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By now you probably know that leads are the lifeblood of every business. No matter what industry you’re in, you need leads to start, grow, and maintain and healthy, successful business.
Real estate investing is no different.
Spoiler alert… No leads = No business. It’s as simple as that.
Whether you're maintaining a healthy, successful real estate investing business - or you're growing your current business to the next level - it’s more important than ever that you have quality leads flowing through your business on autopilot with people and systems in place that allow you to focus your efforts on growing your business.
However, as you focus on leads, it’s important to understand that not all leads, or lead providers, are created equal.
This is especially true in real estate investing. When you are spending money to get leads, whether through your marketing efforts or from a lead provider, you want to make sure that you are getting quality leads that are worth the financial and time investments that you’re making.
Now, Realeflow's investing software makes generating these leads as easy as a click of the mouse. But we're going to go deeper into these leads - how are these leads identified, and why do you want them?
Types Of Real Estate Buyer And Seller Leads
Seller Leads
Absentee Owners
What are Absentee Owners?
Absentee owner leads are property owners who do not live in the property.
How do you identify Absentee Owners?
The tax mailing address of the property owner is different than the subject property address.
Why should you go after Absentee Owners?
Absentee Owners or Landlords are great potential seller leads as they often do not have the same type of emotional attachment to a home as owners who live in the property that they own. Your marketing efforts could serve as a ‘trigger’ for them to cash out and move on from the property.
Cash Buyers
What Are Cash Buyers?
Owners who have likely paid cash for their property.
How do you identify Cash Buyers?
Cash Buyers do not have a mortgage associated with the property at the time of purchase.
Why should you go after Cash Buyers?
Cash Buyers often have the liquid capital to help fund your deals. They are often in the real estate investing business and can also be used as investor leads for wholesale transactions
Free And Clear Leads
What are Free And Clear leads?
An equity-based lead, these properties are owned without any mortgage and are thus ‘Free & Clear’ of any debt.
How do you identify Free And Clear leads?
Free And Clear leads have no open lien or mortgage associated with the property.
Why should you market to Free And Clear leads?
These property owners do not have to concern themselves with ensuring that they receive full market value for their home to pay off their mortgage. An opportunity for an easy, quick sale without having to worry about bringing their home to ‘retail’ condition may be appealing to these owners.
High Equity Leads
What Are High Equity Leads?
An equity-based lead, these properties are owned with a mortgage on the property and the loan-to-value is less than 60%.
How do you identify High Equity leads?
We find all the open liens and mortgages associated with a property and add up the total debt at the time of purchase. This value (the loan) is then compared with the AVM (Automated Valuation Model) price of the home.
If the loan-to-value is less than 60%, that means the property owner has a high probability of high equity in the property. For example, a $20,000 mortgage on a property valued at $100,000 has a 20% LTV, and is, therefore, a high equity lead.
Why should you market to High Equity leads?
A homeowner with a large amount of equity in their home does not have to worry as much about ensuring that the purchase price covers the cost of their mortgage. Any offer over their current debt is money in their pocket.
High equity homes also tend to be longer term owners and may be open to the possibility of an easy exit while cashing in on their home’s equity.
Low Equity Leads
What are Low Equity leads?
An equity-based lead, these properties are owned with a mortgage on the property and the loan-to-value is greater than 80%.
How do you identify Low Equity leads?
We find all the open liens and mortgages associated with a property and add up the total debt at the time of purchase. We then compare this value (the loan) with the AVM (Automated Valuation Model) price of the home.
If the loan-to-value is greater than 50%, that means the property owner has a high probability of low equity in the property. For example, a $90,000 mortgage on a property valued at $100,000 has a 90% LTV, and is, therefore, a low equity lead.
Why should you market to Low Equity leads?
Low equity homeowners are often constrained by the debt on their home. With little equity, they need to make sure that the purchase price covers their existing debt.
Adding on broker/agent fees of 6% to 7%, it may become impossible for them to sell their home without bringing cash to closing, something that most homeowners are not interested in doing.
In a situation where they need or want to exit the property, there are few options for these sellers. Investors who offer solutions, whether a short-sale or a sale without an agent, may be the answer these homeowners are looking for.
Upside Down Leads
What are Upside Down leads?
An equity-based lead, these properties are owned with a mortgage on the property and the loan-to-value is greater than 100%.
How do you identify Upside Down Leads?
We find all the open liens and mortgages associated with a property and add up the total debt at the time of purchase. We then compare this value (the loan) with the AVM (Automated Valuation Model) price of the home.
If the loan-to-value is greater than 100%, that means the property owner has a high probability of being upside down or ‘underwater.’ For example, a $120,000 mortgage on a property valued at $100,000 has a 120% LTV, and is, therefore, an upside down equity lead.
Why should you market to Upside Down leads?
This scenario is one that every homeowner is fearful of - owing more on your house than what it’s worth. A sense of hopelessness can occur as the possibility of a retail sale is difficult as BPOs will often prevent new financing to be put in place for a potential buyer.
The home may also be in need of repairs that cannot be afforded. These make great short-sale leads where you can work with the seller and the bank to negotiate a win-win-win.
Probate Leads
What are Probate Leads?
A probate lead contains the probate contact or Personal Representative who is the Executor of the deceased’s estate.
How are Probate Leads identified?
We receive probate leads for a significant portion of the country. These leads have been sourced by individual counties and provided by the probate court.
Why should you market to Probate Leads?
Properties that are coming out of the probate process are generally well cared for. The recipient or heir of these properties are often looking for a way to relieve themselves of the pressure of owning and being responsible for a home they did not want.
It is important to understand that every probate situation is different - some individuals make decisions quickly, while others need time to grieve and collect themselves for difficult decisions. Sensitivity is key to dealing with these leads.
Important Disclosure: It is important to understand that while a deceased person’s estate may be in probate, it does not necessarily mean that they have real estate holdings. It is also very important to understand how to tactfully and thoughtfully market to these individuals, who may be under emotional distress due to the passing of a loved one.
Buyer Leads
Private Lenders
What are Private Lenders?
Private lenders are identified as having significant capital holdings which can be used as a funding source for your deals.
How are Private Lenders identified?
Our Private Lender leads are individuals who have been identified as having $1,000,000+ of income producing assets.
Why should you market to Private Lenders?
Without question, the number one issue facing investors is access to capital. Having multiple sources of financing available will allow you to quickly close deals before other investors.
Important Disclosure: There are certain disclosures that must be made when negotiating with and marketing to Private Lenders. While we try to ensure that these disclosures are made in our marketing pieces where applicable, it is important that you consult with a real estate attorney in your state when you are soliciting Private Lenders
Remember - leads are just one step of the puzzle.
Once you have your leads, you have to figure out what to do with them. How will you get them into your business’s funnel so that you can begin the process of turning your leads into deals?
There are many lead generation strategies that you can use to bring leads into your funnel.
Real Estate Lead Generation Strategies
Networking & Referrals
Networking and referrals can be your biggest and best source of leads if you play your cards right.
Networking with other local investors is a great way to learn from those who are already in the business and a way to get your name and business out there in the local investing community.
Networking can also become a source of potential buyer leads for your wholesale deals or other deals that you might not want to take on, but are good deals for other investors in your area.
Rather than viewing other investors in your area as your competition, viewing them as your ally would better serve both you and them. You will likely come across deals that aren’t quite right for your business model but are perfect for one of the investors that you’ve met at the local REIA, and vice versa.
Networking will also allow you to make great contacts for other areas of your business such as contractors, real estate agents, and inspectors. Forming a relationship with these types of people, that you can rely on when you need them, is going to be worth its weight in gold.
When it comes to referrals, you could see them start to roll in even before you’ve ever done a deal. The first step is talking with others about your business. This includes friends, family members, people who you currently work with, neighbors, members of your church, etc.
Remember, people do business with those that they know, like, and trust.
If you’ve explained the value of your business and what you’re offering to those around you, you will be top of mind when they come across someone who could use your services.
As you get more deals done, you will have the opportunity for more referral leads. Once you’ve created a happy buyer, seller, or private lender they will likely become a source of referrals for your business. Even if you can’t get a deal done, keep in mind during the process that if you create a positive experience and form a relationship with your buyer, seller, or private lender that they will most likely tell others about their experience with you.
A referral lead is one of your most valuable leads. Someone that they know has already sold them on talking with you, which is half the battle. All you have to do is begin building your relationship with them and show them how you can be the answer to their problem.
We recently did a podcast with a local real estate investor about his referral strategy and how focusing on relationships brings the business TO him. He also talks about having an abundance mindset and how getting involved in his local community has had a positive impact on others and on his business.
Take some time to either watch or listen to this interview here.
Bandit Signs
Bandit signs have stood the test of time. They’ve been around for years and they still work.
- They’re inexpensive.
- Anyone can put them out. You don’t have to spend your time distributing them, you can hire someone to put them out for you rather inexpensively.
- They can be used to generate any type of lead including sellers, buyers, and even private lenders. However, generating a private lender from a bandit sign is probably less likely than generating buyer and seller leads.
If you use a tool like Realeflow’s Moby, you can automate the follow up to the leads coming in from those signs. This takes another task off your plate while you are still keeping potential leads engaged through automated follow up campaigns.
Remember, some communities frown upon these signs, so it’s best to check for any restrictions in the community where you intend to place your signs before spending time and money to distribute them.
Buying Leads
Buying real estate leads is definitely an option when you're looking to pad your lead count. But, using this method means you depend on companies to feed you leads. This is a red flag, and is a huge limiting factor in your ability to scale your real estate business.
And as we make very clear above - not all leads are created equal. You may not even be getting good leads - and paying for bad leads is the same as throwing money down the drain.
Craigslist And Other Online Listing Sites
Craigslist and other real estate listing websites are great places to find seller leads by targeting for sale by owner listings. These sellers are already in the market to sell, they just don’t know about you yet.
Craiglist ads can be a way to drive leads to your business, but you have to be consistent with posting your ads.
This may be a good task for an assistant or even a virtual assistant in your business.
Direct Mail Marketing
Direct mail is another tried and true tactic that continues to be an extremely effective form of marketing in real estate investing.
One of our recent articles on direct mail marketing discusses a USPS study that found that 81% of recipients said they read or scanned their print mail daily. That means more than 8 out of 10 U.S. adults are going to find your message in their mailbox the day it's delivered.
The same study found that 58% of households with incomes over $65K made a purchase as a result of direct mail.
If you do direct mail right, your message is going to get through to your audience at some point. I say “at some point” because direct mail isn’t typically a one and done type of marketing strategy. Oftentimes, direct mail takes several touches before a seller or buyer will respond.
If you find the right platform, direct mail will be a breeze and highly effective. You want your direct mail costs to be low, while the options for direct mail pieces are plentiful, and the whole process can be automated, requiring very little time on your part to establish multi-touch campaigns to your leads.
Direct mail is very targeted, meaning you can craft messages that fit the exact type of lead that you’re targeting so that every piece they get resonates with them and what they’re experiencing at that exact moment.
Realeflow’s Direct Mail Engine was created with all of these factors in mind and has been tweaked over the years to reduce prices, add more marketing pieces, and increase automation functionality for our users.
Real Estate Lead Generation Website
It’s 2023. If you don’t have a lead generation website, you know you need one. This is especially true now, more than ever, when everything in the real estate world has moved to digital over the last few months.
- Your direct mail can drive traffic to your website.
- Your Facebook business page, posts, and paid ads can all drive traffic to your website.
- Your bandit signs can drive traffic to your website.
Any form of marketing that you do can include your website, which is there to create an additional layer of professionalism and makes it easy for people to learn more about you, your business, and services.
But your website can’t just be “a website.” It needs to be functional and answer questions for anyone who visits it. It needs to be appealing and easy for the visitor to navigate.
This might sound intimidating, especially if you don't know the ins and outs of setting up a website. Sites like Squarespace make it simple and inexpensive to create a powerful lead gen website. Remember, your website is available even when you’re not to answer the how’s, what’s, and why’s of your business.
We recently wrote an article detailing best practices, do’s, and don’t’s of a successful lead generation website. You can check it out right here.
Real Estate Investing Software
There are lots of different software platforms on the market today that are built to help you scale your real estate investing business.
Now obviously - we're partial to Realeflow. But nevertheless, here are some things to look for when evaluating different platforms for your business:
All-In-One Toolset
What tools are you looking for to help your business? What would be most important and beneficial for you? Does the software have those tools currently?
Make sure that you determine what is going to provide the biggest payoff in your business and begin evaluating the software platforms that provide those tools.
For example, many investors list "leads" extremely high on their list. Realeflow provides several types of real estate leads that can be searched, targeted, and downloaded daily by the thousands. This saves users hours of time and thousands in fees that would otherwise be paid to list providers.
But you probably also want a CRM, an email marketing tool and comps software, right?
Yep, Realeflow has got all of those. And more.
Software Track Record
How long has the software platform been on the market? Is it a new, fly by night software, or has it stood the test of time?
Updates
How often is the software updated? You don’t want a platform that was created 10 years ago but hasn’t evolved to fit the needs of the market. It’s important to make sure that whatever platform you choose has a development team dedicated to keeping the software up to date and ever-evolving.
Affordability
Does the expense fit into your budget? This can sometimes be a tough one because it challenges business owners to think ahead in terms of the monthly cost vs. the payoff of having a platform that provides leads, direct mail, automation, etc.
While automation saves tons of time, it is not always easy for business owners to see it as a direct payoff, even though it allows them to focus their efforts on more revenue producing activity rather than daily office duties. You can also think of it this way - figure out how much the software costs over the course of one year.
If you do just one deal in that year, how many times over would that one deal pay for the software?
Trial Period/Guarantee
A company with a great software platform stands behind their product. These types of companies often offer a trial period and/or a money-back guarantee. Beware of a company that doesn’t offer one or both of those options.
