In this blog, I'm going to share with you ‘How you can replace your full-time income by selling property deals part-time’. Is it really possible? Yes, it is absolutely possible. Now, I'm not saying it's easy. There's definitely time and effort involved, but it can be done very much part-time, give you enough money, more money than you're earning right now doing a full-time job working for someone else. So how do I know this? Well I've helped many, many people do it.
I've been investing for over 25 years. But when I first started investing in property in 1995, I really didn't know what I was doing. I bought a property just for me to live in and I rented out some of the rooms to my friends who were still studying at University. I kind of lived for free. By the way, that was a no money down deal. I didn't have any money, I had to borrow the money to do that deal.
But then I was living for free in the house and I had a part-time business generating some profit. So I saved up enough to buy a second property. Again, I didn't really know what to do with it as an investment property. I just bought a new house for me to live in. I moved there with my friends and because I had a deposit I didn't have to sell the first one. It just so happened the first one was in an excellent location, and I was able to rent it to students, and get a really good profit on it every single month. That property was paying me an income every single month without having to do anymore work. This was when I realised how powerful property investing can be.
Knowing What Makes a Good Deal
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.
“But there are some general characteristics which make it a good deal for most people.”
Below Market Value (BMV) Property
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.
Area of Strong Rental Demand
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.
Positive Cash Flow
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.
Low Money Down Deal & High ROI
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.
“…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.”
Finding Property Deals on Rightmove and Zoopla
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.
Setting Up A Deal Sourcing Business
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.
“When you think about how much you can actually make doing it, it’s kind of worth doing things properly.”
Replacing Your Income Through Deal Sourcing
So what this means is to replace your income, the average person UK earns between 25 and £30,000, you could sell just one deal a month. You would then easily be earning more than you'd earn with your full-time job. Now, you might think, if these are great deals why would I sell them? Well, as I said earlier, if you get good at this you're going to find more deals than you can possibly do yourself. You might find deals that are outside of your geographic area. Ones that don't meet your strategy, ones that are too big for you, or too small for you. So by understanding this, and finding people you can sell deals too, you can make a really good income.
So how do you find people to sell deals to and who do you sell to? Well, other property investors. People like you who are interested in investing in property. Maybe they've got money, but maybe they're short of time. They don't have the time to find deals. Perhaps they don't know how to find deals. They know how, and they've got the time, but they're just not inclined to do it themselves.
I would recommend you start coming to Property Training events and Property Networking events. People who are already there, they know property is a great thing to do, but they just don't want to do it themselves. You could get to know those people, connect with them, and then find great deals to pass on to them. Again, you need to do things professionally. A big mistake people make when sourcing deals is they go and find a great deal, then they rush around trying to sell it to someone before the seller changes their mind. You need to get some investors lined up, who you can pass those deals onto. So when you find a great deal, you know you can sell it very quickly. After all, the person selling the deal wants a quick solution.
Importance of Motivated Sellers
The final thing I want to tell you about in this blog is that the thing that took me 11 years to learn was working with Motivated Sellers. Now, these are people for whom the speed and certainty of the sale is more important than the actual amount of money they're going to get from the sale. So it's important to understand this. Most people who are selling a property want to get as much as they possibly can. Of course, they do. However, as time goes on, people become more motivated. They might have a deadline they're working towards. Maybe they're emigrating, or they're relocating for work, or they're getting divorced, or someone's inherited a house, whatever it is, there's a problem.
We look for people with a problem, not to take advantage, but to try and help them. To try and understand what exactly is the problem. What do they need? If we can come up with an ethical win-win solution that solves their problem, they're going to be really happy for us to get what we want.
What this means is if we give people what they need, the speed and certainty they need, they might be very flexible on the price and/or the terms of the sale. We can then utilise some Creative Strategies, such as Purchase Lease Options, Vendor Finance, Exchange with Delayed Completion. Some of the really clever advanced strategies that most investors just do not understand.
But it all starts with learning how to find a great deal in your area, and the best thing to do is look for motivated sellers. Most people go and look for properties and you can do that, but you're going to have to look at a lot of properties to find the truly motivated sellers. It's much better to look for the sellers. Then when you find those sellers, work out if the property they have is one that's appropriate for you. You're going to keep the very best deals yourself. The ones you don't want, as long as they're a good deal, you can package up and sell onto other people.
I really want to make sure you understand that learning how to find great deals in your area, and taking action, is key. Particularly right now in 2021, where most people believe we're going to see a Property Market Crash. When prices come down, sellers want to get rid of their property, there are going to be more and more deals available. So you need to understand how to do this.
I have got some online training in place. It's a lot longer than I've had time for in this blog. A 90 minute online training session all about how you can replace your income, your full-time income by selling deals, on a a part-time basis. If you want to click on the link below, you can come and register your place.
FREE Deal Sourcing Training Available
If you would like to learn more about Deal Sourcing, Simon Zutshi has put together a FREE On Demand Master Class - all about successful Deal Sourcing investing.
To register & find out MORE about how you can access this valuable Deal Sourcing training at NO COST - click here.
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