Nick’s follow-up to Rob’s video about closing sales.
Give yourself permission to fail, remember every call is practice, and what we do helps people.
Sales is the million dollar skill and closing is the epitome of making a sale.
Are you closing at least 3% of the deals from people who respond to your marketing? Do you talk to at least 5 sellers a day? This may be the biggest thing holding back your business.
Want to learn more? Then AARE Director of Acquisitions and Resales, Rob Reutzel has some suggestions for you!
I find people getting started in real estate investing are often so focused on the details and fine points of real estate and hunting for their first deal that they skip right over the steps necessary to create a firm foundation for their business. I know these steps can seem tedious, especially if you’re raring to get out and start breaking into meth labs, but trust me — they will pay dividends for years to come and you’ll thank me later.
Step 1: Set up a Contact Database & Create Categories
If your network is your vital component, your contact database is how you maintain, organize, and grow your relationships.
You need a place to organize your contacts and business cards in a way that is very organized and easy to access. I cringe when I see a binder of cards tucked away in sleeves a person bought at Staples. If that is your system, please get rid of it. It will completely hinder the way you do business.
The transparent sleeves business card page, and the three-ring binder are the low-tech solution for what to do with all those business cards. This is a start if you only have a handful of cards to sift through — at least you have them all in one location. Once you start networking heavily, this system becomes ineffective. The biggest problem is that they are usually “organized” only by the chronological order in which you receive them, making retrieval difficult.
Qualities of a Good Contact Database
A system organizes the connections you make through networking, and as you pick up contacts along the way. This is also called your Sphere of Influence, or “SOI.”
A good Contact Database allows you to:
Most importantly, a good contact database is intuitive to how you work and think. A program that is user-friendly for one person might be confusing or annoying for you to use.
List of Contact Management Databases:
DECIDE, COMMIT and PURCHASE an appropriate Contact Database that can fit your needs.
TIP: Do NOT GET discouraged if you’re not a techie – the directions that come with these things now are so simple, even I can understand them. Take some time (but no more than 1 hour) learning how to use your new software, as this is a KEY to building your business.
Buyer Criteria – Segment Your List
After your business set up, building your buyers list – and then QUALIFYING them — is your next step. Your new contact management system is a great way to organize those leads, and any leads you bring in or make through your network. When you do have a deal, all it takes is selecting the right category to blast it out to people looking for, say, a single family rehab, north of Boston.
CREATE CATEGORIES in your Contact Database: To assist you in organizing everything, here are some examples of how to categorize your contact database:
*SFH: Single Family Home
**L/O: Lease Option
Q: Why distinguish between 1-4 Unit Multis, and 5-unit + Multis?
A: There are different types of financing for 1 to 4 units versus buildings with 5 units and up. Some of your buyers (be they retail or investor-buyers) may use conventional financing, and anything over 4 units is considered a commercial loan. Check with your local mortgage broker for the accurate classification… and make a connection for your power team while you’re at it!
While you are looking for the best Contact Database to fit your needs, working habits, and personality, find one that is compatible with a reminder calendar. The best is if you can find one that is able to “time activate” your tasks and other reminders, even your marketing calendar & follow-up schedule if you think you can put it all in one place.
We’ll talk more about calendars that time active your tasks in Chapter 4. For now, keep in mind when you are considering programs.
; – )
What have you found to manage your contacts? What do you like or not like about it? I’m always looking for the latest tech solution!
Keep calm and rehab on!
As I mentioned before, sellers and agents are sometimes insulted by how low my submitted offers are. “Why do you make such low offers, Nick?” you may ask. Well, I do my absolute best to be super transparent and show my seller all my costs involved in the sale, and of course, I explain to them that I also need to make a profit, since this is my business. Happy to share the full details on that in another post, if I haven’t already — oops — take a search!
Today, we’ll consider a new project I recently bought from an experienced and well-regarded wholesaler. In this case, the fudge factor was called into play, before we even started the rehab.
This wholesaler used all of the calculations and checklists I require before he brought me the deal, and when I went to inspect the property myself, I ran all the calculations and checklists myself and was confident we were offering a fair price for both the seller and our own bottom line. And here’s another reason I submit what some people consider “low” offers — it’s the “surprise” or “fudge factor.” And there’s always a surprise! After years of experience, I know first-hand there’s just no way to know what’s lurking below that subfloor or behind that wall.
In this case, we did catch the asbestos in the basement before closing, and both the wholesaler and I reduced the purchase price by $2,500. Good catch.
What we did NOT catch, mainly due to the need to close quickly, was recognizing that the addition may or may not be legal. As part of our closing checklist, we pull the property file at the inspector’s office before we purchase, though rarely, like in this case, we don’t get to it until the day after. (Oops!) It turns out that no permits were pulled when the addition was originally added to the house. We may get away with just completing the interior work and bringing it up to code, but there’s a real chance we may have to demo the whole thing, repour a new foundation with footings, and rebuild it, especially since this is where we plan to locate vital first-floor elements of the home. Either way, this surprise will cost at least an additional $6,000 over our planned rehab budget and possibly as much as $15,000. Even allowing for contingencies, this was one unpleasant surprise!
The moral of the story? If the seller isn’t insulted, your offer is too high. And there’s always a surprise!
Oh — and if the seller is insulted, your number is probably right – and now you need to work on showing them how you got there. At least, that’s what we do.
Keep calm and rehab on!by