The Absolute Best Ways to Find Deals

Have you ever wondered how the top real estate investors find their deals? Do you ever wonder how people can possibly make $200,000 or even $500,000 from one flip? It’s real, and people are doing it all the time. From my dozens of hours of interviewing investors who are consistently earning over 7 figures per year, I’ve learned the secrets to finding great deals. They focus on getting BIG deals, and only work on a few every year. Here are the absolute best ways to get deals in the Bay Area. Focus your energies on these three techniques and you will achieve the same success.

Cold Calling

Cold calling is one of the scariest things to do. The rejection rate is ridiculously high and there’s a big chance that you will be verbally abused by the recipient. The fact is, people don’t like being called on their personal phones from friends and family, and they especially don’t want to be called on by someone who’s trying to buy their home at a discount! However, cold calling is a relatively cheap way to obtain leads. You can buy a list of phone numbers from a website such as listsource.com and go down the list, calling multiple people at the same time. In fact, one of my partners calls three phone numbers at once for 8 hours a day! A majority of the people won’t pick up, so you have to keep going down the list of thousands and thousands of numbers. My friend performed this method for 16 months without any leads. But when he finally got one, it paid off big time. The home was worth over $1.5 million, and my friend was able to acquire it for $1.05 million. It barely needed any work, and he was able to net around $300,000 on his first deal. Not bad for a 22 year old!

Now, his operations have evolved. He no longer spends hours of his own time calling homes. Instead, he outsources the job to his virtual assistants in Jamaica. Now, he only involves himself in the process after a good lead comes in. One solid deal from his VAs will pay for all of his employees for years. That’s the value of leveraging other people’s time. He does no work, and gets the rewards. This method is great for people who don’t want to spend a lot of money and are too shy to network with other people.

Working With Agents

Working with real estate agents is another great way to get consistent deal flow. The agents are already spending a lot of money and energy acquiring leads to sell homes. Sometimes, the homes are in such poor shape that they can’t just put it on the market. That’s where you come in. You can connect with the agents, become their friends, and offer to partner with them on the deal. We call this the “Triple Dip”. When we purchase the property from the original seller, we let the agents represent us as the buyer (giving them two commissions for double ending the deal). We also promise to let them list it when we’re done with the rehab. This effectively gives them 3 commissions on one home! If a property is acquired for $1 million, and we sell it for $1.5 million when we’re done rehabbing, they are walking away with $87,500 from one property (assuming the standard 2.5% commission)! They even have the opportunity to represent the buyer when we sell the home. Imagine telling an agent they can make $87,500 by working with you versus just selling the property as a fixer and only making $25,000. I’m sure they’ll be interested.

You need to create the relationships with agents before they hand you the deals. Show up to their offices, take them to coffee, go to networking events. You will kiss a lot of frogs. One of my friends locked herself in an office room and called hundreds of agents (~750). Of those 750, only a few dozen agreed to meet in person. Of those few dozen, less than 10 have provided quality deals. This method is great if you don’t want to spend any money on marketing (you may have to pay for a few cups of coffee). A downside to this is that most sellers who contact agents want to list their home on the market. You’re also not dealing with the seller directly so you won’t get as much profit than you would if you were to contact them directly. This leads to the absolute best method of finding deals which is…

Direct Mail

Yes! Direct mail! Surprisingly, this old fashioned method of reaching people is still incredibly relevant in this industry. People often wonder why this is the case. I believe it’s because the people who are willing to sell their homes at a discount (in the Bay Area) are usually older folks who have built up so much equity in their homes that they don’t mind leaving a bit on the table in exchange for a smooth sale of the home. No need to clean the house, perform an open house, and have a bunch of strangers walk through your home. The older folks open and read their mail, and while they may have a Facebook account, they may not know how to use their email.

Direct mail allows you to reach out to a huge group of people at once, and allows you to spend your time receiving phone calls instead of spending time calling others. The people who call you will either be people who hate you for sending the letter, or people who are interested in hearing your offer. It allows you to go on appointments to see how you can help them with their problem. By getting in touch with the sellers directly, you’re able to have conversations about structuring the deal creatively. Whether it be to partner with the seller to renovate their home without having the purchase it (saving you tens of thousands of dollars in holding costs), to acquiring it with seller financing, or outright purchasing it at a discount, you’re able to get a better deal without having to go through a middle man.

The biggest investors in our area are making hundreds of thousands of dollars per deal using direct mail. One of the major downsides is that direct mail is incredibly expensive. They cost around 80 cents per letter if you buy in bulk (you can get it cheaper if you buy post cards or if you send them yourselves). 80 cents may not sound like much, but when you’re sending mail to 10,000 homes per month, it adds up. To make this strategy work, you MUST be consistent. You can’t just send a batch one time and expect to get great deals. The top investors are sending around 10,000 letters to a few target locations and sending another letter to the same home once every 3 months! Some people have even called me 3 years after I sent them a letter! You must be persistent and continuously send letters out. If you only send 1000 letters one time, you will most likely get stuck with some bad deals and will think this method doesn’t work. You need to have the guts to go all-in, knowing that for every dollar you put out, $10 will come back. One investor spends $120,000 in the beginning of the year on his campaign because he knows that if he has the option to only spend $10,000 a month, he’ll back out at some point.

Conclusion

These are the three best methods for obtaining leads in the SF Bay Area. In other areas, you may have better luck with bandit signs and banners. Using these methods allow you to get deals that will make you a lot of profit for less effort. Instead of flipping 100 homes to make 7 figures in another area, these investors are doing less than 10. Learn from the best, emulate their steps, and you will be able to replicate their success. Leave a comment below if you have any questions. If I don’t know the answer, I’ll find the person that does. Cheers.