“Steven provides a wealth of info and truth about real estate data…this post from Steven presents a deep dive everyone should read before they spend money on REI lists…” -Dan Schwartz, CEO, InvestorFuse
Every day I get the same question, whether it’s an email, phone call, or a social media post;
“What’s the best list to get a deal fast?”
“What’s the hottest list in my market?”
“What’s the best list for a new investor?”
Real Estate Investor guru’s have been pushing one list or another since the first guru ever appeared. This mentality that certain lists contain magic within them is one of the biggest myths that need to be exposed in our industry. Let me tell you the truth right here and now. No one list type is better than any other. No list type contains magic. No list type will guarantee you a deal whether you are a new or seasoned investor!
Now don’t get me wrong, certain lists do have advantages over others. Different types of marketing and skip tracing perform better with some lists than others, some lists require more of a skill level to succeed, and there are some that are better for those who are brand new to the industry; however none are better than any other overall.
I think it’s best to stop here and talk about where your list data is coming from. Not just where you are buying it, which can make huge difference, but also an overall idea of where the data originates from.
Now I know many of you are frugal, or just looking to cut costs, so you try to get the cheapest data, both for lists and skip tracing, that you possibly can. I get it and I made the same mistake years ago. That’s right, I said it. MISTAKE!
Data is the one area where you never want to cut corners. Yes, shop and negotiate for the best price you can get but do so only with the top providers in the industry. Sure, you can go to places like Fiverr, or find someone in a FB group, that randomly offers data at super cheap rates. They show you a sample and you see the same columns of data that the official companies give you, so you think it’s the same. No! No, it isn’t!
Data changes and updates constantly. People sell daily, people refinance daily, people renovate daily, etc. By the time someone on Fiverr gets the data, whether they are downloading it from a software or selling data that a client gave them to skip trace, cold call, or RVM, that data has been resold around 5 times or more.
Most lists come from County property tax records, Courthouse records, and Mortgage records. You can get most of the information yourself for free, but you must enter addresses in manually one at a time and then copy and paste that information into a spreadsheet or your CRM. Even if you do that, you won’t have equity calculations or be able to create most of the lists that are offered by data companies. You can normally only determine a property is owner occupied or absentee, as well as the years owned, and purchase price. Of course, we are assuming your county has these records online, otherwise you must go on location and do this manually.
To get access to all records in a County database you must get approved by the County and they don’t approve people or companies that don’t live in the United States. Same goes for TLO, Nexus Lexus, and other skip tracing services that accesses sensitive information. (We will dive into skip tracing it part 2 of this blog.)
When it comes to aggregating data, I could go on for days about different sources for information and algorithms needed to match records coming in from those different sources, but honestly geeking out on that will bore most of you and it isn’t important.
This is the basic info you need to know. Vacant lists come from the USPS (you can’t get that yourself). Probates, with exception to a handful of counties in the US, need to be acquired from the actual courthouse if you want to full owner, property, attorney, and personal representative information. Divorce is the same. Tax defaults and code violations vary county by county, state by state. Utility shutoffs come from the utility company or the city/county, depending on the utility in question and the county. Everything else you are going to get from your data provider. If it isn’t coming from these sources, you don’t want the data.
So which data providers should you use? Well I am a thousand percent biased, so I won’t answer that directly, but instead let me offer a few suggestions on making that choice.
When it comes to Probate leads specifically there is one company that I absolutely know that sends people to the courthouse in every County in the US, that is All The Leads. Ask to speak to Jim. The newest records are going to be slightly expensive as it isn’t cheap to hire boots on the ground in every county, but they give you discounts on past months leads. (Note: There is no affiliate relationship or compensation for referencing this company at the time of this post. They are simply the best for probates in my opinion)
Now let’s dive into the nitty gritty of list pulling! Before I give you the secret sauce (which isn’t a secret really) let’s cover two topics that are constantly talked about in REI circles. Targeted Lists vs General Lists and are the cost of niche lists worth it?
Let’s start with niche lists. There are two types. The first are your harder to get lists that national data providers don’t bother with such as code violations, disconnected utilities, etc. The second type is just a filtered or stacked list which means someone bought a list combining multiple options and want to resell it to you. The later you can buy yourself at the normal rate of any other list so don’t be fooled by someone giving it a fancy name. The first type’s worth is subjective. How hard is it to get tax defaults or code violations in your market? If it is easy, then the cost should be low. If it is extremely hard and you have no clue how to, then that dictates that the list has value, but don’t go throwing your wallet at it! Ask questions like how many leads are on the list, how recent is it, how many others have already bought it, what information comes on the list. If you have a limited budget or are new to REI, I advise staying away from these lists until you have an idea of your closing rate and average cost per lead.
When it comes to targeted lists versus general lists you have people in both camps fighting it out and the truth is both are right. Neither is better and both are needed! First though you need to understand what your objective is with your REI business. Are you looking to just do 1 to 2 deals a month or are you looking to grow your business? If you are just looking for that 1 or 2 deals you can just focus on targeted lists and you will probably succeed if you know what you are doing, but I suspect most of you are trying to grow your business. Some of you might be wholesalers looking to grow into flipping and acquiring rentals, some of you might want to expand your business into other markets, and some of you may dream of building the one REI business that rules them all! (insert evil laugh)
No matter your ambition, if you want your business to grow you need to be in front of people. Your ability to make a sale is limited by the size of your audience. Your audience are those who are aware that you exist and know what you do. A sale in REI is getting that property under contract and closing. How do you increase your audience? There are only 2 ways. One is acquiring fame and the second is marketing to the biggest list you can possibly afford to each and every month. So, in that vein, those in the general list camp are correct.
However, the targeted lists are very important as well! First off, even the most general list should be slightly targeted with an equity modifier. For most of you that would be high equity which covers 40% to 100% equity. This is normally enough equity to cover paying the seller, an assignment fee to the wholesaler, as well as repair and closing costs for the flipper. It should also contain a target price range that you feel comfortable working with. While wholesaling mansions do happen, not everyone is comfortable negotiating multi-million-dollar deals. If you’re not, while include them in your list?
Targeted or stacked list narrow down the amount of leads that you will find, but you are zoning in on possible extreme distress and motivation. High equity vacant properties that are in preforeclosure and owned by an absentee owner for over 10 years are going to be rare, but they will more than likely be willing to listen to an offer than can help their situation. Even a high equity inherited absentee owner who has owned for less than 1 or 2 years can reveal a new landlord who doesn’t like the business and would gladly cash out. There are many combinations that you can do. A good one for wholesalers looking for buyers in this more “rental centric” market that we are moving into is a cash buyer stacked with absentee owner list.
The overall strategy you want to employ to grow your business is to buy the biggest amount of leads you can on a monthly basis. In highly competitive markets you are looking at ideally 20k leads or more and 10k in smaller markets. This is an ideal, if you can’t afford that then just get as many as makes sense for your budget. Don’t forget you need to leave money for your marketing strategies as well. Then compose those leads with multiple list types, starting with the ultra-targeted lists that you want and filling in the balance with the more general lists.
It is important to note that you want to work with a data provider that keeps records of the leads you order so when you order again, the new leads can be scrubbed against your prior orders in order to prevent duplicates. This allows you to get the new leads each month for those small lists and makes sure the targeted leads don’t pop up on any general list orders as well.
Now what to do with those leads is another rabbit hole to dive into (i.e. best marketing strategies and organizing your team for success), but first we need to make sure they are skip traced so be sure to check out Part 2 of this blog post where we will dive into everything that you need to know about data used for skip tracing, different skip tracing options, and how to use skip traced data beyond what you normally think.
Author: Steven Neville
About the author: Steven Neville has been in real estate since 2003 and is the owner and founder of M-Power Solutions, a leading Data & Marketing Agency for Real Estate Investors. https://www.supermpower.com