Your goal as a Wholesaler is to find between 6-10 GREAT buyers. Go ahead and put your hand down, I know what your question is already. But Matt, shouldn’t we try to have as many buyers as possible? Shouldn’t we market all of our deals to everyone? The answer to both of these questions is no, but yes at the same time.
Let’s start by dissecting the word GREAT into the individual letters.
G is for Good
A GREAT buyer is good at what they do. They take their business seriously and want to succeed in real estate.
R is for Ready
A GREAT buyer is ready to buy. They will usually have two or three rehab projects going at a time. Paying one additional month of interest is merely a cost of doing business.
E is for Eager
A GREAT buyer is eager to close. They know that you don’t make any money unless you convert properties into dollars. The sooner they can close the sooner they can get their crew started on it.
A is for Accountable
A GREAT buyer is accountable to their word. You don’t have to wonder if they are going to disturb tenants or homeowners, will forget to order an appraisal or forget to show up for a closing.
T is for Timely
A GREAT buyer is timely and on time. If they say they will meet you there at 10am, they are there. If you schedule them to close at noon and your sellers at 2pm, there will not be a problem.
Now that we know what a GREAT buyer is, there are several reasons we want to work with a limited amount of buyers, many of which we learned the hard way.
You need to watch out for people that try to go around you on a deal. This has to be the lowest form of slime-ball that I have ever seen. If you are one of these people, put the book down and ask for your money back now. I really don’t want you becoming successful in wholesaling or any other type of real estate.
A “Go-Around”, happens when someone approaches the seller of the property, usually with your email in hand and attempts to undercut your assignment fee by offering them a few thousand more than you did. This started happening especially after we allowed people to automatically enroll themselves as one of our buyers through our website. The more people you advertise to, the better chance you have of this happening.
Here’s a way to fix this in a jiffy. Send an email blast to your entire group about one of your rentals. If you don’t have any rentals, advertise a friend’s house who works from home. If you don’t have any friends, well, that’s a different book.
Here’s what you do. Blast out a real juicy deal with lots of equity that will be hard for them to pass up. Make very clear instructions, “Do Not Disturb, Owner Living in House.” Instruct your tenant or friend to act like the owner and listen to everyone that stops by and tries to intervene in “the contract.” Pay them $20 for every name, phone number and email that they get. For a hundred bucks you’ll weed out your list in a matter of a week.
In addition, to “go-arounds,” working with many buyers requires you to educate each new buyer on how you do business. When I first got started Paul would hammer home the fact that whatever terms we agreed to on the first deal would set the precedent for every deal that followed with that Investor. This would include; the percentage of the assignment fee up front, who held the escrow and which title company conducted the closing.
Where else can you find GREAT buyers?
The County Courthouse
Try going to your local courthouse auction and see who is buying. Chances are they have a boatload of bank and private finds behind them. Keep in mind I said “buying.” The newbie Investor that has their heart set on Aunt Jenny’s condo that is in foreclosure is not your buyer.
Your Email Inbox
Search your email inbox for the person that originates an email about new properties. You have to be careful because a lot of these people are wholesaling everything and don’t have any real money for a closing.
Hard Money Lenders
Call every hard money lender you know. Ask them who currently has money and is looking for properties. Incentivize them by telling them you will direct the hard money loan back their way. They may not want to release the information but they can find out what they are looking for on your behalf.
We used to put signs out all over town that are totally different from the ones that you normally see. Most signs are yelling at you that they want to “’Buy Houses for Cash!” We have signs that say “We Sell Distressed Properties”. They then call a phone number and are instructed to enter their fax number and a list will be sent to them. Here’s a bit of logic to think about. The people we buy properties from usually do not live in the neighborhoods where we buy properties. They are landlords and what we term “don’t-wanters.” Investors are the ones driving these neighborhoods looking for properties that have the usual distressed markings, such as: overgrown grass, busted windows, bad paint, etc.
You take your pick on how you want to gather the information, but the best way I have found so far is to direct them to a website. The reason being is you can squeeze them for information before they see any properties for sale.
Let’s face it in this day and age if someone does not have internet access, they probably are not your Buyer. Even as I write this I am sitting in a hotel room two hours outside of Bogota, Colombia and my high speed access is working just fine.
If you want to include a phone number, I recommend you using Kall8 for 800 numbers as you can reroute them very easily with an internet connection. This way you can easily transfer the calls to an office when your business starts to grow and you won’t have wasted a ton of money on advertising to your cell phone. Trust me on this one, I learned the hard way.
Fax-On-Demand or FaxBack
Another service that is great for building a buyers list is Fax-On-Demand. If you use a service to send them the current list of properties they enter their fax number or “opt-in” and then you are able to send them faxes in the future as well. Although I do not use this service any longer, here is a link where you can see a real example of a faxback. Use your bandit signs to promote this number.
Here are a few sites that offer this service. Corporatefax.com, Globalfax.com and Mast-ent.com are a few of the companies that can provide this service for you. This list is just to get you started. Try and find one where you upload a computer file vs. faxing in your ad copy, the quality will be MUCH better.
Direct mail to high end apartment complexes
These folks are usually on the cusp of buying their own home. They might have moved to a new location temporarily and have now accepted that they are going to be living in this new location and would like to start earning equity every year rather than dumping it into rent. I am a perfect example of this having lived in Seattle, New York, Miami and Bogota. Each time I move I like to rent before deciding on a property to buy.
This strategy is usually applied once you have implemented several other marketing techniques first.
Placing ads for investment partners is another great way to build your Investors list. Try something like this:
“Investment company seeks partner for several properties in the [your county] area. We have secured special access to non-listed properties that are direct to seller. If interested, please visit www.homereco.com
and fill out our ‘Buyers’ form to see if you qualify. Serious inquiries only, thank you.”
WHAT TO ASK FOR
So what type of information should you collect from a potential buyer? If you have visited several investor sites, you already know what to ask for. If you are like me and are ambitiously lazy, here is the information in concise format.
• Email address
• Company Name
• First and Last Name
• Company Address
• Preferred Phone
• Fax Number
• Type of property they are interested in: Single Family, Multi-Family, Commercial
• Approximately how much capital are they working with?
• Are they interested in loaning money on mortgages?
• What level of Rehab are they comfortable with?
• How many transactions have they completed in their career?
Remember...you only need 6-10 G.R.E.A.T. buyers to have a very successful career as a Real Estate Investor. Finding these 6-10 buyers is the challenge.
If anyone has any additional questions regarding the creation of their buyers list, please feel free to post them on this thread.