Real estate investing is a type of investment where you have to have plenty of initiative, where you have to be prepared for changes, and where you have to be able to make decisive moves. Even in the most conservative real estate investments, such as buying rental properties, it is absolutely imperative that the investor is highly knowledgeable about the market in which he or she operates. The earning potential in real estate investing is staggering, but the knowledge it takes to reach those high levels of success takes time to amass.
When you get into real estate investing, it may be a a few months or more before you close your first deal, but that’s OK. That first year is spent climbing a fairly steep learning curve, but once you’ve mastered the knowledge necessary to successfully invest in real estate, the number of deals you close will increase fairly rapidly.
Despite what a lot of websites will tell you, there aren’t any shortcuts to becoming a successful real estate investor. You have to take the time to understand things like short sales, wholesales, so-called “fix and flips,” and lease options. And one of the most important things you need to learn about is leads. You can have encyclopedic knowledge of what goes into a short sale, but if you don’t have leads, you don’t have anything.
Whether you are buying or selling, there are a number of ways to generate leads. But just as knowledge of the market doesn’t mean anything without leads, leads don’t mean much if you don’t use them.
If you want to find buyers, look at “we buy houses” ads. Ask what they are looking for, and present any properties you have fitting that description to them. Going to auctions is a good move, too. After all, they have cash buyers who are looking for deals. If you have business cards (and you should), hand them out and explain that you have similar properties. Don’t abandon the “old school” lead generation methods yet. Many local newspapers have very reasonable rates on classified ads, and the readership of these publications is often made up of middle-aged and older adults who have higher, more stable incomes.
If you’re looking for sellers, one technique is to work with a local Realtor and ask for expired listings that meet your criteria. You can compensate them for each property you close.
Real Estate Investors Associations may have members who bought in 2006 or earlier and need to liquidate their holdings. This may mean there are great deals to be had. Properties in your area that have had a “For Rent” sign in their yard for more than one month may well be worth a call. The landlord may be tired of dealing with the property and may want to work with you on a deal.
These are just a few ideas for generating leads. You probably have several great ideas of your own for generating leads, and you should pursue them all. Real estate investing is a business, so don’t treat it like a hobby.
Whether or not you buy leads from lead generation companies is a matter of debate among real estate investors and has been written about extensively elsewhere. But whether you buy leads or generate them yourself, it’s what you do with them that matters. It’s not easy to say whether a lead is “good” or “bad,” because different people can work the same leads and get very different results. Successfully working internet leads requires hard work, persistence, and the ability to handle rejection.
You will work more efficiently if you have good customer relationship management (CRM) software and a process to follow for consistently working the leads. The process is the hard part. It isn’t easy to put yourself out there day after day, but it’s what you have to do. Don’t let your process for working the leads break down! It’s the key to succeeding in real estate investment.
Statistically, even though most people choose a real estate agent to work with soon after starting an online search, they don’t buy anything for several months. So looking for buyers often involves making a great first impression, and then holding on to their attention for several months. It isn’t easy, so you have to continually motivate yourself to persevere.
What you do with a lead the day you get it is important, but what you do on subsequent days is equally, if not more important. Using your Customer Relationship Management (CRM) software to send form emails or automatic home searches isn’t enough. You should still be making phone calls, particularly during the first two weeks after getting a lead.
Be aware that when you invest in real estate the money is often made or lost on the sidelines rather than on the actual deal. A $10,000 profit evaporates pretty quickly when you pay your attorney, contractors, and real estate agent. The most important rule in real estate investing is to practice solid business principles. Your ultimate goal is to sell a piece of real estate for more than what it cost you to buy it and get it ready to sell. Rental income will subsidize some of this, but not all. In today’s market, you may have to wait a while for property values to start going up again. It doesn’t pay to go into real estate investment with a short term view. You have to be pragmatic, you have to generate your own leads, and finally, you have to follow up on them consistently.
While the basic principle of real estate investing is “buy low and sell high,” just like any investment, it isn’t like running a retail operation. It is a long-term endeavor, even if you are looking to “flip” a property for a short-term profit. Particularly in a slumping market, anyone investing in real estate must take a long view of things.