Almost any seasoned real estate investor will you tell you that one of the most critical components to a good real estate business is the ability to scale. These days, it’s not as simple as jumping on your local MLS to browse a few houses in hopes of finding legitimate investment opportunities. Sure, you or your real estate agent may stumble across a good MLS deal here or there, but even that one deal probably required a good bit of sifting through listings to find.
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Cast a Big Net
Investors that aspire to a true volume business learn over time that finding houses is really a numbers game. For example, in my market, we still occasionally get an MLS offer accepted, but only after numerous offers have been made. In fact, we typically analyze 100 properties a day and make upwards of 20 offers a day in hopes of getting a 1 or 2 accepted per week … and even then, we may only keep one of those houses. We’ve learned that in order to make the right investments, we have to start with a very big number and whittle our way down to a very small percentage of properties that actually get purchased.
I actually met with some local real estate agents today who have a great system with this exact mentality in mind. They actually make offers on over 100 properties per day. Their strategy is to offer at 50-60% of list price and wait to see who counters. They know that about 5% of their offers will receive a counter offer and those are the properties they engage with. Ultimately, if they can get a couple of properties under contract every month at the right price, they’ve got a great system.
Different Strategies, Same Principle
For those investors that chase off-market deals, the same principle applies. We sent out 30,000 post cards last month in hopes of getting 300 phone calls. Out of those calls, if we ultimately buy 4 properties significantly below market value, we’ve got a system that works.
The bottom line is that casting a bigger net will produce more potential deals. For some, this may mean finding more real estate agents to focus on specific geographic areas. For others, it may mean developing a software platform to automate creating MLS offers. I personally like using virtual assistants to make offers, call for motivated sellers, etc. Regardless of which strategy you use, figuring out how to scale the acquisition side of your business is critical to increasing your deal flow.
What’s your strategy for finding potential deals? Let’s discuss in the comments below…