Build a Profitable Buyer’s List
The quickest, most direct means of making money in real estate is to engage in flipping. You can flip contracts for purchase and sale, or you can flip a property that you own. Both bring immediate profit, so long as you get the flip transaction completed in a relatively short time period without excessive expenses.
This emphasizes the need for both speed and efficiency. The longer you hold onto a property before you sell it, the more it will cost you. The holding costs can add up quickly.
If you really enjoy living dangerously, it might be kind of fun to go out and get a purchase contract on a house and then start looking around for someone to assign it to. However, for most people, this would turn into a nightmare. If nothing else, you want to protect your karma. Can you imagine what signing a contract with desperate, highly motivated sellers, and then stringing them along for 43 days of a 45 closing period, at which point you tell them, “never mind, I was just kidding, I’m not going to buy your house” – what that would do to your standing in the cosmos? That’s not the kind of karma we really want.
What we mean here is that whenever you take on a contract for purchase with the intention of assigning it to a third party, you should either fish or cut bait within the first 10 business days. If you don’t have it assigned within 10 business days, now is the time to cut it loose. Logically, the chance of you finding a recipient of your assignment within 10 days is pretty slim, so you’d better have a number of people on your list who have already expressed interest in taking the contract off your hands. It’s probably not good enough to have just one person ready, because there is no guarantee that this particular deal and this particular timing is just right for that person.
If you’re still with us, you may be asking, “so, how do I find these people?” That would be an excellent question. The answer will require a little effort on your part, and may require that you stretch your comfort zone a little. We say that, because most people, especially beginning investors, don’t just know multiple people who want to buy a house, either as an investment or to live in. That means that you will need to get off the couch and network to find these people.
That might seem a little scary for some of us at first, but remember, in all cases we are not asking people for a favor; we are offering them an opportunity. The investors we work with will make money because of us, and the people who live in a house we provide them most likely couldn’t have gotten this house without our help. The ones we want to talk to won’t see us as a bother, they will see us as an opportunity.
We would like to look at how we can get ourselves a buyer’s list. Let’s put it this way, in all the years that we have worked with individual new investors, every single one of these new investors that has built a list of potential buyers has always gotten a deal done during the time that we have worked together. It seems that the feeling of confidence from having people on hand to take their deals from them empowers them to get out and do the business. It makes them bold and proactive.
Having a network of people in advance to buy the houses you acquire is always a good idea.
When a Buyers’ List Helps
Regardless of your intended exit strategy on a quick turn deal – wholesaling with assignments, lease- options, buy-fix-sell, subject-to or even short sales – maintaining a high-quality list of people who are willing and ready to take properties off your hands gives you a huge edge in the marketplace to the point of possibly increasing your income many times, or maybe determining whether or not you can stay in the business.
We talk of two kinds of buyers, therefore two kinds of buyers’ lists: wholesale and retail.
Retail buyers are those who purchase a house in order to live in it. They are looking for a residence, and their decision making will be more emotional than with a wholesale buyer. The wholesale buyer is looking for a property for business purposes, to make money with. We treat each group differently.
In visualizing the typical retail buyer, we see Jim and Susy, a young couple with a couple of small children. Jim works as a machinist and Susy works part-time at Walmart; otherwise she is taking care of the kids.
Keep this in mind: in just about any community, people working a trade, like Jim, or a menial job, greatly outnumber the doctors, lawyers and business owners. These working people typically have less sophistication when it comes to buying a house. The have fewer contacts to advise them and help them. They are looking for a house that they can afford, which most often will be priced below the median household value for the community.
An investor who caters to this group and supplies them the knowledge and confidence they need in order to acquire a home of their own will always be able to sell all the houses that he or she acquires.
This becomes all the more important when you
want to engage in wholesaling houses, in flipping
purchase contracts with assignment agreements.
If that is part of your plan, one of the first things
you want to do is build a buyer’s list. You
definitely do not want to make the beginner’s
mistake of waiting until you have a house under
contract to find the buyer. That is a lot of pressure to put yourself under, and finding a buyer under those circumstances takes a lot of time that you can be using to pursue other profitable activities.
There are many groups of people will want to obtain houses from you for business purposes: novice real estate investors, handymen rehabbers, contractors, retailers, investors interested in doing lease options, and others. When you create a working connection with members of any of these groups, doing so could lead to a lot of future business.
You have heard much already in this course about real estate investor clubs. Most metropolitan areas in the country have at least one, often more. This is an organization that you definitely want to join and be active in. Your fellow members are your allies and co-workers. You can network with these fellow members to obtain a wholesale buyers’ list. After all, their purpose in belonging to the group is the same as yours: to find good deals to do. If you flip good deals to them, you will become a very popular member of the group.
You should get yourself some business cards and be ready to pass them out during the socializing time before and after the main meeting at these investor clubs. Even if you have no pending deals to flip, you want to be solidifying your connections right away. The cards should give your name, as many phone numbers as you care to give out, and an email address; if you have a real estate related Web site, put that address on, as well. It might be nice to have a tagline of some sort, as well – something that explains that you buy houses, or some such.
You can make these yourself with paper from an office supply or paper supply store (formatted for printing business cards at home), have a local print shop print them for you, or order them online from Moo.com or VistaPrint.com.
Actions for Finding Wholesale Buyers:
Get a list of “section 8” rental property owners from local property management companies. In fact, whenever you see a house for rent, contact the owner (perhaps directly or through a property management company) to see if that owner might be interested in more income sources, which you, of course, are happy to provide.
Place classified ads on local online forums, such as Craigslist (www.craigslist.org – but also search for local online ads, including TV stations and newspapers) announcing that you have houses available at a big discount; an example might be: “Investors wanted. Local property owner selling houses at huge discount. (phone number)”
Join your local real estate club and network with the investors there. Find out information about what each is looking for:
o What kind of property he or she wants
o Where it should be located
o What price range it should occupy
o What percentage of market value it should be available at or what monthly or annual net operating income will be required.
Call on classified ads you see in local newspapers or online. You should especially look for those that mention “newly renovated.” You want to find out whether the seller is a rehabber or contractor who might be interested in getting future deals from you.
Look for particular keywords in any ads you look at: “rehab special,” “handyman special,” “thousands below market,” or “I buy houses.” These words may indicate that the advertiser might be an investor who could funnel a great deal of cash to you.
Whenever your bird dogs do periodic drive-arounds looking for deals, have them stop for any houses being remodeled. They should talk to owner, the contractor or rehabber. You can always find the owner in the county tax records – which are publically available to you.
Attend foreclosure auction. Introduce yourself to the investors and hand out business cards. Tell them you find houses and ask if they would be interested in being contacted when you find something. Just as you do with other investors, find out where and in what price range they buy. Ask for their business card and make notes on the back or take along a notebook. Make sure and do this either before or after the auction because the investors will be focused on bidding during the auction and won’t appreciate distractions.
Contact hard money lenders for investor names.
Advertise yourself: you can always place your own classified ad. Use phrases such as “House for sale. Thousands below retail,” or “investor special” to get your phone ringing. Just with any contact you make, get complete contact information, including email address. Email addresses are very useful for an e-blast when you have a property to sell without having to send out individual notices in the mail. You e-blast should create a bidding frenzy based on the urgency of your offer – a first come, first served kind of message.
You may be wondering whether advertising like this would be good to do without an actual house in your possession. If you are serious about doing this business – meaning you will seriously be looking for houses to sell, you should run “blind ads” all the time to build a solid buyer’s list. In fact, you could even create a retail buyer’s list this way. Retails sales work with people who want to live in the house. If a buyer, wholesale or retail, contacts you at a time you have no house in your possession, simply say that the particular house is not available any more. Then make sure they know that you will contact them next time you have one to sell.
Make note of any potential buyers who can either close fast, are cash buyers, or are experienced. At the beginning, while you are still learning the ropes, you don’t want to waste a lot of your time hand holding a newbie who can exhaust you – both psychologically and financially. You would hate to get the impression that this business is not profitable – it definitely is.
Once word gets around that you turn contracts, you’ll get weekly phone calls from investors asking if you have anything. Keep a log of who calls; these will be the first investors you need to contact when you have a deal.
One last word: you don’t need dozens of buyers to be successful. More than a large number, you need good quality buyers, especially those are experienced cash buyers or buyers who can close quickly.
The Value of a Quality Buyers’ List
Whether you’re using wholesaling, lease-options, short sales or any other investment technique, a huge secret to your success is in how good of a buyer’s list that you maintain.
So Just How Much Money Is Your Buyer’s List Worth to You?
That depends. How many deals will you find? With a strong buyers’ list, you will be able to make money off every one of them because you will know who will pay you for either the contract or the house before you even make your offer.
Can you imagine how much fun such activity can be, and how little stress you have to put up with in doing it?
We will look at a practical example. The single most successful investor we know of has a buyers’ database of 1000 quality leads. This investor has pre-screened each buyer to determine availability to comply with down payment requirement, for credit worthiness, and the ability to work within the stipulated time requirements. All of them know how he works and what kind of returns they can expect from any transactions with him. He even works with builders and developers and is able to take packages of a dozen or more new constructions to make available wholesale to those on his list for substantial profits.
That level of activity with the resulting high profits would not be possible without a solid buyers’ list. This kind of list does not develop overnight. It took this investor years to create, based on a great deal of dedication to his desired outcome and with a lot of networking. But now his business nearly runs itself – leads come to him, sellers contact him, and of course, he has all those buyers waiting to take whatever he provides them.
You will start from wherever you are at this time. This level of investing is something you grow into over time, one brick (or contact) at a time. The apprentice learns the skills to become a journeyman, then the experience to be a master. The mailroom worker becomes a junior executive, then rises through the rank to run the whole company. None of them knew all the ropes from the start – it took time, effort, focus, persistence and experience.
If you apply these qualities to your work, you, too, can build an effective buyers’ list.
How the List Construction Develops
Good timing is always an advantage. This thought leads us to ask, when is the right time to market for buyers? The right time to network for buyers is “all the time.” If you are serious about building your list you will be acutely aware of the three-foot rule of networking.
What is the three-foot rule, you might ask. It is simple: any time a carbon-based humanoid entity gets within three feet of you, you should engage it in conversation and make sure it gets one of your business cards.
Your next question might be: “I don’t know all these people. How do I engage them in conversation? I don’t know what to say – I’m kinda shy.
It will help you to know the fundamental principles of conversation. Conversing with anybody becomes easy if you keep a couple of things in mind:
- You control the direction of the conversation by asking questions
- The person you are talking to will want to talk to you and will never feel you are wasting his or her time as long as that person is interested in the subject matter.
Of course, you don’t want to ask question like a police interrogator – keep your questions light and friendly. You will find that most people enjoy answering questions that are not intrusive.
In his book, “How to Win Friends and Influence People,” Dale Carnegie recounted how as a boy his parents entertained a gentleman who talked to young Dale about the kid’s interest in sailboats. After he left Dale was excited that this man shared his enthusiasm about sailboats. His mother let him know that the man knew little about boats and cared maybe even less. The man was polite in that he allowed young Dale to talk about his own interests.
If you think about yourself, you will recognize how good it makes you feel when a person shows genuine interest in your thoughts and opinions. Therefore, asking friendly questions in a warm and sympathetic way draws that person to you while moving the conversation in a direction that works for you.
If you communicate this way, you don’t ever need to be afraid to talk to people. The most important part of your presentation, more important than what you say or how much you know, is your confidence. You confidence breeds confidence in others. If you act confident, people will trust you. Even if you don’t know everything, your confidence will see you through and this course will fill in the knowledge you need.
The Art of Conversation
Effective and productive conversation is an art. This art will be especially useful when you are talking to a perfect stranger, and, as you can imagine, it works very well in talking to someone you have known for years.
Talking to a stranger is not difficult so long as you remember the first and fundamental principle of conversation. What is that, you ask? It is that the subject matter of your conversation must always be the person you are talking to. Of course, your topic can be anything – it can be the weather, the latest shenanigans of your local government people, the record of the local college football team, the latest foreign news, whatever. Just make sure you discuss it from the point of view of the other person – get that person’s opinions, feelings, and thoughts on the matter.
The other person is the subject matter, regardless of the topic. Let them express themselves. Push your own ego into the background. Good listeners always get paid well – look at the fees you pay a psycho- analyst. If you learn how to listen, you won’t need an analyst, because there will so much good in your life that you won’t have anything to complain about.
Part of any good conversation can cover what the other person does for a living. You give him or her 45 seconds in the limelight, and then you are entitled to give your 30-second commercial. It’s as easy as that.
Set yourself goals for this. You can’t control how the people you talk to respond to you or respond to what you have for them. All you can control is whether or not you talk to them and offer them the opportunity to get a good wholesale deal or a home of their own through you.
The wholesale buyers don’t necessarily wear a name tag identifying them as wholesale buyers, but they are still easier to spot than retail buyers, because they will show up at certain places at certain times, and they advertise themselves.
On the other hand, everywhere you look, you see potential retail buyers. According to HUD figures, about a third of all households doesn’t own a home. So as you stand on a street corner and watch people walk by, you can figure that a third of them are potential retail buyers. It might be a good goal to have this sort of conversation with at least 2 people a day. If one third of households in the U.S. don’t own a house, and some of those who do own a home know someone who doesn’t, that should allow you to add a couple a names a week to your retail buyers’ list, because almost everyone you encounter wants or knows someone who wants a home of their own. The wholesale buyers will pop up often enough as you engage in conversations with people that your list will grow and continue to get larger.
Characteristics of Buyers
First we will describe retail buyers. A lot of them don’t believe they can buy a house, some of them not now, some of them not ever. In most cases, they are unsure of the process of buying a house – it’s a foreign, possibly scary thing for them. The majority of them is certainly not contemplating a home purchase at this time. It will be up to you to introduce them to the idea.
The basic idea of networking is to be willing to talk to a whole lot of people, anytime you get the chance. You want to tell everyone you know and everyone you meet or run into what you are doing with your business. To help you out, we have a 30-second commercial that you can use to make people aware of what you can do for them.
Let’s give it to you right now. Understand, please, this is our version. Feel free to alter as you will to suit your own style and personality.
“We buy houses to fix them up, and then we sell them again or hold on to them for rental. We get them cheap, we get them wholesale from auctions and foreclosures and the like. Hey, you know, if you’d like to get yourself a home at a bargain price, we can help you with that. Just let me know what you’d like, and give me your name and phone number, and I’ll see what we can get for you. Oh! And if you get yourself pre-qualified, we’ll put you at the top of our list.“
Let’s look at this speech a little. First of all, the reason we talk about pre-qualification is less to see whether they meet our criteria for creditworthiness, because we can deal with them no matter how bad their credit is, so long as they can make payments – it’s more to see whether they are willing to go to the trouble of getting pre-qualified. It’s our way of finding out how serious they are.
Secondly, we like to talk about we get them wholesale. The general public at large loves to work with wholesalers. They figure that’s the way to get a good deal – which is true, but it won’t be because you’re going to discount the price they get – terms will always beat out price, as you will see. But you emphasize that you have wholesale sources: people are always impressed if you can get your goods from auctions and foreclosures. They know that’s a good way to go, but they don’t know how – and you do!
You may have heard that it’s not what you know, it’s who you know (it really should be “whom you know”), but we can’t accept that at face value, because what you know is kinda important, too: that is why you are participating in this course. However to a large degree, whom you know counts for a lot, too.
But now let’s take that a step further. It’s not just whom you know, it’s whom you know that knows other people you need to know.
So as you talk to potential buyers, keep an information sheet on each investor, whether in a notebook or online. You could use a sophisticated database application or created a word document for each individual that you store in a file folder on your hard drive labelled “buyers’ list.”
Feel free to be straight-forward and honest and tell them that you are just starting out and will be looking for houses that need to be rehabbed. Ask if they would like to be contacted when you find one. We can assure you that they will all be very happy for you to do the leg work for them.
You also need to find out where they want to buy houses and in what price range. Some wholesale buyers will only work in certain areas and price ranges and others will tell you “anywhere there is a deal!” The retail buyers probably care deeply about the neighborhood they will live in.
Ask wholesale buyers if they are a cash buyer or if they will need some extra time to arrange financing. This is simply a matter of the alternative golden rule: you know, “them that gots the gold makes the rules.” You must know what kind of properties they want, where they want them located, what price range of properties they want, and what percentage of market value are they willing to pay. If you know those four items of information, you can get a good chunk of business going:
What kind of property
Where it is located
What price range they want
The percentage of ARV or FMV they are willing to pay
You might notice that these questions relate to the retail buyers, other than the percentage of market value. Part of the kind of property would be number of bedrooms and bathrooms, nature of the garage – assuming they care about a garage – and size of the yard.
Not long ago a 20-year-old girl in San Diego, a personal client, made a few phone calls on signs and newspaper ads, made some buyer contacts, then went out and found a house that made her $10,000 on an assignment to an investor. Now if you’re living and working in the Midwest, you’re might not get $10,000 on a single house – you would deal in a multi-unit structure for that. The house in question in San Diego was a little starter home valued at $500,000 that she got under contract for $410,000. However, although you in the Midwest would have to find four single-family houses to make $10,000 on assignment, they are four times easier to find in Arkansas or Nebraska or Indiana than in San Diego.
Firstly, you should know when it is the right time to market for buyers. Do you know when the right time is? Be sure to market for buyers all the time, which is the only “right time.” Quality investors take the time to go to networking meetings (not just R.E.I. clubs) to find qualified buyers they can meet face to face to close their deals to. Marketing is the key to your business, no matter what you do.
You should also always have homes marketed online even if you don’t actually have any under contract to build quality buyers lists. You’ll want to meet with them face to face as much as possible to show your seriousness and to build rapport.
If you’re trying to build a quality lease-option tenant/buyers list, a great place to look is for mortgage brokers turn downs. By paying mortgage brokers referral fees for dead leads, you can continually grow a quality list. You’ll know how much the tenant/buyer can put down and exactly what the credit issue is that prevents them from ownership before you even meet them.
You should also network with other professionals. If you want to build a quality list for wholesaling, rehabbing or short sales, take the time to network. Attend real estate investment clubs, legal clubs, other investment clubs, accounting networking meetings, condo open houses, etc. The best investors I know do these little extra steps continually and often and that is not a coincidence.
Getting in the right circles is easy. While you’re sure to be full of motivation for your business, be careful not to be overbearing. People are more apt to listen to you when you’ve taken the time to make them feel important. I recommend asking the other person, “So what do you do?” before anything else and then pay attention. Eventually they will reciprocate the question. At which point, you can move into your pitch. Don’t fake interest; learn to hear other people’s stories. Good karma can’t hurt you.
Trimming Down the List to Those Who Can Buy
When we described the investor with over 1000 quality buyers, we added the modifier, “quality,” with a purpose. He didn’t just compile a list of 1000+ random people. Exactly there lies the difference between people like him and how the average investor handles a list. It is not just size, but a successful list maximizes efficiency. Successful investors do not waste time with those who cannot buy or are not ready to.
Early on in your investing career, this may require a leap of faith. You might possibly be so anxious and unsure that you feel you should put any human being on the list that allows you to talk about your house finding activities. This can lead to a lot of fruitless tail-chasing, frustration and discouragement.
You owe it to yourself to be direct with your buyers. You should screen them before you allow them the privilege to make it onto your exclusive list! Do you see that you are not asking them to help you, you are offering them the opportunity to profit from your help and actions.
Any sales person can tell you that people do not buy something they don’t feel a need for. That is human nature. That is why the good sales professionals ask questions of the prospect until they discover the person’s sense of need. Presenting the solution to an unfelt need wastes everybody’s time, and the sales professional waits until the need has been clearly expressed before introducing the product or idea that will take care of that need.
You do not need to be a professional sales person to qualify people for your list, but you must ask questions to uncover need.
For example, with wholesale contact, does he or she need to make a living? In a retail setting, does the young family feel a need to have their own place to call home? We know that all people really need is oxygen, food, water, sleep, and in certain climates, shelter. We’ll even add love to the list. When we mention need, we are not talking about survival needs. But the guy that spends a half million dollars on a Lambourghini Aventador feels that he needs that car, even though a $12,000 Nissan Versa would get him where he needs to go very efficiently (with much better gas mileage). However, in this guy’s mind, even a S-Class Mercedes Benz is not enough – he needs the feeling of owning the most expensive car in town.
Some people need to buy name-brand groceries, others feel the need to get a bargain by purchasing store-brand. Some people need to run marathons, other people need the most comfortable recliner possible for watching TV.
The only way to know what a potential buyer needs is to ask.
If you are talking to Ed and Lucille about their desire to find their own home, you had better know how serious they are. It is not a good feeling to get a place under contract with a 30-day closing deadline, and then call your one potential buyer only to hear them say, “Oh, I don’t think we’re ready right now. We need to pay down some bills before we can move.”
Of course, despite all your best screening, if your sole retail candidates are Ed and Lucille, you might hear that and hit a dead end. But if you have also screened Jim and Susy, Jack and Diane along with Desmond and Molly, chances are much better that at least one couple among the group is good to go.
Crucial information from retail buyers would include:
How much can you pay total for a house? (they may need some guidance on this, which is why getting them pre-qualified with a mortgage broker is a good idea: the broker can tell them what they can qualify for based on income; even if you are going to get them in with a lease-option or subject-to, if the total amount they get it from you for is within their capabilities, things will go better).
What kind of a monthly payment can you handle? (again, a mortgage broker can help you with this: typically their monthly payment for housing should not exceed 28% of gross income, although circumstances may allow a higher ratio).
How soon can you close once you choose a house? (decisive and definite is always better than unsure and waffling).
What do you have set aside for a down payment? (the more they can put down the better deal they will get, either in terms of which loan programs they qualify for or if you are providing financing, how much their lease-option monthly payment will be or what interest rate you will charge in a subject-to situation.
In many situations, the fact that your retail buyer has poor credit (or no established credit history) provides you an advantage. If they sincerely wish to buy a home, you would be their only recourse, because with bad credit they could not qualify for a loan. They have probably already been renting, and you can qualify them as good tenants (check this out in the property management module), and let them pay as much as they can afford up-front for option consideration plus continued consideration on top of the monthly rent payment for a couple of years. All the option consideration will count as a down payment after they have straightened out their credit and can apply for a mortgage to complete purchase of the house.
You might wonder why you would want to deal with someone with bad credit. There are several reasons why this can be profitable for you. You should look into the reasons for the credit problem: are these people deadbeats who never pay their bills, or did an inopportune company closing, injury or illness interfere with the ability to earn a living for a period of time. This could easily ruin their credit rating, or even push them into bankruptcy or foreclosure.
With credit scores, the further in the past that slow or non-payments occurred, including judgments, settlements and charge-offs, the less impact they have on the score. Time heals credit wounds. As for foreclosure, with a Chapter 7 liquidation, two years after discharge the buyer can qualify for FHA or VA financing, and after four years can obtain a conventional loan. With Chapter 13, two years after discharge they can get conventional mortgages, and FHA or VA financing can be even more lenient – 12 months after filing for Chapter 13 protection as long as they can show at least 12 months of on-time payments (including on their lease-option or wrap-around loan via a subject-to transaction.
Even after a foreclosure, which is among the worst offenses against the lending community, although the waiting period is typically seven years, if the borrower can show that the foreclosure resulted from circumstances beyond their control can qualify for conventional loans after three years as long as they pay 10% down: three years of option consideration will take care of the latter requirement easily. Three years after foreclosure or short-sale they could qualify for FHA financing.
In other words, you will not be lending money in the long term. You really do not take on any more risk than you would in placing a tenant into a rental unit. They pay you rent plus extra that pre-pays the future down payment. I they violate the terms of the lease, you evict them as with any other tenant. If they choose not to exercise the option after the two or three years, you have two action courses:
Invite them to find another place to live, and you retain all the option consideration that was paid over the option term, plus the rent covered your expenses in owning the house: then you offer the house to the next couple on your list.
If they have been excellent tenants and have always paid on time, why boot them out. Offer them a new option for another year or two, continue to cover your expenses with rent and collect ongoing income with the continuing monthly option consideration.Either way, you make money.
Crucial information from retail buyers would include:
Track history counts for a lot here. If you are working with a seasoned investor who has a good number of completed deals in his or her resume, you can figure this person is legitimate. If the investor is a newbie, you can still work with that person so long as you are careful.
You definitely want to ask:
“How quickly can you close if you like my deal? (clearly, “right away” is the best answer; if the investor needs a certain period of time, find out why: you need to know how committed this investor is and the likelihood he or she has the means and disposition to take your contract or property).
How is your cash position for assignment fees and possible down payments?
What kind of properties to you prefer: turn-key rental properties with tenants and management in place, fixer-uppers, or both? (if they like rehabs, that is what you will give them; if they want a ready-to go rental property, that is a partnership opportunity for you in a joint venture – you get the deal, they put up the cash, you split the income; if they like both, use can use them for any good deal you find).
What Else Can I Do With This List?
If you seek good deals consistently you will find those that require more cash than you have available. We truly believe that if the deal is good enough, the money will be there for you, as long as you can visualize it and persist in finding it. If your buyers’ list is of high enough quality, and you have established enough rapport with the buyers, it can be one of your best sources of immediate capital. By screening the investors on the list effectively, you know how much cash they have available and what their source: cash on hand, a line of credit, other investments, or other.
These investors could well be potential debt partners, that is, people you borrow money from. Truth be told, they would probably prefer to be equity partners. Instead of lending money at a particular interest rate, they put money into the deal for an equity position on the property. That way, you are not the sole owner but you do own at least 50%. Your primary question here would be, is it true that half a pie is better than none? Joint ventures are an excellent way to grow and expand your investment portfolio – it allows you to stretch yourself by leveraging someone else’s money.
A good buyers’ list provides you a good list of joint venture partners and money sources.
Not creating a quality buyers’ list could potential cost you a lot of money. Knowing the principle doesn’t guarantee success: it will take practical application. But if you treat your business like a business, it will reward you the way any sound and profitable business does.
The time you put in – the extra effort – in building a quality buyers’ list will make a huge difference in your financial success. It will reduce that amount of work you have to do and increase you profits on each deal you do.