Planning your business and setting goals is the main way to become successful – it’s not all about luck or ’good feelings’!
Good Planning is key
Before you start planning, it is imperative to have set some goals for yourself. At Sourced, we recommend setting a 12-month goal and working out what you want to achieve by then and how you can do it. Then, you work backwards, setting a 6-month goal and a 3-month goal and so on, because breaking your goals into small habits and behaviors will help you achieve your 12-month goal. It is better to create a longer-term goal, which then impacts what your shorter-term goals are, because then you are working up to what you want to achieve rather than what you think you can achieve. This is also great for your motivation, and it encourages you to keep pushing yourself and seeing what you can accomplish.
Plan your Business Activities
After you have set your goals, it is important to put together a serious and coherent way to grow your business, but this doesn’t have to include many different strategies – in fact, at Sourced, we encourage you to use only three to begin with, but we will discuss these later.
Initially, before you begin working on your business, it is important to have a strong knowledge base. Many training providers offer highly specific courses about property flips or HMOs, for example. However, Sourced offers training based around finance and contracts that include strategies for dealing with different types of projects. This is because it allows you to not be limited to just one area of the market. If you go on a HMO course, then you are limited only to that type of property, which has recently become less profitable as competition has gone up, driving rental prices down. By having a broader knowledge base, you are able to be flexible and responsive as markets change, and you have more freedom to decide what you would like to do with your business.
Your Finance Options in Property
When you look into finance options, you will see that there are four (mortgage, bridging finance, peer to peer finance and commercial finance), which you can learn to use to your advantage, knitting them together to create more turnover for your business. Learn more about those in our Quick Guide to Property Finance.
One strategy that you could use would be knitting together bridging finance and a mortgage. Standard buy to let mortgages are based on the purchase price, whereas bridging finance is based on the valuation of the property. This means that if someone sells you a house worth £100,000 to you for £70,000, you could get bridging finance which would leave virtually no need for a deposit. Then you can remortgage it based on its original valuation, and you will have paid next to no deposit for the property.
Next, you have peer to peer lending, which is offered to franchisees by Sourced. This means you can borrow up to 70% of what your unit will be worth by the end of the project, so it can be a great option for strategies that create value uplift as the works progress, such as flips, new build or conversions. The funding will also allow you to have more cash-flow throughout the project.
There is also commercial finance, which is based on the multiple of income which shows the valuation of your property.
Although it can appear complex, it is important that you try to understand what your finance options are, how they knit together and what offers are on the market. For example, bridging finance lending criteria can change a lot, and there are better rates from a bridge if they have a lot of money in the bank that they want to lend.
Get the Right Contracts in Place
After finance options, it is important to understand contracts. As you may know, there are many contracts available, from commercial leases to common law tenancy, to a Sourced Order, which is a creation of Sourced that contractually ties an investor to a sourcer. Understanding the difference between them and the powers of the different contracts is vital.
You may also have heard of lease options, which can be a very powerful option for controlling properties, but again, it is important that you understand how to use them correctly. This is why Sourced train franchisees based on finance and contracts, as they are transferable skills, which allow you to follow whichever path in property that you choose. At Sourced, you are given 8 or 9 strategies and then you get to apply them to contracts and finance, so you are not completely specialised into one area, and unable to branch out into others.
Now, how do you Turn That £15,000 Into £500,000?
The first strategy is to increase your cash-flow. Use your initial £15,000 to buy 2 HMO properties, which should produce an overall cash-flow of £1,000 a month. This produces enough cash-flow to cover for your family life and bills, giving you the security you need to invest more time into bigger strategies.
Next, you should begin looking at the sales market and getting involved in property trading. First, you need to find deals, which you do by using Right Move and Zoopla initially, before beginning to visit estate agents and nurturing relationships with them. Once you have created that relationship, the estate agents will then come to you with property deals before they even hit the market, so that you can introduce them to investors and get the sourcing fee, which is around 2%. It can seem daunting to find investors, but places like Facebook can be a great way to begin generating leads. If you are consistent, over time you will have a database of investors. It does not need to be a big list, a small list of 5-10 committed people will be enough for your business, as the trust and relationship you will have will allow everyone to benefit, and it means you can rely on your investors to put down deposits when you need them to and to trust your judgement.
Building Your Pipeline
Ideally, you want to aim for one deal a month from months 2 to 6, increasing to two deals a month from month 7 onwards. This is certainly an achievable goal, don‘t feel too overwhelmed!
Finally, you want to begin flipping properties. You are already sourcing flips, you’re just trading them on, but instead of trading them on, you can maximize them yourself. A good goal would be to aim for one flip in the first year.
Bringing it all Together
As you can see, you don’t need to try and do lots of different projects to increase your business’ turnover. Simply by being consistent and doing a few things well, you can turn £15,000 into £500,000. The key message is to not over-specialize into one area, as this limits your growth potential. Sourced wants its franchisees to be successful, giving them the tools to create their own path for their business with ongoing help and support, through mentors, training and even podcasts. You can get a copy of the franchise prospectus for free, if you would like to see more about the opportunities that are waiting for you with Sourced.
