find someone who's prepared to sell at a discount. There's no point buying a cheap house if you can't rent it out. So it's very, very important.

Linked to that, the third thing is you want to make sure every property that you buy, or you find for someone else gives positive cash flow. What does that mean? Well, when you take the rent each month, and you take off all the expenses - so the mortgage, the insurance, the maintenance, all of the costs, it must still make money every single month. If it doesn't make money, then actually you don't want to do it as a deal. It must make profit every single month because we want to put money into a deal and get an instant return every single month. A good Return on Investment.

It's also good if we can add value to a property. You can sometimes find brand new properties. You can get a deal from a developer who wants to get rid of the last few properties, you can do that. But the problem is you can't do anything to the property to increase the value. If we buy an older property, one that needs a little bit of work doing to it, we can spend some money on it. The idea is the money you spend on the renovation is less than the value you can create by improving that property. So we like properties where we can add value.

If you can do a strategy where it's a low money down deal, this is attractive. This means not a large amount of money is required upfront, or when you put the money in, you get it back quickly. It is also great to look for something that has a high Return on Investment.

Of course it is unlikely you’re going to get all of these things in one deal. But the more that you can get, the better the deal is. If you ever find a deal that has all of this criteria though, you must be able to move very quickly. This is something you need to understand. One of the biggest mistakes people make when trying to find property deals is that they find a great deal and they sit and think about it for too long.

Successful people are decisive. We take action. We move quickly. That's what you need to learn how to do. Now, if you're new to property, you might think, well, I don't know what to do, but the good news is you can get training. You can educate yourself and learn how to find these great deals.

You can actually find great property deals available on Rightmove in your area right now, and on Zoopla. They're sitting there. The problem is most people go on Zoopla, or Rightmove, and they scroll through hundreds of thousands of properties, not knowing what they're looking for. They come off after hours and hours frustrated because they haven't been able to find great deals.

When you know what you're looking for, you could find some really good opportunities in just 15 minutes, anywhere in the country.

People often say to me, “Simon, that's very good, but you're not going to get people who'll sell at a discount in somewhere like London or an expensive place.”

Let me give you an example about one of my students. So one of my students, she's very, very wealthy. She sold a business in America, had a lot of cash, and she wanted to buy a property in a particular square in London. She'd fallen in love with this square. She did have a rental property in that square, but she wanted a home for her to live in. A property came up on the market for £7 million. So £7 million was the asking price. That was within her budget.

This was just before the UK had the referendum vote about leaving Brexit. Obviously, as you know we are now completely out of the European Union, but this was years ago when they actually first had the vote. There was a lot of uncertainty, as you remember, it was very polarised. Some people wanted to stay, some people wanted to leave. A lot of people were very concerned about what might happen to the housing market if the vote was to leave the European Union. So my client was able to negotiate a deal to buy this property that was on the market for £7 million. She bought it three weeks before the Brexit referendum and she paid 5.5 million for it. So she saved £1.5 million. That's 21% in prime London.

 So obviously there are deals everywhere if you know what you're looking for. Now, you might be saying, “that's very awesome, but I don't want to buy, I can't afford a £7 million property.” No, you might not want a £7 million property. But there are other people who do want £7 million properties, and do you think if they were able to save one and a half million, 21% off the price, they'd be happy to pay a nice finder's fee to you? Well, yes, they probably would.

In reality, the finders fee for that kind of deal might be somewhere like £100 000. One deal selling on for £100,000. That's not even what you make when you typically sell a deal. If you sell a deal onto someone you might make between 3 and £5,000, that's an average. Say £4,000 might be an average, and obviously, if you did just one of those a month that would be £48,000 a year. If you did two deals a month that would be £96,000 a year. Once you know what you're doing, and you put some systems in place this can be done very much part-time.

How do I know? Well, we've had students who have actually had busy full-time jobs, or they'd been running their own business. They've only had a small amount of time, but because they followed our step-by-step process, they put in place, part-time they've been generating great leads. They've known how to speak to sellers, what to say to them, and that's then given the ability to secure really good deals. So you can make a lot of money doing this, but you need to know how to do it in the correct way.

Now, a lot of people ask me, "Simon, how do I set up a deal sourcing business?" Well, there are a couple of things you need to do. Having a limited company is probably the best way of doing it first of all, and there are different types of companies you have for different property transactions.

If you're buying and holding a property for long-term, that would be an ‘Investment business’. If you're selling deals that'd be very much a ‘Trading business’. So you set up a Limited company and then if you're selling deals to other people you do need to be compliant. What does that mean? There's no exams or tests, but there are certain things you need to do. So, first of all, you need to make sure that you register with one of the Property Ombudsman. That's really good in case you have any disputes, they will help mediate those. Second thing is you need to register with the Information Commissioner. If you are holding details of anyone, if you're a landlord, this could be your tenant details. If you're buying properties, or selling properties you're going to have details of sellers, etc.

You should be registered with the Information Commissioner to make sure things are held correctly. Next, you should have Professional Indemnity Insurance. This is in case you sell a deal, you make a mistake, and someone tries to sue you. It means you don't lose everything. The insurance will pay for it. Finally, you do need to register with HMRC to say that you are a deal sourcer, and obviously register people for anti-money laundering checks, AML checks. So a number of things you do need to do. It probably costs less than £1000 to get set up, but you do need to make sure you're doing things in the correct way. When you think about how much you can actually make doing it, it's kind of worth doing things properly.

What a lot of investors do, I don't recommend this, but a lot of investors might sell one deal to a family member or a friend, someone they know really well, making sure it goes very well, and the money they make, say the £4,000 pounds from that, some they keep, some they invest to get set up properly. If you're going to be selling lots of deals to people, especially if they're people you don't know, please make sure you do things in the correct way.