Generally, the harder a property is to find, the better it will be. But finding hidden properties means playing an insider’s game.
The key to finding properties in a high-demand market is developing your own deal flow from people with unique access to information.
Relying on the same information sources everyone else relies on means you get deals that have been picked over … and these aren’t the tasty kind of leftovers.
When the market is hot and demand is high, you want sellers and contacts who’ll come to YOU first.
In our latest episode, we share tips and techniques for how to get your unfair share in a saturated market, all through building relationships with insiders.
Our expert guest, John Larson, manages multiple turnkey real estate purchases each month in one of the nation’s hottest markets. You’ll hear from:
- Your ahead-of-the-game host, Robert Helms
- His gaming-the-system co-host, Russell Gray
- Managing director and partner at American Real Estate Investments, John Larson
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Relying on relationships
John Larson is a managing director and partner at American Real Estate Investments (AREI), where they buy and sell properties in one of the hottest single-family housing markets in the nation. Dallas!
Because of steep population growth that shows no signs of stopping soon, Dallas is a market in heavy demand. It’s easy to lease properties and keep them leased, which is a big plus for investors.
But high demand also means a high saturation of investors. We asked John what it takes to be successful when lots of people are after the same properties.
He told us that success is all about two things: your relationships and your consistency.
First, relationships. John’s assembled a team of pros whom he trusts to do most of the heavy lifting before they even make a bid on a property.
Dallas has a housing auction once a month. Before the auction, John’s team gets a list of the properties up for sale and researches each one to identify properties that work for them.
When John and his team show up at the auction, a good chunk of the properties listed don’t show up.
John is very careful about sticking to a pre-identified target price and not overpaying for properties, so his team often ends up with only a small handful from the original list of forty or so.
Acquiring even one good property at a decent price takes hours of work and investigation, so having a team that knows what they’re doing is a HUGE asset for John.
John’s emphasis on relationships doesn’t stop with his team. If you go to any real estate networking event in the Dallas area, it’s pretty much a given that you’ll find John or someone from his team there.
John says this persistent networking has netted him connections with agents who have their hands on all kinds of properties.
We asked John why anyone would want to sell to an investor instead of an owner occupant who is willing to pay a higher price up front.
His answer? Eight out of ten investors he works with at AREI come back and buy another property. In the end, John’s entire business model comes down to relationships.
Cutting costs with consistency
Consistency is also key to John’s success. John and his team always use the same buying strategy: they buy with cash and close quickly.
They’ve identified a niche in the housing market and don’t generally stray from it … single-family properties in middle-class neighborhoods that lease for about $1,600 a month.
This is a sweet spot that John’s found works best in terms of finding trustworthy tenants who will pay on time, treat the property well, and stay long-term.
Last year, John also brought his property management team in-house. By doing so, he reaped multiple benefits.
Just to name a few, he now enjoys economies of scale, targets maintenance and management to a certain demographic, and buys materials in bulk.
John’s also been working with the same repair and maintenance crew for over five years. He takes care of them, and they know he’ll give them a constant stream of new work.
Basic tweaks and techniques like these allow John to make his properties more attractive—and thus more profitable—every year.
Finding hidden inventory
Many new investors start their investigation efforts by making a beeline to an MLS (multiple listing service). Although checking out what’s on the MLS isn’t necessarily a bad place to start, John warns that most inventory on the MLS will be picked through.
“All of our good opportunities are off market,” John says.
What needs to happen for John and his team to find that hidden inventory?
Well, first, investors need to know what they’re looking for, be financially prepared, and able to make decisions quickly once they find an opportunity.
Most importantly, they need to form the right relationships.
John has built a team of experts that is constantly in tune with the market—which isn’t too hard when AREI’s volume of purchases reaches into the hundreds.
For new and less experienced investors, John recommends they do their research … a lot of it. Before investors come to AREI, John asks that they research the market and make sure they understand exactly what they’re investing in.
And he recommends investors make sure they’re financially prepared. The best investors are the ones who know exactly what they want and what they can afford.
It’s these trusted and trustworthy investors like these who benefit from the properties people like John can acquire.
If you’re interested in more tips on succeeding in a crowded market, John has written a booklet called Hot Tips for Hot Markets.
And, a heads up: John is holding an investor workshop and tour in April. Participants will get to meet John and AREI’s investment coordinators, acquisitions team, and even some of the lenders AREI works with. They’ll also get to see how AREI professionally manages and renovates properties and get a good feel for how the Dallas market works.
Gaining access to the insiders’ club
Lots of beginning investors might read a book, attend a seminar, Google some information, maybe even visit a potential market.
John and investors like him are ahead of the game—they’re going to exclusive auctions and getting listings from short-selling agents. In short, they have access to inventory that no one else has even seen.
Can you work your way up? Yes. But it does take time to become part of the insiders’ club.
If you’re willing to put in the work, start by being prepared. Really do your research and get educated about your market. Then assemble your team. Use the example of John and other successful investors to guide you.
If you’re not willing to put in the time, but you do want to invest, start by finding someone like John who has access to hard-to-find inventory.
Building a relationship with someone who knows what they’re doing can be beneficial on both ends of the equation. An investment organization will get a dedicated buyer … and buyers will get better deals on properties not available to the public.
The key, on either side of the equation? Be prepared. Get educated. Form stellar relationships. And then take action.
Next week on the show, we’ll talk about financing multi-family properties. AND, we’ll introduce a pretty amazing new program.
Until then, go out and make some equity happen!
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