A few years ago, a major newspaper—I won’t say which one—blared a headline declaring that “The era of mom and pop real estate investing is over.” I remember a friend of mine being nervous about it and asking me if it was true. I looked at the headline, looked over my portfolio, looked at the headline again, and saw a bit of a disconnect.
My portfolio was doing fine. I think the headline might have been wrong.
Years later, my portfolio, and that of other mom and pop real estate investors, is still doing fine. But it would be disingenuous to say that times aren’t at least a little bit tougher. The market is getting tighter. Banks are buying up more and more property. Things are just getting more expensive.
But, you can still compete. There are a lot of ways for mom and pop real estate investors to be competitive in a tight market. In fact, you can do more than compete- you can thrive. But you need three things: leads, lending, and support. If you get those, mom and pop real estate investing can still be your path toward achieving your financial goals.
Understanding Mom and Pop Real Estate Investing
You might not consider yourself a mom-and-pop real estate investment firm because you might not literally be a mom and a pop. In fact, you might be neither! That’s fine. It just means that you are an independent businessperson without a huge portfolio.
There is no hard-and-fast definition of what a mom and pop business is. But for the most part, a good rule of thumb is that if you do fewer than 20 deals per year, you can consider yourself a mom and pop. But that doesn’t mean you have to be on your own. There are ways to get the help you need to thrive in the three main areas of your business.
How Mom and Pops Compete in a Tight Market
Have you ever seen the movie Moneyball? It’s about baseball on the surface, but it is really about business. At its heart, the storyline involved a very simple principle: If you have less money than the big boys, you have to be smarter. You have to work the angles, find the hidden tricks, and get help when you can.
To be smarter, you have to know how to compete in the three main areas: leads, loans, and support.
Get Better Leads
There’s probably no more important part of your business than finding qualified leads. If you can’t find real estate properties with potential, you don’t have a business. Everyone knows that. Which means that everyone is going to give you advice.
You’ll get a ton of input on what works in lead generation. Sometimes it’ll be obvious things, like participation in auctions or sheriff sales. Sometimes it’ll be less obvious things, like going to real estate groups on Facebook. A lot of time, people will tell you to pound the pavement and do some door-to-door cold-calling in “the right neighborhoods.”
The thing is, there are no hidden neighborhoods. There are no secret auctions. Everyone is going to be trying to get the same leads, and the big corporate investors will be at the sales. You might get a house. You might be able to pound the pavement enough and get a sale. But you’ll be spending a lot of time, and really, maybe more money than is smart.
There is another way. Instead of spending your time and money on leads that go nowhere, you can invest in a tried and true business model that helps you get qualified leads through nationally-known advertising. These leads come directly from people who are ready to sell. If you can talk to homeowners before they are foreclosed upon, and before they go to a general sale, you have that edge. That’s the smart way to compete: talk to owners before the competition even starts.
Get Better Loans
Whenever I think of huge corporate real estate investors, I imagine them looking at a house, pushing a button in the office, and a huge vault filled with sacks of cash opens up. That might not exactly be the case, but it’s not that far off.
The thing about being a mom and pop real estate investor is that you don’t always have a huge flow of cash. It’s often tied up. But, you don’t want to let a great opportunity slip away, so you need a loan.
That can be hard when going through banks. They don’t understand your business or your margins. But hard money lenders know how that works. Still, you need to get the best rates.
You can do that if you have a way to make lenders compete for you. There is a real estate investment business model that gives you direct access to nationally-known hard money lenders, leveling the playing field. It’s not quite a vault full of money, but it is a way to make sure you get the hard-money loans you need at great rates.
Get More Support
We’ve all seen cowboy movies. The lone rider comes into town, takes care of business, and rides out alone. That’s cool. But it doesn’t always work that way. In fact, it never does. At some point, that cowboy had to learn how to ride and talk to an even older, grizzled mentor on just the right way to make the grand exit.
It’s the same with investing. I don’t know everything. You don’t know everything. No one does. But, there are ways to learn and get the support you may need when you are faced with challenging situations.
That’s the secret weapon. If you are part of a business model that gives you support and mentorship, you have something the big boys don’t have: community. You have people to turn to and a knowledge base that helps you keep growing.
Investing in Resources That Help You Work Smarter
Like I said, I don’t know everything, and I never have. But, there was a time when I got smarter—and that’s what helped me compete. I became an independently owned and operated HomeVestors® franchisee.
You know us as the “We Buy Ugly Houses®” people. What happens is that distressed homeowners across the country who need to sell fast contact us. So, if you are a franchisee, distressed homeowners who are ready to sell call you directly before their house is up for grabs to everyone else. You get an edge.
And, funding is never a problem if the deal is right. You’ll have access to UGVilleSM, a proprietary lead management platform that includes a portal directly to reputable hard money lenders who actually compete for your business. So, you can put that credibility kit back in the ‘old files’ box.
You also get tons of support. There’s a mentorship program to guide you through even the toughest deals. And, there’s a whole HomeVestors® franchise network of fellow local franchisees who just love to talk shop.
The era of “mom and pop” real estate investing is far from over. You can be more than competitive. If you’re interested in beating the big boys, request information about becoming a franchisee today.
Each franchise office is independently owned and operated.