If you are not satisfied with the quality or volume of real estate deals coming your way, check out the following…
Locating good deals is the back bone of making money as a Real Estate Entrepreneur. If you develop the ability to locate the good deals in your marketplace, a lot of the other problems associated with real estate investing will take care of themselves.
Your goal should be to have a constant flow of good deals coming your way at all times. You don’t want any interruptions in this flow. Once you establish a constant flow of good deals, learn how to capitalize on as many of them as possible.
O.K. There are two distinct sources for Single Family Houses: For Sale by Owners (FSBOs) and houses listed for sale with real estate agents. Both of these require a different strategy and both can provide you with a lot of good deals. Let’s start with…
Working with real estate agents
The reason you should start with real estate agents is simple. Real estate agents have access to valuable market information. This info can save you a lot of time and money. As a matter of fact, you may want to consider becoming a real estate agent just for access to the market information. Anyway…
Your goal in working with real estate agents should be to find four or five who will bird dog property for you. Four or five who will call you when they see property which meets your criteria. Four or five real estate agents times four or five houses per year equals success. That’s a realistic goal!
WARNING: You can’t do business with everyone. Only a small percentage of real estate agents will work with investors. Your job is to find the ones who will work with you.
Real estate agents work on commissions. No commissions, no phone calls. No phone calls, no deals. If you want to let a real estate agent know you’re looking out for their best interest, write in a 10% commission in your offer to purchase. It doesn’t effect your purchase price as long as you haven’t agreed to pay commissions outside of closing.
The plan
Pick a quiet time, preferably in the morning, when you can dedicate 30 to 45 minutes to making phone calls. Get your phone book out and turn to the “Real Estate” section of the Yellow Pages. If you’re a real estate agent, use the roster section of your Multiple Listing Book.
Call the larger firms first. These are the ones with the largest ads or the most agents. Ask to speak to the top agent in the firm who works with Single Family House investors. Here’s what I might typically say:
“Hello, my name’s Scott Britton. I’m an investor who’s interested in establishing a relationship with a real estate agent who can help me buy several houses this year. Do you work with real estate investors? If not, does anyone in your firm work with investors? Great!
I understand commission sales and know your time is valuable. Let me tell you my purchase criteria. I’m looking for houses in North and Northeast Jackson to purchase for rental or resale. The rental properties must provide a positive cash flow. The properties for resale must have room for a profit. I can pay all cash and close quickly. Problems don’t bother me. Do you know of any houses I should write offers on?”
Don’t try and call every office in your town in one day. You’ll probably start to burn out after talking with 10 to 15 offices. By that time, you will have found 2 to 3 agents you can work with and have a list of several properties to make offers on.
Keep a written log of your phone calls. Who you called, when you called, outcome of call, etc. I keep this info in a spiral notebook like my kids use in school. You’ll want to keep a log for memory and follow-up purposes. Next time you sit down to make calls, you’ll know where to start. (You may even want to keep your telephone script handy in this book) You’ll have a record for years of who you’ve talked to and who you haven’t. Don’t underestimate the power of keeping a log.
Real estate agent contact software
This system – no computer required – is simple, easy to use and will put you light years ahead of your competition. But remember, like any system, maintenance is required.
Set up a maintenance schedule. Start with once a week. Pick a day and time. The first week go through the yellow pages (or MLS book) and start calling real estate offices. Carry on a conversation something like I suggested. After you do this a couple of times, you’ll develop your own script. Write it down in your log. Constantly look for ways to improve it. Next, follow up on any properties which meet your buying criteria. Make offers on those you like and reject the rest.Then…
The next week, start by calling the contacts you made the first week. You may even want to highlight their names in your log with bright florescent colors. Don’t waste a lot of their time talking about the weather. Find out if they have run across anything you might be interested in. Make sure they know how to reach you in the event they find something.
Next, call a few new offices and locate a couple more agents to help you prospect for good deals. You’ll always need to add new names to your list. Some of the older names won’t pan out. Some will go out of business. Some will even die. In fact, that’s not a bad way to think of your contact software. It’s living and dying. It will always need an influx of new names to stay viable.
Well, I hope you get the idea. You don’t need a lot of capital to develop this program. Just a telephone, a telephone book (or MLS book), a couple of spiral bound notebooks and about an hour a week. The key is consistency. Keep it simple and easy to use. Don’t complicate the system or you’ll never use. Don’t forget your maintenance and follow up.
This system is a renewable resource. A referral system in itself. One good relationship can bring you deal after deal, year after year. You are in fact duplicating your efforts. Set this system up properly and it will pay you cash dividends for years to come.