Do you ever wonder how real estate investors acquire properties at such deeply discounted prices?
These people/businesses are not purchasing these properties on the MLS, auction sites or bank foreclosures. What the successful real estate investors have done, is they have created systems within their acquisition process so they can streamline how they contract properties. By creating systems for your9 acquisition process, your company will be able to purchase more properties with far less headache, essentially allowing you to scale your operation to earn more revenue as well as increasing your bottom line.
Ok, enough of the business lingo, what does the real estate investing acquisition process essentially mean in laymen terms. The real estate investing acquisition process is how you track seller leads, set appointments, create contracts, send offers and manage these offers through the escrow process. The acquisition process essentially starts once a qualified lead enters your funnel and ends once you close on the purchase of the property.
So wouldn't you like to be able to do more deals, earn more revenue and provide a better life for you and your family? I know you would, so let's get into some details on this process. Before we start, we want to get one thing straight, we talk from experience, this is essentially how we operate our acquisition process, so we want you to understand that we are not offering any bullshit here. Ok, let's get to it.
The 5 Different Aspects Of The Acquisition Process
The acquisition process does not have to be complicated (actually better when it is simplified) but you do need to be able to create a strong infrastructure so you can handle all of the leads that your bringing into your funnel. Your acquisition process is the starting point for your sales funnel. Your marketing department will fill your sales funnel and then there will be essentially a hand off from your marketing department to your acquisition (sales) department by relaying essential information from the lead in order for the acquisition team to determine the lead's current status.
1) Incoming Correspondence
All calls have to be monitored, tracked and qualified and this is essentially where your acquisition process will start. This is the first step in the process in determining if incoming calls can be qualified as a lead or is just another phone call coming through your phone. It is essentially that, a place where you can keep track of all of your incoming calls and allow your admin to distinguish if these calls are qualified enough to push them into the seller lead category.
2) Seller Leads
Now you or an admin should be working off of a lead qualification template. This document will determine if the call that came into the top of the funnel can be passed through the funnel and qualified as a lead. A lead is a property owner that makes it through the lead qualification template essentially showing enough motivation to be worth a follow up phone call from our acquisitions manager to dig a little deeper and find out some more details on the property and the situation. Now, not all leads are deals, by any stretch of the imagination. Once you get your process really humming you will know on average how many leads need to enter your funnel in order for you to churn out a contract at the bottom (and what from which marketing medium). You will track and follow up with a seller lead until the property has been purchased by another investor, listed with a real estate agent or they are asking to close to retail value and you do not have a creative solution to capitalize on the opportunity for your exit.
3) Appointments
The next aspect of the Acquisition process will be the appointments that you acquisition team goes on. Once your Acquisition Manager or associate makes contact with a qualified seller lead that has made it into the funnel, there main goal will be to set an appointment to get some face time with the owner, build a relationship, take some photos and evaluate the amount of repairs that are needed on the property. This will be another indicator that you will track so you know how many seller leads you need to bring into your funnel to get 1 appointment. The farther you make it through the funnel, the better opportunity you have of closing a deal.
4) Offers
One key point that I try to get across to my team is that for every appointment that we go on there should be a corresponding offer associated with the appointment. This is a good indicator as to how well your system is working. Essentially if you go on an appointment and you are unable to make an offer because they are A. either asking to much money, B. the seller is not motivated or C. you didn't do enough due diligence, we need to take a step back and take a look at our qualification system in place. If we are going on appointments and not making offer's, everyone who was involved in that appointment wasted their time. You did not get a deal and the seller did not sell their house, so there was no value added. The more offers that we can make on a daily/weekly basis, the more deals we will be able to close.
5) Contract Board
Just because you have a deal under contract does not mean the deal is closed. If you have been in this business for any amount of time, you know that deals fall apart in the closing process. There are several different reasons that this may occur, either on the seller's side or our side. The contract board will allow you to track all of your deals that are under contract through the escrow process. This will allow you to update your seller's through out the closing process allowing for better communication during this period of time.
How To Effectively Manage The Acquisition Process
So what is the most effective way to manage your acquisition cycle for your real estate investment business?
The obvious answer is some sort of CRM (Customer Relationship Management) software. While this is the short answer, it is also the right answer, however the long answer carries much more detail.
What CRM should I use? This is a question we get asked a lot. It is hard for me to comment on any other CRM than Podio because I have only used this CRM. I would imagine that other CRM's can do similiar things but the customization of Podio and also having the ability to automate through GlobiFlow to me put's this CRM ahead of the rest. Especially when it comes to real estate investing.
A CRM allows you track, manage and follow up with seller leads throughout the life of the sales cycle. Podio allows you to create very unique workspaces with built in automation to help cut down on a lot of entry level admin tasks. This saves your company both time and money and sets the infrastructure for your business to do more deals and scale. Once you have your whole team on the same page and working through Podio the way you set it up, then all's you have to do is bring leads into the system to cycle them through your process.
We essentially manage, track and follow up with our leads in Podio using the 5 different aspects of the acquisition process. We create (1) workspace called Acquisitions. Within this workspace we create 5 different Apps. These 5 Apps are:
1) Incoming Correspondence
2) Seller Leads
3) Appointments
4) Offers
5) Contract Board.
Within each of these apps we have specific automation built into the system to help our people work through the system in a simple manner.
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The best part about having an efficient, simple CRM that your team can work through is increased ability to follow up with old leads and make sure no lead is left behind. Each week we have a meeting with our Acquisition Managers to go over there piece of Podio to ensure that we have made contact with all qualified leads in the system and have followed up with all leads that are still in our data base.
How To Effectively Manage The Acquisition Process
Just like any other business, you have to have someone who manages a specific department. For this department you will have an Acquisitions Manager who is in control of managing this process. The acquisitions manager is going to provide management and oversight of all sales activity for a specific territory. They will essentially monitor & take in seller leads, qualify leads, research & perform due diligence on residential properties, make offers, negotiate contracts and process deals.
Now depending how many deals you are analyzing and how many different areas you work in will determine how many acquisition managers you need as well as how many sales associates will work under those managers.
Examples Of Systems To Manage The Acquisition Process
Throughout this post we have continuously spoken about how systems play an integral part in how a process works. For each aspect of a process, you will create systems in order to streamline, simplify and scale your business. We look at systems as instructions to perform a specific task. These instructions could be a simple checklist or it could be a document prepared to explain how to work through a complicated software or analyze a property. Here are some quick examples of some systems we use to simplify some aspects of this process.
1) Homeowner Qualification Template - This is a document/script that we work off of to qualify all incoming correspondence to determine if this call moves to a seller lead or not.
2) House Flipping Analysis Document - This is an excel document that we created to simplify how we determine the Maximum Price we can offer our clients
3) Rental Property Analysis Document - This is an excel document that we created to determine if a specific rental property meets our criteria and we should move forward with purchasing it based on the current conditions, price, rental rates etc..
4) Podio/Globiflow Offer Creator - We have created workflows in Globiflow that produces offers within in seconds of plugging in the information in Podio to populate specific variable fields. We have different Purchase Contracts created for all of the different delivery methods we use to acquire a property.
5) Appointment System - For each appointment we bring with us a sales packet. We also have our acquisitions managers bring an IPad for photos and a "Pre-Acquisition Task List" to begin documenting the repairs that are needed on the subject property.
Each system that you create will move your team throughout the specific process they are trying to complete. If your systems are easily executable, easily understood and you have alignment from your team as to how to execute them then you are developing the infrastructure you need in order to scale and do more deals.
We always say where ever you have a problem in your business, you need to create a system to eliminate the problem or you need to simplify or re engineer the system to make that aspect of your business run better.
"Where there is a problem, Create a system"
Wrapping Up: The Real Estate Investing Acquisition Process
We hope that we gave you some valuable insight into how our Acquisition Department works and some of the systems and processes we work off of on a daily basis. It is very important to have a strong acquisition infrastructure in place so that you and your team can handle more deals as you scale. The difference between a successful real estate investment business and an unsuccessful real estate business is the amount of deal flow you can handle and execute. As you begin taking action you will find holes in your acquisition process. For all of the wholes or gaps you find, be sure to create a system with your team to eliminate that issue in the future.
If you guys have any questions on anything real estate investing related just shoot us over an email at info@hspropertyfunds.com and we would love to offer you some insight/value into your questions.
HS Property Funds, LLC
Funds to Help, Problems to Solve
315-516-8023