The pricing dynamics in property sourcing hinge on various elements that directly impact the potential return on investment (ROI) and the level of involvement required from the investor. To succeed in property sourcing, maximizing earnings per deal is crucial, enabling you to achieve monthly goals with fewer transactions.
Factors impacting deal sourcing include:
Potential ROI: The potential ROI of a deal significantly influences its pricing. Investors are more willing to pay higher fees if they foresee a substantial return. Effectively presenting the deal and possessing a thorough understanding of the financials are essential in optimizing the perceived ROI.
Investor Involvement: The degree of hands-on involvement required from the investor plays a pivotal role in determining deal pricing. A completely hands-off approach, where the sourcer manages every aspect, can command higher fees, often in the range of £5000. On the other hand, deals handed over with less follow-up may fall in the £2000 - £3000 range.
Deal Type: The nature of the deal itself influences the pricing structure. Different deal types, such as straight sales, portfolios, or lease options, command varying fees. Unique opportunities, such as high-yield HMO finds or profitable renovation projects, typically warrant higher fees due to their potential for substantial ROI.
Long-Term Perspective: While some enter property sourcing as a starting point due to its low entry barriers, many choose to pursue it as a full-time career. The prospect of consistently earning high fees—£8000 to £10,000 per deal—makes it a viable option for generating a substantial income, potentially reaching six figures annually with just a few deals per month.
Deal Rarity: Focusing on rare and harder-to-find opportunities enhances the earning potential. Unique and sought-after projects contribute to higher fees, providing an avenue to optimize earnings in property sourcing.
In summary, property sourcers can generate significant income by strategically considering factors like potential ROI, investor involvement, deal types, and the rarity of opportunities. The flexibility and high earning potential make property sourcing not only a stepping stone but also a sustainable and lucrative full-time career. With deals priced between £3000 and £5000, sourcers have the opportunity to achieve six-figure annual incomes with relatively minimal effort.