10 Ways to Build your Potential Buyers List

I've heard a lot of people asking about how to go about building a list of potential buyers for wholesale real estate deals. Here are ten free or inexpensive ways to build your list:

1) Classified ads - craigslist, local newspapers, community newsletters, local real estate publications, etc. Many of these are free, such as Craigslist and kijiji , while others are paid placement but still affordable. Be sure to use key words such as “rehab” “fixer-upper” and so on. Another option is to advertise a free list of 55 foreclosed / distressed homes – this works because people save time getting a list of 55 properties rather than having to look at 55 different ads. If you don’t have a list of properties to send them, you can have a realtor put together a list for you, then email it out to the people who responded to your ad.
2) eBay - Post a property for sale on eBay - you will receive the contact info of all bidders. After the auction is over, contact each bidder, find out what sort of properties they are looking for, and contact them when you find something suitable.
3) Networking – go to lots of networking events, chamber of commerce meetings, workshops, seminars, boot camps, etc. In addition to learning from the speakers at these events, you’ll make valuable connections and potential partners.
4) REIA meetings - go to your local Real Estate Investor Association meetings, meet people, exchange business cards, and make note of what they are looking for. If there isn’t a REIA group in your area, why not start one?
5) Roadside signs – posting your own signs can get expensive, particularly since they are often removed by local authorities and “quality of life” units. Thursday or Friday nights are often a good time to place these signs out, since they have a better chance of staying up over the weekend (since enforcement of these signs happens most during the week). So why not capitalize on the signs that others put up? Jot down the number of every “we buy houses” and “we sell houses” sign, contact the person and see whether it makes sense for them to be on your list. The odds are that it does. Also ask them if they wholesale houses, and ask to be put on their list if they do.
6) Call realtors – ask them if they have any cash buyers who are looking for wholesale deals. Of course you want to make it worth their while to refer these buyers to you – realtors are, after all, in business to make money just like anyone else. One approach is to offer the realtor a 2-3% fee, or perhaps a percentage of the profits on deals that their buyer purchases from you. In fact, you may want to take this a step further and pay them each time their buyer purchases a deal from you – this resolves the realtor’s fear that their buyer doesn’t buy from them because they’ve purchased a property from you. Also make sure to ask the realtors to alert you if they find any really good deals, particularly if you can close in cash within 2 weeks.
7) Talk to your current buyers. Home buyers often know other buyers. Let them know you will only call the referral if they pass on a property, or if it is outside the area they focus on.
8) Talk to landlords and out-of-town owners – people often ask these people if they’d like to sell their properties, but they don’t often ask if they’d like to buy additional properties
9) Bird-dogs – typically, investors use bird-dogs to find properties, not buyers. Why not give each of your bird-dogs a stack of your cards, and encourage them to find buyers for you as well?
10) Call contractors, rehabbers, painters, etc. – find out whether they work with any investors and, if so, if they can refer you to them. The benefit to them is that when the investors they work with buy more properties, they need more help to rehab them and prepare them for resale or rental.

When building your list, have your potential buyers be as specific as possible in regards to what they are looking for in a property. The more specific they are, the less likely you will waste your time or theirs by calling them about a property that does not meet their criteria. For example, if they’re looking to purchase cheap houses only for section 8 rentals, it wouldn’t make sense to call them about an $800K property even if you’re able to get it for $200K. Ask them what percentage of market value they are interested in buying, what areas of town they are interested in, types of properties, level of repairs needed (whether it’s just cosmetic, paint & carpet, full rehab, teardown and rebuild), and so on.

Be a little ruthless in maintaining your list. It just doesn’t make sense for you to keep people on your list if they aren’t going to buy. After all, it is a buyers list, not a tire-kickers list. I know of one wholesaler who does hundreds of deals a year and his strategy is simple. It’s easy to get on his list, but he follows a strict two-strikes rule. If he calls you once with a property fitting your criteria, and you don’t buy it, no problem. If he calls you a second time with a property fitting your criteria, and you don’t buy it, no hard feelings, but you’re no longer on his list.

Another wholesaler takes a different approach – he charges people $20 to join his list, refundable by request if, after 6 months, they haven’t bought any properties through being on his list. This can be useful for people just getting started in wholesaling, as it provides a little bit of cash up front. It also helps separate the doers from the talkers by forcing people to put their money where their mouth is.

To your success,

David Wright
www.creatingrealestateinvestors.com