In This Article
Heard of driving for dollars? Wondering if it’s worth pursuing? We say yes!
But don’t do it all yourself. Instead, build a high-quality team of motivated, dedicated deal finders. You’ll enhance your property sourcing and potentially gain access to leads you won’t find elsewhere.
Where do you find deal finders? It’s easy: They’re already all around your neighborhood. Here, we’ll discuss the benefits and methodologies of recruiting local drivers and scouts to uncover high-potential real estate opportunities in various markets.
1. Building a Team of Deal Finders
Driving for dollars has been around for many years, but in the current real estate climate, some investors consider this strategy controversial, arguing it’s not necessarily very lucrative. And yet, real estate veterans still promote driving for dollars as a great tool for investors, especially beginners. Who’s right, and how do you make driving for dollars work in 2024?
For those new to the concept, “driving for dollars” refers to physically driving around a neighborhood in search of potential leads. The idea is that properties that seem distressed may well have a motivated seller, but these properties may not (yet) be available through traditional channels like the MLS. So, the ideal-case scenario is landing a deal with little to no competition by locating a suitable property and reaching out to the owner directly.
Now, the counterargument many people make is that looking for a great deal among these seemingly suitable properties can be like looking for a needle in a haystack. It’s time-consuming, too. If you’re a busy investor with multiple jobs, for example, you’re unlikely to be able or willing to drive around for hours trying to locate one or two properties that could be good leads. Some investors also argue that finding vacant properties with motivated sellers is tougher now than it was, say, in the post-2008 era, when there were a lot of hastily abandoned homes across the country.
Does this mean that you abandon driving for dollars as a real estate investment strategy? Not at all. You just need to update how you use this strategy. Most importantly, you need to reap the benefits of innovations in real estate tech—and you need to build a team of deal finders who know what they’re looking for.
Consider this: If you have five to 10 people looking for potential leads for you, your chances of closing on a deal increase exponentially. If those people are equipped with an app that helps them get better at finding quality leads, those chances increase even more.
2. Recruiting the Right Talent
Here’s how you should go about hiring your deal finders—and training and equipping them to succeed.
First: Where do you find your deal finders? It’s actually much easier than you think. With the right approach and ability to incentivize people, you can easily find multiple deal finders in your neighborhood. You can, of course, put an ad on Craigslist or Facebook, or you can attend your local real estate investing social group (these are typically pretty active on Facebook).
But you may not even need to do that. Your best bets often are people who already are driving or walking around your neighborhood regularly: your mail person or local delivery driver. You also might be surprised by how useful your local contractor or property manager can be in finding leads.
These are often perfect matches because, in terms of extra effort, they don’t have to change what they do during the day—they just need to be on the lookout for distressed properties and be able to log them. Getting paid a little extra while already doing their job can be a great motivator, and if they’re interested in real estate investing or you can get them enthusiastic about it, even better.
Enthusiasm and cooperativeness are key when looking for the right talent. You also want to hire people who are comfortable learning new technology and have no problem approaching people, as they may need to contact potential sellers on your behalf. This doesn’t necessarily mean you only hire younger people (no ageism here), but if someone outright says they don’t use their phone that much or that they’re not keen on talking to people, you may want to consider someone else.
And while an interest in real estate investing isn’t necessary, it’s a huge plus. Many people start their own investing journey by becoming deal finders; if your potential deal finder indicates they have an ambition or at least a potential interest in becoming an investor themselves one day, you have the perfect candidate. That’s because they’ll be more involved in the process and willing to learn.
3. Training and Equipping Your Team
Now, even with the best team in the world, you won’t get very far if they don’t know what to look for. Training your deal finders to recognize valuable distressed properties is the first step and essential for them to start bringing you quality leads.
However, some of your deal finders, especially your mail carrier or delivery person, may already be highly experienced in spotting the more subtle signs of a distressed property. Boarded-up windows and unmowed lawns are obvious, but they’ll also be able to recognize other clues, like full mailboxes or a notice placed on a door, which can be less visible.
The next—and crucial—step is to train your team to look up the property’s details online. This is very easy to do with the DealMachine app, which will tell you whether the property you’ve located is vacant or in pre-foreclosure and who the owner is.
You might also like
This second component is what makes a quality lead. Without this information, your deal finder just found an empty house, but with the key bits of information, they have found you a property that may have a motivated seller. Deal finders who understand how important it is to check every property and mark it off in the app will feel more part of the process and improve their skills over time.
DealMachine’s technology is beneficial to your deal finders in making their job easier and more efficient. But it’s also highly beneficial to you, the investor because you’ll be better able to manage your deal finders and track their performance.
Another useful CRM feature is the ability to create a leaderboard for your deal finders, which increases accountability and incentivizes your deal finders to perform better.
4. Incentivizing and Retaining Top Performers
We all know that the greatest incentives for your deal finders will be the income they earn from getting you high-quality leads. There essentially are two schools of thought on how best to compensate your deal finders. Carefully consider which one you’ll choose.
One approach is to pay your deal finders per lead, regardless of whether it turns into a deal you close on. Real estate investor Aaron Anderson posted on the BiggerPockets forums that he pays all his deal finders $10 per lead, no matter the outcome.
“The reason for this is if you only pay per deal, they will be unsure if they ever will get paid because their payday depends on your performance,” explains Aaron. “If you think you can get away with just paying per deal, you are telling the world that you can’t afford to do this business or are just cheap.”
The other approach is only paying for a lead if you close on it but paying more if that happens (say, $500 per deal). This can work for deal finders who are in less of an immediate need of cash and have a more long-term interest in investing themselves.
However, if you do go down this route, be careful to set out terms from the very beginning, explaining that your deal finder won’t be closing any deals themselves. Doing so would technically make them a wholesaler and could result in them asking you for a fee; in some states, it could also technically mean that they’re involved in brokerage, which can be illegal.
If you draw up a very clear contract that outlines what your deal finder will be doing and when you’ll avoid these issues. It’s always best to have an honest conversation with your deal finders in advance about your expectations and which compensation model would work best for both parties. It’s very important to establish trust and allow your deal finder to feel involved; they’ll stick around longer.
5. Case Studies and Success Stories
When the relationships between you and your deal finders are strong, you will often find that they’ll be taking your driving for dollars business further without you needing to be involved. Aaron Anderson went about building his team of deal finders in a very methodical way, even developing a training manual “that covers what I’m looking for, how to find it, and how to market for it.”
This last part is a huge bonus for a real estate investor: Truly savvy deal finders take on the marketing role as well as the finder role. It can be something as simple as sticking a logo on their car or wearing an attractive branded T-shirt while
Source link
