We all know that property sourcing and deal packaging provide you with:
Money in the bank one month from starting.
A replacement for your current income, enabling you to leave your job within 12 months.
The ability to drink Mojitos on the beach next year!
I know you’re probably rolling your eyes or at least smiling, if not chuckling, at the points above, thinking to yourself, “Here we go again, another article about how easy it is to set up, run, and make money from property sourcing or deal packaging.” Well, you’d be wrong, because now I’m going to bring you all back down to planet Earth (with a big bump for some) for the rest of this article!
Let’s take this process step by step, realistically, of course.
You Must Have a Clear Image of Your Goals
What do you want to achieve? What do you want your new business to provide you with? For example, to replace your salary and allow you to leave your current job and work in property full time.When you have decided on that goal, the next step is to think about what it will take to achieve that goal. How many deals will you have to sell every month to reach your chosen goal? How many leads would you have to generate? How many viewings would you have to do? How many offers would you have to make? How many deals will collapse before completion?Understanding those points above will enable you to create a business plan, which will, in turn, show you what you’ll need to be doing day in, day out, week in, week out, and month in, month out, to hit your targets.
What Do I Mean by That?
Example of a Step-by-Step Goal Review & Task Setting
Your goal is: to replace your £30,000 per year salary.Fee per deal sold: £3,000.But don’t forget that isn’t your money to just spend. You must consider a lot of other costs and factors.
Running Costs: Company systems, accountant, tax, national insurance, annual insurance, registrations, and ongoing training.These costs could be in the region of £5,000 per year, depending on the level of insurance, the redress scheme, the systems, the accountancy charges, etc.Don’t forget you will have to leave some cash in the bank to continue to run the business. Negative cash flow is one of the major killers of businesses and the reason why most businesses fail.
Necessary Targets:How many deals would you have to sell to cover all costs, pay yourself, and leave cash in the business for the following year?To get your £30,000 per year income, you may well have to have a business turnover in the region of £40,000, which equates to around 18 deals per year sent to solicitors to progress to completion. I know that some of you will have your calculator out now and saying, “Tina, you’ve got that figure completely wrong!”Well, I haven’t. Let me explain. A recent report looked at property sales data for the whole of 2024, focusing on the deals that 'fell over.' The reasons behind the failure to complete were varied, from the seller pulling out of the sale to RICS valuation figures coming in low, and of course, the buyer being unable to get finance approved. What is of more interest to us for this exercise is the number that fail to complete. The report stated that 28.8% of property sales in the UK in 2024, which were sent to solicitors to progress, failed to complete (for the purposes of this article, I will use a simpler figure of 25% failing to complete).
Where Do the 18 Deals Come into This?
If we accept that there may be a 25% failure rate to complete, in order to meet your income target, you’ll have to send 25% more deals to a solicitor to allow for the inevitable ‘failure figure’ and still meet your target income.Your deals sell at £3,000 each. You need 14 deals sold to hit a £40,000 target, but to cover the 25% failure rate, you’ll need to send 18 deals to solicitors for progression to completion and not risk failure to achieve the target set.That doesn’t sound too bad. But consider this: it is currently taking approximately 12-16 weeks for a property transaction to complete, if there are no serious issues. By the time you have set up your business — legally and compliantly, of course — found an investor to work with, found a deal that has been accepted, and sent it to solicitors for conveyancing, you can easily be talking six months (if not longer) before you get paid.It is advisable to look at the following points, all of which will affect your time and ultimately how many deals you can source within any given 12-month period:
How many leads would you have to generate?
What’s often overlooked is the number of leads required for each completed deal. At first, you won’t have a clear idea of what that number will be, and it’s likely to fluctuate over time. However, based on our 13+ years of experience running a sourcing business, a reasonable estimate is around ten leads per completed deal.That number can be significantly higher if your marketing message isn’t clear and specific. A well-defined description of your requirements helps filter out unsuitable inquiries—whether that’s from areas you don’t operate in or strategies you don’t source for, such as land development or commercial conversions.
How many viewings would you have to do?
When you receive leads in your pipeline, the first step is to filter them on paper to determine if they could work for your client. If the answer is ‘Yes’ or ‘Maybe,’ you can then have a conversation with the seller to gather more information about their situation and what they want from the sale. If it seems like a viable option, schedule a property viewing.Out of those 10 leads generated for our business, we would end up viewing possibly five or six at most. This may be due to the seller not wanting to drop their asking price, which, for that property in its condition and in that area, was hugely overpriced. In that case, we would just stay in touch in case their circumstances changed; which often happened, and we would often pick up a deal a few months later when their property hadn’t sold.
How many offers would you have to make?
Out of the five or six properties we actually viewed, we would make offers on two or three. Often, when we went to view a property, the condition had been exaggerated as being very good, but in reality, it would require a full refurbishment. This wasn’t always what our client at the time wanted; they were looking for a property that only needed a light refurb before being rented out quickly.
How many offers were accepted?
It’s difficult to give an exact figure for this, as it depends on the level of the offer made. If you’re offering significantly below the asking price, the number could be much higher than if you’re targeting a buyer who’s happy with the asking price, especially if their strategy adds substantial value or they run a high cash flow service.From our experience, we often didn’t have the first or even second offer accepted. But eventually, we would hit a figure that both the seller and buyer were happy with, reaching an agreement on one or two of the properties offered on. We wouldn’t give up on the ones we initially lost, though—we’d continue monitoring them and go back to the agent if the property remained unsold.
How Many Deals Completed?
Out of the couple of properties where our offer was accepted, the vast majority completed. We believe that a major reason for this was the level of due diligence that we carried out on the seller, the property, and the buyer before working with them. We made sure that due diligence on the seller and the property was completed in-depth, and that if there was anything that may cause a delay or, worse still, the collapse of the purchase, we discovered it at the earliest stage and found a solution or walked away from the deal. We ensured that the buyer had the cash to purchase, that it was in place, and if any additional funds were required from mortgages or bridging, then we received confirmation from a broker or the finance provider that, depending on the property, finance would be available, that the buyer was within the scope of their loan criteria, and had gone through a process of assessment with them.
A Real-Life Example
I will never forget the three deals that did fall over. They were all development sites for the healthcare sector: land for building care homes. We were well on the way to exchanging contracts, and for all three deals, a sourcing fee of £75,000 was involved when they all fell over! Why did this happen? The care company that was intended to build the care homes on the land had lost the care contract with the local authority. The contract had been put out to tender, and they didn’t win, which ultimately caused the deals to fall through.
Sourcing: It Can Provide the Dream If Approached With Reality
Property sourcing and deal packaging do work and can provide sufficient income for you to leave your current job and work in property full-time, but it takes time and a lot of effort to get to that point. As long as you come into the sector with open eyes, understand your goal, what will be required to achieve it, and have everything required in place, as well as patience, you will succeed.So, rather than property sourcing or deal packaging from Mars or Venus, come back to planet Earth, keep your feet firmly on the ground, and achieve your goals!
Website: Instagram: napsauk
