{"id":102235,"date":"2018-09-10T15:47:44","date_gmt":"2018-09-10T21:47:44","guid":{"rendered":"https:\/\/www.biggerpockets.com\/renewsblog\/?p=102235"},"modified":"2021-03-16T14:50:17","modified_gmt":"2021-03-16T20:50:17","slug":"ultimate-guide-building-maintaining-powerful-real-estate-network","status":"publish","type":"post","link":"https:\/\/www.biggerpockets.com\/blog\/ultimate-guide-building-maintaining-powerful-real-estate-network","title":{"rendered":"The Ultimate Guide to Building & Maintaining a Powerful Real Estate Network"},"content":{"rendered":"

When you get started in real estate investing, it\u2019s easy to become overwhelmed with the multiple niches of investing. Each niche requires a unique set of skills that sometimes don’t translate to other strategies. But there\u2019s one skill that is applicable to all forms of real estate investing that doesn\u2019t get enough attention: <\/span>building your real estate network<\/span><\/i>. Knowing how to build your real estate n<\/span>etwork is the most important aspect of real estate investing. It\u2019s a skill that transcends all others and will make or break your real estate endeavors.
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\n<\/span>Without your real estate network, you\u2019re flying blind in real estate. A real estate network exposes you to deals, financial capital, contractors, property managers, and off-market information. When you\u2019re new to an area, typically the first thing you do to start your real estate network is reach out to a real estate agent. Most investors focus on the official job function of an agent: to represent you during the process of buying property. Anyone new to real estate thinks, \u201cOh, some random person is just helping me buy a piece of property for 3%. I\u2019m better off just going to Redfin or getting a lawyer to help me close deals.\u201d But that thought process misses the true value of a real estate agent, which is their network. In essence, when you agree to work with a real estate agent, you\u2019re gaining access to the network that took her many years of hard work to build. So, how did the agent go about building this network?<\/span><\/p>\n

The Glue That Holds Networks Together: Social Capital<\/h2>\n

Much time is spent on learning on how to attract capital for deals, but little time is spent on the other form of capital\u2014social capital. In our conte<\/span>xt,\u00a0social capital can be defined as the trust between two parties developed through regular interactions and business transactions. Look at it as the glue that holds your real estate investing network together. Without it, your ability to get things done in real estate investing is greatly compromised.<\/span>
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\n<\/span>If you regularly contribute to\u00a0the BiggerPockets forums<\/a>, you have created social capital that will allow you to connect with others to pursue your real estate goals. If you have a history of closing deals with your real estate agent, you have developed healthy social capital that will incentivize her to come to you first when she has a great deal. If you\u2019re known in BiggerPockets’ meetup groups as someone who helps people connect, you have social capital that can be translated to future partnering opportunities.<\/span><\/p>\n

Some of you might look at social capital as new age real estate investing gobbledigook, but in financial markets, social capital is referred to as goodwill\u2014and companies are <\/span>willing to pay billions<\/span><\/a> of dollars for it because it\u2019s the social grease that keeps the dollars coming in.<\/span><\/p>\n

Due to lack of social capital new investors have in the community, they might run into issues because agents, bankers, and property managers don\u2019t know if they’re worth the time commitment. So instead, they might send newbies bad deals\u2014or the newbie might have to deal with terrible agents and property managers desperate for work. Social capital is a barrier to entry. It prevents unproven investors from penetrating the core of a valuable network\u2014and rightfully so because the network needs to protect itself from strangers who might not be ready to contribute to it or who could hurt it through leaching, backstabbing, or just plain mischief (more on this later).<\/span><\/p>\n

So how do we build social capital?<\/span><\/p>\n

\"real-estate-networking\"<\/p>\n

How to Build Social Capital<\/h2>\n

The simplest way to build social capital is shown in this formula:<\/span><\/p>\n

Familiarity + Honesty + Giving = Social Capital<\/p><\/blockquote>\n

Let’s dive into detail for each of the 3 elements that make up social capital.<\/p>\n

Familiarity<\/h3>\n

Let me know if you have seen this before on the BiggerPockets forums. <\/span>
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Hey, BiggerPockets! I have a great deal, but I need capital. Would anyone be willing to invest $1,000,000 with me?<\/span><\/i><\/p>\n

Sincerely,<\/span><\/i><\/p>\n

Person No One Knows<\/span><\/i><\/p><\/blockquote>\n

Most people wouldn\u2019t consider investing their money with a stranger because they are taking a huge financial risk. The investor hasn\u2019t put in the ground work necessary to make themselves known in the investor community. Some people commit this sin out of ignorance, and others are just plain lazy. ( Thank goodness they are because that\u2019s what makes social capital valuable\u2014it takes considerable time to develop.) So, how do you build familiarly? We will get to that later in this guide when we talk about the People Funnel.<\/span>
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\nRelated:<\/strong> How to Build a Million-Dollar Network of Private Money Investors<\/a><\/em><\/p>\n

Honesty<\/h3>\n

Everyone says they\u2019re honest, but if that was the case, there wouldn\u2019t be dishonest people in our society. When I say honesty, I\u2019m not looking for you to tell every investor your deepest and darkest secrets. However, it\u2019s critical to clearly communicate with others what your intentions are. If you\u2019re a real estate agent selling class D investment properties in North Dakota, be clear with your potential investors that these investments are risky and if you aren\u2019t prepared you could lose your shirt.<\/span>
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\n<\/span>The easiest way to break your credibility with people is trying to play the role of a know-it-all. If you don\u2019t know the answer to a question, be up front and tell the person you don\u2019t know. Counterintuitively, this builds credibility with others because they learn that you are honest enough with yourself and others to not make up answers. More importantly, when you talk about something you do know about, people are more willing to listen to you. <\/span><\/p>\n

Another aspect of honesty is knowing when to prioritize the needs of others over your own. As an example, let\u2019s talk about selling fruit (tasty fruits like apples and oranges, not grapefruit). Mike sells oranges, and Frank wants to buy apples. Mike could try to convince Frank to buy oranges, and with enough sales pressure, he could convert Frank into an orange buyer. High pressure sales might work for a few customers, but over the long-term, Mike could force people into buying fruit they don\u2019t want, leading to dissatisfied customers and poor reviews, which will hurt his business. The good salesman that Mike is, he realizes Frank wants apples, and he will do what he can to help them find an apple provider. Down the road, Frank will remember Mike\u2019s honesty and will recommend Mike to his friends and family, leading to more business for Mike. <\/span><\/p>\n

It\u2019s easy to see what Mike should do in the abstract, but when you finally find your \u201cgreat\u201d deal and you are in desperate need of funds, you could fall into the trap of trying to put people into deals that might not be a good fit for them. Don\u2019t fall into this trap. Do what\u2019s right for people, and you will be rewarded.<\/span>
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Giving<\/h3>\n

One of the most important elements that I\u2019m going to devote an entire section to.<\/span><\/p>\n

Successful investors are like gardeners, but instead of nurturing plants, they nurture people by helping them grow and providing solutions to their problems without the expectation of something in return.<\/span> In Adam Grant\u2019s book\u00a0<\/span>Give and Take: Why Helping Others Drives Our Success<\/a>\"\", <\/span><\/i>he calls these people <\/span>Givers.<\/b> A Giver is someone who seeks to help others selflessly for the sake of making a positive impact in their lives. Unlike <\/span>Matchers<\/b>, who give only when they receive, or <\/span>Takers<\/b>, who suck people dry, Givers have no intention of receiving anything from those who benefit from their help. According to <\/span>Give and Take<\/span><\/i>, all the help a Giver provides to their network creates a rising tide of success that results in the Giver out-performing Takers and Matchers. Being a Giver has rewards in the short-term, too. According to research, people who help <\/span>others are happier,<\/span><\/a> live longer lives, and are less likely to be depressed<\/span><\/a>.<\/span><\/p>\n

The giving mentality can\u2019t be faked or used as a bargaining chip for future favors because <\/span>people will see through the deception.<\/span><\/a> I remember a get-together where an individual tried to give me a back rub (yes, really!), offered me a drink, and soon after asked me if he could be introduced to people in my network for his personal gain. Not only was it creepy, but that person also burned his bridge with me and identified himself as a Taker.<\/span><\/p>\n

Building Social Capital With the Investor’s Toolbox<\/h2>\n

How can we give to others when we think we have nothing to offer? Mistakenly, many people think that in order to build a real estate network, one must inherently be charismatic, held in high esteem, or have tons of money. Luckily, that isn\u2019t the case. In their book\u00a0<\/span>Influence Without Authority<\/a>\"\",<\/span><\/i> Allan Cohen and David Bradford argue that people focus too narrowly on the tangible assets they value, instead of the intangibles that others value.<\/span>
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\nRelated:<\/strong> How to Take the \u201cWork\u201d Out of Networking (Even if You\u2019re Nervous & Inexperienced)<\/a><\/em><\/p>\n

T<\/span>he Investor\u2019s Toolbox has 5 tools that you can use to give to others without requiring anything but your own effort. They are:<\/p>\n

Expertise<\/h3>\n

Apply your skills to help someone achieve their real estate goals. If you\u2019re a great marketer, maybe you can help an investor improve their advertisements for their rental properties. Are you awesome at Excel? Maybe you can help an investor set up a spreadsheet to track possible investment opportunities.<\/p>\n

Mentorship<\/h3>\n

Provide someone with counsel or resources to help them achieve their real estate goals without charging them anything. You can share your experiences with others to help them work through their problems or provide them with advice.<\/p>\n

Sweat Equity<\/h3>\n

Offer extra hands on someone’s project or find information (articles and books on real estate, potential leads, etc.) to help them when you lack expertise. It\u2019s a great way to start networking, learn new things, and cement a relationship.<\/p>\n

Introductions<\/h3>\n

Facilitating introductions between two or more people to help either person further their real estate goals. Maybe a contractor is looking for a realtor to sell their fix-and-flip or realtor is looking for clients. Act as the connector and the people you introduce will never forget that you connected them to each other.<\/p>\n

Gratitude<\/h3>\n

Show people who have impacted your life that you appreciate them. Writing a thoughtful thank you note can do a lot to make you feel happier and the person you\u2019re thanking feel appreciated. Maybe when you read an article on BiggerPockets that impacts your investing career, you write a note to the author to let them know their writing has improved your life.<\/p>\n

Next time you meet someone, remember the Investor’s Toolbox, and think of ways you can apply it towards your relationship.<\/p>\n

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The Social Capital Habit<\/h2>\n

It\u2019s important to educate yourself in real estate investing, read quality books, watch videos, etc. But in order to get your investing off the <\/span>ground, you must spend regular time each day building your social capital. While deals might be scarce in your market due to where we stand in the late stages of the real estate cycle<\/a>, you must continue to build your social capital so when the market slows down, you have opportunity to act.<\/p>\n

I know some real estate agents that spend a minimum of 10 hours per week looking for new clients, prospecting for deals, and getting their name out in the market. While most of us have full-time jobs and are unable to do so, we must spend regular time each week engaging in similar activities to build our social capital. Be it one hour a week or 10, you must continually interact with people in your real estate market to build your social capital.<\/p>\n

Assuming you’re working a full-time job, you need to spend at the minimum one hour a week talking to someone about real estate. Why? Because it will help you learn new things, crystalize your investment strategy, and build momentum towards your real estate goals. I said an hour at minimum because you need to make the commitment to yourself that you\u2019re taking your real estate endeavors seriously.<\/p>\n

So, how much time will you commit each week to develop your social capital? STOP READING NOW AND MAKE THE COMMITMENT. If you do make the commitment, message me so we can <\/span>hold each other accountable<\/span><\/a>!<\/span><\/b><\/p>\n

So now you have your toolbox and have made a time commitment. What\u2019s next? You need to get out there and meet people.
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How to Build Your Real Estate Network<\/h2>\n

Messaging people on the BiggerPockets forums<\/a> is a great way to make your voice heard, but nothing beats real time communication through a phone call or meeting in person. But what if you\u2019re not a social butterfly and are super introverted? How can you go about getting started? <\/span><\/p>\n

Introducing the People Funnel<\/h2>\n

A people funnel is a grouping of people dedicated to a common cause that amplifies your reach and ability to connect with new people while minimizing the fear of rejection. A people funnel is a BiggerPockets meetup group, a Facebook or Reddit group, Toastmasters club, after-work basketball team, or a volunteer group. A people funnel can be offline or online, but it\u2019s preferable to have a face-to-face interaction to make it easier to solidify relationships.<\/p>\n

Why Do People Funnels Make Meeting New People Easier?<\/h2>\n

Members of a people funnel share the same love for a common interest or a goal, which <\/span>develops a shared identity that makes communication easier<\/span><\/a>. This shared interest <\/span>makes it easier to connect with others<\/span><\/a>. Having a higher purpose helps people shake off the icky feelings of networking, because networking <\/span>can make us feel dirty.<\/span><\/a><\/p>\n

Different Types Of People Funnels<\/h2>\n

So, how can we get involved with a people funnel?<\/span><\/p>\n

Join a funnel.<\/span><\/h3>\n

You can find funnels online, at your work, or through word of mouth. For our purposes, the best place to get started is at BiggerPockets. First, create a <\/span>BiggerPockets account<\/span><\/a>. Then add a picture of yourself to your account. Write a bio about yourself. If you can, record a video of yourself and share it on your profile so people have a better idea of who you are. Once that\u2019s done, head over to a BiggerPockets <\/span>meetup page<\/span><\/a>. There, you will find all the events going on in your area. Click on a event to learn about the meetup agenda and to see who\u2019s going. Also, make sure to reach out to attendees before the event so they know who you are.<\/span><\/p>\n