Property sourcing is the latest phenomenon in the property market and makes quite a lot of sense. Here’s how it works:
A property sourcer has the contacts and know how in the property market to find the appropriate property, develop or refurbish the property using their experienced team and let the property to new tenants, which they also manage. They do all this work to provide a ‘hands off’ service to busy professionals looking to make more returns on their money than financial investment products. With savings interest rates deals sub 2.5% and inflation over 2.5% its easy to understand why more people want to find a better return than a savings account as they are literally losing money by doing nothing.
Indeed – I analysed one of these HMO deals for funding recently and the returns were truly impressive with double digit yields.
For all this professional service the property sourcer earns a finder’s fee on acquisition and further fees for the professional services they carry out, so the investor doesn’t need to themselves. The investor – who may have ambitions to start a property portfolio, but no experience can use a sourcer to enter the market. Everyone wins.
Different modus operandi of the sourcer can include a simple high rate of return on invested cash (compared with bank products), a Joint Venture with the sourcer to share the profits or a fee’s only service and the investor retains all profits.
ADDING FINANCE QUADRUPLES THE PORTFOLIO.
Imagine you had £200k to invest or you are a property sourcer looking for a £200k investor.
You could buy a £140k house, spend a further £40k on a heavy refurbishment into a 5 bed HMO, market and let the property and there you have it you could be getting a circa £1k rental income per month.
Now imagine you could buy 4 properties of a similar nature with a total spend of £720k and a passive income of £4k per month. Using commercial finance this is achievable with your £200k cash + £520k lending.
As the property sourcer you have quadrupled your fee income. As the investor you have quadrupled your passive income – everybody wins.
Note your income will not be £4k per month as you will need to service the debt, but it will be more than the £1k for one property project done with cash and you also have the appreciating value of 4 properties instead of 1. Clearly you are likely to make much more profit progressing 4 properties with finance instead of 1 property with cash.
WHAT DOES SPECIALSIT PROPERTY FINANCE OFFER?
As leading brokers of Property Project Finance and an arm of one of the UK’s Elite Master Brokers we are uniquely placed to make available to you the finance solutions from Retail, Challenger and Sub Prime lending markets.
Lenders actively want to increase their loans books in this space – why wouldn’t they if its such a profitable area? The more profitable the lower the risk to the bank. However finding these lenders and then having access to them is not easy and this is where Specialist Property Finance add value. We enable you to be matched with the right solution from the most appropriate lender for your individual circumstances, but more than this we have qualified an appetite to lend from certain lenders operating in this sector.
The property investment sector has evolved over the years so different products and services are needed to accommodate the demand for example: Overseas and Expat Investors, HMO Investors, Heavy refurbishment and auction players. All different types of stakeholders that could benefit from different lending products and solutions.
We provide detailed and expert industry advice on how to navigate the field of funding for Property Sourcers and their Investors for purchase, refurbish, buy to let and bridge. Let us help you through the journey to profit from your existing projects and on to the next.