Next, after you’ve pre-screened them by telephone, they will send you an email with their name, email address and phone number.
After that, you will set up a criteria search on the multi-list system: what areas to invest in, what type of properties they want to flip, or how many units in a property to rent (2-4, 5-10, 11-19units). You need to get that search narrowed down. Give them the full listing with all the information possible.
Right about now, you’re probably thinking, “Hey, Gary, that sounds different than what I was taught about from my broker and my classes.” I know it is. You’ve been taught how to work with owner/occupants. Those rules of engagement are completely different from the rules of engagement of working with an Investor.
I teach classes on working with owner/occupants, but when you’re working with them, you’re doing more of the work and you’re prescribing the properties to them. Here, your clients should be doing the analysis and prescribing the properties for themselves. You give them everything on the multi-list system, all the data, all the listings.
If they work with me and I’ve trained them, and I hope that I have, I’ll teach them the same process. They’re going to know how to go through all the properties to save you a lot of time. They’ll start by going through the properties. Their objective is, regardless of how many they start off with, even 300, it doesn’t matter. They’ll narrow it down to about 30 properties in the beginning. 28 Paths to Profit
If they only have 30, maybe they’ll narrow it down to 10. Essentially their job is to look at the list price relative to market value. At this point, the searches need to be confined to certain neighborhoods. You need to know the market value, and so does your client. If that list price is below market value, it’s a keeper. It stays in the good pile. If not, it goes in the bad pile. Don’t even look at it again. You’ll know more about why in a second. List price, in and of it, is meaningless. But relative to market value is what’s really important.
Why spend your time looking at investment properties when you already know you’ve got good properties below market value? In the case of flips and rentals, the properties need to make sense economically from an income/expense standpoint. We’ll cover that later.
Once your Investor clients separate the wheat from the chaff, that should narrow down the list by half. Now they will go look at photographs of the property, the lot size, the room sizes and other characteristics. This will take several passes, but they will narrow down the list to just those that have the greatest prospects of becoming a good flip. If you notice, we have not yet actually talked about going to the property and looking at it in person.
We’re not even close to that yet. This is the high-percentage shot approach. Will some good deals slip through the cracks? Yes, they will. But would you rather spend all your time going around in a car looking at properties that might be decent or might need a lot of work, only to find out they will never make sense as a flip prospect?
Why would you spend time with properties that don’t exhibit the characteristics we’ve discussed? If they’re retail priced, chances are the owners don’t have to sell. It’s not like REOs, Estate Sales and the pre-foreclosure Short Sales. Your client will be narrowing these properties down on their desktop first. Once that list is narrowed down, then and only then, do they do the drive-by on their own. Not with you, not asking you to do it.
Whenever your Investor doesn’t follow one of these steps, you need to correct them right there on the spot. If they do it again and you correct them again. But on the third time say, “Why don’t you just bring me a deal?” They are not the kind of people you want to work with. What I means is, “You go do all the work and I’ll tell you if I like it or not.” That’s crazy. That’s a horrible waste of your time. Don’t ever do that.
Follow this program and your Investors will be doing the work with you there to guide them. Now that your Investors have narrowed down the list of properties, they do a drive-by. This should help them narrow down the list again, to maybe 10 or 15. At this point, they should send you a list by email with the MLS numbers, separated by commas. This way, all you have to do is simply cut and paste the MLS numbers.
If the Investors give you physical addresses, or partial addresses – all that stuff on scraps and pieces of paper – you’re going to spend hours trying to figure out what properties they’re talking about. Simply tell them, “These are the instructions. They’re very simple. You need to give me the Multi-List numbers of the final 10-15 properties.”
At that point, you’re going to review their homework. This is where we get a little stickier, because some people say, “You’re not supposed to be steering them.”We’re not steering them. What we’re doing is guiding them. As a licensed Agent, and possibly a Broker, you have a responsibility to look out for your client’s best interest.
If they give you 10-15 MLS numbers, you want to try to cut it in half again for them. Narrow it down to say 6 properties on average. It doesn’t make sense to go out to look at 10 properties. The human brain is incapable of digesting and compiling and organizing all of that data.
6 is the magic number. Sometimes it’s 7, sometimes it’s 5, but on average it’s 6. Narrow down their list to 6 properties. If you can’t (in good conscience) eliminate any of the 10- 15, then you need to create a List A and List B.
List A is the ones you most likely think will be the best prospects for making money. List B is the least likely. If you strike out on the A list, you can always go with the B list. Then you schedule an appointment to actually go see the properties. Every week of my life for years, I worked on the following schedule: On Wednesday of any week, I sent an email out to my active buyers. Typically, I have anywhere from 6-10 buyers at any given time. I wouldn’t work with all of them at once.
I would work with four at a time and tell the other guys they’re going to be on hold for a week or so.I can do 6 in a week, but then I’m really cutting into my personal time, and I never like to work Sundays, so I didn’t. I didn’t want to work every night of the week, so I didn’t do that either. I did a lot of stuff in the afternoons.
A lot of investors are willing to take off an afternoon to go with you to look at properties. I did usually four afternoons a week and a half a day on a Saturday. That’s all I did. Every time I went out, probably greater than 90% of the time, we would find 1-3 deals we would make offers on. My offers had an average of 60% acceptance rate after negotiations. In any case, send an email to your active clients.
“Here’s my schedule for next week. First come, first serve.”
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