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Your Real Estate Pipeline is Full of Gold

by Marty Boardman on January 19, 2013 · 11 comments

  
Pipeline

I just finished reading an article about a guy in Australia that found a 12-pound gold nugget. He used a $6,000 metal detector called a Minelab GPX 5000 with Advantage plus ‘Sadie’ mono elliptical coil and Rooster Booster audio enhancer to dig it up. Apparently the precious metal was buried more than two feet below the surface. Valued at $315,000, the report states that the “specimen is said to be the largest lump of gold ever discovered in Ballarat, Australia.”

Wow. This prospector spent $6,000 to earn $315,000. That’s a 5150% annualized return on investment.

No doubt the Australian gold digger will quickly become a celebrity with gold diggers worldwide. And can you imagine the endorsement deal he’ll get from the company that sells the Minelab GPX 500 with Advantage plus ‘Sadie’ mono elliptical coil and Rooster Booster audio enhancer?

I’ll bet these metal detectors will start flying off the shelves. Soon you won’t be able to drive around the block without seeing some dude in those goofy headphones swinging the long metal rod back and forth just above the ground. “Is that guy weed-eating the grass?” you’ll wonder. Nope. He’s a gold digger.

A Real Estate Investor’s Metal Detector  

In the past week I closed four fix and flip deals for a net profit of $83,000. Needless to say, I’m pleased with the way 2013 has begun.

However, I only have one new deal in the pipeline – an REO property that should close by the end of next week. That means I need to find at least another 3-4 properties to purchase and rehab. If only I had a Minelab GPX 500 to help me dig for good real estate deals.

I’ve learned that one of the keys to earning a living in real estate investing is to have a pipeline full of profitable deals – deals that can be fixed and flipped or wholesaled to other investors. That’s where the gold is.

Unfortunately, in the world we live in today – where banks are calling the shots with short sales and REO inventory – maintaining deal flow can be a monumental challenge. That’s why it’s so important to have more than one source for those deals.

Currently, I work with four Realtors – each scour the multiple listing service in their area for short sales and REOs. And at the end of last year I began working with a bird dog that door knocks on the weekends. I also created a website for distressed home sellers. These are my real estate investment metal detectors.

Where do you get your properties? Direct mail? Realtors? Cold calling for sale by owners? At auction? What works best for you?

The truth is it doesn’t matter where the deal comes from, as long as it’s a deal. It’s keeping the pipeline full that counts. Do that and you won’t need to blow $6,000 on the Minelab GPX 500.

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{ 11 comments… read them below or add one }

Leonel January 19, 2013 at 11:59 am

I like your blog about keeping a pipeline full of gold(deals). I am a newbee and always accepting tips from experienced RE investors.
I want to be a player not only for the money but to get the state of mind of euphoria for RE negotiating. My background is RE, Short Sales mortgage and so one, but never as a RE investment for my self. Better later than never, I wake up for the REI business and I am turning more to the comercial (apartment building units) than 1-4 residential.
I have 20K to start this challenging business. Where do I start? How do I contact for private money lending?
Thanks for your help.
Leonel

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Marty Boardman January 21, 2013 at 9:04 am

Leonel, begin with the end in mind. Determine your financial goals first. Are you working now? How much money do you want? How much do you need? Work backwards from there.

Many new real estate investors start out by using the “ready, fire, aim” strategy. This won’t work. Once you have 1-3-5 year plan then you can figure out your acquisition and exit strategy.

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Sharon Vornholt January 20, 2013 at 1:33 pm

Marty –

I would be interested in knowing how you actually found a birddog that is motivated to work. I haven’t had much luck with that.

Sharon

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Marty Boardman January 21, 2013 at 9:05 am

Sharon, so far, so good. He was referred to my business partner. Very motivated guy. But you’re right, they’re difficult to find.

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Brian Burke January 20, 2013 at 4:03 pm

Good stuff, Marty! You are SO right, no deal flow = no business. I think we operate a similar platform, I find most of my deal flow through MLS (REO/Short/Probate) and courthouse steps. I tried the “mailing campaign” approach many years ago and never got anywhere with it except to burn up my time. Once I stopped wasting time trying to find a needle in a haystack and focused on just buying property, my business really took off.

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Marty Boardman January 21, 2013 at 9:07 am

Brian, there are a lot of BP members running successful DM campaigns. I’m not one of them. I agree with your needle in a haystack analogy. I’m just not that patient, which is why I’m a lousy fisherman and poker player. Plus I can’t stand talking to homeowners on the phone – very time consuming.

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Henry Halley January 21, 2013 at 9:21 am

Marty,
Some of your postings are helpful, but some like this one in particular are sprinkled with quite a bit of pride and may even appear that you are boasting about your earnings. This could mislead new investors into thinking that earning net profits of 83K plus in 3 weeks is a piece of cake when it is not. It may also make new investors feel like a failure when their net profit was nowhere near yours. You may rethink about throwing out net profit figures around unless you also throw the expenses, costs and commissions and partnership cuts and taxes that need to come out of net profit of $83,000. Furthermore, why is it relevant to the reader to know what net income you made this month in relation to the article’s subject of keeping the pipeline full of deals?

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Marty Boardman January 21, 2013 at 9:32 am

Henry, my apologies if this article came across as boastful – was not the intent. Nor do I want to discourage anyone. If you read my post from last week you’ll see I’ve taken my share of losses as well.

The purpose of this post was to let our readers know how important it is to have a consistent flow of deals. I have two deals set to close in February. That’s it. Until I get more in the pipeline I have zero income for March, April, May, etc. Hence the need to fill up the pipeline.

I appreciate the comment!

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Travis Daggett January 21, 2013 at 12:11 pm

Marty-

Great article!
Another big benefit of having a full pipeline is that it can really help your attitude. The hope of future deals can encourage you when a current deal isn’t turning out as good as you expected. It can also keep the momentum going when you are having success with current deals. W. Clement Stone called hope “the magic ingredient” in success.

Thanks again!

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R Jenkins January 22, 2013 at 6:47 pm

Ms Halley, I kindly disagree
Seeing net profit gives people like me motivation to keep moving forward
I do agree, expenses and other costs would need to be mention upfront
Keep up good work -> Mr Boardman

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Shaun February 2, 2013 at 5:01 pm

I guess this figure is net all expenses except taxes.

I agree that seeing that kind of stuff is inspiring not discouraging!

Also good for newbies to see it to get a better idea of what they should shoot for so they don’t over pay for everything so there aren’t any deals for us. :)

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