- It’s vital that you have a clear investment strategy before looking for that initial investment deal.
- When it comes to finding real estate deals, it’s important to give your marketing a chance to work — and continually test to see if the marketing is working.
- Making sure you’re ready to take action on opportunities, both organizationally and emotionally, can be one of the best assets you exhibit have as an investor.
Most people in the residential redevelopment business will tell you that once you land your first investment deal, everything starts to fall into place, but we all know that’s easier said than done.
How exactly do you find those real estate deals when starting out? What precisely do you need to do to ensure that it leads to a speedy completion?
One of the most important components of a successful foray toward your first deal is to have a clear, articulated strategy for what your end result will be, and what type of property fits in with that strategy. Another key factor is to give your marketing time (and focus) to come to fruition. Finally, perhaps the biggest element of completing your first deal quickly is to have all your ducks in a row and be ready to take action when need be.
Here are some strategies you can use to find (and close) on your first investment deal, far quicker than you would have ever thought possible:
Finding Your First Investment Deal Made Simple
1. Be Clear About Your Strategy
As Stephen Covey said so eloquently in the 7 Habits of Highly Effective People, it’s crucial that you “begin with the end in mind.” Finding real estate deals requires focus and an understanding of exactly what kind of property you want.
Are you looking for a fix-and-flip property? It’s vital you understand the after repair value (ARV) of the property, minus repairs, to see if the return will provide you enough of a cushion.
Are you looking for wholesale real estate deals to generate a little extra cash? What, exactly, is your wholesaling fee going to be? Do you have a wholesale buyers list already set up?
As with any area of business, if you know your numbers, you know whether a deal makes sense for you. Oftentimes first-time real estate investors will walk away from a promising project, just because they couldn’t determine its projected profitability. Don’t make this same mistake. Know your numbers.
2. Give Your Marketing a Chance
It can be frustrating, when trying to get your real estate investing career off the ground, to endure the many stops-and-starts that come from marketing for real estate deals. Though we’d love to able to predict with absolute certainty what the results of our marketing will be, it’s not always a quid pro quo — do “this” and “that” will happen — situation. This requires we approach our marketing with patience, focus and more than a little innovation.
Key things to keep in mind include:
Not giving up too early: Just because those 10 bandit signs you put up over the weekend or those 50 direct mail postcards you sent out last month didn’t yield any instant leads, doesn’t mean that the entire campaign should be scrapped. It’s important to give each form of your marketing — whether Facebook Ads or Craigslist posts — a chance to work its magic.
Know what’s working: Again, it’s all about the numbers. What’s your conversion rate? What’s your cost per lead? Which marketing sources create the best, most profitable leads, and which provide very little return on investment (ROI)? Many times what you don’t do is just as important as what you do do when it comes to marketing.
Always be testing: Unfortunately, there is very little “set it and forget it” when it comes to marketing. You must always be attentive to how a marketing campaign is doing, and whether there is any way that you can improve it, even on a small scale. Will a change in copy (or color scheme or subject line) make a difference? Change one thing at a time and track your results. This can often reduce marketing cost, and make the slightest difference between profit and loss.
3. Strike While the Iron is Hot
Unfortunately, learning how to find real estate deals is just the first step. The key to successfully navigating your investing journey to a finished deal is to be able to move with speed, when the opportunity presents itself. This means:
Having your team ready: Do you have a contractor in your network who can get you repair estimates or at least provide a quick walk-through of a property? How about a realtor who can run comps? How about financing? Making sure you have all the components ready, if you decide to pull the trigger on a property, can dramatically boost your chances of completing that first investment deal.
Having your numbers ready: You have to know your numbers. Make sure the projected return, and cost of repairs and acquisition, work for you financially. Good deals and bad deals are relative; it’s all about how it fits in with your investing picture.
Give your self-doubt a night off: A certain amount of caution is healthy — required even — before plunging ahead with an investment. However, it’s important to separate healthy, critical thinking with that voice of self-doubt in your head. Just remind: If the numbers work on paper, and you’ve done your homework, that nagging self-doubt might be nothing more than you shedding an old pre-entrepreneur mindset.
Have you learned anything in the course of trying to close your first investment deal? Let us know in the comments below.