Note closers find strength in numbers, mainly because the business is a number’s game. But also, this helps when working somewhere outside of your market that requires a lot of meeting up and reaching out to find deals and close them. Creating local market teams helps to get things done in the shortest amount of time possible. While it is ideal to keep making deals, lessening your focus can be a good method to get better deals. If you are buying in a local market, make sure to become a member of the local real estate investment club. Learn more ways to build your team, like talking to local title companies and looking for hard money lenders.
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Talk To People And Expand, Creating Local Market Teams
Our topic is something that comes from questions being asked on The WCN Crew private Facebook page. For many students of ours, we have a private Facebook page that’s growing. It’s very interactive, a lot of great questions, a lot of great comments, a lot of networking taking place, and that is a beautiful thing. It really comes in handy with this episode. I posted a question, “What questions would you like to see?”
These are some of the questions, “How do you build a team in a market outside of your backyard? What’s the most effective way to do that? How do you find people to help you out with things?”
First and foremost, we’re going to start off on some basic stuff and we’ll dive into a little bit deeper stuff. The first thing that I always like to tell people is the easiest way is not to try to eat the whole elephant at once. Try not to have the whole United States as your market. As new note investors, a lot of us are like, “We have all these deals. We don’t want to miss on a good deal by limiting our focus.” I can agree a little bit with that but I can also agree to, “Pick two to three markets at the most or states because if you’re looking to buy in twelve states, you’re just going to be overwhelmed and not be able to get a lot of your good due diligence done initially.” Instead of eating the whole pie, have a slice at a time and move your way forward. A couple of things that you need to understand is you’re going to be doing the same things in an outside market that you would be doing in your local market.
Let’s talk about what you do in your local market. Hopefully, you are a member of a local real estate investment club if you’re buying in your local market. Here in Austin, I haven’t bought anything in the local market. I still occasionally will go to local real estate investment networking things, but for the most part I’m not buying anything here in Austin. That doesn’t mean I’m not a member of a Houston club or a Dallas club. I’m also a member of quite a few clubs across the country that I’m tapped in through one or two sources. I like going and checking out the national REIA groups. Go to NationalREIA.com. That will list all the main charters from the national to big real estate investment associations across the country. There are a few that are very small but most of them are pretty good. That’s a great place to go research-wise. What I mean by research-wise is contacting the president, contacting the VP and inquiring about, “Do you have any investor-friendly realtors? Do you have any rehab crews? Do you have a vendor’s list?” Some of those people will want you to join before they give information out, but usually they’ll give you one or two good recommendations especially if you need to get a realtor. Your investor-friendly realtors often have crews that they’ve reached out to or people that can help out with that. That’s usually the first spot that we go to.
A lot of people will go to Realtor.com to find realtors and that’s fine. I would just prefer to go the real estate investment clubs. If you’re going to be buying notes in some cities where they’re maybe smaller and don’t have a big real estate investment group, that’s fine. The next phase that I would go to besides the National REIA Group is then go to Meetup.com. It’s an important thing. It’s a very easy way to literally search by typing in real estate and the city that you’re looking for, and it will pull up real estate investment focus groups or any networking group or Meetup group that has real estate as a hashtag or keyword search in that aspect.
The thing to keep in mind with that is you’ll be overwhelmed, but it will often lead you to a real estate investment club that has a decent page. You’ll be able to see how many members are a part of it. It’s usually free to join the online Meetup groups. They often will have a discussion board that you can post questions to it. You can ask questions. You can reach out to the main administrator or the president of the club and ask them questions. Often they’re pretty good. Often they have their email right there. The discussion boards are phenomenal for you to either post questions or eventually post your deals or asking for realtors for help in the neck of the woods.
The third thing that you can always do as well is to jump to ActiveRain.com. It is a great website. A lot of people haven’t used ActiveRain that much. It’s a free website for real estate professionals. Those that use it on a regular basis, you’ve got points. What happens is you create an account with ActiveRain, it gives you points for everything that you do in ActiveRain, whether you like somebody else’s post, people have a lot of blogs on there. ActiveRain was started by Trulia. There are a couple of hundred thousand real estate professionals. It allows for you to check for insurance people, appraisers, realtors, commercial agents, brokers, mortgage brokers, loan officers and real estate investors on there. It’s a pretty good sized list. What’s really cool is it allows you to edit your page into whatever you’d like it to be. If you want it to be about your business, great or if you want it to be referrals or case studies, it’s a blob of information that you can create for your own custom page.
A lot of people will create an ActiveRain profile and they’ll never go on there to even put their profile. The one big advantage I love about ActiveRain is the referral network. I’ve used a lot of ActiveRain posts in the past to find realtors to pull comps or potential investor-friendly realtors that do drive-bys and CMAs or even find buyers for our assets. It’s a beautiful thing that way when it comes to it, but you’ve got to use it. It’s like a muscle. If you don’t use that muscle, it gets weak and you don’t have any access to it. People get upset because they don’t ever use ActiveRain. They go onto their Facebook profile or even a picture post-referral and nobody takes it seriously because all they do is click on their profile and see, “They don’t have a lot of information here. They may not even be in business anymore.”
Three big things: REIA clubs, National REIA is a good point but you can also find others. REIAClub.com will give you a list of stuff and just Google on it. Meetup.com is a little bit more effective aspect of things to give you a lot of groups. You can choose and pick and join a variety of things. One thing about Meetup.com groups, sometimes when you join a group, it’ll list the mailing list and you can send an email out to the entire member list of that specific group. Sometimes these groups have 300, 400, 4,000 people too. One email out to the mailing list can be a very effective marketing tool to find a lot of things. I’m a big proponent also besides ActiveRain, Meetup and National REIA Club, of networking and asking on Facebook groups. If you’ve got a group like WCN Crew, 610 members, it’s a great place because everybody’s very active and you’ll often get quite a bit of responses. I think Dan Zitofsky posted something there that said, “I’m looking for a realtor in a specific area,” and somebody responded. Gail Greenberg was asking a question about bankruptcy and she got a couple of responses. It’s a great spot. There are a lot of big real estate groups out there that can help answer your questions. They’re either local. There’s a big real estate group in Houston, which I’m a part of. It’s 713 Houston Area Real Estate Networking that our buddy, Landon, runs. They’re a great resource, great place to post. What you don’t want to see which often happens in a lot of real estate groups is where it stops becoming interactive, where people just post and nobody really responds. That’s what you don’t want to see in a Facebook group. Those are your four biggest things. Facebook groups are growing a bit bigger. Meetup would be the second. Your real estate clubs or REIAClub.com is your third. ActiveRain is the fourth one, the weakest.
The thing you have to do when you’re building teams is ask. Be specific about what you’re looking for. It’s like you would do anything locally. If I’m going to do a rehab, I’m going to ask for two or three people to go buy it and give me different bids so I can pick the best one. I’m also going to ask for references, “Who would you recommend?” Another thing that’s really good is if you’re going to be buying in a specific area, what you probably need to do on a regular basis is get on a plane and go out to the area. Go out and meet with the rehabbers. Go out and meet the fix and flippers. Go out and meet with your investment team in an area. That way you can meet people face to face, eye to eye and really have a good feel for what’s going on in the market. This is important if you’re buying consistently in one area. If you’re not buying in one area, you may not want to jump in and visit twenty different areas. If you pick a couple of spots, that would probably be a good start to go out to do your way and feel around it.
One of the reasons I fell in love with Indiana as an investment thing is we drove around Indiana, spent a couple of days there multiple times, drive around looking at property, the cities, getting a feel for things, getting comfortable with the area. We’re big fans of Indiana. It’s the same thing about Florida. I’ve spent a lot of time driving around Florida, meeting with people, talking to realtors, building that team. If you’re in different parts of the country like if you’re in San Francisco, you may want to fly all the way across to Indiana or Fort Myers or wherever you’re investing at. Honestly, Southwest is pretty cheap. Sometimes if you’re going to be buying in a consistent area and you’re seeing deals consistently in Columbus or Detroit or Indiana or Indianapolis, you’re probably best to jump on and spend a couple of days out there. It’s a write-off business expense but it’s an opportunity for you to really see what’s going on and identify and get some really great information.
I’ve had realtors that we’ve met with face to face pull lists of ZIP codes that we wanted to avoid. That’s a really valuable tool when it comes to looking at tapes and seeing what’s going on, “We want to avoid these zip codes? We’ll avoid these ZIP codes.” If you meet with somebody face to face, they’re a little bit less likely to flake off than if you just talk to them on the phone. We’ve had this happen multiple times. We call realtors and they flake off. They’re like, “I’ll go do that,” and then they flake off. It just happens. When you can find a really good realtor, you want to make sure you take care of them. Make sure that they’re doing amazing things for you. If you go to Meetup.com and search in some of the biggest cities in the country, you’ll often find that some of these Meetup groups online have large members. San Diego’s got a couple of groups that are big, San Francisco, LA, Tampa. There are some big groups out there looking for real estate investment clubs. Those are some great groups to search out there. I’m not going to give you our list, but I’ll give you a hint there of a few of those. You can go to ActiveRain.com, definitely an easy thing on there to do stuff.
Some people talk about raising capital in a local area or looking at a new group. One of the things you need to meet when you’re out there talking or visiting with people is go by and talk to the local escrow or title company you’re closing deals at. Often, title companies will serve as a hub for traditional transaction. They’ve got realtors, they’ve got mortgage brokers and they’ve got lenders, all sorts of stuff come together at a title company. Your title company really knows what’s going on in the market. They want your business so they want to close these deals out with you. When you’re buying a note, you’re not going to be using a title company initially because you’re buying the debt, you’re not buying an actual property. If you turn around and sell it, list it as an REO, you’re going to need a title company to do it. Going and meeting with a title company is an effective tool to build the relationships because they often know the rehabbers as well besides the realtors. They often know who the private investors are in the area. Anytime we’ve gone to meet with a title company and asked them, “Do you know who’s lending money? Any private investors that are lending money to people, would you be willing to introduce me to them?” They’ve always been willing to either give me three or four names or they would be like, “Let me check. Let me talk to them. If I get the permission, then I’ll give their information out,” which is completely fine and respectable to do. Another thing we have used title companies for is sometimes pulling lists. Oftentimes, a local title company can do a quick search through their software to pull a list of self-directed IRA investors. Then they can send it to me in a spreadsheet. It works out really well.
Let’s recap on this. You’re going to need realtors, rehab crews, property preservation, cleanup crews, title company and then potentially local private investors. All those are great and all those are often members of your local REIA clubs. It’s important to have that aspect of things. Those are the same people that you would go out and meet with locally in your aspect. One thing that you may also want to do is find turnkey specialists in a specific market. We have done this in Columbus, in Michigan, in Indianapolis. We’ve done this in quite a few spots where we will go out and meet people that are doing some nice turnkey stuff to find out what they’re looking for. If you can find an asset that doesn’t turn into a re-performing note but turns into an REO, you may want to try to find a ready-made buyer who would be willing to take it off your hands and put it in their portfolio. That’s one of the big things that Dan Zitofsky likes to do when he buys assets is he buys it, foreclose it, turns it into turnkey rental and then finds an investor to take it off their hands and get most of their capital back and still provide a good return on investment to his investor. It’s a great turnkey model.
If you could take a property back, decent sized area, find out the local hard money lenders. Why would I want to reach out to local hard money lenders? I’m a big proponent of reaching out to them and seeing what they would approve the project for funding on. If a fix and flipper bought the house, what kind of financing can they get available on the asset? In some cases, we’ve been able to get the hard money lender to give the asset pre-approved financing, “We’ll fund up to this and provide this on the fix and flips.” That becomes a really valuable asset at that point. Often too, hard money lenders will often list the people they deal with. They’ll often sometimes market your fix and flip or your REO out to their database because they want to get the funding on the loan come through them. That’s a really good little tip/trick to help you be able to move assets that maybe you don’t want to necessarily do the big heavy fix and flip, but you can still get it done and make things happen. It’s not the easiest thing to do, but you have to do this. You’ve got to spend time on the phone and talk with people. Do the same things that you would do if you were in the local market, except the fact that you’re doing it outside your market. You can do it all from phone or email. Sometimes you’re going to go through three or four realtors you talked to before you can find something. I just went to the local real estate club, talked to the president and got two or three names from them. It’s often going to be a much better relationship because it’s going to be a warm up.
Pre-approved from hard money lenders is a great idea. That’s a thing you could add, “I got this pre-approved project,” or they’ll do the email blast out for it. When you do post it to the Meetup groups or ActiveRain or the local REIA clubs you say, “This is pre-approved with financing from such and such company,” it’s literally like a deal wrapped up with a bow on top of it for people. If you’re selling the asset, great, you’ve got somebody financing it. You don’t have to worry about somebody going out and get financing. Usually hard money lenders can close at seven to ten days versus 30 or 45 or longer depending if you do the rehab. It’s also a win for the investor because numbers are in place. They can’t really fight you that much on the deal because a hard money lender has already approved it for that. It keeps you pretty clean if you can take care of that and take advantage of that, if you’ll take the time to do that.
One great way to find hard money lenders from across the country is not only your local real estate clubs, but if you check out REIAClub.com as well, that’s where hard money lenders are doing stuff in different states. That number has fluctuated over the past years. I think it peaked at 58 that were doing different things across the country. That may have dwindled down. I’m not sure exactly where it’s at. You’re going to your local REIA Club, you want to talk to people. I’ll give you an example. Here in Texas, we have Jet Lending out of Houston. It does a really good job with that. You have Longhorn Investments out of Dallas. It does stuff in Austin and Houston and San Antonio as well. You’ve also got Noble Lending there locally who also is out of Houston. How do I know these guys? I just talk to local real estate investors.
You have networking with different masterminds is a good spot. I made a lot of great connections in different markets from going to events where there were other real investors at. When I was a part of the Collective Genius Mastermind and we have a lot of guys doing fix and flips all across the country, I made note of where they were located, what they focused on, so when I did have something, I can move it to them relatively easy. It was a true win-win. I made a little bit less because they’re investors just like you and me, but at least I got the deal done and closed and moved on and didn’t have to drag it on. Another thing is just going on the Financial Friends Network cruise that I did meeting other investors in other areas of fix and flips. We met another buddy in Indiana who’s doing some fix and flips. Somebody down in Fort Lauderdale is doing some stuff in that neck of the woods. It’s important to try to expand your network when you are out talking to people. This is all why it’s also important when you go to events like the Paper Source Symposium. We’re actually excited to have Bill Mencarow come on as a guest. Part of that event is going out and collecting business cards. It’s important when you go to Note CAMP and you see that I’m sending a survey out to everybody on Note CAMP, which we usually like to do, that you fill out the survey so you get the survey information and now you have a list of people in different states and their interests. Being able to take that information, put it in your CRM tool so that when you do have a deal that needs help, you can do a quick email blast out to those people, “I’ve got a deal in your backyard. Are you interested?” Cards are important and connections are important if you want to get things done.
Another source for finding stuff is going to LinkedIn and typing in ‘real estate investor in Indianapolis’ or ‘real estate investor Columbus’ and see what pops up from there. They’re not going to be as warm a lead as you would from a real estate investment club or a hard money lender or Meetup.com, but it’s still a way to find people on there and leverage your LinkedIn profile to make things happen. The beautiful thing is if you just go on and search on Facebook or LinkedIn, you’ll often find real estate clubs, Columbus real estate investors or Houston real estate investors and you’ll find groups that way to target to. The beautiful thing is you can do it all from your home, your computer, your smartphone, whatever you need to do to make things happen.
We have a comment, “I’ll finance the deal myself if a rehabber will come in with a little skin and do the work.”
That’s a great source of owner-financing technically. It’s not a long-term loan but usually you’ve got six to twelve months. Mezzanine financing when somebody gets their fix and flip done and move on to it, I totally think it’s a great way to do that. If you advertise that often in the Meetup groups or in the real estate investment clubs or groups and things like that on Facebook, you will often have quite a few people pick up on that. I love that idea. The one thing I worry about when I carry financing is sometimes people don’t have as much experience. I’d rather almost deal with the hard money lender, make a little bit less but at least I get paid back when you figure in the time value of money. If I take 5% less but I get my money now, versus waiting twelve months to get paid off, how does it equal up? How often can you turn your money and have the velocity of capital working for you to make more money and to make things happen?
If this has been valuable, feel free to share it. If you’re listening on iTunes, Stitcher or anything like that with the online platform, feel free to leave a review. I love to hear what you like about the show. Post any comments, questions, concerns, feel free to email me directly at Scott@WeCloseNotes.com.
We have another question, “Where have you start seeing some more tapes that come in from some of our sources, whether it’s some assets that we’re moving ourselves or assets we’re taking down?”
Go to WeCloseNotes.com. If you go there, you’ll often see three buttons that pop up immediately in the homepage, whether you want to buy assets or join the mastermind or get trained. If you go to the Buy Notes aspect and register, that will get you registered to be on our note investors list that we’ll send out these tapes to. We’ll be sending a list out as well to our database of investors on some assets that we have from a hedge fund that reached out to me and said, “Would you mind helping us get these assets moved?” That’s one of the biggest things that I would tell you to do. If you want to see some assets, you’re more than welcome to register for that and we’ll see about getting some of these lists out to you.
The thing you have to keep in mind is as you’re doing business, it’s very easy to get pumped up and then work towards something. If we’re not seeing immediate results, sometimes it can be hard to stay focused. It’s easy to drift, “I’m not really enjoying that. I’m going to do something now,” instant gratification. One thing I can tell you is to stay in the course. If you’re dealing with struggles in your note business or you’re dealing with struggles with finding assets, stay in the course. Do a little bit extra. Push yourself a little bit further to do some things. Don’t just settle for the status quo. Don’t listen in to those who say they can’t find assets or that, “It’s overpriced.” I get that. I understand that some of the lower hanging fruit has gone up in years.
The thing that’s going to help separate you in finding things that make sense is reaching out to banks, but then also building teams in specific markets that can take a look at things. I’ve got several teams in markets that will look at anything in specific areas. Sometimes I’m moving assets that I probably wouldn’t have necessarily bought because I’m creating a win-win. I’ve got people that will buy assets. It’s something that I would buy, but they’re willing to take it down and I’m still making something off of that. If we’re buying, we’re moving our wholesale on a few assets as well. Keep that in mind. There are a lot of ways to make money in the note business, a lot of great ways, a lot of great deals. We’re still seeing a lot of great stuff out there. I highly recommend it. Go check it out. Go get on the list for We Close Notes as our note buyer as we send stuff out to you. We’re looking to get the list out. We’re going to have our monthly offerings pretty much on a regular basis for you.
We have a question, “How do I compensate realtors?”
I compensate realtors in a variety of fashion. First and foremost, you have to realize that you will tell them that you’re an institution. You don’t want them thinking that you’re a one-man show. There’s nothing wrong with being a solopreneur but you’ve got to tell them, “We’re buying a portfolio of assets. We’ve got a couple in your area. Can you do a drive-by CMA for me?” I don’t want a BPO because BPO is a cost to that for the most part, “I need a realtor to drive by, give me some photos, give me an idea if it’s occupied and then it will be a listing for you once we close on the note.” The thing to keep in mind is I probably won’t foreclose on about half of the deals because we’ll work to get them re-performing. In that case, if we do get them re-performing and I’m still going to pay the realtor a flat fee. If we do buy the note and it turns out to be vacant and we start the cancellation of contracts, the foreclosure process, I keep the realtor involved. I let them know what’s going on because it will eventually become an REO for them.
In some cases, we’ve had realtors find buyers that were pocket buyers without ever having them listed on the MLS. That can be a win. Also, you need to be careful about that. Sometimes investors or realtors will not give you a true market value. It’s lower than expected, trying to find a good listing to move it. You’ve got to be careful about that. You probably see that in about one out of fifteen, one out of twenty realtors. For the most part, realtors are really good in quality at giving you information. They just want to get paid. They want their time valued just like anybody else. You do get realtors that are like, “I can’t go do that for less than $200.” “Great, have a good day.” The thing you want to do is you want to press to make sure that they give you the information in 24 to 48 hours. As far as the desktop CMA showing you recent solds in the last 90 days, the pendings and the ones that are on the market, and you want the comps or the comparables that they’re pulling to be within 200, 300-square foot of your subject asset. You don’t want it to be all spread out three miles away from each other. You want it relatively close and stay within a mile, if not less, preferably in the same housing complex, your neighborhood part of the city that you’re buying the asset in.
Make sure they try to give you multiple photos. The photos where they’re in the car and you can see the rear view mirror, those are really only acceptable if the borrower or the person living in the house is on the front porch or out in front of the yard. I totally get it. I understand it. That’s why you want to make sure that they try to give you a decent photo. They go back maybe once or twice. I’ve had realtors sent me photos of the property in the dark and I’m like, “I can’t do anything with this. I need you to go back.” That’s the biggest thing. You’ll have some lazy realtors sometimes that will go by and take photos in the dark like, “What good does this do me? I can’t see the property. I can’t get a good idea.” “I can see where you’re lit up, but I can’t see anything else around there.” If that’s the case, sometimes you’ve just got to say next and move on to the next realtor. That’s probably the thing that takes the most amount of time is building your realtor network, especially if you’re not reaching out to the meet-up clubs and Meetup groups. Those guys can sometimes take a little time to get back to you, but once you get somebody they’re usually pretty good and spot on. If you meet them in person at some point, whether it’s an investment club thing or an expo, the expos are a great thing to go to in specific areas.
One of the best things we’ve gone to is the Ohio REIA. We met a lot of great people up in the Cincinnati area, realtors that we’ll be using for our posts or our deals. We really nurtured some great relationships with some of those people and are excited that they’re helping us out with some things. We hope that you found it valuable and we hope that you’ve taken some notes on how to help you with your note business of where to reach out to and who to talk to. It’s just a conversation. It’s all about getting on the phone and talking to people first and foremost. It’s not the hardest thing to do. You’ve just got to tell them what you’re looking for. Sometimes if people say, “I’m not the person for you,” that’s fine, “Do you have somebody that you would recommend?” Asking for recommendations and referrals is a very key integral part to really building teams in areas along the way. One person I did not mention that you may want to find is a property management team in areas. They are sometimes great people to find because they know the rental market. They know what’s going on. They often will have other investors who are looking for similar properties that you take down that they can basically take over and add to the rental portfolio. Go out and make something happen. Have a great day. We look forward to seeing you all at the top.
- Dan Zitofsky
- Gail Greenburg
- Jet Lending
- Longhorn Investments
- Noble Lending
- Collective Genius Mastermind
- Financial Friends Network Cruise
- Paper Source Symposium
- Bill Mencarow
- Ohio REIA
- 713 Houston Area Real Estate Networking