When I first started my real estate investing business, I didn’t realize how much work went into finding and nurturing leads. I had to try many different strategies over many frustrating years before I developed a lead generation method that consistently produced results. I want to make sure nobody else has to struggle the way I did, which is why I created this guide to real estate leads best practices for investors to acquire and nurture toward conversion.
Real Estate Lead Acquisition Strategies
The first step is to find new leads—homeowners who may be interested in selling their property to you. Let’s look at some of the most popular lead acquisition strategies and discuss which ones are worth pursuing.
Property auctions are a popular way to find leads, particularly if you’re looking for a good deal on a distressed home. These auctions are typically held by local sheriff’s offices and municipalities and mostly feature homes that are in the last stage of foreclosure. This means they’re usually priced very cheaply but may require a lot of repairs and renovations before you can flip them. You can find real property auctions pretty much anywhere in the country both in-person and online, though the number of good deals to be found will obviously vary based on the local real estate market.
Before you dive into this lead generation strategy, however, you should be aware of the risks involved. First, you’re likely to face stiff competition from other investors, including large firms that can afford to outbid you on all the truly great deals. Getting into a bidding war with another investor could drive up the price and leave you with a bill for far more than the property’s actually worth. You usually only have a few days (or even hours) to make your full cash payment, as well, which makes financing almost impossible. Plus, this quick turnaround doesn’t leave much (if any) time for an inspection, which means you may not know the real condition of the property until after you’ve finalized the purchase. For these reasons, I don’t recommend property auctions as a lead generation method unless you already have a lot of experience making these kinds of real estate deals.
Pounding the Pavement
Old school real estate investors love to recommend pounding the pavement to find leads, and it’s still a pretty common method for finding deals on distressed or undervalued homes. The idea is to target a nice or up-and-coming neighborhood, and walk around looking for houses that are older, smaller, or in need of repairs. Then, you knock on the door and ask if the owner is interested in selling. Sometimes, if you’re lucky, the owner of this kind of home is in financial distress and will be very motivated to sell to you at a reasonable price.
This strategy can pay off if you’re very persistent and know which neighborhoods and homes to target. However, you’ll likely need to spend a lot of time pounding that pavement before you even find a potential deal. Then, you need to hope that the owner happens to be home, or even still lives at the property—often, distressed homes are vacant or tenant-occupied. Even if you do find the owner, you still need to convince them to sell to you, a stranger who just walked in off the street. Your chances of pulling this off as an inexperienced investor are pretty slim, but it’s certainly possible if you’re a great salesperson or the owner is already motivated to sell. However, you’ll likely need to try this on many properties before you get anywhere close to making a deal, and you’ll need to repeat the process every single time you need a new lead.
Buying Lead Lists
Rather than (or in addition to) tracking down individual leads themselves, many real estate investors purchase lead lists. These are curated collections of homeowners who may be motivated to sell for financial or personal reasons, but they haven’t actually listed their properties on the market yet. You can combine and filter lead lists to target specific types of homeowners or properties, such as those in the first stages of foreclosure or with unpaid tax bills, allowing you to develop your own strategy for finding leads.
Lead lists can be extremely effective—which means everyone else is already using them, too. Homeowners on lead lists get a lot of cold calls from real estate investors, so you’ll have to work extra hard to pitch your case without annoying them. Plus, most people end up on lead lists for unpleasant reasons (like divorces and foreclosures) which means they may resent your call even if you’re the first out the gate. Also, the information on lead lists goes out of date pretty quickly as people sell their houses or resolve their financial difficulties, so there’s a chance you could end up spending money on a bunch of dead leads. If you’re going to buy lead lists, the best practice is to make them a small part of your lead generation strategy, but to focus most of your energy elsewhere.
Joining a Franchise
The truth is, most veteran real estate investors have to use a wide variety of lead generation strategies that they’ve developed over many years of experience making deals. As a newer investor, you can’t buy that kind of in-depth knowledge, but you can still benefit from it by joining a real estate investing franchise like HomeVestors. The HomeVestors® network of seasoned real estate investors has bought over 100,000 houses nationwide with the help of the “We Buy Ugly Houses®” national advertising campaign and a full suite of lead generation, marketing, and listing tools.
As an independently owned and operated HomeVestors® franchisee, you’ll still get to run your real estate business your way. You’ll just get the support, training, and guidance of a HomeVestors® Development Agent as you make your first few deals and get your real estate investment business running smoothly. Becoming a HomeVestors® franchisee is one of the best ways to acquire the top real estate leads.
Real Estate Leads Best Practices to Nurture Towards Conversion
Finding a lead where someone may be interested in selling their house to you is only the first step. Not every lead is “qualified,” or likely to end in a sale—sometimes homeowners change their minds, or sell to someone else, or just tell you what you want to hear so you’ll go away but never intend to follow through. Many new investors get frustrated early-on because they spend too much time chasing down leads that end up going nowhere. The trick is to determine which leads are most promising, so you can nurture them towards converting to a sale. While every lead is different, there are some common criteria of “qualified” real estate leads, including:
Incoming Leads: If a homeowner approaches you first rather than the other way around, they’re likely very motivated to sell. Maybe they found your contact information through some sort of advertisement, or they know a former client of yours who recommended your services, or they’re just desperate to sell and called the first real estate investor they could find on Google. Either way, a homeowner making the first move is a great sign that the lead is worth pursuing.
Information Exchange: If a homeowner really wants to sell, you’ll have no problem convincing them to provide you with all the information you need to make a decision (e.g. inspection reports and other property records). If you have to obtain that information from lead lists or public records searches without the homeowner’s consent, that’s a sign that your lead isn’t “qualified”.
No Competition: If the homeowner reached out to you first, and they’re not speaking to any other investors or officially listing their property, then you’re definitely on the right track with that lead. The more people who are interested in purchasing the property, the higher the price will go up, and the less likely you’ll be to actually land the deal.
Nurturing “Qualified” Leads
Once you’ve determined that a lead is worth pursuing, you need to nurture it until the homeowner agrees to sell. Remember, buying and selling properties may be business to you, but this is someone’s home, and they might need some time to emotionally and logistically prepare before they’re ready to pull the trigger. However, that doesn’t mean you should just sit around and wait for them. You need to create and maintain a relationship with the homeowner, so you know you’ll be the first one they call when they’re ready to sell.
Staying in touch with all your “qualified” leads can become an overwhelming task if you try to manage it all manually. Most experienced real estate investors use lead management tools to assist them, like CRM (customer relationship management) software. However, when you’re just starting out, you may not have the capital to invest in this kind of specialized software, especially when lead nurturing is just one of the many tools you need. That’s why HomeVestors created the UGVilleSM real estate investing platform.
As a HomeVestors® independently owned and operated franchise, you’ll gain access to a full suite of tailor-made, proprietary real estate investing tools to help you take your business to the next level. In addition to an intuitive lead pipeline management tool for nurturing leads through each step of the sales process, there’s also a sophisticated lending portal to help connect you with reputable hard money lenders. HomeVestors also provides a complete, easy-to-use payment center to help you manage all your incoming and outgoing payments. The UGVilleSM platform is truly a one-stop-shop for your HomeVestors real estate investing needs.
Each franchise office is independently owned and operated.