If You Are Looking For Everything You May Find Nothing
Looking for profitable deals in metro Detroit. Want 20% ROI and at least $250 per month positive cash flow. Will not pay more than 70% of ARV minus rehab costs. Prefer seller financing, lease option, etc.
How many times have you heard this type of pitch? Is there any investor who wouldn’t take this deal if they came across it? Do you think asking for this increases your credibility or makes you look a bit foolish?
Any experienced investor who comes across a property that meets these criteria will either keep the property for themselves if it fits their portfolio or they, most likely, already know who they will refer it to. Asking for a deal like this demonstrates your inexperience, that you have no specific expertise. You’ll take any great deal that comes along. So would almost anyone. Could you close it if you got it? Why should anyone call you?
Narrow your criteria. Develop an area of expertise. Look for a certain kind of property in a few cities, better yet, a few neighborhoods. The more specific you can get the more it seems that you know exactly what you will do with the property when it comes along. It is also much more likely that the investors you speak with will remember what you are looking for and will call you if they come across it.
How specific should you get? Narrow your criteria as much as possible. A 3 bedroom 2 bath SFH in Oakland County is too broad. A 3 br, 2 ba, w/ basement and garage in Farmington, Farmington Hills or Royal Oak is still too broad. Specify what you want to do with the house. Are you looking for a long term rental or a flip? Do you want it to be rent ready or would you prefer to do some rehab? Narrow down the cities to a couple. Specify the area of the city if you can. What school district? What price point? I know several investors who have criteria this specific. When I hear of a property that might be a good fit for them (that is not a good fit for me) I immediately think of them and pass along the lead.
I have a set of specifications for a type of property that is difficult to find but fairly easy to remember. It is for a house, in any condition, on at least a 40 ft wide lot within half a mile from the downtown area of a local booming city at a price point under $100K. Why don’t I care about the condition of the house? I am part of a group who has knocked down a couple similar homes and built new homes over them in this area. It is an easy criteria to remember. There are a few Realtors and wholesalers who send me leads on properties near this criteria on a regular basis. Unfortunately, they usually stretch the area a bit or miss the price or frontage. The criteria is very specific. When I find it I buy it.
There is a local wholesaler who knows my criteria well. I have purchased or have funded the purchase of a few of his properties previously. He regularly blasts out the properties that he puts under contract but not until after he calls the investors who have specific criteria and who have shown they will close when he finds something that meets their criteria. The best stuff never gets advertised. If your criteria is too general you will not be put on a list like this.
When your criteria are specific you appear to be an expert in your area and you will get leads (assuming you close them when you get them). If your criteria are not specific no one will remember what you are looking for. You may be surrounded by opportunity but may not see anything.