So many people want to take the leap from the sidelines into the real estate investing field, but have difficulty getting off the ground. Their first and biggest problem usually boils down to one thing, finding deals! Without the ability to find deals, your business is dead before it even begins. Fortunately for you and everyone else in the real estate investing community, there are a ton of methods out there to generate leads. Some are more expensive than others. Some are more time consuming than others. Lead generation all comes down to how much time you want to put in, and what your budget is. The more money you have, the less you’ll have to work for leads if you choose not to. If you have no money at all, you’ll need to use a more hands-on approach at first for lead gen. The way you find deals is all about preference as there is no right or wrong way to go about doing it. In this blog, I will break down strategies for both newbies and seasoned professionals to add to their repertoire of lead gen starting with the most basic first, and working down to the less budget friendly options later.
Defining yourself as an investor
Before you start lead generating, it is important to first define yourself as an investor. Are you interested in buying and holding, wholesaling, flipping, BRRRing, or anything else I may have not mentioned? Determine which path you would like to pursue and formulate a plan. This will keep you from meandering around success and instead guide you on a consistent path to be the best at whatever you want to be. You can change and adapt the plan as time goes on of course, but just having that plan lays the framework for everything you will be doing from that point forward. Narrowing your focus at least in the beginning of your real estate investing career will allow you to perfect one thing instead of trying and failing to be the best at everything. Define yourself as an investor and then lay out your plan!
Cold calling/Door Knocking
The reason I lump these methods together is because they are both free (minus the cost of a call list), but take up lots of time. Cold calling is basically getting a list of leads from an online source and calling them to see if they would be interested in selling their property. According to the Rev Real Estate School, the success rate for this method is very low with a typical appointment rate of about 1 percent of the people you actually talk to on the phone. This means if you call 1000 people, on average you can expect 280 of them to answer the phone and roughly 3 of them to agree to have an appointment with you (and this still isn’t even close to a guarantee they will accept what you have to offer). As you can probably guess this can get discouraging pretty fast and is not a method for people who hate rejection such as myself. Once you have the funds however, you may be able to pull viable lists of distressed sellers and outsource the cold calling to a company such as Pace Morby’s Start Virtual business. In my opinion, a better way to get in front of prospective leads is to door knock neighborhoods in which you are looking to buy in. This gives you the advantage of being face to face with a person rather than just an annoying phone call. You can make a much better impression door knocking, but it isn’t a method without rejection. Prepare to have doors slammed in your face or be cursed at. There is a method to add efficiency to your door knocking, and I will go over it in the next section.
Driving for dollars
Driving for dollars is one of my favorite methods for finding deals. The premise behind it is you drive neighborhoods you want to invest in to search for potential deals in that market. Ideally, you could use a software like DealMachine that allows you to mark where you have already driven on your driving for dollars quest, and provide you with skip traced lists of potential leads you come across to get in touch with them. Skip tracing for those who don’t know is getting access to the property owner’s contact information so you can speak with them directly. This is a much more effective way to cold call if you choose to call the leads you find instead of door knock because you have some sort of background on who you’re calling and may have access to see if they are a “distressed” property owner or not. The key to a high rate of success is finding and contacting distressed homeowners who may be dealing with divorce, death, a home in need of rehabbing, or a plethora of other things that are beyond the scope of this post. Driving for dollars is a cheap and effective method that enables you to do this. The only caveat is that it is time consuming and flat-out rejection is still a high possibility although less likely.
Pro tip: Driving for DoorDash, Uber Eats, Grubhub, etc. is a great way to get to know a neighborhood you want to invest in. You’ll be able to see all of the hottest places to eat, where people like to spend their leisure time, and other important aspects of the area all while getting paid to do it! I have personally done this myself and have been able to get a feel for how prospective neighborhoods function and where the hottest spots in town are all while getting paid to drive around and deliver some food. Who knows, you may even deliver food to a distressed property and later convert that property into a deal!
using an agent or wholesaler
A real estate agent as mentioned in one of our previous posts is a key member to your investing team. They will be able help you find and negotiate for properties listed on the MLS. This can be extremely useful to you and won’t cost you a penny in most instances. Typically, the buyer’s agent (your agent) is compensated from a percentage of the purchase price paid by the seller at closing. Many people don’t know this and are scared to reach out to an agent because of this fear. Agents also have a fiduciary to you meaning that they are legally obligated to operate in your best interests in a transaction and disclose everything they know about a property to you. By law agents are required to be fully transparent to you which is a big sigh of relief and another reason to have one on you team. Wholesalers are people who find you great deals, lock in a price for that deal, and then sell you the contract to that deal with their wholesale fee added on top of the purchase price. Great wholesalers can be amazing assets and bring you deals without you having to do any work yourself, especially in the case of finding off-market deals. However, they don’t have a fiduciary to you and do not have to disclose information they may know about the property they are looking to sell you the contract to. In addition to this most of them are just bad at what they do. Oftentimes, newbie investors with no money try to break into the real estate investing circle wholesaling. While this can be a great method for those who are persistent, most will fail and give up. Always make sure that when you are working with an agent or a wholesaler (especially a wholesaler) they have a positive track record. If not, it is best to avoid them as they will only add headache to your business.
direct mail
Direct mail is an effective way to find leads. It requires little of your own time, but a high budget. Basically, to have an effective direct mail campaign you first must pick your target neighborhood and make your mailers stand out. Most people will ignore “junk mail” so in order to stand out you can use colorful pastel paper and handwrite letters to make it look like an invitation. Do whatever you can to make your mailers pop and you will see better results over time. The key with mailers is staying consistent. You may not hear any responses the first time you send a mailer, however if you stay consistent people will begin to remember you and call you when they come across a situation in their lives in which they could use your services.
SEO
SEO is an amazing lead generation tool, but it takes time, effort, and some money. The idea behind SEO is to make a website that ranks top page for keywords relating to distressed houses for sale in your desired area. For example, if you wanted to invest in Tampa, you would want to rank your website for keywords such as “quick home sale in Tampa”, and the like. To do this, you will need to put some time into learning SEO tactics. You may want to start a blog on your website to rank for keywords, as well as add a lead capture tool for people to click on when they visit your site so you can contact them. Companies such as LeadPropeller can automate this whole process for you from starting your site, to getting you ranked for keywords, to even writing blogs for you. Using a company like this takes time to see success and costs a lot of money in the meantime. If you are at a stage where you can afford something like this, it may be a good option to consider.
Picking 1 or 2 methods and sticking with it
One of the biggest reasons why many new investors fail is that they try every single lead gen tactic at once. This leads to burnout and little to no success. In order to perfect your craft at one single method, it takes time and effort in most cases. I would not recommend trying to tackle more than 1 or 2 methods yourself at once, especially at the beginning. Once you become savvier and/or your budget increases, you may be able to expand the scope of your lead gen tactics. Develop a plan that best fits your goals and personality and go for it! Don’t deviate course or give up. Stay persistent and your business with flourish!