Now this is what really makes or breaks the business…
Doing prospecting… learning the language and it’s the conversations that you have with people when you’re talking on the phone and you’re looking for deals, generally referred to as prospecting.
It’s not that bad…
Once you get organized and you have your list of brokers as I taught you in the previous modules… it’s time to prepare for making those phone calls.
If you missed that article about how to get organized for this business and creating a list, you can check it out by clicking here.
But I know what you’re thinking, you’re like, “ugh!”
Cold calling, prospecting, networking, reaching out, making phone calls, however you want to slice it, most people don’t get overly enthusiastic when they are told that they have to pick up the phone and put some work in.
That’s the reality of the situation.
If you want to find a deal in this game then, I mean that’s the drawback, if you will, where you just need to pick up the phone, reach out, and introduce yourself to someone that you’ve never met.
Now that’s a daunting task for a lot of people.
But like I said, don’t worry, it gets much easier and less painful as long as you know what to say.
You just have to practice and put the work in.
I can’t overemphasize that I’m here for you, and that’s one of the things that I love of all the services that I’m offering, is that I will practice with you making these phone calls.
We can role play.
We can practice the scripts back and forth and handling the objections, until you feel comfortable and confident enough to actually pick up the phone and start calling brokers if it’s challenging for you.
If you can just do it with no problem, if it doesn’t bother you, then that’s good too!
But a lot of people, don’t like prospecting or calling people on the phone.
So I felt that there would be a great need to offer that support to people, to practice the role playing.
So that way you can get dialed in and when you’re having these conversations… it’s seamless.
After you get your first deal done, brokers will be calling you.
So it just takes practice.
Now this is what you’re gonna start off with. These are the scripts.
There are gonna be counter responses and objections.
The objection is the “but, but” when you say something to someone and then they have a response where they’re like, well what if this, or but, you know, it’s a hurdle of some sort.
So, you’ll start to see it as this unfolds here.
When you’re calling someone, you’ll have your list of the brokers that you’ve got off the internet or whatever the case may be, LoopNet, etc.
If you want some tips on finding brokers… click here.
The following is a sample conversation of what you should say when calling a broker and you are looking for deals.
You can download the scripts here as well:
You say for example, “Hi, Joe. My name is Chris Tracy, I’m calling from The Synergetic Investment Group…just looking to introduce myself… How is it going?”
“Regarding this listing you have that I see here up on LoopNet, 123 Main Street, my partners and I, we’re looking to buy investment properties like your listing here.”
“I was just wondering if I could take a closer look at the financials for 123 Main Street. That looks like a promising dealing and I’d just like to take a closer look at it.”
So, that’s your main script of what you’re going to start off with.
Now, if you don’t have a company name, that’s okay.
You can just say, “Hey, my name is Sally”…. I like to keep it really nonchalant.
I don’t read word-for-word off of a piece of paper.
You can do bullet points, if you want, just to keep you on track.
If that helps guide you, that’s fine, but I think that maybe if you just practice this enough, you’ll be able to say these scripts in your sleep because it’s going to be much of the same thing over and over again.
So it just takes a little while, and then you can do it without even looking at any scripts, or any paper, or whatever.
Your initial goal is to get the financial information about a potential deal, so you can analyze it.
These are the main items:
- 12-month trailing profit and loss statement
- a current rent roll
- an offering memorandum
- the asking price
Now, the 12-month trailing profit and loss statement, that just has all the income and expenses for the previous year, regarding the property.
The current rent roll is what has all the tenants on there that are paying their rent.
The offering memorandum is the cute little flyer the broker makes that has all the general fundamental information about the deal, the address, it’s got pictures, it talks about the market, etc.
So, those are the basic things that you want to take a look at when you start analyzing a deal.
Now, every once in a while you’ll have a broker or you will see it in the documentation where they’ll speak about proforma numbers.
Now, if you see that, that is not acceptable for what we’re trying to do.
We want to analyze the deal how it is currently performing and proforma just means that, that is what the property is projected to produce for income and for a return, if you will.
It’s a fantasy projection… a projection into the future saying well, hey, if this property was 100% occupied, you know, this is what you could do. And if you raise the rent, you can do xyz, etc.
I mean, that’s great if all the stars are aligned in the future and then we hit Powerball, and then, you know, what-ifs are wonderful…
We want to know what EXACTLY is going on today.
What’s actually happening as we speak, how many tenants are there, how many are actually paying the rent.
Not what if, future fantasy calculations.
So, we need the numbers and it’s not really too hard to get these numbers from brokers.
You just have to be pretty confident and proficient with getting these things because if you don’t get them, it’s just more difficult to analyze these deals.
This is objection- public enemy number one:
“I need to see proof of funds.”
So that means, basically they just want to see, your bank statements or some financial information that can validate the fact that you have the wherewithal, the capacity to buy the property.
You’re not going to show the broker your bank statements, your personal statements. Nor will you show them the statements of your investors initially.
So, just starting out, you’re going to say:
“Okay, Mr./Mrs. Broker… I have no problem showing you proof of funds, but not until we go to contract and my partners and I know that we have a deal that we can stand behind.”
“You see, [Insert Name]… I keep my investors very private. It took me a long time to build these relationships with these investors and I would jeopardize these relationships with them by asking them for their financial information, their proof of funds and having that information out on the internet circulating around before we even have a deal that we can make an offer on.”
“You know what I mean? We just need a deal that we can stand behind, my partners and I, but ultimately, we’re going to pool funds together and we’re going to form a syndication. That’s typically how we do it.”
So, if you can just nonchalantly role that off of your tongue, you’re really telling the broker how it is and how it’s going to go, and there’s a lot of verbiage in there that demonstrates that you know what you’re talking about.
So, after you say that to the broker, that typically will stop them dead in their tracks.
That’s a fairly eloquent paragraph and there’s some things in there where the broker will be probably fairly confident with you at that point.
So then they’ll just want to know a little bit more about you.
They’ll want to know your buying criteria and what you’re looking for.
I outline exactly what to say in my Scripts document above.
Generally speaking you’re response is going to be:
“Well, Joe Broker, I’m looking for…
B and C type asset class properties in your market. This is where we’re looking, this is the size of the deals we’re looking for, this is the price range, this is what we need for occupancy,” you know, “we like it in a good area.” So on and so forth so.
So, these are the things that you’re going to say. They’ll also want to know, typically, what your investors would like for a cap rate.
So they’re just testing you a little bit more. You would say:
“Well, my investors would like something around an 8 cap… but more importantly… we are looking for a deal that has a proven value add opportunity.”
“If we could find something that was a 6-7 cap with a proven value add opportunity… that would work!”
You’re more than halfway home at this point because then this demonstrates that you really know what you’re talking about.
However, the broker will throw you some curve balls…
So you want to make sure that you have the economic occupancy numbers as well as the physical occupancy.
Now that is how many people are actually paying their rent versus how many people are actually living there.
A big difference there, obviously.
You also want to find out how much the seller is asking for the property.
You want to find out the asking price because the broker’s job is to help sell this deal.
Their job is to try to get maximum money for that deal because the seller has a fiduciary legal contractual relationship with the listing agent.
So, the broker on the selling side is trying to get top dollar for the seller.
So they will, many times, say okay, well, they won’t put a price on the deal, they’ll just say, oh, we’ll have a call to offers or they’ll say the price is gonna be determined by the market.
If there is no asking price, say to the broker:
“What do you think this will trade at?”
The broker many times will tell you.
They’ll give you a number at that point because you need that to analyze the deal.
You know, you can’t just analyze something that’s a mystery.
The broker that’s representing the seller is trying to create a bidding war.
That’s why they leave it in the dark a little bit.
That last question- What do you think this will trade at?… solves that issue.
Here’s a huge golden nugget script for you!
You can also say, “Hey, you know, Mr. Broker, if you meet any sellers that don’t want to list with you, let me know and you can represent my team as the buyer agent!”
And there’s no problem there.
We’ll gladly pay a broker commission all day long for him or her to to bring us good deals!
There’s a lot of people out there like that where they just don’t want to use a real estate agent.
They would like to try to sell something on their own because they don’t want to pay the broker a commission on the seller side.
The seller just turns the broker away because they want to try to sell the building themselves.
So, if you meet these brokers and build relationships with them…I’m sure that they have people that they’ve talked to and the broker can come and play on our side and bring us deals too. So that’s a beautiful thing!
Practice these scripts and just get confident with them.
You know, you just have to practice them so you can go backwards and forwards with them and be able to do it in your sleep and brokers will send you deals.
You just have to get over those first few hurdles.
Handle those objections, get comfortable with the typical conversation, and it’s usually just a couple of curve balls the broker tries to throw you, a couple objections, and then you’re pretty much home free at that point.
The broker just tests you and just wants to know that you know what you’re talking about so that the broker isn’t wasting his or her time and rightfully so.
So, when you’re wrapping up the call with the broker, you can say:
“Okay, [Insert Name]…send me the financial information,” you know, you exchange email addresses…
The big goal here is you’re really just trying to be friends with the broker.
Develop the relationship with him or her.
Get excited about working with them!
Say, “Hey, listen, even if this doesn’t work out here, I’m really just looking to build a long term working relationship with you.
I want to do multiple deals with you over time and just make money together.”
So, just be cool with the person. You know, try to be friends with them, get a warm, fuzzy feeling on the phone with them.
You know, we’re not just trying to make money quick off the broker then run for the hills…you know, or make money off the seller.
We want that broker to really know that you are the go to person for deals that would fit the criteria that we described earlier.
Follow up every couple weeks as appropriate.
Just check in and say, “Hey Joe, remember me? We spoke a couple weeks ago about 123 Main Street. Just checking in, wondering how business is going, and if you have any new listings.
If not, do you know of anyone who does? Got anything coming down the pike in the near future?”
Because sometimes, you know, these brokers they will know about stuff that’s not on the market yet because sellers will be like yeah, well, you know I’m planning on listing next month, or whatever the case may be so you can kind of get first dibs.
All of this in a nutshell, your goal is to get “pocket listings.”
So, you want to get on the inside track with these brokers and get first dibs on these deals so you can make offers on them!
So that’s the 500 foot overview.
Build that relationship with brokers, so that you can get these deals one after another.
People like to do business with people that they know, like, and trust and that’s what it comes down to.
So, you want to get these people to know you, like you and because you’re have cool conversations with them and they will trust you because you’re demonstrating the competence on the phone and you sound like you know what you’re talking about.
So, if you get stuck and a broker say something to you and they back you in a corner and you just don’t have an answer to it. No worries.
You can always just be like, hey, Joe let me get back to you on that.
There may be a few times when you trip up on your words, you get nervous or you don’t know what to say.
There’s no problem there…
Just reach out to me, email me the conversation that you had, and I’ll help you out with an answer so the next time you find yourself in that situation, you can overcome that obstacle with ease and you can also get back to that broker with an answer.
Following-up effectively is what’s going to separate you from everyone else in this business because most people don’t do it.
You know, even if the deal doesn’t work out, it’s kind of like what I was saying earlier where the goal is more of a long term goal here and you give the broker some feedback after you’ve analyzed the deal.
“You know, Joe, we were taking a look at 123 Main Street, my investors and I, and we’re passing on this one… The price we’re thinking of offering is not near what the seller is asking. But please keep us in mind for anything in the future.”
The broker may say to make an offer anyway!
Nobody does that.
So, if you do, that’s really going to separate you from the heard!
The broker will love you for that and really respect you.
So now you have the fundamentals you just have to get out there and do it!
Don’t overthink this whole business. It’s really quite simple as I’ve outlined for you.
I gave you the meat and potatoes.. the tools… the basic things and the strategies that you need to start.
The lifeblood of it is the implementation.
I’m here for you.
I’m here to support you.
My group is always looking for deals.
I’ve got the different players in place:
- the sponsors
- the mortgage broker
- the investors that are ready to buy deals wholesale
We just need a good deal!
So, the motivated sellers, they are out there.
It is a competitive business and you will meet brokers and sellers that are trying to sell a property where the numbers are quite inflated.
Some markets like Nashville, Charlotte or Atlanta are just absolutely on fire right now because those are great areas.
However, there are still those untapped resources and golden nuggets out there that we have yet to find.
So, all you have to do is find that deal, and we can make something happen!
So again, I’m here to support you, you know, via phone call, text, or e-mail, whatever’s easier for you.
So, I hope you enjoyed this article… I hope it was helpful for you. I hope you learned a lot and I value your feedback.
Please contact me and let me know if you feel that this was helpful for you, that you like it, and if there’s anything you’d like to know more about, anything you’d like to see me discuss.
I value your feedback!
Contact me and I hope to hear from you, and I wish you the best of luck with trying to find these deals and hope to hear from you soon, with a good deal.
If you would like more details about how we can work together… click here.
Thanks and go get’em!