One investor who trusts me, or six who barely know my name

Question

I'm planning my first purchase carefully and scouting is the part I can start on this month without money. What I can't decide is how many buyers to build toward.

The one-investor version: I find a person who actually closes, learn exactly what he buys, and send him only that. Everything I hand over fits, so my hit rate climbs, and he starts telling me what he's looking for before I go out. The risk is obvious. If he stops buying, or gets slow paying, or his definition of a qualifying lead moves, my whole operation is one relationship.

The six-investor version: I send the same lead out to several people and whoever moves fastest gets it. More shots, no dependence on anybody's mood. But I've read that investors turn cold on scouts who shop leads around, and I can see why. If a guy knows three other people got the same address, he has no reason to pay me for finding it and every reason to just go get it himself.

There's a middle version where you give one person first look for a day or two and then open it up. That sounds reasonable and I have no idea if it survives contact with reality.

What's actually worked.

samantha_ruiz · Answer

I ran the six version for a year and it capped me around $600 a fee, because everybody knew the lead was shopped and priced accordingly. Then I narrowed to two buyers with different criteria, one buy-and-hold and one flipper, and fees roughly doubled. The reason is that criteria coverage matters more than buyer count. Two buyers who want different things covers almost everything I find. Six buyers who all want the same three-bedroom rental means five of them are just competitors I invited in.

mitchell_ray4 · Answer

Coming off the trades I'd say the first-look window @quill described does survive contact with reality, because that's how subcontractor relationships already work. You give the guy who paid you last time the first call and a short window. Everyone understands the deal without it being written anywhere. What breaks it is a vague window. Say twenty four hours and mean twenty four hours, otherwise he learns that his first look is unlimited and he'll sit on it.

chriswalton8 · Answer

The pattern I see on the capital side is that the value sits in knowing one buyer's box precisely, and that only comes from repetition with one buyer. @keystone's two-buyer split with different criteria seems like the honest compromise, since you get depth on both without inviting five competitors into your own pipeline.

One investor who trusts me, or six who barely know my name

3 replies