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During this episode, Alex talks about a topic that has caused a lot of headaches for property investors and serviced accommodation hosts - unscrupulous deal sourcers. He explains how people get scammed by deal sourcers selling SA rent-to-rent deals that are too expensive, for properties that are not suitable for use as serviced accommodation or are of such poor quality that guests will not want to stay there.
Alex explains exactly how to avoid falling into this trap. Taking you through vetting the sourcer, assessing the property, working through the numbers to make sure it will be profitable, ensuring you are not paying above the market rate and more.
KEY TAKEAWAYS
Getting out there yourself and speaking to agents and landlords is still the best way to find legitimate deals that work for you and your business.
A legitimate deal sourcer who has good connections in the area you are interested in can use their network to find you the right deal. But not all of them have your best interests at heart.
If you do plan to use a deal sourcer learn to differentiate a good deal from a bad one.
Deal sourcers should be transparent. If you have questions about the area, council regs, average rent or occupation rates they should be able to answer them.
If you want to know the sources of the data they share they should willingly show you.
Walk away if they use pressure tactics.
The exact costs involved in the deal should be laid out in writing.
If something sounds too good to be true, it usually is. Always pause and break the numbers down yourself.
Fully understand the costs involved in running the property e.g. maintenance and laundry.
Look at what is happening to the area in the long-term, e.g. are zoning changes looming, is a road due to be built through the property?
If it is in a block of flats or another community-controlled development double check SA is allowed and other restrictions.
BEST MOMENTS
“A sourcer is someone who locates and arranges property deals for investors.”
“The property industry, unfortunately, is littered with horror stories of investors who have ended up stuck in bad deals ”
“A good sourcer should be completely transparent about the details of any property they present to you.”
“Make sure that you're not paying above-market rent.”
“Get independent property valuations.”
HOST BIOS
Alex & Pooh have built a portfolio of over 16 Serviced Accommodation Units and 10 Buy-To-Lets collectively over the last 5 years.
This AirBnB Business has allowed each of them to create their own tailor-made ‘lifestyle by design.’
Pooh chose to escape the corporate life as an electrical engineer instead to spend his time at home with his young and growing family, and Alex likes to spend most of his time in sunny Spain enjoying his love for road cycling or even hiking in the Tramuntana mountain ranges.
