Referral-Based Investing, Part One
|Iím all about getting more for doing less. Not (usually) because I am lazy, but because by spending less time on one thing, it frees me up to do something else that I couldnít have done otherwise. Or, by spending less on something, it means I have more money to spend on other things. And when youíre talking about motivated seller prospects, more is better.|
Yet we investors continue to advertise in ways that require us to find and win over new customers over and over again, every time. Think about it ó has a seller in distress ever sold you his house, and later, because you did such a great job the first time, decided to fall behind on payments again and sell you another house? It doesnít happen (with the possible exception of finding a burned-out landlord who wants to dump his entire portfolio on you).
This means that time and time again, investors have to run ads, send out our message, build trust, and get people to respond. That sounds like a lot of work, and it is! Ask any business owner...What is easier to do ó to win over new customers or to get a repeat sale from the same customer? The repeat sale is much easier because the hard part (ads, message, trust) has been done already. (And, of course, our "customers" are sellers who we buy from, not sell to, but the marketing principles are the same).
Running ads costs money and takes time. Over and over again. I want to suggest a different way to generate leads, that isnít going to be the main method you use, but will probably get you qualified leads for years to come, with a minimal cost. Iím talking about referrals.
From whom? Not from people you have bought houses from before. Because even if you did everything you said you would, bought their house on the date of their choice, and even hired a moving company to help them get into their new home in style, Average Joes only know so many people. Motivated sellers are just good, regular people. They hardly know any motivated sellers anymore than you would if you werenít actively searching for them for a living.
Our business is not normal. You wonít find many mailing lists of motivated sellers. There arenít TV shows made for motivated sellers during which you can run commercials. There arenít chat rooms where motivated sellers hang out and talk where you can easily find them. This is why I recommend fulfilling your promises to those you buy houses from, but donít expect them to send a flood of referrals your way. They just donít come across other people in distress that often, and they frequently move out of state, never to be heard from again.
So who can you get referrals from? People in a position where they meet potentially motivated sellers. Think about who they might be. Iím going to name a few types, but Iím sure Iím missing some (or saving them for my next course). So think of the reasons why sellers become motivated, and then think of the types of people who might know about their problems.
Wholesalers are obvious, and probably the most consistent producers of referrals since they are actively searching for them every day. And frankly, some of them are geniuses at finding tons and tons of potential deals. How they do it, Iíll never know. Why they donít fix up and sell the houses themselves, Iíll never know (and will never ask). But they find them, so be sure to network with them as much as possible. The only downside is that they will want to be paid, and you might make $5,000 - $10,000 or so less than you would have, but so what, as long as your profit is acceptable.
Some less obvious types of people to get referrals from are bankruptcy attorneys, probate attorneys, realtors, and the person in charge of loss mitigation in small banks (big ones have call centers for that purpose several time zones away). Iím going to go into more detail later about the means by which you introduce yourself, deliver your marketing message, build a relationship with them, and get them to respond (does this process sound familiar?).
For the time being, just understand that it makes more sense to do the work with these people once, with some follow-up from time to time, and have them refer motivated sellers over and over again over time. This will allow you to get more (deals) for doing less (hustling and bush - beating), which, as I said, Iím all about doing in just about every endeavor.
|Alan Brymer is the creator of The Assistant Who Pays Their Own Salary and the Founder and President of the Utah Valley Real Estate Investors Association. He has been a full-time investor since his first property at the age of 22 and has raised millions in private funding. Alanís investment company was named by the Utah Valley Entrepreneurial Forum as one of the ďTop 25 Companies Under Five Years Old.Ē He is a frequent guest expert for the news media, having been featured on multiple television programs as a real estate expert, published in 12 magazines nationwide, and as a speaker at seminars and associations around the country.|
In addition to his real estate experience, Alan is an expert at systemizing businesses. Like many, he attended seminars and bought courses but found that while the techniques of real estate are frequently taught, there were no courses that showed how to run a business in the level of detail that he was searching for. He began to develop systems for his own real estate business, which has allowed him to do more deals in less time each month. He has incorporated these into his consulting and is now presenting them as complete systems modules, the first of their kind for real estate investors.
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