What is more important, having a real estate buyers list or having a deal?
That is a question many starting real estate investors are asking themselves.
And if you look around the web, follow different real estate investing “gurus”, and read books, you will find many different opinions on the matter.
Some say it is more important to first focus on finding a deal, and then the buyers will come, or if you have a bunch of reliable hard money lenders at hand, you won’t need a buyers’ list that cuts your profit on a deal.
The other opinion is that having a buyers list first is more important, because it gives you leverage when negotiating with motivated sellers.
In this article, I will try to solve these questions and hopefully bring you clarity and confidence regarding whether deal first or cash buyers first is more important, and how you can generate a nice cash buyers list by knowing on what to focus on.
My decision grid, which you can access via Google Drive below, will help you with the latter so you avoid losing time and money with potentially wrong methods and tactics.
What’s The Purpose of a Real Estate Buyers List?
So first things first.
In the context of real estate wholesaling and creative real estate investing, a buyers list is a list of real estate investors or entrepreneurs that are interested in or looking for attractive investment opportunities in a certain area.
This list should usually contain their basic contact information, such as names, email addresses, and ideally, also their phone numbers.
A healthy list should also be updated on a regular basis so you don’t use a dead list when you want to propose deals you have under contract to your investors with the aim of assigning them.
Real Estate Buyers List First vs. Deal First
Between real estate investors, there has been a debate going on for a long time: what should come first – the buyers list or the deal?
So, let’s see if we can analyze this situation a bit further and reach a conclusion about that.
Real Estate Buyers List First
By doing active real estate investing, in contrast to passive real estate investing, (e.g. buy and hold) you do certain things in a repeated manner, such as selling properties or rather selling the contracts (e.g. option to buy).
Since selling real estate is not like selling lemonade or hot dogs in the streets (this isn’t that easy either, I guess) and you can’t just have a realtor do all your work who quite likely will reduce your profit margin significantly.
Easier and Less Risky
So, an easier way and very often a legally safer way (Disclosure: I am not an attorney or your attorney) is having a healthy buyers list ready, where you can partner with other wholesalers that might be stronger financially.
If you were financially strong with a lot of cash in the bank, you wouldn’t need a buyers list in the first place and could read this article just for pure entertainment.
Fast Turn Around
A good and healthy buyers list allows you to sometimes move a deal in a matter of hours and, thus, is worth a lot of money, and you won’t be in much need of real estate agents or property portals.
And then there is the legal part (Disclosure again: I am not an attorney or your attorney), because in the U.S., without a real estate license, it is basically not allowed to advertise a property you have under contract as if it were yours without disclosing that you are selling the contract.
This could get you into trouble with the board of realtors.
By signing an option to buy a contract with a seller, a real intent to purchase the property at the end should be there.
With the help of or by partnering with a cash buyer, this gets easier.
A Better Position When Negotiating With The Seller
The other advantage of having a buyer’s list is, that you have a better leverage position when it comes to negotiating the deal with motivated sellers.
In contrast to not having a buyers list, you can say to the seller that you are negotiating with that you work as a team (with your cash buyers).
You can move the property fast, and know that you (well, actually, your partnering cash buyer) can follow through at the end by buying the property, showing a real purchase intent.
By that, you can negotiate with more confidence and create a better deal with a likely higher profit margin.
Then, there is the other school of thought, which tells you that your focus should be on finding, negotiating, and controlling a great deal first, and the buyers will come.
Because, without a great deal, why should anyone want to do business with you.
This approach makes sense at first glance, and if you have reliable access to cash via hard money lenders or your own money so you could follow through with the deal, (showing purchase intent) this is a nice option.
Maybe I am wrong, but I think it carries a bit more risk if you don’t have access to cash.
And even if you have access to cash, what happens if you don’t find another wholesaler (e.g. a fixer and flipper) to whom you can sell the property to via a double closing, for example?
Yes, your profit margin could be higher that way, but so is your risk of not finding a buyer and then having to deal with interest and your liability regarding your hard money lender (hint: risk/reward ratio).
The other thing is, when you have a hard money lender, you have quite a short time window to market the property to find a buyer ,and if you don’t have one and can’t do a double closing, you might run into legal issues with the board of realtors.
So, if you are following the contract flipping strategy and don’t want to first risk your own money, be liable for a hard money loan, or have a bit less stress and legal risks when it comes to marketing the investment property, you might want to prefer the buyers list first approach.
Here, your main work is generating, growing and nurturing a buyers list, and finding deals, which your wholesale partners or buyers can follow through with.
There might be less margin per deal, but you might do more deals in the same time than with the second approach compensating for the lower profit margin due to your cut with your cash buyers.
In conclusion, you can consider these two approaches as not even directly competing with each other.
The first is more on the purchase option flipping side, and the other on the property flipping side, approaching the fix and flip strategy.
So, in the end, it’s a question of individual preference and risk tolerance.
What To Focus On – Your Decision Grid For Creating A Real Estate Buyers List
Researching this topic, I found really nice articles with large lists regarding how to create a buyer’s list.
I will spare you another large list, but will rather complement the work already done by getting you a tool which will help you make your own decisions on which marketing methods to create a buyers list to focus on.
Here is where a decision grid comes in handy.
In a decision grid, you identify the most important conditions to qualify the different methods as effective or not and give each one a weight of importance (this is rather subjective).
After that, you give the different methods points in the context of these conditions.
Each point is then multiplied with each weight of the regarding condition, and all points are totaled at the end.
Yeah, I know, it sounds complicated.
I will just give you the concrete information with different examples.
So, I selected 16 marketing methods suggested in the different articles above, determined the following five factors, and weighted them according to what I considered as important to be effective (you might have used other weights than me, since it’s kind of a subjective evaluation) with points between 1 and 10:
1) Low Costs
I weighed this with 5 points, as not important but also not unimportant.
2) Not too time consuming
I weighed with an 8 since it’s kind of important, so it doesn’t produce too much opportunity costs (LINK) for you
3) Higher Barriers to Entry (Skills Necessary), Less Competition
This one I gave a 10. Yes, it’s not fun to have to learn or do a lot to do a certain method well enough to bring results. But if it’s easy, many others would do it too, meaning more competition.
I gave this a 10 too, because if you start with a marketing method, you want to have the possibility to test it fast, so you can create something that is working after several iterations.
This one might be a bit redundant to “not too time consuming”, but it’s leaning more towards the opportunity to be able to grow your business with it. So I gave it a 10, too.
And here come the 16 marketing methods to create a real estate buyers list I used in the decision grid (sorry, I couldn’t completely avoid to get you a little list):
- Direct Mail combined with Trulia and ListSource
- Call some local “For Rent” signs
- Join some Real Estate Investor forums and get connected with other buyers and investors in your area
- Craigslist Ads and contacting potential buyers via craigslist
- Facebook Groups
- Partner with Real Estate Agents
- Bandit Signs
- Facebook Ads (PPC Advertising)
- Call some Hard Money Lenders
- Google Ads (PPC Advertising)
- Driving for Buyers
- Website Link in E-Mail Signature
- FindCashBuyersNOW from Kent Clothier
- Newspaper Ads
- Attend some local REIA
- Attend some Foreclosure Auctions
And here comes the partial decision grid:
|Factors||Weight||Direct Mail Combined With Trulia and List Source||Total Points||Facebook Groups||Total Points|
|Not Too Time Consuming||8||7||56||8||64|
|Higher Barriers To Entry (Skills necessary), less competition||10||7||70||4||40|
Since I didn’t want to break the design, I couldn’t display all methods with metrics in this table.
But you can access the whole google drive excel file (so you can see how the calculations were done) here.
The priorities that came out of that where these (descending order from most points to least points):
- Facebook Ads (PPC Advertising): 379
- Google Ads (PPC Advertising): 374
- Direct Mail combined with Trulia and List Source: 261
- Call some local For Rent signs: 244
- Newspaper Ads: 236
- Craigslist Ads and Contacting Potential Buyers via Craigslist: 234
- Facebook Groups: 204
- Partner with real estate agents: 202
- Bandit Signs: 195
- Calls Some Hard Money Lenders: 184
- Driving for Buyers: 180
- Join some real estate investor forums and get connected with other buyers and investors in your area: 172
- Website Link in Email Signature: 170
- FindCashBuyersNow From Kent Clothier: 162
- Attend some local REIA: 127
- Attend some foreclosure auctions: 127
By having those points, you could even go a step further and determine the 80/20 (pareto principle), of which 80% of the results likely might come from 20% of the methods above.
So 16 methods multiplied by 20% equals 3.2.
Let’s round down to three, so you might want to focus on the first three: Facebook Ads, Google Ads, and Direct Mail, combined with Trulia and List Source.
Design Your Follow Up Sequence
Now that you have some methods to focus on to create your buyers list, you will also need a place to collect them (the conversion part).
I already wrote a larger article about real estate marketing funnels you can use and this is the point where they come into place.
So, you will need your own website with a landing page, which can be time consuming to maintain, or you can use done for you website providers where you can have a website and/or your landing page up and running in a few minutes.
There are two providers that I can recommend to you, which specialize in real estate investors.
Leadpages provides you with the following features:
- A Website-Builder:
- Drag-and-drop website builder
- Website preview
- A mobile-responsive menu
- A drop-down menu
- Drag-and-drop website menu
- Integrated conversion tools
- Website SEO
- Website templates
- Pre-built add-on pages
- Free Custom Domain
- Automatic SSL encryption
- Sub account login
- GDPR Compliance
- Connect your domain(s) to third party domains
- Free hosting
- 40+ Standard integrations (send your leads to your ESP, CRM, webinar app, and more)
- Advanced integrations including Hubspot, Marketo, and Salesforce
- Link your favorite email marketing account—whether you use MailChimp, AWeber, ConstantContact, Get Response and more
- Education and Support:
- Meet 1-on-1 with a Leadpages launch specialist
- Free Leadpages Virtual Workshops
- Phone, chat, & email support
- Design and Templates:
- Shutterstock Premium Images
- Built-in icon library
- OpenTable embed widget
- Countdown timers
- Custom branding
- Customizable templates
- Design from a blank page
- Global page style settings
- HTML & Custom Code Editing
- Keyboard shortcuts
- Mobile-responsive templates
- Calendly embed widget
- Social share buttons
- Thank-you & confirmation pages
- Device-specific display
- Video embed widget
- On-page section links
- Conversion Tools:
- 10 Opt-in text campaigns
- Get a detailed picture of each campaign’s performance with clear campaign ROI
- Email trigger links
- Exit-intent pop-ups
- Real-time optimization tips
- Real-time analytics
- Third-party analytics (e.g. Google Analytics)
- Unlimited A/B split testing
- Unlimited alert bars
- Unlimited pop-ups
- 5 Free sub accounts
- 99.9% Uptime
- Automatic saving
- Custom & hidden form fields
- Custom social media preview
- Device-specific preview
- Digital file hosting & delivery
- Duplicate & edit pages
- Easy drag-and-drop interface
- Fast page load speed
- Lead backup/CSV download
- Lead gen form builder
- Lead notifications
- Lead routing
- Mobile responsive pages
- Online sales & payments
- Page grouping
- Revert to last published version
- SEO-friendly pages
- Unlimited traffic & leads
Leadpages offers three different pricing plans: Standard for $37 per month, Pro for $79 per month, and Advanced for $321 per month.
LeadPropeller offers you the following features:
- Free website domain with whois protection
- Free unlimited custom email addresses
- Fast web hosting
- Various high-converting templates to choose from
- SEO-optimized website content and content packs (new content you can publish)
- Click and change website editor
- Customizable form questions (form editor)
- SMS lead notification
- Customized text autoresponder
- Customized email autoresponder
- Landing page builder
- Backend CRM to manage leads
- Podio integration and other CRMs
- One-click WordPress blog install
- Blog SEO plugin
- Online training
Prices start at $49 per month for the starter plan, $79 per month for the professional plan, and $299 per month for the franchiser plan.
Once you have a landing page or website to collect your cash buyers, you will need also a tool with which you can nurture them and send them your valuable deals and other marketing information.
How to do a whole sequence or drip campaign and which content to use would be food for a whole separate article in the future.
To conclude, I would like to close with an additional bonus hack for you of how you can use listsource.com Facebook ads with look alike audiences to do a sniper approach to create your cash buyers list.
I won’t get into the exact technical part of setting up this type of Facebook campaign, which ad copy and ad creatives to use, etc., but will give you a rough strategy.
A Bonus Hack With Facebook Ads and ListSource
The main strategy is actually quite simple.
You get first a list of targeted areas with a high likelihood of cash buyers being active there.
Hopefully you get at least several zip codes, email addresses, and/or phone numbers.
Once you have either of these contact information, head over to Facebook and create a new campaign and import this list as a custom audience.
Depending on the size of this list, you can then either target them directly with your Facebook campaign and/or create a lookalike audience, letting the Facebook algorithm do its magic and target an audience that is similar to the first one, such as potential cash buyers.
To get a nice list with cash buyers from listsource I can recommend to you this video below:
So, ending this article, I hope I could convince you a bit that deal first vs. buyers list first isn’t really competing with each other and that there is a great value in having a buyers list when you want to go the wholesaling route more on the contract assignment or contract flipping side of things.
My decision grid approach might also help you with finding the most effective methods to create your buyers list.
If you liked this article, feel free to share it.