What does CRM stand for?

If you don’t know, you need one. CRM (Customer Relationship Management) is a necessary component of long-term lead follow-up. Deals could pass you by.

Spending over $100 per month generating leads, economic sense demands you invest time and financial resources implementing a well-designed CRM.

The Necessity of Off-Market & MLS Lead Follow-up

Long term lead follow-up is where I have sourced every deal I’ve ever done. Off-market leads (my “bread and butter”) take months to nurture. I wrote about this in my blog about long-term follow-up so won’t repeat in full. Suffice it to say – you’re off-market efforts require months (if not over year) to reap full benefits.

As to MLS, in the rapidly climbing market the last 5-years, new listings have tens if not a hundreds of offers in the initial 24 to 48 hours. Pricing is driven beyond reasonable levels because: (1) wholesalers immediately offer list price, gambling they can assign and cancel without repercussion; (2) market appreciation bailed out “investors” making questionable financial decisions. In my locale of Miami-Dade, Broward, and Palm Beach County, Florida, unless your taking approach #1 (i.e. wholesale and pray), hard to imagine much success at the initial listing. I’ve had some MLS success – but the window is 3-12 months after the initial listing where the agent grows tired of wholesaler cancellations and investors that can’t close. There is a “pressure” for the listing agent to encourage offer acceptance before the listing agreement expires. Sourcing MLS home purchases in the heated South Florida market has required regular agent contact, high quantity of offers, and striking fast when opportunity knocks.

Why You Need a Quality CRM

Long-term follow-up alone isn’t landing deals. You can’t bank on a few offers and hope 50% turn into deals. My deal rate per lead has been quite low, under 5% off-market and under 1% on-market. Part of that goes to personal conservatism, but also consistently being beat out by wholesalers and speculators. Perhaps close rate can be higher for others willing to accept lower margin deals, but you still need quantity to get regular deals.

If you’ve agreed that regular deals require regular follow-up on a considerable amount of leads, how exactly can you do that? Can’t rely on memory for scheduling follow-up. Google calendar? Excel? I used Excel /Evernote for my first year: it was a mess. I regret not having a proper CRM. I can’t know this, but I suspect, early struggles to find deals was poor info organization.

Lead relationships also require detailed CRM. I lost a deal due to not keeping sufficient data. I received a call in September 2016 from a home seller that was motivated at a reasonable price. We were only a few thousand off. I scheduled follow-up in two weeks, but the lead called me back and I was off-guard. I was scrambling through my notes (I had just set up my new CRM). I couldn’t find the last offer I made and put the number I thought I remembered (it was only a few thousand off my last number). The seller was upset claiming it was a “bait-and-switch”. It wasn’t – I simply couldn’t locate my last note quickly. The seller was right to be upset. We are professional investors, we should have proper notes on our last offer. I explained it was an accident, but seller wouldn’t hear it. Hung up. I later learned on the county appraiser he sold to someone else for lower than my price. We just can’t let deals slip through the cracks for any controllable reason.

Sellers also shouldn’t have to (and don’t like to) repeat themselves. If they said something 12-months ago, you should know it on your follow-up calls. I can’t imagine being able to recall info from months ago for hundreds of leads.

Hope this is helpful for some newer investors learning the ropes. At prices likely a small fraction of your marketing budget, having a great CRM is no-brainer.