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The last couple of years have without a doubt been tough for many and 2022 and beyond is shaping up to be just as tough. The cost of living crisis is impacting people already and is only going to get worse toward the end of the year.
With many people in the past couple of years losing their jobs and struggling to find new ones, the amount of people starting 'side hustles' has exploded! So I wanted to talk about how you can scale a property business and turn it into your 'working from home dream'.
Imagine you roll out of bed, step in the shower, go make yourself a hot cup of coffee and fire up the laptop... And that is how every day starts...
Your work commute is now by foot, no more traffic jams in the rain, no more stress trying to get to work on time because your in total control of your day. Your the boss!
The side hustle in Britain, has exploded in the past year or so, largely down to a need of earning more money and people searching for more control over their own lives.
So the question is??? How can you start your property side hustle and scale it to get to this point?
The Start:
First you need a business plan, a strategy a roadmap, to take you where you want to go! Sound's easy, but many skip this part and just assume it will happen. Wrong. Yes your starting a side hustle (but it's a still a business) and their needs to be a strategy in place for it to work for you.
Write your goals out for:
The next 30 days (short term tasks you will complete to move forward)
Medium term - goals for the next 6 to 12 months (business goals, activity milestones)
Long term - 1 to 3 years (keep these more lose, as they will be re-written over an over)
Lot's of people write out a big 5 year plan in so much detail, but the reality is it might drive you forward but it's so far away it becomes less important to you and serves little purpose. My advice is to focus on the next 30 days and make them task orientated so you know what you are doing for the month ahead.
The medium term and long term goals will change as you move forward and progress so these are likely to change over and over. Focus on right now and create that 30 day plan of tasks you MUST complete.
Your Property Niche Area?
Choose a strategy/niche area, that will work for you part-time but one that you can scale up. Most people start out by 'property sourcing' and as you progress and build momentum you will eventually have a pot of money.
For each deal you source and package for an investor you get a 2% fee (on average). That's 2% of the purchase price by the way! The average fee is between £2,000 and £5,000 per deal just to give you an idea.
You now know the earning potential is between £2k and £5k per deal. OK so how many deals do you need in a calendar year, to replace your full time income? Most people need between 6 and 8 deals in a year. That's less than one deal sold a month.
But let's not get ahead of ourselves here, you need to learn the knowledge first, so there is a start-up phase, where you will need to register your business, get a business bank account, meet all the compliance legislations so you are able to legally trade as a property sourcer. Whilst your doing this you will need to start learning; how to source, how to find investors, how to set up your businesses processes and so on... think back to the 30 day plan... this could easily fill your first 30 day plan.
If you keep your business task orientated, so every task you do is to drive the business forwards then those small steps will lead to huge gains when you look back after a year.
The Wheels Are Rolling:
Once you have a good understanding, it's time to start putting the knowledge into action in the real world. This is when you will undoubtedly learn the most... you will hone your craft, tweak how you approach things and you will get better, as you take each step forward. Speaking to agents, investors, vendors, sourcing, searching, chatting, networking... eventually it all becomes second nature to you. You have to allow time for this to happen.
Success comes with consistency, you might speak to 20 investors and 2 will want to work with you and have you source for them. To be honest, one is all you need. You're concentrating on getting one deal done, not deal 2 or deal 3, they will follow. So focus down on those investors that you signed up and get busy. Work with them, build a relationship, understand their needs and provide them with your service.
Check the Bank Balance:
It's finally pay-day, that deal you sourced for your first investor client, has completed and you have money in the bank. Your first fee, your first deal done and dusted... and the realisation hits you in the face... it's all just a process. It's not so complicated after all!
Find the Investor and qualify what they want from a property investment
Sign them up on your contracts / terms of business and carry out your A.M.L. checks
Source opportunities and send to the investor and get feedback to aid your search
Investor wants to purchase a property - you help manage the sales process
Property purchase completes - you get your fee and onto the next one!
Most people have a habit of over-complicating property sourcing. Your prime focus should always be investors, not properties. Find investors and serve their needs, provide that service and the rest is straight-forward.
Sourcing is a people business and if you can be friendly, professional and communicate well, you are the ideal person to build a business just like this.
Scaling the Business So You Can Quit the Day Job:
You might have that first deal done and banked but, you can't quit your day job just yet... you need to repeat that process over and over. So the key to scaling your business is in two parts... one you will need to create a pipeline of investors who want to work with you, or investors that want multiple properties. Secondly, you can provide 'other services' for your investors, to bump up that sourcing fee and inflate your income.
You can offer to manage a refurb on a property, if you have a good relationship with a builder or trades people. You can charge a fixed fee to do this or charge 15 to 20% of the refurb cost. This can really boost your income, so one deal might earn you £5k in sourcing fees and a further £5k in project managing fees. So you have doubled your income from that deal/project.
You will find once you do this once for an investor, you will most likely be doing it on a regular basis with the same investor on their next project or other investors in your pipeline. You could earn your years salary in doing just two deals.
Think about giving your investors a full service, what else can you offer? Help them find an agent to manage the property? Project management, you could even JV with investors on deals when you have the experience to do so, the income streams are plentiful when you focus on servicing the needs of your ideal client.
I would say when you have got to this point you will naturally start thinking... if I did this full time, I could earn way more than my day job.... and that is how it starts for many people.
In Summary:
I would say to people considering a move into property, that you just need a workable plan, and you need to be able to keep yourself accountable to your goals. If you start losing interest or stop taking action then your not going to take it anywhere.
You have to go into it with your clear plan and work on that each day, be it part-time, be it a few hours a week, be it only on the weekends. The more you put into something, the more you will get out.
Without a doubt effort and consistency is the number one driver of success. If you understand this, and you liked the sound of this blog, then maybe property is your side hustle of choice?
