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?
A lot …like millions of dollars a lot.
Let me explain to you why using a practical example. The single most successful investor I know (even better than myself) has a buyer's database of 3000 quality leads. Every buyer on his list has been pre-screened for having the down payment requirements, having good credit, having the ability to work within his time requirements and they have been sold on his investments and their projected returns. He actually works with developers to find homes by the dozen which in turn he wholesales to his buyer's list for substantial profits. I have seen him literally buy and sell 25 turn key homes in one single day. Just imagine the pay check he got from that too!
None of that is possible without an extensive and complete buyer's list. Many others have tried to emulate his actions but without the dedication to building a quality buyer's list, it is an impossible and uphill battle.
How Do I Build a Quality Buyer's List?
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.
How Do I Weed Out Who Can Buy and Who Can't?
You probably noticed that I said my investor friend has 3000 quality buyers and not just any old list of 3000 people. Do you know what the big difference between how people like him and I manage our lists and how the average investor handles their list? Besides the sheer size, we maximize efficiency by not wasting time with who can't buy or is not ready to. In short, our list is of the highest quality. Don't be afraid to be direct with your buyers.
“How soon can you close if need be?
“ASAP” = Quality ready and serious buyer
“I need at least…” = Still window shopping for investments
“How much can you put down?”
Only a direct answer = serious buyer
“Do your prefer turn key already rented and managed properties, fixer uppers or both?
“hands on” = flip rehabs and short sales to them
“hands off: = joint venture partner
“both” = use them for anything and everything
What Else Can I Do With This List?
Occasionally you're going to come across great deals that require cash without any way around it. The benefit of having a quality list that you have established rapport with is that you can turn around and raise private capital with your list very easily. In fact, if you screened your database properly in the first place, you'll know exactly how much cash they're working with and what the source of that money is – i.e. cash, line of credit, investments, etc. Furthermore, putting together a quality list will help you get in to larger and more profitable deals because you'll have a quality list to mine your joint ventures from.
If you don't have a quality list already, you may be costing yourself millions. Many investors know the techniques that can make them successful but only a select few treat their business like a business so that they can very wealthy.
The moral of the story is this. Those few extra hours a month you spend building a quality buyer's list make all the difference in the world for your financial success.