Today’s REI Classroom Lesson

Holly McKhann elaborates on where and how you can approach acquaintances for getting new deals and how to make it beneficial for them.

REI Classroom Summary

Learn more about talking with people in your community about how they can benefit by sending you deals in a casual, stress-free manner.

Listen to this REI Classroom Lesson

Real Estate Investing Classroom Show Transcripts:

Mike: Welcome back to the REI Classroom where experts from across the real estate investment industry teach you quick lessons to take your business to the next level. And now, let’s meet today’s expert host.

Holly: Hi there. I’m Holly McKhann and your teacher for today in the REI Classroom. And I’m really excited to share this tip of the day with you today about networking.

Mike: This REI Classroom real estate lesson is sponsored by

Holly: Quick background of myself, my husband and I have purchased and we have flipped and sold 200 homes in Southern California. And I’ll tell you the first hundred we bought through the local auctions at the courthouse steps. But when these big hedge funds moved in and squeezed us little guys, out, my husband turned to me and said, “Holly, you like to talk. Go find us some deals.” And I, “Okay, how am I going to do this?”

So I started doing what I call lifestyle networking. I mean, not only looking for realtors but also just talking to people out in my community and my kids’ activities at the schools, at the gym, wherever I’m living my life. I started telling people what I do and what I’m looking for.

So I have a little story to share with you today that was very successful for us. One time, I was on the phone with my daughter’s volleyball . . . she was in a club volleyball team, and I was talking to the club owner about sponsoring the team so I could get a tax write-off for the business. And, “Where do we get a banner?” One thing led to another, but I just have my radar always going out for any little clues that could help me buy a house.

So he said, “Oh, you can go to my sign company. Since I’m a realtor, I’ve got this great sign company. We could get you a banner.” And I went, “What? You’re a realtor?” And I instantly said, “Well, I’m a house flipper and I’m always looking for houses that are in distress and have problems that we could sell after we fix them
up. Do you know anything?”

He’s like, “Well, actually, yeah. I’m not that active as a realtor, but the house next door to me might work for you.” I thought, “What? How great is that?” So it’s just like 9:00 in the morning. I get home from the gym, talk to my husband, tell him about this. It’s in Laguna Beach, California. I’m sure many of you have heard of that no matter where you live in the country. We instantly got on the phone with him, drove down and checked out the house. It was about an hour away from where we were living at the time, and it worked.

It was a little, tiny 700-square-foot house. An older lady had passed away and her neighbor,
this realtor was the executor for her estate and he needed to get this thing sold. And there had
been a problem, no one to buy, and it was old, and run-down, and outdated, and just a big problem.

So he helped us get it and my deal with realtors is if you bring me a deal, I’ll buy it with you and I’ll resell it with you. So he was guaranteed those two commissions and he was pretty excited about that, even though he wasn’t really that active as a realtor.

So it worked out really well. We kept it the tiny little size it was, 700 square feet. And it was definitely a challenge, working with the City of Laguna Beach had its issues of permits, even just improving and not even adding square footage. So another little side lesson, check out the city before you take on a project and maybe go in and talk to them. Well, maybe not talk to them, but definitely talk to someone and find out what the deal is with permits, how hard it is to get things permitted and do your homework there.

But, overall, it went really well. We got the house beautified, sold for a nice profit, and it was because I had that radar up looking for any little clue of relation to house, or realtor, anything like that.

In addition, I would, at my kids’ soccer games . . . I have four kids, so I had lots of activities at the time. Two of them are up in college now, but whenever I’m out and about, I tell people what I do and say, “Hey, if you ever hear of a house that needs to be bought, or someone’s having a problem, or they’re having tenant problems with an investment property, let me know because I help solve problems for people like that. And if you find me an opportunity, I’m going to pay you a referral fee.”

And just today, couple of hours ago, I had a bug spray man at my house, and I gave him my card and said, “If you ever come into a house and you hear of a problem, keep me in mind because I will pay you $1,000 referral fee if you find me a house.” And in my area, I can definitely pay that for the price range. We’re in Orange County, California. And he was so excited. He took my card and he’s like, “Oh, definitely.” I run into people all the time.

So, if you tell someone what’s in it for them, as not just like, “Oh, find me a house. Find me a house,” and don’t make it all about, “You, you, you,” say, “I’d love to pay you $1,000 finder’s fee, or $500 finder’s fee,” whatever works in your market, and really inspire and motivate them. Write it on the back of your business card or on the flier and hand it to them, and say, “Hey, I would love to pay you a referral fee, I’d love to pay you a finder’s fee,” and get excited for them, and make it about them, they’re going to be excited to bring you deals.

So that’s kind of my little tip on lifestyle networking. Tell everyone what you do. Don’t be obnoxious about it, and then tell them what’s in it for them, that you are looking to pay people referral fees and finder’s fees. Hey, you need to buy five houses this month, and you’ve only bought three. Who do they know? Do they know anyone on their street? Any neighbors? Any friends? People at their church? Anything like that. And build your team, get your team of people out there in the community looking for houses for you. And they’ll be excited to help you. And just be positive and upbeat, and they’ll want to help you. So that’s it for your tip of the day, and can’t wait to see you next time. Thanks.

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