Deal flow is the nucleus of a successful real estate investor. If you want deal flow you need to build relationships

There are three groups of people you need to surround yourself with. Real estate owners, like-minded investors, and industry pros (brokers, prop. Managers, etc.) That's a broad group of people to reach. You can easily find yourself wasting a lot of time with the wrong people. The key is to optimize your outreach. So that you’re building relationships with those that align with your needs.  

This framework by Paige Craig with Outlander Labs was the catalyst in optimizing my outreach. Paige breaks down his deal finding into 4 activities: Hunting, Trading, Farming, and Trapping.

Hunting

Hunting is what keeps you going - you must eat to survive. Hunting is a direct outbound approach. Outbound efforts such as cold emails/calls, engagement at events, and email campaigns. When hunting you’re taking a broad stroke approach. Your goal is to grow your network, reputation and competence. This will be your first activity when entering a market or industry.  

An example of hunting. I spent hours on forums dm’ing investors I liked, asking genuine questions. I was able to meet my partner this way and we recently closed our first deal together.

As a new investor speak to as many other like-minded individuals or industry pros as possible. Display competence and genuine curiosity. If you are further along in the process you can even let them know what you’re looking to buy. Be sure to focus on those who are active and open minded. 

Trading

After a successful hunt (finding those who are active and open-minded) it's time to begin trading. At this point you have a network and know exactly what kind of deals you want. You have shared your ideas with others in the industry and understand their needs. Now, reach out to other investors, brokers, and vendors and leverage their needs with yours. These exchanges are not always 1:1. It is important to give without expecting anything in return. Remember, the importance is in building the relationship. 

Example: I have a network of investors who are years ahead of me and value 100+ unit deals. I am not buying these deals. But I do come across them. When this happens, I’ll share the good ones with my network and ask them to return the favor on smaller deals.

This is my favorite outbound strategy because of its exchange in value. I find the best way to build a relationship is to add value.

 Trapping

Trapping is an inbound play. The trap being most potent in the niches. You know exactly what and who you’re looking for. So you set “bait” that will attract your targets to you. 

Examples of traps: 

• blog posts sharing ideas and criteria. 
• podcasts where you can express your ideas (host preferred). 
• Host an event and leverage connections to come and then spill your thoughts and ideas. Speak at events

I attribute my success in sourcing the 51-unit deal to trapping. I set traps by sending very specific criteria to specific brokers in a market. I was able to target the most active and niche brokers in the market. I specifically stated what kind of deals I was looking for. Any time a deal fit my threshold they would think of me immediately and send details. 

I was recently listening to a podcast with Ryan Begelman. He gave a great example of trapping via hosting an event for those with little to no influence. You can leverage a small trusted network to put on a sizable event. Here’s how Ryan explained it

•  Have successful one-on-one calls with 4-6 people (build trust)
• Send these 4-6 people a list of other owners. “Here’s 60 people you may know (saw you were friends on LinkedIn) would you mind introducing me so I can invite them to this event I'm going to host?” 
• This provides a warm intro and value for those you’d like to meet. 
• At the event you share your ideas and let the people know what you’re buying (i.e. specific criteria).
• Now you have 60 new connections who are aware of you, your ideas, and your goals.

Farming

Farming is a long-term approach. It takes years to seed, grow, harvest and scale a farm. Farming as an outreach activity that involves investing in helping other people.

Examples of traps: 

• Answering questions from new investors/industry pros,
• Mentorship
• Going above and beyond for your LP’s
• Helping your community.

Farming is more passive than the other activities. It requires a patient and giving personality.

Like real farming you’re planting seeds. The seeds are new investors and the harvest comes when these new investors become sellers.

The best way to source deal flow is to blend all 4 of these activities. While hunting and trading kick starts your journey it's pertinent to be setting traps and expanding the farm in the background. Hunting and trading drum up activity while trapping and farming create scale.