How To Build A Property Portfolio That Pays You To Take Time Off
Most people I know dream about this.
The life it can afford them, the luxury that comes with it, and the thought of never having to worry about money ever again.
You see, investing in property can afford you all of this and more…
In fact, some of the smartest property investors I know even have their property portfolio’s PAY THEM to take time off!
That’s right, the smart moves they make allow them more free time to do with what they please.
Sounds amazing doesn’t it?
That’s precisely why I want to show you the 5-stage system professional property investors use to get paid to take time off.
I’ve been using it for years to live the life I want.
And now you can too…
How To Turn Your Property Portfolio Into An Income Generating Machine
Your property business, like any other business, needs to be nurtured in order to survive.
But what I really love about investing in property, is that when you invest in it, you’re afforded the luxury of time.
That’s precisely why it’s so crucial to create a system that allows the business to be able to be nurtured as well as to be automatic. In doing so you free up your time to be used in other areas.
Now, when it comes to creating this kind of property business, one that literally pays you to take time off, there are five specific stages you need to look at.
These stages are:
- Generating Leads
- Chasing Offers
What does each stage require, and how can it build you a property portfolio that pays you to take time off?
Let me show you.
Property Profit Stage #1: Generating Leads
After you’ve chosen your investment strategy (buy-to-let, auction etc) and your area, you then have to look for good property deals.
This is the part of the property investors’ journey that takes the most time and therefore requires you to systemise first.
This is especially true if you are still in a full-time job.
The first aspect of getting leads is to get your phone to ring on a regular basis.
The following ways can be used to get your phone to ring OFTEN:
- Car branding
- Wall painting
Once you’ve put out the right kind of advertising / marketing, you should start to receive a number of calls.
The problem here is that people will call you during the day, and especially during office hours, which might not be easy to handle if you have full time work (like most people do).
That’s why, and now don’t get a fright here, but I like to employ a call centre to take care of this for me.
I’m sure at this point you’re probably thinking this is going to take hundreds of people and cost a whole lot of money, right?
Not at all – In fact it’s just the opposite!
You can hire a call centre agent, usually based in Cape Town, for roughly R400 a month which can take up to 50 calls.
There is obviously a more expensive option where you hire a full-time person at R20 000 per month.
With this service, you also get a dedicated number which you can put on all of your marketing & advertising collateral.
Think about how this comes across to a potential lead, when someone calls you they get forwarded to a professional call centre agent (all whilst you can go through your day in peace).
The next step from here is to create a website (which will become the hub of your business).
The website is crucial for the call centre agent, because when they receive a call from a potential seller, they’ll input the responses from that seller into your website which will provide you with all the information you require to take the conversation forward.
Alternatively, you can also use a spreadsheet – But remember, we’re talking about automating as much of the business as we can so it really becomes ‘hands free’.
Back to the call centre agent. When they get a prospect on the phone there are a few specific questions they should be asking.
- General questions about the seller (i.e. name, email, address…)
- Details about the property (i.e. features – beds, baths, address, size, amenities…)
- Whether they have engaged an Estate Agent already?
- What he (the owner) thinks the property is worth?
- What are the outstanding bond(s)?
- Why are they selling?
Question 5 and 6 are probably the most important questions because any good property deal requires equity (i.e. the value of the property is far greater than the outstanding debt associated to the property) and motivation (which we determine with question 6).
After asking the above questions the call centre agent will input the answers into a form on your website and submit an email.
This email will pop into your inbox with all the relevant answers, and then you can determine if this deal is worth pursuing and call the seller directly.
As you can see, it’s a system that feeds itself and removes you as much as possible from the situation, opening you up to focus on other important things.
Property Profit Stage #2. Chasing Offers
When investing in property it’s rare to get the deal on the first phone call.
Because you’re offering values well below the market value, the seller usually says no (unless they are very distressed).
That’s why you need to follow up on offers on a regular basis.
Why is this important?
Let’s say that you find a property where the owner wants to sell quickly because they’re relocating and need the money for a property in Cape Town.
You submit an offer and it’s rejected because it’s too low, and in the interim another buyer waiting for a loan has made an offer.
Every month you call the estate agent to find out if the property has been sold, and the estate agent keeps you up to date with the bond registration process.
Imagine that three months have passed and you phone the estate agent again - The bond approval has been rejected and the owner is in a bit of a tight spot.
She’s already started building in Cape Town and if she doesn’t get funds in soon, she risks losing that west coast property.
Do you think she’s going to be interested in a cheeky CASH offer at this point?
That’s why following up is a critical part of this business.
As time wears on it’s important to keep up with your distressed sellers because their situations can change, as too can their motivation, which places any potential offer from you in a different light.
Now it’s easy to keep track of a few properties, but if you’re professional you’ll more than likely have multiple offers on the go and you’ll need to have a system for following up.
Whenever you make a call to an estate agent around a property, make sure that you file the details of that in an excel spreadsheet.
In the excel sheet you can split the tabs into 12, one for each month of the year. Whenever you find a property, insert the details of that property into the corresponding month when you found the property.
When you get to the month of February you can go back to January and phone the estate agents about those properties.
Remember, most offers will be a no for now, but a potential yes for later.
Review this excel sheet once or twice a month and call all the properties still on the roll and follow up.
If the estate agent says that the property has been successfully transferred, then you can remove the property off your roll and focus on other properties.
You’ll also want to keep a file of enquiry documents per property. The enquiry document will state the vendor’s details, all the refurbishments, the property details and the price that you’re willing to put on the table.
The reason this is important is because when you speak to an estate agent you can quickly remember which property you are talking about, what work it required and then you can justify your reasoning for giving a low offer.
The justifications can mean the difference between an accepted offer, or you going back to the drawing board.
This will also make the estate agent take you seriously because you’ll come across as if you really know what you’re talking about and you won’t waste their time.
Another thing to do is to choose days to do certain activities.
For example, on Mondays you can review the enquiry file to ensure you know which properties you want to analyse.
On Tuesday, you can phone the estate agent to setup viewings of certain properties for the weekend.
On Wednesday, you can read something to improve your property knowledge.
On Thursday, you can complete the deal calculations, and on Friday’s you can make provisional offers.
It’s all about batching your work and getting into the habit of finding deals and making offers.
Remember, we are what we repeatedly do. Excellence, then, is not an act, but a habit.
Your next step in chasing offers is negotiation.
Negotiation is a critical skill for a property investor and needs to be followed tactfully, especially when dealing with distressed sellers.
When you make your first offer, you must document what you said and how the estate agent responded. Usually your offer is too low and you’ll have to follow up at a later stage.
Before hanging up with the estate agent say something along the lines of, “I understand that the price doesn’t work now, would you mind if I call you back in three weeks to see if anything has changed?”.
Essentially, you’re getting their permission to phone them back shortly, and ‘planting the seed’.
In three weeks’ time make sure that you give them a call.
Now if your database starts to get a bit big, you can resort to emails/texting. The key is to find out if the property is still available - if not delete the contact – and if the deal is still in early stages and hasn’t transferred yet, keep following up.
If the property is still selling, mention that your offer still stands and ask if the seller would consider it now.
Never forget, as a property investor it’s all about equity and motivation.
If the outstanding bond is low, you have a chance. If the motivation is high, you have a big chance!
Sometimes in this game you just have to wait out the motivation.
Your 5-Step Property Profit Plan
Investing in property is a business.
If you treat it as such, you’ll reap the rewards, if not you’ll find making the money you dreamed of as just a dream.
But remember, it also comes down to the type of business you want it to be!
When you systemize and automate your property business, you afford yourself the time to put into bigger things. Not to mention you allow yourself the luxury of scale – one property turns into three, which turns into five which turns in 10 and so on.
I’ve covered the first two stages you need to turn your property portfolio into an income generating machine (generating leads and chasing offers), but keep an eye out for my next article where I’ll cover stages 3 – 5 (purchasing, managing, and selling).
Until next time, be bold and go build that property portfolio.
Analyst, The SA Property Investor
The Money Lab