Building the Ideal Real Estate Investor’s Buyer’s List
I have a lot of different types of buyers on my buyer’s list. They have come to me from a variety of different sources. Some of my best people I met at my local REIA group. I found a couple of quality rehabbers for my buyer’s list from BiggerPockets. Yet others have come from sources like bandit signs, Craiglist and finally, from old fashioned networking. Like most real estate investors and especially wholesalers, having a good solid buyer’s list is essential to my business.
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I would put investors that are Realtors right up on the top of my list. Over the years, I have worked with a number of these folks — many of them are active in my local REIA. They are well informed about the market and they already understand things like double closings, assignments and other facets of real estate investing that regular folks sometimes find puzzling. In other words, a lot of times they actually make my job easier.
Is There a Downside?
Not for me. However I can tell you from experience, you don’t want to take any marginal deals to these folks. They know how to spot a good deal, and that’s what they are looking for — a good deal! They can be tough negotiators, so be sure you’ve done your homework when you take a deal to them. Understand what a realistic comp is for the property and what the repair costs will be; you can be sure they will figure this out pretty quickly themselves.
The Ideal Buyer’s list
I am always looking to add more cash buyers to my list. However, not only do they need the ability to close quickly, they need to be able to make a decision quickly. This is one thing that seems to separate experienced investors from the “wanna be” investors and the tire kickers. An experienced investor will look at one of my houses and be able to make an immediate decision regarding whether or not it meets their needs and their investing goals.
Individuals that have “retired” from their first career after 30 years or so with a major corporation can be a great addition to your buyer’s list. Sometimes they have a nice pension that they want to invest in real estate, and they can be very excited about this new phase in their life.
I also love ordinary people that just have a passion for real estate investing. These folks can be from just about any walk of life. They may be looking for a second career, or possibly just looking to earn extra money rehabbing houses. Often they are trades people that have good skills and can do a lot of the work themselves.
Just about anyone that has a passion for real estate investing and a strong desire to succeed, will ultimately find the resources needed to become successful in this business. These are the folks that I want on my list.
Four Types of Cash Buyers
How do I define a cash buyer? For me, anyone that can close in 7 to 14 days and doesn’t get a traditional mortgage is a cash buyer. Where does the cash come from? It can come from a variety of sources.
- There is always the true “cash buyer”. I am lucky enough to have a couple of these folks on my list. They simply pull out their checkbook and write a check. I have closed deals in as little as 3 or 4 days in these cases.
- A HELOC or home equity line of credit. This is just as good as actual cash in the bank. These folks also just pull out their checkbooks and write a check.
- Using a self-directed Roth IRA. This is a popular investing strategy for a lot of folks.
- Loans from an investor friendly bank. This is just as good as cash in the bank as far as I’m concerned. If your buyer is pre-qualified and takes a great deal to their lender, this works as smoothly as any of the other “cash sources” above. You will most likely be closer to the two week time table for closing with this source of funding.
Building a quality buyer’s list should be on the very top of your goals for 2012 especially if you are a wholesaler or a rehabber. You want to be the “go to” person when someone needs a house to rehab, or they need to add another rental to their portfolio this year.