Hello fellow investors!
I am using different ways to find leads for off-market property while looking a rental investment property and they brought me my first deal which I am working on with my agent hoping to close soon.
I do get other potential deals from my marketing which either do not match with my specific search (area, type of product,...) or that I can't / don't want to take myself. I am spending time, energy and money on marketing and when I get a lead I want to try to make it profitable for me, even if I don't take it for myself.
The options I have found available to me are as follow:
- providing the lead to another investor/agent/wholesaler for a fee\
- wholesaling the deal
- partnering on the deal with another investor for a share of the profit
The differences I find between each options is certainly the time spent to make it happen and the different potential gains associated to it. Also not every opportunity is a good one for every option.
For now I believe it would be easier for me to choose to refer the lead / for a percentage of the deal and I wonder what is a fair percentage of the selling price to offer.
Can anyone more seasoned than myself relate? How did/do you manage this situation when it happens?
I would appreciate hearing about you own experience!
The contractor whose only tool is a hammer sees the world as a nail. Take every deal/lead and analyze it--you are on the right track with the first three options you mentioned. The best percentage for a share of the deal will be what works for you and the other party; but in a situation like this, I have seen the lead-provider get less than what they thought they agreed to as the start, so be very careful with the partner and paperwork.
As a real estate broker, 20% for a listing referral (20% of the listing side commission) when it closes, is fairly standard, but always open to negotiation, of course. However, you don't mention if you are licensed, so I can't tell you if it would be legal/ethical for a licensee to pay your a referral fee.
You are correct--in general, the more time/effort you put into making a deal happen all the way to closing, the greater the potential reward.
@Yacine Rimmo Here in Ontario it's possible to put a property under contract and hire a broker to list it on the MLS as an "assignment sale". This lets other agents and their buyers know that you are selling the contract and are not the titled owner of the property. These types of listings are common on new construction, less so but still possible on resales.
Might be worth looking into if you can do that in New York.
Great ideas and suggestions here! This is why you need to be networking - a lot.
Attend all your local investor meetings. You can find many on MeetUp.com.
Also, call all the we-buy-houses signs you see.
Start discussing your topic. Find out what people are doing and paying for these deals in your area.
I sell a lot wholesale deals to investors, but not every lead you come across will work as a wholesale. I'm not a big fan of partnerships because those deals can kill friendships. One person always feels they didn't get their fair share.
I often sell deals that are just too far away from me for as little as $250. I'm happy because it helps pay for my marketing and it's a deal I wouldn't do anyway. Because of this, I have people I can call all over the place who are ready to take what I find. That also makes my time more efficient so I can move on to something else.
Make friends and make agreements. Turn your leads and move on. This should not be a point of stress.
I am based in New York City while I invest out of state in the Lehigh Valley in PA (Allentown, Bethlehem, Easton).
I am not licensed right now and not sure yet of the proper and legal way to be compensated for the marketing work generating a lead. I have to dig on this as I know certain states do not allow a brokerage to pay referral fees to unlicensed individuals (might be different in a deal happening solely between investors). I understand this can be a whole topic itself.
Without a doubt, I need to be networking and I have some ideas I wanted to put in place. Thanks for reminding this to me :) . There are many investors from New York being interested in the Lehigh Valley that there are things to be done yes.
I see partnerships certainly for larger deals in the future but I am not there yet, hopefully soon!
The assignment sale sounds like an option to wholesalers to put a property on the MLS, with then a brokerage to compensate and a broader exposition to different types of buyers. I'll check if that can be done in PA.
I'll keep on working on this and share what I find!
I am using mail, email, phone to contact owners from lists I pay for online, like a lot of people suppose. I haven't heard of realtors providing such lists but since they have access to a certain number of tools it's certainly a good idea.
How precisely are you able to specify your target in your lists?
Other than that my searches on the topic in Pennsylvania have lead me to the following conclusion:
- if it's a killer deal, put it under contract with option to assign and figure it out later.
- if it's a good deal that you can buy buy it, if you can't buy it send it to another investor and build relationships
I am possibly missing other possibilities but none that I found simple enough.
The problem otherwise in trying to monetize all ok-good lead is trying to analyse everything but not everything is worth it. Most of it is not... it'd be a waste of time.
My realtor generated my list for me using criteria I provided. I had him generate a list for multi-family units in specific zip codes where the owner has held the mortgage for at least 10 years. I then scrubbed the list for properties I believed would work for me. Once I worked through the list I compiled the addresses and sent the mailers.
Because I do a little research when I go through the list prior to mailing I shouldn't have to take too much time when they call. I also believe this method eliminates deals coming in that may not be worth it. The potential sellers should be receiving them this week. We'll see how it goes! I hope this answers your question.
@Yacine Rimmo I'd be interested in hearing about some of the deals you're not able to take advantage of. I'm looking to enter the Lehigh market and having trouble finding numbers in locations that make sense. Maybe we could work out some time of finder fee or something similar if you're open to this.
I'm just learning about Direct Marketing....how are you getting your lists online? Is it accurate?
@Matt Bertsch How did your DM campaign go?
@Mark J. so far it’s been sellers who all wanted a price point too high to make a deal work for me.
@Matt Bertsch I see...seems like it's a numbers game. Best of luck- I'm sure you'll connect with the right seller at some point.
Hi @Mark John. Your ability to do find deals in this market depends on what your investment goals are. A good source for lists is list source although a lot of people are using it so you need to be a little bit creative.
It is a numbers game without a question!
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