...continued from Part 1 (obviously!) 🙂
4. Ready made deals [RMD’s]
a) - Finder’s Fee [FF] The simplest, easiest and least time intensive of the RMD’s: you find a deal, then sell it on. Easy right? Well actually, yes, it is the easiest of the 3. You charge a fee that is either all up front, some up front and some on completion, or all on completion: and it is smart to offer a guarantee that you will find the investor [your customer] another property if the first one ‘falls out of bed.’ Your Fee: 2-3% or around £3K
b) - Pre packaged Deal [PPD] If you find that when you offer Finder’s Fee deals the customer either needs more help, or you feel that you can warrant more money, you can offer a Pre Packaged Deal, where you are offering a more complete service to the investor. You may have a powerteam in place [feel free to use ours, simply send us an email] so you can offer mortgage, finance and legal services too. This will make it a smoother ride for the investor, with a more complete service, but they will need to pay more for this service, and you will need to feel confident that you can offer it, and have the right team in place. You could even go one stage further and offer to find tenants. Your Fee: £4K - £7
c - Portfolio Building [PB] So you have offered some Finder’s Fee deals: you did well and made some good cashflow, but you found that you wanted to charge more for your services, and many of your new customers wanted a more ‘hands-off’ service [after all, not everyone has the knowledge in property that you are building now]. If you offer the complete service [which you may not be able to do right from the start – start with FF first and build up] then you can realistically, ethically and fairly charge more fees for your services.
It is quite reasonable to charge £15,000 to £20,000 per property to fully manage the whole portfolio, from getting a good discount, a good yield, renting it out, managing the refurb, management and maintenance of the property, bookkeeping and so on. You will need to buy and manage a multiple of properties: say 5 [hence Portfolio Build], and you will need to do it over a longer period of time: say 5 years, to justify your ‘management’ fee.
At Progressive, we have a ‘Handsfree Property Portfolio Building’ service. If you would like to ‘model our model’ [copy it], or would like to find out more about how we can help you build a portfolio without any time input [‘the baby without the labour pains’] please email us at firstname.lastname@example.org [Yes I do read an answer all of them!].
Your fee: up to £20K per property over the long term. You’ll need to be clever with this fee to reduce the risk to the investor, so email us for more detail
5. Assisted sale [AS] This strategy is clever. You take control of a property [exchange on it with an ‘Assignable’ contract or take an ‘option’ to buy it], then pass it on to the investor/your customer and take your profit from the equity. Let’s say you source at 30% UMV [Under Market Value]: you can pass this on to another investor or, more easily, a FTB [First Time Buyer] at 20% UMV. They will jump all over that because they do not expect professional discounts like you will be able to get, and you can make a larger profit: 10% of £100K is more than an FF deal, yet you have had to do little more.
This is a little more technical, and you will probably need a little assistance [excuse the pun] with the legal framework. You will need to make sure that no one can take the deal from you [hence using an assignable contract or taking an option] and you will probably want to use an IR [Irrevocable Request] to ensure the vendor does not walk away with your £10K AS money!
This is great for the investor/your customer, as once you get the hang of this you will make more money and they won’t have to pay you an upfront fee.
Your Fee: 10% of the equity [around £10K]
6. ‘Multi-Let Without the Sweat’: MLWTS
Your Cashflow: £500-£900 [net] Per Property
Each one of the ‘packages’ mentioned above enables you to monetise every deal: from leads you source online that you don’t want: uQL & QL, to deals that you buy at discount but are not worth holding: FLIP, AS or where you can help a tired landlord ‘manage’ his property: MLWTS to helping time poor investors build up their property portfolio: PB