How I Built My Oklahoma City Deal Funnel

“You make your money when you buy,” says every savvy real estate investor. Buying the right property at the right price is such a crucial part of the investing process, and it can also be the most challenging, especially in a hot seller’s market like we have in America right now. So how do investors find deals? What’s the trick? Like many other areas in life, there is no easy button or magic sauce. It requires confidence, patience, and, most of all: persistence.

In the Oklahoma City market, I’m trying to acquire deals in multiple ways, and I’m always trying to improve my “deal funnel” via networking and technology. It’s incredibly challenging to find these deals when you don’t live in the market you invest in, but I promise it is possible.

Real Estate Agents

Utilizing an agent is the easiest and most common way for people to find properties. I found my first Oklahoma City property via my real estate agent. An owner approached her, saying he wanted $100,000 for his duplex. The agent recognized that the property fit my criteria and she sent it to me. It was a win all around: my agent made a commission on the deal, the seller got his asking price in cash, and I got a cash-flowing duplex with appreciation potential in an up-and-coming neighborhood. All of this was accomplished without the property ever going on the market!  

However, many agents don’t seek out off-market deals because most of their clients aren’t investors.

What is an Off-Market Deal?

An off-market property is a property for sale that is not listed on the MLS (multiple listing service). Why would someone sell their home directly to a wholesaler or investor rather than listing it through a real estate agent? Many of these homes have been neglected or abandoned for years and wouldn’t qualify for a conventional mortgage. So if they tried to sell the house on the MLS, many people wouldn’t be interested because their bank will not finance a home in below-average condition. The owners of these properties may be people that can’t afford to update the houses, or maybe the home was owned by a parent that recently passed away, and the surviving family members don’t want to deal with the home. Major life events are frequently the catalyst for someone needing to sell a house quickly.

People also sell to wholesalers and investors because they are likely to get cash for the property. When you purchase a property in cash, it usually means the closing process will be much shorter because you don’t have a bank getting involved with a lengthy due diligence period, inspections, and appraisals. Investors usually have lines of credit or private lenders providing the funds to pay cash for these properties. 

Wholesalers

Wholesalers are the true hustlers of the real estate world. When you see “We Pay Cash For Your House” signs around a neighborhood, they were probably put up by a wholesaler. When you get text messages and phone calls and postcards from people wanting to buy your house, they’re probably coming from a wholesaler or one of his/her employees. Wholesalers find off-market properties owned by “motivated sellers,” put the property under an assignable contract, and sell the deal to real estate investors. 

I’m on email lists for many different wholesalers in the OKC area. It’s a great way to find off-market properties that need some improvement, but you have to be very careful. Many wholesalers will overestimate what a property is worth once it’s improved and underestimate the amount of work it needs. As a result, wholesalers have a bad reputation in many markets. This deception is why it’s essential to have a good relationship with wholesalers and only work with the honest ones who will give truthful assessments of the property’s condition. I do not rely on the wholesaler’s estimate of a property’s worth once repaired. Instead, I have practiced analyzing properties on my own to get an accurate estimate of the property’s value. My real estate agent helps me with this value estimation, and she also tells me how much rent I can expect to receive each month.

Organic Deal Funnel

When I first started looking for properties in Oklahoma City, I quickly realized the properties for sale on the MLS were priced much too high for my strategy. I needed off-market properties owned by motivated sellers, which led me first to wholesalers (since real estate agents don’t typically have much access to off-market deals). Eventually, I realized that I needed to create my own deal funnel. After researching and having conversations with successful wholesalers, I hired a virtual assistant in the Philippines to cold-call property owners and ask if they wanted to sell any of their properties. This process was expensive and didn’t yield many leads at all. 

After some more research, I learned that SMS (text message) marketing was becoming a very effective way to reach more motivated sellers. Many people do not answer calls from numbers they don’t know, but people are much more likely to read a short text message even from an unknown number. 

One of my wholesaler contacts told me about a marketing software platform called REIReply. This software allows you to reach out to potential sellers using SMS, ringless voicemail, cold-calling email, Facebook messenger, and more for a flat monthly rate of $49 (which is way less than I was spending before!). Since signing up for REIReply two months ago, I have gotten one property under contract and have acquired many quality leads! I will continue to use REIReply as my primary source of lead generation. Send me an email at doug@honorandequity.com if you have questions about REIReply.

Goals 

Ultimately, I want deals to be brought to me by people in my network. Brandon Turner (of Bigger Pockets fame) is an excellent example of this concept. He started Open Door Capital, which purchases mobile home parks via syndication deals. Brandon has a massive Instagram following and uses that audience to bring in leads for mobile home parks. I’ve talked to real estate investors who have reached high-levels of success, and when I ask how they find deals, many reply, “People bring deals to me.” 

I will achieve this by continuing to grow my real estate network and provide as much value as I can. If someone in my network hears someone else talk about real estate in OKC, I want them to think about me and connect me with those people. So if you know of anyone who owns property in Oklahoma City they may wish to sell, please let me know! 

I hope you enjoyed this article. Please follow @honorandequity on Instagram and reach out to me via email at doug@honorandequity.com. I love connecting with new people and chatting about real estate!