A Three-Pronged Approach to Finding Deals
With the property market in overdrive in some states, it’s becoming increasingly important to find new and creative ways to ensure the flow of great property deals heading your direction.
To become a successful full time property investor that can sustain multiple market swings, you really need a method and a process that will bring you opportunities to access profitable deals on a consistent basis.
Having deals flow across your desk ensures you’ll never be in a static phase while waiting for things to happen. Successful investors tend to have one project being acquired, while managing a second project and selling a third to capitalise on the momentum.
Here’s my tried and tested three-pronged approach to ensure great property deals are presented to you in abundance:
1. Prong One – Look Beyond Those Retail Websites
One of my mentors recently told me that buying deals using realestate.com.au or domain.com.au is like buying your TV at Harvey Norman – you always pay retail. That’s not to say you won’t find opportunities on the retail property websites, but it’s not a great place to search unless you are crystal clear on what you are looking for first.
Most people tend to waste a lot of time doing random searches for deals on “retail sites,” usually after work or late at night, which yields little results due to your frame of mind. Those who happen to stumble across an opportunity take no action because they haven’t laid out a plan of attack on what to do next. Instead they print it out, put it in the top drawer and move onto the next bright, shiny object.
This type of random searching for deals tends to lead to distraction, boredom and becoming disheartened with your efforts. The truth is, if the deal is on the internet, it’s probably too late and not worth pursuing in a hot market. Prong Two and Three will show you some more efficient options to implement.
2. Prong Two – Become an Area Expert
The goal here is to know your area intimately. I’m talking between one and three suburbs, and know them better than anyone else, even the agents! This will instil confidence in your deal assessment abilities and ultimately lead to faster decision making, improved feasibility skills and better rapport with real estate agents.
Here’s a simple method that I have used based on some advice I got from Steve McKnight many years ago. Follow this process and I guarantee you will become a master of your area in as little as between 30 and 60 days, depending on your time commitment:
- Buy a hardcover, 200-page journal. Start tracking every deal you inspect. Include cutouts of the deal, feasibility templates and any relevant conversations you have with the agent.
- Attend at least five open for inspections (OFI’s) per week. Even if you’re not interested in the property, inspect it anyway to become familiar with the agents.
- Interact with as many agents as possible. You can do this by phoning them, visiting their offices and attending their OFI’s. Educate the agents on the type of project you are seeking and look to reward them for their efforts
- Aim to document 100 deals. You’ll be amazed to discover your journal transforming into a scrapbook jam packed with on the ground facts and figures that will give you the street smarts to out muscle and out manoeuvre other investors in the market.
3. Prong Three – Targeting Agents
Real estate agents often get a bad rap, but like any service-focused industry, there will be good and bad representatives. If you have a negative mindset around agents and what they stand for, make some internal adjustments, because your most likely source of property deal opportunities will come from agents, so start befriending them!
Follow these tips to target area agents:
- Pay them a visit. When researching a new area, look at paying each agency a personal visit in your quest to genuinely understand your area.
- Introduce yourself. Then, explain what sort of property you’re interested in and start building rapport. If approaching agents scares you, rest assured they are all human and you’ll find that the more you do this, the more comfortable you will become with the process.
- Use the one in 10 rule. In my experience, I’ve found that one in 10 agents will be worth building a long-term relationship with. This is a good ratio to have in mind as you look to leverage your time while out in the field.
- Attend their OFI’s. Always touch base once a week with a short phone call or a visit to their office. Real estate agents have short memories so you want to make sure you’re front of mind when a deal presents itself.
Types of Agents
Additionally, target these three types of agents in the market:
- Agents selling premium, million dollar properties with a cheap, unattractive listing. You’ll find these guys are used to higher commissions and a dud listing is like a thorn in their side; they’ll be more motivated to get it off their books, potentially at a discounted price.
- Tired agents that have been in the game too long who don’t want to work hard for the sale. They’ll look to take the easy route by conditioning the vendor down in price.
- Out of area agencies that suit your strategy. If you find one of these agents with a deal, jump on it. The agent probably may not know the area or the value of their listing and the property is often a pain for them that they’re happy to get off their books.
These tips will take you a long way in the property investment market, but it’s not enough to simply implement this three-pronged approach sporadically across a 12-month period. If you want the best results, you need to be dedicated to the task and apply the process with consistency.