Investing in properties is a lucrative opportunity for investors in the UK especially when property prices, rental demands, and rental yields are all increasing.
Are you willing to enter into property investment or property deal sourcing? Then this article will guide you thoroughly.
With more than 10 years of experience in property deal sourcing and helping over 100 property investors, Pluxa Property believes property investment or deal sourcing isn’t easy if you don’t follow the right strategies, know the legal requirements, and use modern tools. Our guide today covers everything needed to start deal sourcing today!
What are property deal sourcing and deal packaging?
What is deal sourcing: Property deal sourcing refers to finding, analysing, and negotiating properties for investors. Property deal sourcers find properties in the best location, analyses their chances of generating higher yields, and negotiate with landowners for a discounted price for investors.
What is property deal packaging?
Deal packaging is a service where a professional provides different packages such as doing research in that area and providing analysis reports to investors, price comparisons with competitors, multiple offers, dealing with property maintenance, etc.
You shouldn’t confuse a property deal sourcer and a deal packager, as the first one focuses on finding you a suitable property deal while the other one includes all kinds of services required to make the right investment choice.
Importance of Deal Sourcing in Property Investment
Finding the right property deal is time-consuming, and time is the only thing that investors mainly lack. This is why you need to understand deal sourcing in property investment. A well-crafted strategy will create a big difference between a successful property investment portfolio and an underperforming one. Here are a few things that deal-sourcing strategies provide to property investors
- Find deals below market price value than traditional sources like using a realtor or auction listing sites
- Identify high-potential investment opportunities before your competitors without compromising quality due diligence
- Portfolio diversification becomes easy allowing you to mitigate risks and maximize investment returns
- You have a steady pipeline of property deals throughout the year
- Minimum communication barriers that you might face while investing in overseas properties
- The chance of getting scammed especially when it is your first-time property investment, reduces
How to Get Started with Property Deal Sourcing?
Step1: Understand what is property deal sourcing
The first step to getting started with property deal sourcing is to understand clearly what it is. It involves identifying the right deals after considering multiple factors like the location, the condition of the property, and its potential return on investment.
A skilled property deal sourcer will have in-depth knowledge of the market and acquire excellent networking and analytical skills.
Step 2: Gather the major requirements for a deal sourcer
Property deal sourcers are the bridge connecting property owners and property investors, and ensuring any deal meets all the criteria on both ends. However, to become a successful deal sourcer you require a proper understanding of the UK real estate investing market including the opportunities and challenges that investors can face.
Proper networking skills of a property deal sourcer will help them stay connected with the real estate market and learn about any off-market deals before competitors. Additionally, stay trendy! This means you require knowledge of industry trends and economic changes that can impact property prices and investment opportunities to find authentic deals.
Knowledge of UK property law is a must when conducting legal deal sourcing.
Step 3: Choose a deal-sourcing strategy
There are multiple ways you can source a property deal.
For example, you can directly contact property sellers without requiring any middleman or hire an estate agent to find you deals.
There are some off-market property deals which aren’t advertised on any platform and you can find them only when you have a good network of investors, property sellers, and estate agents.
Otherwise, on-market property deals are the most common ones where you can find deals on social media platforms, property auction sites, and traditional property listings. However, the competition in on-market property deal sourcing is high as they’re advertised to a wider audience over the Internet.
Here are some of the most common property deal sourcing strategies for the UK marketing:
| Strategy | Description |
| Market Research and Analysis | Analyzing market trends, supply and demand dynamics, and property values to identify high-potential investment areas. |
| Networking and Relationships | Building connections with real estate agents, property managers, and developers for access to off-market deals and referrals. |
| Utilizing Multiple Channels | Leveraging various sourcing channels such as online listings, auctions, direct mail, and social media to uncover properties. |
| Off-Market Sourcing | Direct outreach to property owners and utilizing word-of-mouth to find properties not widely advertised. |
| Property Due Diligence | Conducting thorough evaluations of legal status, physical condition, and potential risks of properties before purchase. |
| Negotiation Skills | Using effective negotiation techniques to secure favorable purchase terms and prices based on seller motivations. |
| Understanding Investor Needs | Aligning property deals with the investment objectives of clients through regular communication and understanding their requirements. |
| Deal Packaging | Preparing a comprehensive overview of the property, its potential, and financial implications for investors. |
| Risk Management | Implementing strategies to analyze potential risks and having contingency plans to mitigate them in property investments. |
Step 4: Create an impressive online presence
To improve your professional network, creating an omni-channel online presence is a must. Also if you are willing to run a property deal sourcing business, you need a website where people can connect and know about your services.
Your website must highlight your expertise, success stories, client reviews and testimonials, and provide valuable information to property investors.
For example, in our property investment website, we have created the following pages to build trust and social proof:
- About Pluxa-property
- Live property deals in the UK
- Our portfolio
- Reviews of our R2SA AND B2SA services
- Our talk show by property investment experts
However, to connect with potential property sellers and estate agents or other experienced property deal sourcers you can use social media.
It also helps to expand your reach and engage with a wider range of audiences. You can start by engaging with posts and content shared by other professionals in your domain.
Step 5: Use software tools to find property deals
There are several software tools that help you source top property deals. For example, you can use PropertyEngine. This platform is specially built for property investors and deal sourcers to find and analyse property deals faster across multiple portals for BTLs, HMOs, BRRR methods, etc.
Here’s a video tutorial on how to use property enginee SaaS platform:
It offers a complete suite of features that can assist you with the entire property sourcing process from managing deal pipelines, and generating customized property reports, to sending direct-to-vendor letters, and more.
💡 At Pluxa Property, we have hundreds of property deals available in the UK market— that will give you high rental yield and ROI.
Explore our property deals:
👉 If you want to invest in property in the UK, find our top recommended buy-to-let areas to invest in the UK.
Step 6: Implement analytical tools to streamline property deal analysis
Not all property deals can be authentic or suitable for your investment strategy. But analysing them one by one is time-consuming, instead of that, you can use analytical tools like PropertyEngine and PropertyData that can help you analyse and identify the best property deals.
For example, you can find rental yield hotspots, rent inflation, and more insights from PropertyData:
Step 7: Shortlist and connect with property sellers aligning with your strategy
Evaluate your target deals based on multiple factors like the location, valuation, potential ROI, and condition of the property. Then make a list of a few property deals, connect with the contact person for each property and negotiate on price and terms of sale.
Is deal sourcing legal in the UK?
Yes, deal sourcing is legal in the UK, but only if you are following the legal requirements in the country. As a property sourcing agent, you need to carry out “estate agency work” under Section 1 of The Estate Agency Act 1979 to maintain professionalism.
Anyone starting a property deal sourcing business must know about the Consumer Protection Law in England. It says such professionals must act with due diligence and stay ethical during property dealing with investors, instead of influencing or manipulating their decisions that are unfair or misleading. There are multiple other regulations in the Consumer Protection Law that you must know and follow to avoid paying penalties.
You need registration for ICO (The Information Commissioners), Property Redress Scheme, HMRC, and the National Trading Standards to operate your property dealing business legally.
Another essential requirement for estate agencies is Anti Money Laundering registration to introduce your customers (property investors) to a third party (landowners) for property purchases or rentals.
Deal sourcers must get Professional Indemnity Insurance (PI) that protects them from any kind of claims made by their customers (investors) like breaching contracts or neglecting duties. The insurance covers costs related to legal fees and other losses incurred.
Another essential Insurance for your deal-sourcing business is “Public Liability Insurance” which covers all the costs of a public injury or suffered losses due to your business.
You must sign contracts like property sourcing agreements, property finders agreements, sourcing fee agreements, etc., that outline the processes and timelines for your interaction with the client before and during the property deal and after that. You also need to learn about the Unfair Terms in Consumer Contracts Regulations 1999 which protects property buyers and sellers against unfair terms and conditions in contracts and other sourcing agreements.
Common problems faced in deal sourcing and how to overcome them
Problem 1: Property investment carries inherent market risks
How to fix: Put the property for rent and keep adjusting prices according to the market conditions. This ensures you can earn higher profits when the demand for accommodation is higher, or the market price is higher, such that you can adjust with little profits made during low market conditions.
Problem 2: Unforeseen legal issues
How to fix: Fulfil all legal requirements set under The Estate Agency Act 1979, sign property sourcing contracts, and get necessary insurance. Having all these contracts and insurance in place, and abiding by the UK rules and regulations, you can save on unwanted fines and penalties.
Problem 3: Physical assets take longer to liquidate
How to fix: Ensure you have sufficient access to cash reserves whenever required. It is because you cannot easily liquify properties like other valuable assets such as gold, and stocks. Having sufficient cash will help you fulfil certain needs like property refurbishments, repairs, and maintenance.
Problem 4: Lack of property sourcing knowledge or experience
How to fix: Hire a professional property deal sourcer. Pluxa Property works with top property sourcing experts in the UK having knowledge of the local markets and the regulations in the country. We provide you with the best investment strategies, find the top properties and negotiate terms with property owners on your behalf.
Problem 5: Analysing a huge volume of investment opportunities can be overwhelming
How to fix: Choose top property deal analysing tools. There are multiple tools available in the market that can help you analyse a large volume of investment opportunities in minutes and assist you in making data-driven decisions for choosing the best deal.
Problem 6: Lack of access to off-market property deals
How to fix: Look for a property deal sourcer. They act as an intermediary between property sellers and investors, assisting in sourcing and analysing top off-market property deals that aren’t available on any platform and usually occur privately.
Tools and Platforms for Deal Sourcing
Finding the right deals is crucial for a property deal-sourcing business. Fortunately, there are multiple tools and platforms that can help you search and find the best property deals.
Pluxa Property
Pluxa Property is one of the top UK property sourcing platforms that has over 10 years of experience in helping investors find the best properties in the UK. We ensure top property sourcing and negotiating prices with landowners to help investors find the best properties at lower market values before competitors find them.
Not only do we source properties but also prepare them for renting at higher prices in the UK.
👉 Contact our experts and find top property deals UK
PropertyData
One of the best property sourcing tools in the UK is PropertyData, which is suitable for homebuyers and property investors to make better decisions while buying residential property in the UK.
They provide research tools to shortlist top areas and analyze their surroundings in great detail to provide data on pricing, rental values, yields, capital growth, property stock analysis demographics, etc.
Their source algorithms can scan the UK market regularly for properties that match your specific buying strategies.
Nimbus
Nimbus is another useful tool for sourcing residential or commercial property, on or off the market, and anywhere in the UK.
Some of its game-changing features include “Site Finding Filters” that allow you to find viable opportunities depending on your property requirements, “Planning Constraints” that help in understanding your planning policy and environmental, heritage and strategic land constraints, and their inbuilt project management tool “My Sites”, to manage your property searches effectively.
This software assists you to visualise and analyse geography aerial including their demographic, infrastructure, land use, and more.
Here are the top deal sourcing strategies in the UK
1. Off-market transactions
Even though you can find the number of publicly listed properties online, there is a significant portion of transactions that occur privately, often through personal networks, word of mouth or a property sourcing agent. This is a selling strategy that helps avoid disruptions to current residents and helps close deals on time. These off-market transactions occur directly between two parties without the need for public marketplaces like real estate listing services.
It is especially common for commercial properties, where the property seller may be willing to take offers from a selective group of potential buyers.
2. Direct-to-seller sourcing
Direct-to-seller property dealings mean the transaction is happening between a property seller and a buyer without involving intermediaries like real estate agents. However, you must have proper research and negotiation skills to communicate directly with the owner and get a fair deal.
This deal-sourcing strategy eliminates the middleman cost but requires adequate experience to identify good deals.
3. On-market deal sourcing
This is the most common type of property deal sourcing strategy where investors can find attractive deals from publicly listed advertisements, through property portals, auction sites, or using real estate agents. One major problem of this strategy is that you need to face higher competition as they are publicly listed and that can drive up the property prices.
Also, the sellers often don’t negotiate on price and terms due to the higher demand for the properties.
4. Use of online platforms
The best way to source the top properties in the UK is to use online tools or platforms. Our platform assists you with finding and purchasing the right properties in the best locations. Pluxa Property finds property deals faster than your competitors and can negotiate on price and terms on your behalf.
You can have a one-on-one talk with our property strategist and get a clear understanding of our investment. This makes finding property deals easier for investors, allowing them to go through multiple options at one time.
What are the differences between private equity and venture capital deal sourcing?
Effective deal sourcing is important for private equity and venture capital firms. They have taken control of their deal sourcing by developing direct sourcing teams and processes. Here’s how deal sourcing is different for private equity firms and venture capital firms.
Private equity firms focus on established real estate assets that can generate steady cash flow and have the potential for value appreciation. They usually invest in commercial properties, large residential areas, or large-scale developments.
On the other hand, capital venture firms source early-stage real estate properties that might not be fully developed or require refurbishment.
What are the key metrics to measure the effectiveness of deal sourcing?
| Metric | Description |
| Lead Quality | Evaluates the potential profitability of sourced properties. High-quality lead channels should be prioritized. |
| Conversion Rate | Measures the number of sourced leads that convert into completed deals. A low rate may indicate issues in evaluation or negotiation. |
| Cost Per Lead | Total expenses incurred to generate a single property deal lead. Helps assess the cost-effectiveness of sourcing strategies. Identifying lower-cost channels allows for better budget allocation. |
| Return on Investment (ROI) | Compares profits made from closing a property deal to the cost of sourcing. Calculated by dividing net profit by total sourcing costs. Higher ROI indicates a more valuable sourcing strategy. |
| Time to Deal Closure | Average time taken to close a deal from introduction to completion. Shorter times indicate an efficient sourcing and negotiation process. Analyzing this metric helps identify delays in the process. |
1. Lead Quality
By evaluating the lead quality, you can measure the potential profitability of a property sourced. If a channel constantly provides you with high-quality leads, it is better to focus on it more.
2. Conversion Rate
It is the number of sourced leads converting into completed deals.
A low conversion rate indicates there might be issues in the deal evaluation or negotiation process, allowing you to find those issues and correct them to improve overall efficiency.
3. Cost Per Lead
Cost per lead refers to the total expenses incurred in generating a single property deal lead, including your networking cost, marketing charges, and other associated business expenses.
It helps you understand whether your deal sourcing strategy is cost-effective, or needs changing in allocating resources for better outcomes. If you can identify the channels that produce leads at lower cost, you can allocate your budget effectively, and earn higher profits.
4. Return on Investment (ROI)
It is the measure of the profits made on closing a property deal compared to the cost of sourcing them. You can calculate the return on investment of a property-sourced deal by dividing its net profit by the total cost of sourcing and closing them.
If your ROI is higher, it means the sourcing strategy is generating significant value related to its costs.
5. Time to Deal Closure
It is the average time taken to close the deal from introducing them to investors to completing the transaction. When your deal closure time is shorter it indicates you have a streamlined and efficient sourcing and negotiation process that allows faster ROI generation.
By analyzing this metric you can identify the stages in your property deal-sourcing process that cause delays and require changes.
FAQ
What is a sourcing fee?
A sourcing fee is a fee charged by a property deal sourcer to find the right property deals for you. These fees can be a fixed amount for sourcer services, a percentage of the property price, and commissions. Pluxa Property usually charges £3000 for deal sourcing. However, the price can vary depending on the deal, complexity of property search, and the services required.
Do Property Sourcers Need Contracts?
Yes, property sourcers need contracts to protect their business, ensure clear terms and conditions in their dealings, and comply with legal documents. They require a property sourcing agreement (outlining services, fee structure, exclusivity, terms and termination clause), a Non-disclosure agreement (protect sensitive information), a sourcers fee agreement (outlining payment terms), and a non-circumvention agreement (it states your commission is due if a deal is closed after several months of introduction).
How do economic conditions influence deal-sourcing opportunities?
Economic conditions do influence deal-sourcing opportunities by increasing or decreasing the demand for property deals. An area with strong economic conditions will tend to have higher property purchases than other areas due to the rise in demand from buyers.
What qualifications are needed for a property deal source?(No qualifications needed just need skills )
No special qualifications are needed for a property deal source but you must have some skills like networking, analytical, communication, attention to detail, negotiation, and time management skills.
What is the difference between a deal source and an estate agent?
The difference between a deal source and an estate agent is that a deal source usually works for a property investor and earns a fee from them on sourcing the right property, but estate agents work for property sellers and earn a commission from them on selling a property.
Peter Juhasz is the founder of Pluxa Property, the biggest property investment company in UK and Group CEO of AIP Capital Group and a property investment expert with over a decade of experience in the UK market.
He built a successful property company using innovative cashflow strategies like Serviced Accommodation and HMOs, scaling to 200 units in four years.
Peter leads a team specializing in property and business acquisitions across various sectors. A former co-host of “Cashflow With Property,” he shares his expertise in real estate investing and business scaling.
He is committed to continuous learning and helping SME owners and investors maximize their returns, driven by his passion for empowering others to achieve their financial goals.
To learn how Pluxa Property can help you in UK property investment, contact our experts.
