As a real estate investor, you need all kinds of leads depending on your strategy. The more active and business-like, the more often you need them.
However, it can be overwhelming knowing where to begin with so many different strategies, approaches, and sources.
That’s why I wrote this deep dive about real estate investor leads, which covers…
- What real estate investor leads are
- Ten real estate investor lead categories
- What real estate investor lead generation is
- How to identify high-quality real estate investor leads
- 5 Challenges in real estate investor lead generation
- How real estate investors find leads
- Whether something like free real estate investor lead generation exists
Curious? Then, please keep reading…
What Are Real Estate Investor Leads?
Generally, a lead in marketing is a potential client who has already shown some interest in your product or service offering.
The showing of interest can come in different forms: an email subscription, a phone call from an advertising campaign you run, an appointment booking, etc.
Hence a real estate investor lead is a potential client showing interest in a real estate investor’s offering aligned with a particular real estate investing strategy.
These leads can, on one side, often be distressed property owners and, on the other side, other investors or tenants.
For a real estate wholesaler, this can be a motivated seller that may accept a low-ball offer or the fixer and flipper that would buy the wholesaler’s contract or partner with them on a deal.
For some, a “lead” is already a contact that may be interested in your services or products but hasn’t shown any interest yet.
I prefer to make the distinction clearer and treat this more strictly.
You have contacts ( you could copy and paste from Craigslist or other sources) interested or not, or you have leads that have already visibly shown interest in your services or products via their behavior.
10 Real Estate Investor Lead Categories
As you may already see from the section before, different real estate investors will need different kinds of leads.
Before I get into the various real estate investor lead categories, we need to put them into the context of the different real estate investing strategies.
Why?
Because depending on the real estate investing strategy, the type of investor leads you to need to target changes.
Hence you may need different marketing channels for your lead generation depending on the below passive or active real estate investing strategies, and in some cases, none at all.
Active real estate investing means a more time-consuming endeavor and hands-on approach closer to a business.
While you will always need to invest some of your time, passive real estate investing is, as the name implies, more hands-off and leans more toward wealth-building.
7 Active Real Estate Investing Strategies and Lead Categories
1) Fixing and Flipping
The strategy of a fix and flip investor is buying a distressed property at a discount, renovating and repairing it, and selling it (eventually) for a profit.
To have this high-risk, high-reward strategy turn out well, you need enough capital, market knowledge, and construction skills.
You also will need enough experience to identify undervalued properties and anticipate unexpected repair costs.
Other challenges that may cross the investor’s plans are finding a buyer in time and changes in the real estate market.
What leads will the fix and flip investor need?
It will be, on one side, motivated sellers that own distressed properties; on the other side, retail buyers or even buy-and-hold investors.
2) Real Estate Wholesaling
A real estate investor pursuing a wholesaling strategy buys a property at a discount and then assigns or resells the contract to another buyer for a higher price.
The difference between the fix and flip investor is that no repairs will be done. Technically, only the contract, not the property, is sold or assigned.
The buyer of such a contract can be another fix and flip investor.
Both investor types can work well together as long-term partners: one (the wholesale investor) getting the distressed properties under contract, and the other (the fix and flipper) buying the contract.
What leads does the wholesale investor need?
It’s again motivated owners of distressed properties on one side and other investor buyers (e.g., fix and flip investors) on the other.
3) Wholesaling Lease Options
This is the more versatile “brother” of the traditional wholesaling strategy. Here the investor leases a property with the option to buy it later.
The key here is having a good contract with the (distressed) property owner.
Why is it more versatile?
Because if the contract includes the proper clauses, you can do several things with it: assign it to another investor for a fee, subletting to tenant buyers, and later assigning it when they buy (you stay in the contract).
There are other subcategories I won’t go into today, but you see, it’s more versatile than traditional wholesaling.
What leads does the lease option wholesale investor need?
It’s owners of distressed properties, less motivated owners of often “underwater” properties, and even the average property owner.
Conversely, they need motivated buyer leads who either have bad credit or can’t get pre-qualification for a bank loan.
4) House Hacking
The advantage of a house hacking investor is that he may hear when their tenants’ toilets cloak. It’s because they live in the same house as their tenants.
So with this strategy, a house-hacking investor lives in a property while renting out a portion to generate rental income and offset their expenses.
What leads does the house hacking investor need?
On the seller lead side, they need to target owners of multifamily properties or single-family homes with rental potential that the investor can partially or fully occupy.
On the other side, this investor will need good-quality rental leads.
5) Live in, then rent
This strategy is like the less annoying brother of the house hacking strategy.
Why?
Because it won’t involve you still living in the house while renting it out.
The difference is that the investor buys a property to first live in because, at the moment, they can take advantage of lower interest rates.
After some time and building some equity, he moves to the next opportunity but starts renting the property out where they lived before.
What leads do live-in then rent investors need?
Regarding seller leads, the “live-in then rent” investor needs to target motivated property owners (e.g., distressed ones) but no properties needing much work.
Because if it does, the investor quickly becomes a living-in-while fixing and flipping investor.
They will also need good-quality rental leads.
6) Living in while fixing and flipping
This real estate investing strategy is the tough sister of the house hacking strategy.
Instead of tenants, the investor has to live on and with a construction side.
Why?
Well, the strategy is that the investor buys a distressed property, lives in it while renovating, and then sells it for profit.
If you want to go hardcore, combine house hacking with living in while fixing and flipping (don’t do this with kids).
The living-in while fixing and flipping strategy can save money on living expenses and help to avoid holding costs.
What leads do the living-in while fixing and flipping investors need?
This investor usually also needs seller leads of distressed or undervalued properties with the potential for profitable renovations and resale.
Regarding buyer leads, they will need retail buyers or buy-and-hold investors.
7) BRRR: Buy, rehab, rent, refinance, repeat
This one is a slightly more layered real estate investment strategy.
The investor buys, renovates, and rents a distressed property. Then refinances it to use the equity to buy more properties.
The goal is to build a rental property portfolio over time and generate cash flow from rental income.
What leads does the BRRR investor need?
It’s again owners of distressed properties and, on the other hand, quality tenants.
3 Passive Real Estate Investing Strategies and Lead Categories
1) Short or long-term buy and hold
A short or long-term buy-and-hold investor buys a property to hold it either for less than five years (short-term) or more than five years (long-term) to rent it out during that time and then sells it for a profit.
The short-term approach is more suitable for an investor with the resources to hold a property for up to five years.
The long-term approach fits an investor interested in building equity over time due to the potential property value appreciation.
What leads does the buy-and-hold investor need?
Regarding seller leads, a buy-and-hold investor is less limited to only distressed property owners.
They can also target less motivated owners (e.g., absentee owners).
However, they should still have a certain degree of motivation to ensure rental potential and potential for long-term appreciation.
They can also target and work with active real estate investors (e.g., wholesalers) to get seller leads.
Once the buy-and-hold investor owns the target property, they need quality rental leads (my article).
While a buy-and-hold investor still has to do some continued lead generation (at least regarding rental leads), the effort compared to active investors is much less and approaches a more passive situation.
2) Property tax lien investment
Suppose you are a property tax lien investor and pursue this strategy. In that case, you buy a tax lien on a property with delinquent property taxes.
The owner must pay the investor with interest within a specific time frame.
Why would you do something like that?
First, an investor like that can earn interest on capital by loaning it.
Second, they can bet a bit on the owner failing to pay back. When they fail and do the contract right before, they can have the right to foreclose on the property and take ownership.
What leads does the property tax lien investor need?
As seller leads, they need to target owners of properties that are in tax delinquency and have outstanding property tax debts.
Regarding buyer leads, these can be potential buyers interested in an opportunity, such as other real estate investors (see above).
The property tax lien investor may even combine other investment strategies and make a buy-and-hold investment with the foreclosed property on top.
3) Real estate investment trusts (REITs)
Investors using real estate investment trusts as their strategy is pretty passive.
Why?
Because a REIT is a type of investment fund that owns and manages income-producing real estate properties.
It allows the investors to own shares of real estate assets without directly owning physical properties with all the overhead an active real estate investor or even a poorly organized buy-and-hold investor (doing property management on their own, for example) has to deal with.
What leads do real estate investment trust investors need?
Here the answer is a pretty easy one: none. The whole lead generation is done for you by the trust.
To wrap this section up, I leave you with an overview table of the different real estate investment strategies and the needed leads.
| Real Estate Investing Strategy | Strategy Type | Seller Lead Category | Buyer/ Rental Lead Category |
|---|---|---|---|
| Fixing and flipping | Active | Motivated sellers of distressed properties | Retail buyers, other investors |
| Real estate wholesaling | Active | Motivated sellers of distressed properties | Other investors |
| Wholesaling lease options | Active | Motivated sellers of distressed properties, less motivated owners of “underwater” properties, average property owners | Tenant buyers with bad credit or unable to pre-qualify for a bank loan. |
| House hacking | Active | Owners of multifamily properties or single-family homes with rental potential that can be partially or fully occupied by the investor | Quality tenants |
| Live-in then rent | |||
| Active | Motivated property owners (e.g., distressed ones), but no properties that need a lot of work. | Quality tenants | |
| Living-in while fixing and flipping | Active | Owners of distressed or undervalued properties that have the potential for profitable renovations and resale. | Retail buyers, buy and hold investors |
| BRRR | Motivated sellers of distressed properties | Quality tenants | |
| Short or long-term buy and hold | Passive | Distressed property owners, less motivated owners (e.g., absentees), other real estate investors | Quality tenants |
| Property tax lien investment | Passive | Tax delinquent property owners | Other investors |
| Real estate investment trusts (REITs) | Passive | - | - |
When you look at the table, a pattern forms.
Regarding seller lead generation for investors, for most strategies, it’s your best bet to focus on motivated sellers regarding your lead generation.
And on the other side, it’s quality tenants and other investors.
I covered how you can generate these different motivated seller leads already in various articles such as…
- Expired Listings: All You Need to Know (Ultimate Guide)
- FSBO Leads: The Ultimate Guide to Getting Them
- The Smart Way of Generating Real Estate Probate Leads
- Real Estate Divorce Leads Without Falling Flat on Your Face
- How to Find Motivated Seller Leads for Real Estate
And you can find my article about getting rental leads in three steps here.
What Is Real Estate Investor Lead Generation?
As you could learn above, it is also essential for some real estate investors to get a full pipeline of other real estate investors they could partner with on a particular real estate investment strategy.
An example would be wholesaling.
For the wholesale investor business, it’s advisable to have a full pipeline of real estate investors so they can sell a contract promptly.
So real estate investor lead generation is identifying and attracting potential investors interested in investing in real estate opportunities.
Depending on the type of investor you are looking for, you want to use different marketing channels.
These investors can be individuals or companies looking for their next purchase or investment.
There are fewer real estate agents working with investors than investors working with other investors.
However, investor lead generation is not limited to real estate investors only.
Again, the goal is to build a pipeline of potential investors for future deals.
How to Identify High-Quality Real Estate Investor Leads
Identifying high-quality real estate investor leads is like defining the targeting criteria for your lead generation campaigns.
Since from above, we know that the best bet will be the lead categories of motivated sellers, quality tenants, and other investors, we need to define their criteria.
How to Identify and Qualify High-Quality Investors
- You want to look for investors with a track record since they are likely interested in future opportunities.
- Check the investors’ net worth (e.g., if they are willing to provide financial statements, public records, credit reports, and cash flow) and investment portfolio to ensure they have the financial means to invest in your deals. To do that, you can also use third-party providers.
- Learn early on the investor’s investment goals (e.g., rate of return, risk tolerance, investment timeline, etc.)
How to Identify and Qualify High-Quality Motivated Sellers
- Look for distressed properties since their owners are likely motivated. The articles above include those properties (e.g., expired listings, FSBOs, probates, etc.)
- Use the proper marketing channels to target the owner type you are aiming for to generate as a lead (in this context, you may want to read my article on real estate lead generation in general here)
- Provided you did a good job in the past (e.g., being a good problem solver, helpful, etc., read my article on referral real estate marketing here), referrals can also be an excellent way to identify high-quality motivated sellers. However, this also depends on how well your referral partner works with you.
- Monitor and analyze market trends, so you know in which area the market shifts. Hence, you know where sellers are likely more motivated.
How to Identify and Qualify High-Quality Tenants
- Check your potential tenants’ backgrounds, such as criminal history, credit, and rental history.
- Check references, such as past landlords.
- Vett their income and employment via tax returns, pay stubs, the tenant’s employer
- Focus on tenants with a stable rental history and employment history.
- The property type you want to rent defines the target group of potential renters, hence the message you use in your lead generation campaigns on suitable marketing channels. If your property is in a family-friendly neighborhood, you don’t want to market to students, and vice-versa.
Final Thoughts on How to Identify High-Quality Real Estate Investor Leads
What happens when you can (dis-)qualify (read my article on that topic here) potential investor leads through the real estate sales copy you use in your lead generation campaigns?
And what happens when you use the proper marketing channels to reach the ideal prospects?
In both cases, the lead quality will increase, and the above lists to identify and qualify them will become more of a formality.
Again, as I have already mentioned so often in various articles, the prerequisite is a good understanding of your target audience (here, in this case, it’s the target category of real estate investor leads).
5 Challenges in Real Estate Investor Lead Generation
Cudos if you’ve got until this section.
You may suspect at least one of the challenges in real estate investor lead generation if you read the previous sections.
It dictates logic when you read the last paragraph of the previous section.
A good understanding of the target audience and applying this knowledge to your real estate sales copy communicated in the right marketing channels leads to higher-quality real estate investors.
By logic, the contrary leads to rather low-quality leads.
So here are the challenges:
- Finding the right target audience (provided it’s a tiny niche market)
- Building trust with potential investors
- Competition from other investors or other opportunities (e.g., stocks, mutual funds, etc.)
- Compliance with regulatory requirements (e.g., anti-money laundry regulations, wholesalers need a real estate license in some states, etc.)
- Lead follow-ups and nurturing (my article) when the deals you do are more complex.
How Do Real Estate Investors Find Leads?
Typically this question is answered on the web by giving you a list of just some lead-generation ideas for real estate investors.
This usually includes…
- Direct mail
- Skip tracing
- Craigslist (contact data of motivated sellers)
- Organic social media content
- Facebook and Google Ads
- Display advertising
- Content marketing (SEO)
But these lists usually don’t help on the level of strategy.
And evergreen principles to find or generate real estate investor leads also apply here.
As I discussed in-depth in this article, before you touch any of these marketing channels for your real estate investor lead generation, you want to have what I call in this article a “choice filter” involving assessing your goals, conditions, and constraints to determine which marketing channels to use.
This includes questions about commission goals, monthly budgets, sweat-equity budgets, and knowledge about which real estate investor lead category you need to target with your strategy.
Based on that, you choose the likely proper marketing channels you focus on.
In the above article, I explain that there are only four primary marketing channels: outbound, database marketing, inbound, and referral marketing.
Outbound channels include cold calling, real estate direct mailing, and door knocking.
The database marketing channel involves past clients, retargeting via ads, email marketing, and sphere of influence marketing.
The inbound channel includes content marketing, SEO, webinars, and guest posting.
The referral marketing channel involves partnering with professionals or participating in events.
Additionally, I briefly discuss done-for-you lead generation companies in this article.
Is There Something Like Free Real Estate Investor Leads?
The short answer is no lead generation is free.
Especially generating high-quality leads usually requires some investment: your time, effort, or money.
So if you consider “free” just not using money, there are free real estate investor leads.
For example, you can go on various FSBO sites, manually copy and paste seller contact information into an Excel file, and then cold call them.
If you turn a blind eye also, referral investor leads you may consider free.
However, to get to the point that someone refers leads to you from your network, you must have already invested some time, effort, or even money in getting to this point reputation and trust-wise. So no, not really free either.
This article has been reviewed by our editorial team. It has been approved for publication in accordance with our editorial policy.
- The Surprising Link Between Weight Loss Struggles and Real Estate Lead Gen Success - October 29, 2024
- Performance Risks of “Marketing ROI Black Boxes” for Real Estate and other Industries - October 15, 2024
- What You Don’t Measure in Real Estate Marketing… - October 1, 2024