Categories: Podcast

126 – How To Run A Successful Real Estate Investing Operation with Isaac Barrow

Synopsis

With several years of experience and many valuable lessons, some learned about real estate investing the hard way, others by trial and error and some by pure luck. Here are some key points to help you run a successful real estate investment operation as Isaac Barrow joins us in today’s episode.

Key points

Hire And Lead A Small, High-Performing Team.

When running a successful real estate investing business, it’s best to keep it small, simple and efficient. Isaac and his family have had success by playing on each other’s strengths and implementing systems to help keep all aspects of the operation organized, efficient, and in order.

In their operation, Isaac’s father specializes in construction where he has over 20 years of experience and has a very sociable personality which helps in bringing more business and networking. His brother, an IT specialist has contributed his expertise in implementing systems that help keep the company efficient and organized.

For example, for their text blast, they use Twilio in which his brother helps customize their preferences so that they contact exactly who they want for the property they have with just a click of one button. They also use systems to manage their properties and where they are in the process, so they know who’s doing what and when keeping the machine running as smoothly as possible.

Getting The Buyer And Buyer List

Finding buyers can be tricky and time-consuming but once you have a set list of buyers that you work with, the process becomes that much easier and knowing what deals to put together and your exit strategy for those deals become just another part of the process. When looking for buyers go to your local real estate investing groups, talk to as many people as you can. Sometimes you may not be speaking to the buyer you are looking for, but they might know someone. This business is about networking. The bigger your network, the bigger your net worth.

One strategy mentioned by Isaac that most wholesalers may not pursue due to pretenses or maybe a past experience is real estate agents. In Isaac’s experience, real estate agents are a great source for investors as they are always looking for properties for their investors. Of course, if you have a good property with great numbers the real estate agent would help you get the deal closed because it benefits them as well. You brought them a property that they didn’t have to work to find, they look good to their investor by bringing the property to them and ultimately, they are earning another commission by closing on the property. It’s a win-win for both of you.

Acquisitions

There are several ways to acquire property, depending on your location one strategy may work better than others. Knowing your market and what your niche is can help you better pinpoint the strategy to pursue.

There are also contact lists you can purchase that will help jump-start your process. Isaac and company send out about 25k – 30k postcards a month that generates 10-15 deals per month. This is a very good ROI for this strategy.

At the same time, they have a system in how they go about choosing and refining their list from List Source and the messages they are sending out.

25k-30k postcards are a lot of postcards, ranging about $10k a month, but their deals are also anywhere from $7-$12K profit per deal. 1-2 deals from the 10-15 pay for the mailings and funds the following month as well.

Through trial and error, they also realized that sending postcards instead of letters work better for them. Sending letters takes more work and reading for the potential client. In this modern age of instant gratification and “not enough time”, being able to go to your mailbox and having a postcard with all the information instantly in front of you saying someone wants to buy your home is a message and strategy that has worked well for the Barrows and can for you as well.

Know Your Exit Strategy

When purchasing real estate there are several exit strategies depending on your ability to continue to purchase more properties, long term goals and investment plays. You may be looking for a property to wholesale it and you don’t need the capital to purchase the property but have the buyer on hand. Your play may be to purchase and flip the property. Ultimately, the potential profitability of the deal in hand is correlated to their respective exit strategy.

Understanding and knowing which plan will help you maximize your return on investment. The Barrows mostly like to purchase properties that are tailored to their buyer database. They also keep in mind their exit strategy as that would play a part in their profit margin. If they are looking to purchase the property and flip it they look to make at least $10-$20k on each deal but, if they are looking to flip the contract and not put any money down then they look to make at least $7k. They also mostly purchase properties that need cosmetic changes and they can quickly flip.

As an investor, you may be looking to make more profit and your risk tolerance is a lot higher than most so your willing to flip a property with more than just some cosmetic damages. Your exit strategy may also be more of a long term play, you can choose to purchase properties to rent out for the cash flow or even a subject to wrap strategy where you take over the mortgage payments of a property from the current owner and get a down payment from a tenant and have them pay more monthly than your monthly obligation.

The Exit

In order to run a successful real estate investing operation, you need to have the right people and systems in place. Having the right people and playing off of their strengths and having the right systems that work for your strategies ensure that your operations run smoothly. Also, knowing your market, your buyers and your exit strategies are imperative in making your deals run just as smoothly and maximizing your ROI for each and every deal.