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IF YOU DON’T HAVE DEAL FLOW, YOU DON’T HAVE A FUTURE The new dynamics of deal generation and deal flow.
by John Chin T here is an old expression that we’ve all heard before, and it goes something like this: “The real estate market is big and deep, and there is enough room for everyone.” It’s a nice expression—cheerful actu- ally, but deep down inside, we all know that it’s not true. The market is big and deep with over 382 Metropolitan Statistical Areas in the United States, but the discounted house buying opportunities are like fine gems that must be uncovered some way, somehow. In this business, which is both science and art, you must stand out and be dif- ferent in order to make a sizable impact in your areas of operation. The landscape for single-family house op- portunities has dramatically shrunk nation- wide as the real estate market has recovered in most areas. Deals are getting thinner, and foreclosures are down nationwide to one- third of what they were at peak. REO packages are almost non-ex- istent, unless they are re-packaged by aggregators of turnkey operators. It’s fascinating to see the real estate market changes and how particular family offices and hedge funds adapt to the changing times. There is no coasting in business, and the rapid changes in tech- nology and marketing will determine who wins in what markets by adapting fast. Everyone knows Google and other search engines are constantly changing their algorithms, thus creating an entire market for technology nerds to constant- ly tweak and change their marketing schemes, while others are slow to respond. And it’s not just the elusive discount- ed house buying opportunities that are
changing. Property management has changed, too, with new software con- stantly being implemented. And more and more companies are using virtual assistants (often from overseas) to handle the influx of phone call—from tenant placement to maintenance departments of property management companies. The real challenge today is to find off-market single-family house oppor- tunities at a discount. Competing at auctions, and for MLS listings, does not give any of us a pro- prietary advantage. This is the first place most investors and hedge funds go for opportunities. The problem is that you are competing with everyone else in your mar- ket for the same opportunities. And, sure, you’ll find some scraps, but the “pickings” are slim, and the profit margins are skimpy. If your business plan is to acquire five to 20+ houses a month in your market, you’ve got to find more exclusive, not- picked-over opportunities. We can help you! I’m not kidding. This is not one of those foo-foo, feel- good marketing messages. We have the influx of phone call—from tenant placement to maintenance departments of property management companies. The real challenge today is to find off-market single-family house oppor- tunities at a discount. Competing at auctions, and for MLS listings, does not give any of us a proprietary advantage. This is the first place most investors and hedge funds go for opportunities. The problem is that you are competing with everyone else in your market for the same opportunities.
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