As a young real estate investor, being obsessed with my lead list was a big part of my daily routine in California. Between scouring local property listings, calling homeowners directly, and emailing around with some of my investor buddies, I made sure my dealbook was always busy. I never had trouble understanding how important it was to always be building a reliable inflow of leads.
But the only reason why I was so obsessed was because finding leads was a perpetual headache for me; I never quite had enough. No matter how much time I sunk into it, I’d still find myself searching for good prospects—until I got involved with some of the more elaborate marketing techniques for house flipping.
If you’re struggling to build the lead list of your dreams, you’ll need to get serious about the lead-generation process and appreciate the particulars of the Californian real estate market first. Don’t worry, I’ll walk you through a handful of different methods for grabbing great leads so you’ll be ready to tackle the market with the right mindset.
What’s Special About Finding Real Estate Leads In California?
The first thing lead-seeking investors need to know about California is that it has many different real estate markets, and they vary quite a bit.
For instance, the type of home and sellers you might find in Fresno or Bakersfield imply a different flipping strategy than those in Pomona or San Diego. And whereas it might not be a problem to find moneyed buyers or qualified contractors in San Francisco, you might not have much to work within Indio or other desert towns.
For investors, that means any real estate leads in California will need to be tightly targeted to the types of opportunities your business is efficient at capitalizing on. When you’re gathering leads, you’ll need to consider:
- The size of deals your business can accommodate with financing
- The average price of homes in your market
- The average level of demand for homes in your market
- The financial resources of the market’s average buyer and its average seller
- Whether there are homeowners who could be convinced to sell with the right offer
- Whether you’ll have easy access to contractors for renovations
Generally speaking, you’re going to have plenty of competition from other investors and homebuyers in many of California’s urban areas. And the valleys in the south and middle of the state tend to be dynamic markets, too. You don’t need to be afraid of competitors, so long as you have a good strategy for gathering leads that nobody else can replicate.
Building Your Lead List
In this section, I’ll get into the nitty gritty of how you can use different sources to make a list of leads. Then, once you have a list of leads, it’ll be up to you to sift through what you’ve found and identify the most lucrative opportunities.
On that note, there’s a little principle I live by that could prove useful to you as you’re building a lead list: Garbage in, garbage out.
When you’re reading through each of the methods for finding leads that I’ll share with you, keep in mind that the majority of leads you find will not be suitable for an investment once you inspect them more closely. It’s the nature of the business, and you’re going to spend a lot of time shrinking your list no matter what.
Therefore, the more high-quality your leads are to begin with, the better opportunities you’ll find—and vice versa. And while it’s entirely possible to move forward with a mediocre lead and eventually turn it into a wonderful flip, doing so tends to take a lot of skill which newer real estate investors may not have. So don’t forget that gathering high-quality leads to begin with is a big time-saver, and it might be a money-saver as well.
Now that you’re situated, let’s dive in. There are quite a few ways to go about building your collection of real estate leads in California, including:
- Physically scouting areas that you think might have promising opportunities
- Looking at multiple listing systems (MLS)
- Paying for leads
- Looking at public records to identify foreclosure auctions, pre-foreclosures, and homeowners who are likely to be interested in selling
- Reaching out to homeowners directly to see if they are willing to sell
- Networking with other real estate investors
- Conducting marketing campaigns targeted at likely sellers
I’ll get into each of these methods in more detail below, starting with the least efficient one and ending with the most efficient.
Sometimes, there’s no substitute for walking or driving around a neighborhood where you think hidden gems may be lying in wait.
Seeing a community helps you appreciate the unique aspects of how local properties are valued. You’ll get a more acute understanding of who lives in the area and what the condition of the median home is. And if you see a property that you think might be worth a purchase, you can even try your hand at talking to the homeowner directly by knocking on their door. As a bonus, you may also have a chance to see properties that are for sale but are not listed as such online for whatever reason.
Unfortunately, as pleasant as walking around a new area to do lead-building research might be, it’s usually an incredibly low-return activity for your time. Unless you do a lot of pre-research, it will be hard to even pick the correct neighborhood to scout. And the chances are slim of finding an unlisted property that’s also worth flipping. If you are able to scrounge up a lead, there’s no guarantee of it being high-quality either.
Screening Local MLSs
MLSs are the bread-and-butter of real estate investing, and I highly suggest that you keep your eye on as many different regional feeds that are relevant to your business as possible.
Scrolling through MLS entries can be time-consuming, but once you set up a good collection of filters, it’s a high-throughput way of seeing what’s going on in your target market(s). Homes of all qualities are listed on there, and marking something as a worthwhile lead is entirely in your court.
But the trouble with MLSs is that everyone can see the same set of information you can. As a consequence, you’ll be facing competition from homebuying members of the public, private equity firms, other real estate investors, giant public real estate companies, and sometimes even state or municipal property buyers. That makes it really hard to sit on opportunities as another buyer is likely to snap up anything that’s especially attractive.
So, you should expect to get scooped at least a couple of times when using leads from an MLS.
To mitigate this, you’ll need to differentiate between when you’re browsing an MLS to gain an understanding of a market and when you’re hunting for leads. If you find something that you think qualifies as a lead, you’ll need to develop it into a prospect quickly with research. Then you’ll need to move as fast as possible to close the deal.
Paying For A Lead List
Because of how hard it is to find qualified real estate leads in California, many house flippers simply pay for a list of leads.
Often sold by wholesalers, lead lists tend to be a curse more than a blessing—in my experience, at least. While it’s true that at least some of the leads on pay-to-play lists are going to be exclusive and impossible to find elsewhere, the vast majority won’t be. In other words, you’ll be paying for leads that you could have found on your own using public sources, for example.
And there’s no guarantee that you’ll get what you pay for. More expensive lead lists may actually be full of marked up low-quality leads. Cheaper lists might be out of date, or with precious few exclusives. Or cheap lists might be packed with great opportunities. You just can’t really tell until you’ve paid up, which turns the entire endeavor into a bit of a fishing expedition. Even if there are a bunch of exclusive listings, keep in mind that you’ll still have to compete with other people who pay for access to the list.
So, reliable and high-quality paid lead lists are unfortunately often a self-correcting phenomenon. As the good news of their effectiveness spreads, there won’t be enough exclusive leads to go around.
I don’t recommend paying for lead lists on a regular basis. But if you’re just trying to get your business established in a new area, they can be a helpful way to get a jumpstart.
Researching In Public Records And Finding Pre-Foreclosures
Finding homes in a state of pre-foreclosure is key to building your lead list.
Pre-foreclosures are where you’ll be able to work your charm and negotiation skills to see if a homeowner is interested in selling to you. Most investors find pre-foreclosures from public records searches for homes with liens or other situations where the homeowner is underwater.
The best thing about pre-foreclosures is that if you’re slick, you can get a better-than-market price for your purchases. The flip side is that sellers can be difficult to work with, and you’ll need to move at their very fast or very slow pace.
But be aware that leads found via public record searches are only as high-quality as your search criteria. A carefully-designed screening query will go a lot further than a dragnet.
Home flippers love foreclosure auction listings because they’re one of the most evergreen sources of below-market-value properties.
Furthermore, because foreclosures are administered by county or municipal authorities, you’ll never need to worry about your counterparty being inexperienced or stubborn. I highly suggest you learn the foreclosure auction process in California so you can take advantage of them no matter where you choose to operate your business.
Depending on the market, foreclosure opportunities may be plentiful or sparse. Counterintuitively, in my experience, the places where foreclosures are uncommon are the places where you’ll find the best value for your dollar.
The reason for this is that hotter foreclosure markets tend to attract bigger numbers of hopeful buyers, including a plethora of other real estate investors. And areas where there have recently been a lot of foreclosures are often populated by homes that were overpriced at their prior time of sale—meaning that bargains are actually harder to come by sometimes.
Many real estate investors leverage mailing campaigns, cold phone call campaigns, and other forms of direct outreach to potential sellers.
Generally speaking, these methods are fairly inefficient as their response rates are rather low. You’ll have quite a bit of control over the type and quality of leads you get back, but homeowners can always misunderstand your angle. There will still be a few duds here and there when attempting to find real estate leads in California this way.
Nonetheless, in the right market, direct outreach campaigns can be a powerful tool. In fact, for up-and-coming neighborhoods, contacting homeowners can help you find sellers who wouldn’t have been interested otherwise.
In my experience, there’s no single trick to making a direct outreach campaign work, but keeping your pitch short and sweet is essential. Finally, be aware of any federal, state and local laws and regulations pertaining to telemarketing, mailing, and flyer campaigns. You may only face a fine or a complaint at worst, but it’s better to be in sync with the rules of the community that you’re planning to do business in.
Networking with other investors is by far my preferred way to generate a list of real estate leads in California, or any other market. The majority of my highest-yielding flips come directly from leads that my fellow investors send my way. And there’s a special joy that comes with passing off an opportunity you can’t approach to someone who can.
As you become closer to other investors in your network, they’ll toss you leads that are more relevant to you and your interests. At the same time, those same leads are more likely to be of better quality than those you find via public sources.
Of course, the catch is that you won’t have anyone in your network that can help if you’re just getting started in a new market. Strong investor networks take time to build, and there are no shortcuts for good relationships.
Inbound Marketing Campaigns
Inbound marketing campaigns on billboards, public postings, or the internet are one of the most efficient ways to find real estate leads in California—or practically any other area.
The reason why inbound lead generation methods are so great is because they’re typically low-cost and high-yield. At their worst, they’re high-cost and low-yield, but your time will not be a major component of the cost either way. If you find a market that your research suggests could be a hotbed of flippable properties, setting up an inbound marketing campaign can validate your hunch without much effort.
The beauty of inbound marketing is that sellers will approach you when they’re ready. If you target your marketing materials carefully, you could get a stream of high-quality leads that have everything you’re looking for. You won’t need to convince homeowners to sell, nor will you have much difficulty weeding out opportunities that aren’t right for you. To cap it all off, you’ll build a visible presence for your business, which can pay off down the line even if you eventually stop your inbound campaigns.
How you approach your inbound campaign is up to you. Many investors find that teaming up with several of their fellows and paying for billboard space is a solid strategy.
Tying It All Together
Now that you’re familiar with the most important techniques for finding real estate leads in California, it’s time to put everything you’ve learned to use. But if you think tackling all of these lead sources at once might be difficult, HomeVestors is here to help.
As an independently owned and operated HomeVestors® franchisee, I leverage the nationally-trusted We Buy Ugly Houses® inbound marketing campaign to find high-quality real estate leads in California. Rather than compete with other investors for leads on MLSs and at foreclosure auctions, the We Buy Ugly Houses® campaign makes my life easier by finding sellers of properties that might be amenable to flipping.
HomeVestors franchisees also receive initial week-long training, access to proprietary valuation software, and invaluable networking opportunities with other investors. Without them, I wouldn’t be where I am today—and that’s why I wholeheartedly endorse becoming one of their franchisees.
If you want to start a real estate investing business or learn more about how to find real leads in California, request information about becoming a HomeVestors® franchisee today.