Hey everyone! Casey and Ryan here from Massive Value. Today, we have an exciting episode with special guest Scott Hoots from California. We’ll dig deep into how to achieve consistent deal flow and scale your margins from $30,000 to over $100,000. Stick around, leave comments, and show us some love!
Why Consistent Deal Flow is Crucial
One of the biggest struggles for real estate investors is maintaining a pipeline of deals. Whether you’re wholesaling or flipping, getting the first deal may be easy, but securing the next one can be challenging.
Common Mistakes in Deal Flow
A big mistake investors make is stopping their marketing efforts after landing a deal. They get a check and pause their marketing to finalize that deal, which can halt their pipeline.
- Stopping marketing efforts: Once investors get a deal, they focus solely on closing it and neglect their marketing efforts.
- Not reinvesting: Investors often spend their initial profits instead of reinvesting them back into marketing. This can dry up their deal flow.
Scott’s Approach to Consistent Deal Flow
Scott emphasizes the importance of continuous marketing and nurturing seller relationships. His team sends out 30,000 mail pieces weekly. They also provide top-notch seller support and move leads quickly through the pipeline.
- Continuous Marketing: Keep your marketing consistent to ensure future deals.
- Great Team: A competent team can streamline processes and improve efficiency.
- Seller Support: Understanding and catering to seller needs can make closing deals easier.
Building an Effective Team
A great team is essential for maintaining consistent deal flow and increasing deal margins.
Open Environment
Scott’s company avoids the typical cubicle setup. An open environment encourages communication and collaboration, making the office a lively place.
No Strict Chain of Command
Scott keeps his office hierarchy flat. His door is always open, and employees can bring forward ideas and feedback without going through multiple layers of management.
Team Bonding Activities
To build strong bonds among team members, Scott organizes regular team outings. These outings include dinners, drinks, and even adventurous activities like wine-tasting and renting suites at baseball games.
- Dinners and Drinks: Regular social gatherings outside work.
- Outings: Fun activities to build team morale.
- Open Communication: Employees feel free to share ideas and feedback.
Low Turnover Rate
A positive work environment leads to low employee turnover. Scott’s company hasn’t had anyone leave in over two years, which speaks volumes about their work culture.
Overcoming Objections and Building Rapport
Focus on Relationships, Not the House
When Scott’s team walks through a house with a seller, they build rapport by asking about personal details rather than focusing on the house’s condition.
- Talk About Personal Details: Engage sellers in conversations about their lives.
- Comfortable Settings: Sit down in a cozy setting to discuss terms.
Let Sellers Lead the Price Talk
Instead of throwing out a number first, Scott’s team asks sellers where they want the price to be. This helps in negotiating a fair deal that both parties are happy with.
Importance of Communication
Communication is key in ensuring a smooth closing process.
Dedicated Transaction Coordinator
Scott employs a dedicated transaction coordinator to keep sellers and buyers updated. This person handles all aspects of the transaction, from title checks to answering seller questions.
- Constant Updates: Keep sellers informed about the process.
- Setting Expectations: Make sure sellers know what to expect at every stage.
Increasing Deal Spreads
Scott’s average deal spread has grown from $30,000 to over $70,000. Here’s how:
Role of an Effective Team
An effective team is crucial for increasing deal margins. From acquisitions to dispositions, each team member plays a vital role in securing higher spreads.
Addressing Low Spreads
Even smaller spreads like $5,000-$10,000 are valuable. Scott recently demonstrated this by spreading $40,000 in cash across a table to show his team the value of smaller deals.
- Visual Demonstration: Show the tangible value of smaller spreads.
- Adjusted Commission: Scott’s team doesn’t earn commissions on deals under $15,000, but these deals contribute to quarterly bonuses.
Expansion to New Markets
Scott’s next big move is expanding into Dallas, Texas. Here’s how he plans to do it:
Relocating Key Personnel
Scott is relocating a key acquisitions and dispositions specialist to Dallas to spearhead the new market.
Expected Challenges
Scott anticipates growing pains but is prepared for them.
- Relocation: Sending experienced staff to new markets.
- Prepared for Challenges: Ready to face initial obstacles.
Facing Rejection
Getting comfortable with rejection is essential for success in real estate. Scott advises:
Proactively Seek Rejection
By intentionally trying to get a “No,” you become more comfortable with rejection, making it easier to navigate tough negotiations.
- Knock on Doors: Ask to buy houses you’re unlikely to close on.
- Learn from “No”: Each rejection teaches a valuable lesson.
- Track Close Rates: Understand your success rate to improve.
Final Thoughts
In summary, achieving consistent deal flow and scaling margins in real estate requires a multi-faceted approach. Scott Hoots’ success highlights the importance of continuous marketing, a strong and communicative team, and focusing on relationship-building with sellers. By maintaining an open work environment, supporting team bonding, and preparing for new market challenges, Scott’s methods offer a blueprint for sustained growth. Embracing rejection and learning from it also play crucial roles in refining negotiation skills and closing more deals. For those looking to enhance their real estate investing strategies, implementing these principles can pave the way to higher margins and ongoing success.
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