Hello @Mindy Jensen, I've had success generating cash buyers in multiple ways. Each method I'm listing below has resulted in me wholesaling a property to a buyer. I'll start with the less-technical methods first then get into the more-involved techniques. The time and money spent implementing these methods will payoff if executed properly.
1) Craigslist
This is by-far the most common way newbies start off generating buyers. However, I frequently see them using it incorrectly. I strongly suggest having a deal under contract before you post on here. Posting ads that state something like "Need a Buyer for an Abandoned House" or "Investor Special!" and uploading one generic picture of a boarded-up house that you found on Google with no address will just end up getting overlooked by serious buyers because they see these type of ads all of the time. Additionally, the people that do call off of your ad will likely be other wholesalers looking to co-wholesale your deals and tire kickers (time wasters). The correct method to post on Craigslist is to get a deal under contract and know roughly what buyers will pay for before posting it. If you are about to get a property under contract and don't know what a cash buyer will pay for it, then go to Zillow and check what recently sold near it. In this scenario, I like to stay within .2 miles of the subject property and check to see if a realtor listed any of the recently-sold houses. If you go down to "Price/Tax" history and the "Source" area has either a "--" or states "Public Record", then this a good indication that it was a cash sale. Although, realtors do sell to cash buyers, you'd need MLS access to get this data. If you want to be absolutely sure that the buyer is an investor, go to the tax assessor's site for that comparable sale and put in the address. If the owner is an LLC, then it's almost guaranteed that this is an investor. After you verify the cash price, post your ad with lots of pictures, a detailed description, and an email so potential buyers can reach you. I used to list my phone number on Craigslist, but this just resulted in a lot of non-serious buyers wasting my time. If a buyer is serious about purchasing the property, then he will email you requesting more information. If your price is too high, you won't get any emails and you know you need to lower it. Lastly, I would place a lockbox on the property, if it's vacant, so you don't have to go out there every time a buyer wants to view it.
2) Zillow
The way I use Zillow to generate buyers is similar to Craigslist. The main difference is that you're also dealing with realtors and brokers that may not have a lot of experience working with investors so you need to add some more information in your property description. Follow the steps I previously indicated in the Craigslist portion regarding your due diligence. Remember to post plenty of pictures of the property, even if it looks bad inside. It's a cash deal so a serious buyer has seen it all, and more pictures of the home will allow buyers to disqualify themselves. If you have 30 pictures and the property looks like a full-gut rehab, then the novices or tire kickers won't even waste your time contacting you about it. Take my advice on this because your initial instinct is to make the property look appealing by not posting unflattering photos. By doing this, you will ultimately end up wasting your time by speaking to a ton of unqualified buyers. In your description, specifically indicate that you are a wholesaler and have the property under contract and do not intend to list it. I think Zillow notifies agents when a FSBO pops up in their area so a lot of them attempt to reach out and try to get a listing. By putting that you're a wholesaler or investor in the property description, it eliminates unnecessary phone calls and emails by listing agents. However, you do want to let realtors know that you work with them. In my descriptions, I like to indicate that if a realtor provides me with a buyer who closes on the home, then they'll receive a $500 referral fee. Before offering the fee, please check with your attorney to ensure you can do this because the laws vary by state. If you're new and have no buyers, then I suggest answering the phone live rather than sending them to your email. You'll still get tire kickers on Zillow, but they'll be fewer than on Craigslist. Even if a buyer passes on your current deal, you can add them to your CRM and place them on your email list or focus your marketing to areas where they're specifically interested. By doing this early in my investment career, I was actually able to get a good feel on what areas to focus on and eliminate the zip codes or neighborhoods that buyers didn't want.
3) Mailing Cash Buyers
This requires a few steps, but will allow you to grow your list the quickest. In the process, you'll gain a greater understanding of your market and generate high-quality buyers. Firstly, you want to go to List Source and identify all of the absentee buyers who bought within the last year and have 100% equity. I'll list the criteria that you should place in List Source. Your "Property Type" should be SFR, "Equity" is 100% to 100%, "Last Market Sale Date" should be 1 year (or six months if you're in an active market), you should list your target areas by zip code (I found that the accuracy is greater in my city by using zip codes), and the "Owner Occupied" status should be absentee owned in-state and absentee owned out-of-state. I also like eliminating trusts, but make sure you include corporations. Once you have these leads, go ahead and buy the list. It should cost you roughly $200 per 1,000 records. I like to keep the duplicates because I'm able to see which buyers have bought multiple properties. Once you pay for the list and download your spreadsheet, sort the list by mailing address. Add another column next to the mailing address column and run a formula to identify duplicates based on this parameter. If you Google "how to identify duplicate entries in excel", then you can learn this in less than 10 minutes. Once you identified duplicates, click the mailing address duplicate field and only have excel display duplicates. Using mailing addresses is the easiest way to identify multi-property buyers because some buyers like to put their properties in different LLCs. However, the mailing address will likely be the same for every entity. The goal here is to see which buyers bought multiple times because these are most likely your serious buyers! This will significantly reduce your list size, and if you're strapped for cash, this is the best way to only mail the buyers you know are active investors. A lot of people on your cash buyers list may have purchased a house for cash as a vacation home, bought it for a child, or retiring and downsizing. These are "retail" cash buyers and not actual investors. Also, you may want to include LLCs in your mailing list, even if they only bought once. As indicated above, a single individual may own multiple LLCs and have each property in separate entities. The final step is to go to a direct mail vendor and send the buyers a post card. The post card can simply state that you're an active wholesaler who is doing a lot of off-market discounted deals and looking for buyers. Research cash buyer postcard templates, and don't deviate from them. There are active members on Bigger Pockets who own direct mail shops and have templates specifically designed for mailing cash buyers.
Another method that my business partner and I are currently experimenting with is looking up the phone numbers for buyers who bought near our subject properties. While this particular method hasn't resulted in us wholesaling a deal to a buyer yet, I do think this is a great way to quickly generate buyers for a deal if you don't have a list. Nothing is more unnerving as a newbie than getting a deal under contract and not having a buyer. So if you're currently in this situation, follow the steps I listed in the Craigslist and Zillow section for locating buyers near your subject property and go to White Pages or Spokeo to locate a phone number for the buyer. Also, if your prospective buyers are LLCs, it makes your job easier because most of these businesses will be listed in local directories (e.g., Yellow Pages). You can also search the LLC name on Google to find a phone number.
The point I want to emphasize is that quantity is not necessarily the best thing when it comes to buyers. I have about 5 serious buyers that I sell to over-and-over again, and my business thrives off of them. They want the deals I have and will pay a premium for them. I have a database of about 100 buyers, but when I send deals out to my list, those few buyers snag them up quickly. Another thing I suggest is to focus on contacting sellers first and get the phone ringing. You may burn your reputation with the serious buyers if you're calling them and don't have any properties under contract or haven't closed any deals. I know a lot of real estate educators teach that you should build your buyers list first then contact sellers. I took a different approach when I started, and it worked out for me. I mailed sellers and got properties under contract without even having a single buyer in my area. If you study your market and pull your cash buyers list on List Source, then you'll have a good idea of where most of them are buying. This provides you with insight on what zip codes you should market to. I hope these tips help!
