One of the myths quickly dispelled when starting my own deal packaging business was that “you can start a deal packaging business with no money”....well that’s not strictly true. Many articles and YouTube videos acknowledge that you will need some money to get started and concede that it isn’t a ‘no money down’ strategy. Simultaneously, they also suggest that you will need approximately £2,000.00 to kick things off: again, in my experience, that’s not quite accurate enough for me.
Regardless of the property strategy you are currently employing or looking to employ, it is often recommended that we add an element of deal packaging as an alternative stream of income - the guru David Siegler has been preaching this for years. And this I wholeheartedly agree with: after all, there is likely to be a point (especially when starting out on your property journey) where you will find a cracking property but simply don’t have the capital to do so. So why not benefit from this legwork by marrying it with somebody who does…..and take your cut in the middle (watch Layer Cake, 2004).
In theory, this is simple: keep finding the deals as the great investor you are (continue your love affair with Rightmove), then find the investors that are willing to invest in you. And it’s that ‘willing’ bit which in my experience is the tough bit to nail - how do you get somebody with the capital to have the confidence in you to be able to deliver their needs?
Unfortunately, this is where you will need some cash to get started. In essence, all of the below costs fall into one of two (or both) categories: compliance and marketing. I feel both of which go hand in hand when building confidence in your brand and a perception of professionalism to get your investor to be willing enough to invest in you.
I wanted to break down all of the costs I incurred initially when starting my deal packaging business so you guys know exactly what you need if you were thinking of doing the same:
Membership to the Property Redress Scheme (£238.80)
Information Commissioner's Office (ICO) Membership (£32.12 annually)
Terms and Conditions (£1,800)
HMRC Anti Money Laundering Membership (£340.20)
Public and Professional Insurance (£302.40)
Website, domain name and bespoke email (£146.40 annually)
Limited Company Setup (£12.00)
Monthly Accountancy Costs (£110.00 monthly)
Training and Development (£2,936.40 initially)
Property Data Membership (£264.00 annually)
Initial Marketing (£30.86 Initially) - leaflets and business cards
Essentially, to do everything (in my opinion) above board and professionally, it cost me £7,422.40. That would be based on me doing no additional training or further marketing within that calendar year. I’m certainly not suggesting that this investment isn’t worth it (I certainly would not have parted with my own cash if I thought otherwise!) but it is worth bearing in mind when starting out - all you need to do is to find approximately two deals and you will have already recouped your costs. There is also a school of thought as to the timing of these costs, for example, whether you need terms and conditions before you find your first investor; I would prefer to get my ducks in a row before I welcome my first bit of business.
Let me know what you guys think in the comments below, I’d love to hear your thoughts - after all this is just my opinion!
If you are looking to invest your own money by starting a property portfolio, please get in touch by putting HPI in the comments or emailing me directly at contact@harrisonpropertyandinvestments.com!
Thanks,
Lloyd
Harrison Property + Investments
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