How important is systematizing and streamlining your real estate acquisitions department?
The acquisition department of your real estate investing business will be a cornerstone for evaluating and closing deals.
Whether you are a sole proprietor or run a large company there are specific roles and responsibilities that your acquisition department will be in charge of.
If you are first starting out, these roles and responsibilities may fall on your shoulders but as you grow you will be able to delegate and hire employees to manage and apply your systems.
When it comes to real estate investing, your acquisition department will be in charge of:
Evaluating the deal
Setting up a meeting
Creating a pre-acquisition task list
Putting together offers
Negotiating
Closing the deal
Now every company/business will handle their department differently and will have different roles and responsibilities for their departments, but this is how we chose to lay out our acquisition department.
Real Estate Acquisition Department : Responsibilities & Systems
You acquisition department will essentially consist of an acquisitions manager along with technicians to assist and fulfill all responsibilities. For each step of the process, we will put together systems of how we want to handle this specific aspect. Some of the tasks will be associated with the manager while others will be delegated to a technician.
Your acquisitions department will work with your sales department and will work for hand and hand with your marketing department to better understand leads and the status of that lead.
1) Evaluating the deal
Once your marketing department brings in a lead, they will be classified into a couple different categories. For simplicity we use:
25%
50%
90%
Essentially these categories will tell the acquisitions department where the lead is in the sales funnel and what approach to take in follow up with them.
Once a lead is generated, the first task of our acquisitions department will be to evaluate the deal. Our marketing team has qualified the homeowner and has a good understanding of their motivation and the asking price of the property.
By evaluating the deal, our team will have a better understanding of the spread on the property. This will allow us to know how we should approach the lead and how quick we need to act.
Our acquisitions department will run an in-house comparable market analysis, determining the ARV of the property. This ARV will give us a good understanding of what we will be able to sell the property for after we make our repairs.
From this number, we will be able to compare the clients asking price with the ARV and decide if it is a deal we need to act on immediately or need to nurture.
The ARV will be the first step in the evaluation process of a deal to determine if we need to put more time into the evaluation. If the lead is hot, we will further evaluate. This will consist of:
Estimating repairs
Determining holding costs
Determining closing costs
Determining required profit
By establishing these numbers, we will be in a better position to negotiate since we will create a Maximum Purchase Price for the property.
2) Setting Up A Meeting
If we decide that the spread on the property is not large enough for us to move forward with, we will contact the owner and explain our position. At that time, the lead will be stored in our CRM with all of the information on the prospect for us to follow up with.
However, if this is a deal that we would like to pursue, the acquisitions manager will be in charge of contacting the homeowner and setting up a meeting to come out to meet and get a detailed estimate on the repair cost of the rehab.
When contacting the homeowner, you will set the meeting up based on their schedule while also understanding that we need to set up the meeting as soon as possible. If it is a very hot lead, we want our acquisitions manager to establish this meeting the same day to prevent them from reaching out to any competition.
3) Creating A Pre-Acquisition Task List
At the meeting, our acquisition manager will be in charge of building rapport and creating a detailed pre-acquisition task list (pre-acquisition scope of work). In our business, we like our project managers and our acquisition manager to work together on this step since the project manager will be managing the project if we close on it.
The pre-acquisition task list will give us a better understanding of what the repair costs on the job will entail and how much it is going to cost us to put the home in condition to reach our ARV.
This is not the final scope of work for the project but will be used to further create our final scope of work.
4) Offer System
Every business will have different offer systems depending on the particular lead. When purchasing from the MLS you will be dealing with real estate agents so you will need a specific offering system for this purchase. When dealing with homeowners face to face you will need to develop an offer system to best suit their needs. Sometimes we send offers through email, if this is the case you will need to develop a system to send offers through email.
The acquisitions manager will be in charge of managing and operating of these different offering systems that you put together.
5) Negotiations
Negotiations are a large piece of getting the right price for the property and being able to obtain your required profit on a specific job.
Through our evaluations, we will have determined a maximum purchase price for the property. This maximum purchase price will allow us to manage and control negotiations.
The negotiation system that you create will depend on the profitability of the lead, the desirability of the lead and the competition for the property.
Your acquisitions manager will be in charge of managing and implementing the negotiation systems created for each scenario.
6) Closing the deal
The job isn't complete until a purchase contract is signed. Closing the deal on property consists of more than signing a purchase contract. Along with the purchase contract, we will also need:
Property disclosure
Lead paint disclosure (house built before 1978)
After the acquisitions manager puts the homeowner under contract, these documents will then be sent to your title company to begin processing. This will be a task for the technician that works under your acquisitions manager.
Wrapping Up | Real Estate Investing Acquisitions Department
Your acquisition department is a very important piece of your real estate investment business. Develop specific systems to operate each step of the process, test and iterate. Streamlining this aspect of your real estate investment business is essential but will take time and will be always changing.
HS Property Funds
Funds to Help, Problems to Solve
(315)516-8023
www.hspropertyfunds.com