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Deal packaging can be a lucrative business venture, but it all depends on how you source and secure properties. To be a successful deal packager, you’ll need to master the art of identifying properties that have the potential for high rental yields, property value growth and a passive income stream for long term investment. That might sound challenging, but with the right strategies and plan in place, it is possible! In this blog, we’ll walk you through some of the top strategies for identifying profitable properties that are ideal for deal packaging.
If you’re considering deal packaging, it’s important to familiarise yourself with your desired neighbourhood and surrounding areas. Learn about the location’s trends, demographics, and what’s in demand. Consider factors such as access to transportation, shops, schools, parks, and local amenities. Identifying and targeting areas with high-demand factors could be one of the critical ways to maximise your returns. Make use of online property portals or talk to local estate agents to gain local market intelligence to understand your area’s milieu and operating environment.
The Price to Rent Ratio (PRR) helps to determine a property’s rental yield potential. This is calculated by dividing the sale price of a property by the estimated annual rent it would yield. The rule of thumb is that the higher the PRR, the less attractive the property is for buy-to-let investors. Aim to look for a balance between rental income potential and affordable yet desirable areas that differ depending on the property location, size and rental demand.
Finding distressed properties, like a foreclosed or abandoned property, could be a great strategy for finding value-added deals. Such properties sometimes require upgrades or repairs that pose significant risks for conventional buyers, but a creative deal packager can secure a beneficial property that can be redeveloped to a higher standard. Keep an eye out for properties that require minimal work, and you could be on your way to ensuring higher returns.
Spotting a property with commercial or residential development potential may not be an easy feat for most, but the rewards can be astronomical. These types of properties could be ideal for creating multiple value-added deals from exclusive one as a deal packager, and many real estate entrepreneurs have found success in this field. With a bit of initiative to understand types of development opportunities, you’ll shift to a category of sourcing opportunities that have a high-profit margin and long-term investment potential.
Finally, deal packaging is about understanding the market, selecting the right property in areas with stable returns, securing the best rate and having a network of partners to support your business growth. Work with parties such as real estate agents, capital investors, builders and fellow deal packagers to create a team that will bring in a range of opportunities for your deal packaging proposition. Attend industry events, and do not hesitate to join in online communities or social media groups where you can share ideas and connect with like-minded individuals to help your business grow.
There you have it; top strategies to identify profitable properties for deal packaging from knowing your target area, understanding the price to rent ratio, looking for distressed properties, identifying properties with a commercial or residential development potential and finally, building your network. A successful deal packager is one who implements these strategies and adapts them to opportunities that arise in the market. Remember, your success depends on how well you educate yourself, understand the market, and the people you work with. So, work smart, network hard, and seize the profitable deal packaging opportunities!
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