All Forum Posts by: Ivan Guillen

Cold Calling? Yuck!

A little background on this, I am a new real estate broker in Indianapolis, and I am a very ambitious person. Working for a small brokerage firm has its positives and negatives. One of the negatives being I have to procure almost any and all leads. This is where I figured I would go out and cold call FSBO found on various listing platforms, but is cold calling effective or should one stay away from it?

I have called A LOT of people the last few days, and I realize we already get bombarded with ads, so I wanted to add a fun and energetic approach to my calls! I wrote a few scripts to help me on the first few calls, and after a few I felt comfortable just winging it! Due to this, I was able to keep the majority of the people on the phone with me while I explained. Of course, I have had handfuls of people give rude responses, or simply hang up, but that's just part of it right?

Now, how effective are these calls? From my experience, I have gotten 1 potential listing opportunity in the last 3 days of cold calls. While that doesn't sound amazing, I think it has added to my experience a broker. I am a young and hungry individual, and I tried to leverage that when calling people. I have offered taking a cut on my commission to get their house sold quicker, because I want to show them that I am not in it for the money. I want to provide value to them by helping them sell their house as quick as possible! While we all need money to live our daily lives, I simply love the experience and I truly want to provide value to people. So although I have only received 1 opportunity, I think every broker should do cold calls simply because it puts their sales skills to the test.

I think where most people go wrong when calling is their energy level and confidence. Don't get me wrong I fell victim to this too, and people hung up right away! People do not want their time wasted, so engaging with them is always the first step. I also think that some people are simply looking at the commission rather than provide true value for the principle. They probably get a handful of these calls per day! How are you different than any of the rest? What value are you providing? or what problem are you solving for them?

So whether you're a broker, wholesaler, or salesperson try cold calling! It is a way to test your skills and keep you in-front of potential clients!

Hope this helps! 

I would love to hear about your cold calling experiences!

@Justin Hayden I think this is a question that you and your wife should reflect on together, although I think you are doing the right thing by gathering opinions. Everyone's opinion is subjective, and should be taken with a grain of salt.

Furthermore, I think you should take into consideration your investing goals, risk tolerance, and your experience/education on the type of asset. 4 unit properties carry different pros and cons when compared to SFR or large MFR. Like stated by @Jim Pellerin, the cashflow tends to be better, but on that same token you're now responsible for managing 4 units vs just 1. Along with that, you could deal with other pesky issues such as noise complaints for example. Nonetheless, a 4-plex has the perk that all the units are in one location, there's some scale, one roof, and risk mitigation because it could leave you cashflow positive even if all the units are not occupied (this would depend on the deal you're getting into). 

Different types of investment properties have their own issues and benefits that come with the purchase. As an investor, we have to pick what issues we are willing to deal with, and if the benefits are worth the time spent on the deal.

@JD Martin I am a business management major, so sadly, no it does not align with large MFR at all. I ask myself the same question all the time, but I was lucky enough to have my tuition covered and not take on any student debt. This is what has kept me in school, but I have always prioritized investing over my classes. Ultimately, my parents would like to see me go the traditional schooling route, so I figured it is the least I could do in exchange for the sacrifices they have made.

I have been able to manage a hectic schedule, and continue to grow in the industry. While at school, I have become a licensed agent. I hope to learn more by doing some brokerage transactions, and helping investors find opportunity in the Indianapolis area. As of now, I have viewed school as a networking opportunity, and leveraged that the best I can.

I agree with you that my time would be better spent looking for new opportunities in my niche, but I am pretty close to graduating so might as well finish off strong. 

We all know about passive income, and for a lot of investors, like myself, it is one of the main reasons we choose to invest in the real estate industry. When starting out, my goal was to earn as much passive income as possible, and as quick as possible. Currently, I am 20 years old, and I have come to realize that I do not need to rush this process. My goal now has shifted to creating stable forms of income, and retire as early as I can. True passive income is the name of the game for me. By this, I mean that eventually I would like to not manage my own properties because I feel like my time is better spent looking and underwriting new opportunities. Being hands free on my rentals is the ultimate goal in my case.

Investors should know how much 'passive income' they need in order to be financially free. This means taking into account all personal debt and expenses, and having income from rentals cover those expenses and business expenditures. Doing so allows for investors to have a primary target to reach to be financially free. Generating wealth takes time, and planning the right steps to achieve this 'freedom.' When I mention the word 'wealth' I do not mean rich, wealth is how long you can continue living your lifestyle without the need of a job. That is how you calculate the passive income needed, and now how do you achieve that goal?

Real estate comes in various forms, and an investor must pick what kind of real estate they are comfortable with dealing with. Along with that, and keeping your passive income goal in mind, one must also think what kind of real estate will realistically be able to set them 'free.' 

For example, in my case I am a college student and I live below my means, and for me this means that my passive income number is relatively low. I have a portfolio made up of SFR and small MFR, because this was what lined up with my initial goal of becoming financially free. From now on, I expect to deal with larger MFR to generate wealth. I am picking these larger deals because it is the type of real estate that has caught my interest the most, and it is the niche that I have educated myself the most on. This makes me comfortable taking on these deals, and the learning curves that come along with it. Along with this, I feel large MFR (50+ units) will allow me to be more hands-free, since the cash flow is higher and will allow me to pay a property manager a livable salary. I would prefer to be able to pay someone a decent amount so they are incentivized to take good care of the asset.

What niche is going to allow you to achieve your passive income goals, and how is the process going for you?

Excited to hear your thoughts!

Check out my thoughts on SFR investing:

Single Family Rentals: Are they a good investment?

I currently invest in the Indianapolis, IN area, since I am very familiar with the area. There is a lot of change going on around the city, and investors have definitely noticed the growth in the city. Overall, the midwest has been an investor's hub for the past few years due to the low cost of living and inexpensive properties. When investing in Indianapolis, it is important to know what areas to look at because there are areas in the city that haven't gentrified yet, and probably won't for the next few years. If you're looking for cashflow in SFR, then I would recommend that you take a look at Indy.

I do not know much about the other cities that you mentioned, but due diligence is always key before entering into a deal. I recommend that you do some research and invest in a city that you like and matches your style of investing.

If you have any questions about the Indianapolis area, I would be happy to help in anyway I can!

Good luck!

@Brian Pfaehler I went through the online course. It was with PDH Academy!

@Sylvia B. Do you currently manage the properties yourself, or is there a property manager in place for your rentals?

I was recently faced with the same question, and I actually received my real estate license not too long ago! I think you should get your license if it aligns with your personal and business goals. 

For me, my overall goal is to continue investing in opportunities across the midwest and specifically in Indianapolis. I decided to get my broker's license because I figured I could learn from the transaction process, as well as a way to network with others in the industry. Real estate is exciting to me, and have been lucky to be part of a handful of great investment opportunities. My goal by getting my license is to help people starting out, and help them spot great opportunities.

Another reason that I decided to try to get my license was to save up my commissions and invest that money into my rental portfolio. 

You should consider the time that you will invest into the course, and studying for the exam. I think its a great, and you should go after the license, because it never hurts to have more knowledge! 

Since I recently took the course and exam, I would be more than glad to guide you in any way I can, so feel free to reach out with any specific questions! 

The way my team and I have approached this is quite simple, and can be started with no advertising. 

We are a small group, so our methods are not as sophisticated as these bigger firms. We simply drive around and look for "FOR RENT" signs outside of a property. We then look up the owner on a fastpeopleseach and give them a cold call. We also go door to door in gentrifying areas, and see if the owners are motivated to sell.

Keep in mind that selling a home can be an emotional process, and everyone you contact will not be willing to sell. We usually ask if there's any issues with the property. Offer a solution by either giving advice or solving their problem by selling their property, and getting rid of their headache. 99% of the responses will be a 'no', but you have to find the 1% that will say 'yes' and allow you to place their property under contract.

Hope this helps!

I am almost positive that everyone has heard great success stories about partnerships! Along with that, some have also either heard of or dealt with a bad partnership. So for those starting their investment portfolio, when should we seek a partner in the industry?

Collaborating with someone on a project is great, and can bring extensive experience along with a ton of learning lessons. Partnerships allow for investors to learn from each other, tackle a deal together, limit liability, and share ideas on growth. They are not always necessary though, and one should be careful when partnering with someone.

From experience with various business ventures, I have learned that partnerships can make or break an operation. The main reason I entered into partnerships early in my career was because I was fearful of taking on a big venture. Looking back now, I realize that I did not need a partner on some of these projects. Collaborating with someone gave me a sense of comfort that I had someone to fall back on if there was something I had a question on in regards to the business. Sometimes my partner and I had similar skillsets and knowledge, so nothing new was brought to the table, and it caused several conflicts due to us wanting to work on the same thing. Not only did it cause conflict, but it also made the business stagnant because of our similarities. 

In my opinion, and from dealing with several successful and failed partnerships, they are not always necessary. Collaborating with someone is great when the partner brings different values that they can add to the partnership. If someone has different expertise then the partnership can be great! I believe that this is the key to a successful partnership, you have to find someone that brings a value to the table that one could not do on their own. This allows for work to be split up on the project, learn from their area of expertise, and bring fresh ideas that lead to growth. If they have the same expertise as you, then doesn't it make sense to do the project on your own?

Now, after learning from my mistakes, I have started to seek out partners that are either bring a different value to the table, or someone who is further ahead in regards to expertise. I anticipate doing so will bring more success to my investing and growth in real estate.

Hope this helps, and I would love to hear about your experience on this topic!

Drop some experiences or knowledge down below!