How to Find Good Deals, Part 1
January 8, 2010 by Matt
Filed under "How to", Featured, Recent Posts
Of the multitude of workshops and seminars I have had the privilege of attending, a great amount of time has been dedicated to “How to find a good deal!” It’s understandable, as finding a good deal is the most bankable skill of a real estate investor. After reviewing the transactions I’ve completed the past few years, I’ve noticed very few of the traditional methods of finding deals taught at these seminars and workshops have panned out. To be sure you finish this article with some real practical “meat,” I’d like to share with you the sources and methods that have, and are, working for me—in today’s market.
My most successful lead generators for finding good deals are essentially free. My personal experience has been the more expensive a lead generating system is to employ, the less effective it is. To this day I haven’t been able to figure out why that it is, but it’s rule o’ thumb #1 that I trust and abide by (most of the time 
). Rule o’ thumb #2 that continues to serve me well, in every aspect of life, is to analyze what everybody else is doing and then do the opposite. Or, look at what people are unwilling to do, and do it. After years of experience, I have found one strategy that satisfies both rules… and it’s made me a ton! Have you guessed what it might be? It’s very simple… Talk to people!
Talk to people! It is simple; however, it’s not easy for most people to implement as a “deal finding” method. Real estate investing is a people business, and if you don’t like talking to people, this probably isn’t the business for you. There are several ways to talk to people when looking for good deals, and I have sorted them all into two categories. You can 1) Hunt for leads, or you can 2) Fish for leads. Both are effective, yet I prefer to Fish. It matches my personality better and I find I rarely, if ever, get on anybody’s nerves with this approach (or at least nobody is telling me that I do 
).
The first thing you need as a fisherman is bait. I have found that the very best bait is to convey that you are likable, trustworthy and competent; and what I continue to find as the most important of the three is being likable. Regardless, all three qualities have tremendous value and none are to be ignored or underestimated.
How do you get somebody to like you? How do you get somebody interested in you? These are two questions I am commonly asked by my students and the answer is painfully simple. If you want someone to like you, you must first like them. If you want someone interested in you, you must first be interested in them. To kill both birds with one stone, I ask questions and listen to the answers. I listen until it hurts. I listen as if I’m going to be tested on their answers later. Not only is it a great practice for lead generation, it’s what people should do for each other. It’s how people should treat each other. It doesn’t always create an immediate lead, but it often creates very strong relationships. As your investing career progresses, you’ll begin to understand that your relationships (and reputation) are worth their weight in gold. Adopting the habit of asking questions and authentically listening to the answers is a win/win practice, and people like people that do it.
How do you get somebody to trust you? Depending on the person and situation, trust can be created instantly or it can take some time (like days, weeks, months or years.). Listening, as mentioned before, can go a long way in creating trust. A solid track record with references is probably the best way to gain one’s trust, yet that can be a catch-22 during an initial conversation, particularly when your strategy is “fishing.” Unless asked, I refrain from sharing stories, bragging and/or boasting about my accomplishments. The reason being is I continually run into to people that love to recite their resume, and more times than not, they turn out to be all talk and no action. Remember rule o’ thumb number 2! Analyze what others are doing and do the opposite. Another way I feel that has contributed to me gaining someone’s trust is to dress for the occasion, but be understated. At networking events and real estate clubs I see so many people with big signs on their head, “Look at me! Look at me! Please ask me about the blinking light on my shirt! Please ask me about my unique tie pin!” Although wearing a “conversation starter” like a button that reads “Ask me how!” is a fishing technique, I find most of these people that implement the technique to be hunters. I haven’t experienced combining the two strategies to be effective. The point is that people like and trust people like them. The most trust you can probably gain during an initial conversation is to have a third party introduce and edify you. Third party credibility goes a very long way. Use it whenever it’s available.
Now I’ve pointed out a few things to gain people’s trust (as much that can be gained during an initial meeting), but the category these things might better fall into are avoid the things that cause people to distrust you. Don’t talk about yourself too much. Don’t dress like an obnoxious dork. Watch your manners and attitude. Positivity goes a long way, but don’t overdo it. As tempting as it may be sometimes, avoid going for “the kill” at the first sign of blood. Act like you’ve been there. Make sense? Building relationships and trust takes time, be patient.
Lastly, how do you get someone to see you as competent? For me, this is the easiest part. I mentioned before that being likable continues to show up for me as the most important element of your “bait” as I believe it’s what gets you in the door. Being trustworthy and competent, however, are what keep you inside the door generating long-term business. This part is easy for me as I’ve invested a considerable amount of time and money into my investing education. I know the process and procedure of executing a win/win real estate transaction, and I can articulate it in a way that people understand, yet understand in a way that they know they would rather not do it themselves. It takes some practice to articulate your investing solutions effectively this way, but it is invaluable once perfected. You will find there are many “investors” out there that have a general understanding of how things are done, but when a distressed property owner is in need of help, they want to work with an expert. Experience and the right education creates experts, and by being an expert I can convey that I am one in conversation without my words sounding like a “sales pitch.” Don’t be daunted by thinking you need a ton of experience and education for this to work for you. It doesn’t take much education to appear more competent than the aforementioned “investor.”
I have an unwavering rule when it comes to demonstrating my competency in conversation and I strongly recommend you follow it, too. That rule is… I won’t talk about what I do until someone asks me, “What do you do?” It’s probably the most common question asked if someone remotely has any interest in you, and if you are asking questions and listening as I explained above, you will almost always be asked, “So, what do YOU do?” At that moment you’re on! And you better be prepared. Luck has been defined as the moment preparedness meets opportunity. The question of “What do you do?” is your opportunity. To bring it together, you must be prepared.
You will need to prepare a short answer and a long answer to that question. Here’s how I initially respond (and feel free to use it until you come up with your own, or don’t 
), “I buy and sell houses.” I used to say “I’m a real estate investor,” or “I’m in real estate.” I no longer use the words “real estate” in that initial response because I found it to frequently be a conversation killer (actually, I will use “I’m in real estate” when I don’t want to talk to the person). Most people think they know what it means to be “in” real estate, so it doesn’t pique the interest enough for them to ask you more about what you do (and that’s the goal of fishing! to pique their interest so they keep asking you about what it is that you do). So… “I buy and sell houses.” That’s it, and I wait. And sometimes I wait and I wait. I wait for the person’s reaction. Either they will ask to hear more, or they won’t. If they don’t, it’s no big deal. It’s not the right person. The subject of the conversation will either change or end. If they do ask to know more about what I do, I now have my long answer ready. I have variations of this answer based on who I’m talking to, but typically it sounds something like this… “I help distressed homeowners and investors get out of trouble, and I’m always looking for three types of people… I look for people with property to sell, people dissatisfied with the current return on their investments and people who want to learn how to do what I do. However, I get the most joy out of showing busy professionals how to build a real estate portfolio in their spare time so they can spend more time with their families having fun.” That little blurb not only conveys my competency, it will pique the interest of the person I am looking for. If there is no interest from the person I’m talking to, they are not the person I am looking for. If any question related to what I shared is asked of me, I set up a time to further discuss. Yes, I set up the time right then and there by saying something like… “Wow, it sounds like you might have some interest in what I do. Would it make sense for us to get together over coffee (or beer 
) to further discuss?” If they say Yes, I pull out my iPhone and schedule it. Once scheduled, I change the subject of the conversation. By changing the conversation at that point, you appear as if you do this every day and it’s no big deal. That sequence will convey competency like nothing else (well… as much as you possibly can during an initial meeting).
In a nutshell, talking to people works. More specifically, being prepared to talk to people works. But! It will only work for you if YOU talk to people. I know… you were hoping for the proverbial “silver bullet” to finding good real estate deals. Everybody is looking for the silver bullet, but remember our rule o’ thumb #2? Analyze what everybody else is doing and do the opposite. Stop looking for the silver bullet! No, wait… here’s your silver bullet! Get educated through a credible program and do what others are unwilling to do… and that is make it a habit of talking to people everywhere you go focusing on being likable, trustworthy and competent. Do that? Miracles and riches are promised.
That being said, I would never recommend relying on only one lead source. Doing so is typically a death sentence for aspiring investors. No worries, I won’t leave you hangin’. Stay tuned as I will soon share with you several other effective lead generators I use to find great deals!
Great Post Matt! I read this post about a month ago and have since then implemented my free lead generating system, word of mouth, in my business and I can say that business has definitely changed for the best. Keep the great info coming!!!!