Real Estate Basics: Real Estate Investing Secrets to Building a Super Buyer’s List
This series of articles on the basics of real estate investing discusses what an investor needs to know in order to take advantage of the current real estate market and build a profitable real estate investing business. To some, real estate investing may seem somewhat complicated, but it’s actually easier than one might think. This doesn’t mean you can just read a book or go to a seminar or two and gain all the knowledge you need to safely invest, but it does mean that with some effort, you can get the training you need to start investing. Rich Dad Education provides numerous courses (online and live) covering the basics of real estate investing. If you couple those courses with a personal real estate coach and a Mentor, you can gain the knowledge you need to start investing in record time.
Nothing will give a real estate investor more confidence than having a super buyer’s list. It helps to take away the number one fear that investors have—the fear of not being able to sell a property that they buy. This is especially worrisome for many investors in the current buyer’s market where it is more difficult to sell a property; however, with a good buyer’s list the property can easily sell.
There are two main components to a buyer’s list: 1. a list of other investors and rehabbers who may be interested in buying properties and 2. a list of buyers who are looking for a home to purchase as their primary residency.
This article will focus on building the investor component of your buyer’s list. The next article will discuss ways to generate the second type of buyer’s list—a list of people who are looking for their own personal home.
Building a Wholesale Buyer’s List
If you are planning to wholesale, you should spend time building a list of active buyers, usually other investors, who are looking for properties to buy. This is an ongoing process and an investor should always be searching for potential buyers. An ideal list for a wholesaler would have buyers for every type of property that one might find—contractors/rehabbers, landlords (for low-end, high-end, and average properties), multi-unit buyers, other wholesalers, cash buyers, new investors, and commercial buyers. An investor’s list usually starts fairly small, but grows over time into a list with hundreds of ready and willing buyers for numerous types of properties.
Here are a few suggestions to help you build a super buyer’s list:
• Search the newspaper for “Cash for Houses” or “We Buy Houses” ads. Many investors worry when they find numerous “I buy” type ads in their local newspaper. They think, “Boy there is a lot of competition for real estate deals in this area.” But if you are going to wholesale deals to others, the “I Buy” guys become your customers, not your competition. They are looking for property to fix up and sell or rent, and you may be able to supply them with that property, if you have negotiated a good deal.
Develop an information sheet that you can fill out each time you contact an “I Buy” guy. When you call, get to know them as best you can. At a minimum, get the following information:
1. Name and contact information (office phone, business cell phone, and e-mail address).
2. Find out what type of properties they are looking for.
3. Find out what areas of town they prefer to invest in and if there are any areas they don’t want to consider. Hint: If you are just getting started and are not that familiar with an area, this information can help you know in which areas you should look for property and the areas you should avoid.
4. Find out what price range they are interested in.
5. Find out how fast they can close on a property. If you have a property under contract that has a closing deadline in two weeks, you need to know who on your list can close in a relatively short period of time.
6. Find out how much profit they want in order to be interested in the deal. You will find that some investors will be satisfied with deals that produce $10,000, while others may not even look at a deal unless they have a potential profit of $25,000 or more.
As you generate your buyer’s list, categorize and group potential investors
based on the above data. That way you can save time and match the right properties with the right investors.
• Always be on the lookout for “I Buy Houses” bandit signs. Again, new investors may view the investors who use bandit signs as competition, but as a wholesaler, these people can become some of your best customers. Whenever you see a bandit sign, immediately write down the phone number. If you think, “I’ll get that number later,” you won’t remember where you saw the sign or the sign may be gone by the time you get back to that location.
• Search the Internet for “I Buy Houses” ads. Go to some of the popular advertising websites, such as craigslist.com and backpage.com, and look for “I Buy” type ads in your area. You can also try a search by typing in “I Buy Houses” along with your city and state. You will get more information than you really want, but start calling and add the names of interested investors or investment companies to your buyer’s list.
• Call on “For Sale” ads. Research your local newspaper for homes that are advertised for sale. Look for key words that might indicate that the home has been recently rehabbed. Words such as, newly remodeled, completely updated, or new interior can be indicators of rehabbed properties. Call on the ads and find out if they are investors. If they are, get their information and add them to your buyer’s list.
• Run your own ads in local classifieds. Experiment with the regular newspaper and the weekly free papers, such as the Penny Saver or Thrifty Nickel. Try running an ad that says, “Handyman Specials – Low Prices – Terms Available – XXX- 123-4567.” This should get your phone ringing. You are not advertising a particular property (unless you have a property under contract) and when people (usually investors) call, get their information and let them know you will be getting additional properties soon and will provide them with specific information. Get them on your buyer’s list.
• Run your own ads on several Internet classified advertising sites.
• Network at your local real estate investment club meetings. Most areas in the country have real estate investment clubs that meet on a regular basis. Plan to attend the monthly meetings for as many clubs as you can find. Gather cards from everyone you meet and follow up later in the week with a phone call to discuss what type of investing they do and add them to your list.
• Call on all the “For Rent” signs you see and ads listed in your local newspapers. Property owners who have properties they rent out may be looking for additional properties to buy, fix, and rent. If you have a property under contract at a high-enough discount that provides a positive cash flow, it should be easy to assign that contract to an existing rental property investor.
There are other techniques that can be used to build a wholesale buyer’s list. Be creative and your list will continue to grow.
So how many active buyers do you want on your list—50, 100, 200? You want as many as you can get! Don’t ever stop building your list. Investors with a super buyer’s list never have to worry about selling properties or assigning contracts. And if you have a super buyer’s list, you will find that other investors will come to you and ask for help in selling their properties. That can generate an additional income stream for you. A super buyer’s list is one of your most important assets.