EDIT: Moderator - feel free to delete my post in the PRO forum because it's the same. There's very little traffic over there and I got no responses so I decided to post the request here in multifamily.
I'm wondering if anyone here has had experience making the transition from mom and pop level investing to a larger scale of operations where you need to employ someone to operate your internal deal flow "funnel" (for lack of a better term) to re-invest cash flow and/or gains from property sales. OR if you haven't done it for your own funds but you have worked in a small REIT or small private equity shop and have insights on lead gen and deal flow management in a environment of a very small team - that would be helpful also.
In other words, having an employee in place to systematically perform the mechanical aspects of the flow of:
Lead generation -> deal analysis -> placing offers -> due diligence checklists
If you have done so, I would LOVE to hear any of:
1 - Your "best practices" insights
2 - Whether or not you felt that the expense and time involved (I'm forecasting a full time) in operating your own lead funnel generated, over time, investment opportunities at better values than what is available on the open market. My targets are mid-sized apartment complexes and mobile home parks
Why I'm planning to employee my own lead generator / analyst - feel free to criticize my plan.
Prices are really high for apartment complexes right now. In the past when I've looked for purchases cap rates were reasonable enough that purchasing listed assets on the open market was attractive.
Now, having disposed of some matured assets I'm in the hunt for acquisitions again and want to diversify the portfolio (rather than simply lever up into even larger properties) into a larger number of properties. This of course introduces the headache of what could become an unmanageable workload for one person.
My gut instinct says a formalized funnel will be worthwhile. And my experience managing a sales prospects in a different industry was that using CRM software was worth the time and effort.
I'm willing to lay out the capital to employee someone hunting for deals for as long as 2-3 years before "harvesting" any prospects - if necessary. Of course I'd like to see results faster than that if possible.
Things I am uncertain about:
1 - Whether or not to separate the lead generation/prospect management function from the underwriting/due diligence/paperwork function - ie employ two part time people rather than one full time person.
2 - Compensation structure for the lead generation person - pure salary? Commission? Mix?
3 - Any particular CRM packages you've tried? I have extensive experience with 37 Signals' Highrise (cheap, fast to implement, fast learning curve) but have also looked at Salesforce and heard good things about open source programs like Sugar.
4 - The necessity of working together in the same office vs virtual operations. I had a great administrative assistant, smart as a whip, who worked for me full time for several years in a different industry. She moved out of state - not ideal - but we know how to work well together, I can count on her once she says she will do something and I wouldn't have the anxiety of trying to find someone from scratch. On the other hand I know myself, and it's way too easy to blow off going to your own office if there's no accountability you have to be seen by your own employees.
In The Millionaire Real Estate Investor Gary Keller, Dave Jenks, and Jay Papasan outline the different teams in the full operational real estate business.
They are: Admin, Operations, and 'A&D' (Acquisition & Disposition).
Admin: Your office, contract, legal, generally paperwork business.
Operations: Your management, repairs, contracting, the physical business of real estate.
A&D: Lead generation, offers, networking, essentially your sales arm (to view it from a traditional business perspective).
What's interesting is that the book emphasizes hiring a full-time A&D role, last. Typically an REI business offloads admin and operations tasks before lead generation. Furthermore, I have seen this very idea exemplified in the best investors I know. The real question is: Is your organization mature enough to offload lead generation from you to another person? If you have not ironed out the other parts of the business, I recommend giving the idea a second thought.
I recognize I am not the key response you are looking for (someone with direct experience). Hopefully my response will point you to the difficulty that comes with finding that on the forum(s).