Editor’s Note: Dennis Fassett is a former corporate finance executive turned real estate investing “Cash Flow Mercenary.” Dennis specializes in single-family and multi-family cash flow properties and thoroughly enjoys assisting his fellow investors with their own strategies, including how to buy your first apartment building.
As an ongoing contributor to Mogul’s “Market News Updates,” Mr. Fassett provides us with his own unique, lively, and thought-provoking commentary on the timely industry news and events of today that are impacting our industry. And be sure to check out his other super-helpful Market News Updates. For now, enjoy...
From Dennis Fassett, Cash Flow Mercenary...
Is it just me, or are those TV-Real-Estate-Guru-Weekend-Roadshow-Seminars getting more and more frequent?
I ask because I’m getting more and more calls from noobs. It’s up to 4 or 5 a week these days.
They all start the same… they call my business number from my website, almost always from an out-of-state number. Then they ask if I buy houses in the Detroit area.
When these calls first started, I thought they were strange. But now that I’ve received several dozen of them, I know what they’re after.
Every one of them attended a TV-guru-weekend-seminar. And at the seminar, the guru told them the first thing they should when they got home was to contact every single person in the market with a “we buy houses” type of website and ask them if they buy houses.
So they can build their buyer’s list.
Which is stupid. Completely stupid, actually, in this market.
Why?
Because right now, if someone finds a deal – I mean a real deal – it’ll take exactly 32.5 seconds to build their buyer’s list.
As you know, with the high demand we’re seeing now, it takes no time at all for a wholesaler to sell a real deal, and to find a number of very serious cash buyers for future deals in the process.
So starting out by building a buyer’s list is not only stupid, it’s a waste of productive time – your most precious resource.
The Holy Grail
What the TV gurus should be teaching folks to do in their weekend sell-a-thon “seminars” is to go out and find a motivated seller.
They don’t teach that, because finding motivated sellers is HARD right now.
It takes work. It takes money. It takes persistence. And it takes time.
Which means that it’s the opposite of instant gratification. Which in turn makes it hard to sell noobs into those mega-thousand-dollar coaching programs they’re peddling.
If you’ve been in REI for longer than 10 seconds, you know the value of a motivated seller.
And the fact that absolutely nothing happens in real estate investing until somebody finds one.
Think about it…
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What do wholesalers sell without a motivated seller?
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What do rehabbers rehab without a motivated seller?
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And what do landlords buy and rent without a motivated seller?
Again, absolutely nothing.
I’ll even go so far to say that a buyer’s list that hasn’t bought anything is worth ZERO.
You see, in this market, motivated sellers make the REI world go round.
Nothing happens, and nobody makes a dime, until someone finds one.
That’s what I teach my coaching students. And therefore, I spend the majority of the time teaching them ways to find sellers.
It ain’t sexy. It ain’t easy. And it ain’t fast.
But man oh man, once it clicks with them and they get some traction, the sky is the limit!
Now when I get these noob calls, I try to counsel them on what’s important, and I go through my motivated seller speech.
The problem is, once they’ve been pumped up by a TV guru on how easy this real estate thing is, I can almost hear their motivation balloon deflate as they realize the truth of what they should be working on.
And how much work is involved.
At first, I hesitated to explain this to them because I was a little concerned with creating more competitors in my market.
I don’t worry about that anymore. Because I’ve never heard from, or heard about, any of them – ever again.
Which is too bad. Because there’s plenty of money to be made in any market these days.
One Neat Trick
The cool thing that most noobs don’t realize is that focusing on finding motivated sellers somewhat levels the playing field for them.
With everybody pretty much carpet bombing every type of potential motivated seller in the universe with pretty much the exact same cards and letters, the fact that someone is new doesn’t matter very much in direct mail, does it?
Sure, there’s a learning curve. You need to find and test mailing lists and find a postcard or letter to use, but that’s about it.
A new person who’s truly serious can have their first mailer campaign in the mail in just a couple of days after they decide to do it.
It’s that simple.
So if you’re new and you’ve never done a deal, and you’re calling every investor in town to get them on your buyer’s list, you should stop. Immediately.
And spend all of your time, effort, energy and money finding a motivated seller.
Because that’s what’s going to put money in your pocket.
What Say You?
Agree with me? Tell me why or why not below.