When Should You Transition to Off-Market Acquisition and Finance?

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When is the right time to consider transitioning your acquisition and finance strategy to buying properties off-market, directly from Sellers? A lot of people think that you should only make this transition after you’ve exhausted all the “low hanging fruit” ways of buying and financing properties. Others think you should only make this transition after you’re more experienced. In this episode, Jeff explores the notion of what “low hanging fruit” really is in real estate acquisition, and explains why buying properties off-market directly from Sellers is actually lower-hanging fruit than conventional ways like shopping on the MLS or working with wholesalers.

Episode Transcript

So let’s say you are considering developing the skill and the mastery of going off market directly to sellers for your acquisition of finance strategy. So when should you transition in that direction? Is it something that you should wait and do later when you have more experience on your belt as it’s something you should do after you’ve kind of exhausted all your current options? Well, if you’ve ever asked yourself that question, or kind of wonder how it fit in, in relation to the other options you might think are at your disposal. That’s what we’re going to talk about in today’s episode. So let’s keep the theme song and I’m gonna jump right in to explaining my thoughts on this for you. Welcome to racking up rentals, a show about how regular people, those of us without huge war chests of capital or insider connections, can build lasting wealth acquiring a portfolio of buy and hold real estate. But we don’t just go mainstream looking at what’s on the market and asking banks for loans, nor are we posting WE BUY HOUSES signs, we’re just looking for quote, motivated sellers to make lowball offers to. You see, we are people oriented dealmakers, we sit down directly with sellers to work out Win Win deals without agents or any other obstacles, and buy properties nobody else even knows are for sale. I’m Jeff from the thoughtful real estate entrepreneur. If you’re the kind of real estate investor who wants long term wealth, not get rich quick gimmicks or pictures of yourself holding fat checks on social media, this show is for you. Join me and quietly become the wealthiest person on your block. Now let’s go rack up a rental portfolio. Hey, thank you for joining me for another episode of racking up rentals. Show Notes for this episode can be found at thoughtful rt e.com/e 148. Please do us a big favor by hitting that subscribe or follow button or whatever it might be called in your podcast that app today. These days, it really really helps other thoughtful real estate entrepreneurs to find the show because the platforms know that you are listening, and you’re liking the show onward with today’s episode. I think of this episode as a little bit of like an empathy episode because I feel like I recently had thanks to the help from somebody I’ll introduce you to in a second, a little bit more of a flash of understanding how other people think about the topic of off market acquisition and finance. And so the question I asked you in the intro was when should you transition to off market acquisition and finance. And I had this flash recently of understanding and once I’ve understood this, now I can help reframe this topic for you. So here’s how this came up. I was having a conversation recently with a person who was potentially interested in the deals workshop. And this person seemed like a really great person in general, definitely a good fit, like the type of person who fits in well with the way that we do things, the Relational Approach to negotiation and acquisition. Polite, well spoken definitely had the traits of a thoughtful person, and I was chatting with them about this. And they were going to consider looking into the workshop, our conversation was like very, very preliminary. And they got back to me. And they said, you know, among a few other things, basically, I think I’m going to hold off for now. But what they said was, I haven’t mastered the simple tasks yet, of putting in many offers on the low hanging fruit, parenthesis, MLS and networking with as many people as I should be. So I read that and I thought, okay, sure that that makes sense. But something was sticking in the back of my head about that statement. So I, you know, close the email, and I kind of let my subconscious work on it. And I went back and I read it again. And again, it said, I haven’t mastered the simple tasks yet, of putting in many offers on the low hanging fruit, multiple listing service, and networking with as many people as I should be. And I realized it was kind of this idea of low hanging fruit that was just striking me funny. And as I let my subconscious process that, I realized that this person was saying they were giving me an insight into their assumptions and how they think. And I’m guessing that this is not unique to this person. And that’s why I make a whole episode about it. Because I’m guessing there’s a lot of people maybe even you listening right now, who are thinking something along those lines too. And I realized that in those comments. There was this insight embedded that said, basically, you know, everybody knows that you should go get the low hanging fruit first. And then when you’ve exhausted all of the low hanging fruit options to use this metaphor of fruit hanging off of a tree, you might then choose to reach higher up the tree for the stuff that’s harder to get the harder to get fruit So what they’re saying is everybody knows that you should grab the low hanging fruit first, before you put in the effort to reach further up the tree, the tree for the harder to get fruit. Or in other words, going off market directly with sellers, with your own lead generation is what you do after you have exhausted your easier options. And as I read and reread that that email, I thought, Okay, I understand I understand what they’re saying. In their mind, what they think is that the off market direct to seller lead generation that I am talking about is great, but it’s something you do only later after you have exhausted all of the low hanging fruit. And it really got me thinking about what is low hanging fruit. And, boy, if you know me, I love a good analogy or a metaphor. So let’s talk about fruit as sellers that we are trying to get to or properties that we are trying to buy. So let’s talk about that. What is the lowest hanging fruit? Because the truth is, I agree like we should do the stuff that’s easier first, why wouldn’t we do that? But let’s talk about what is the lowest hanging fruit, right. And this person has insinuated that stuff on the Multiple Listing Service listed properties through realtors, in other words, is a major category of low hanging fruit. I think through their comment where they said I haven’t done enough to network with as many people as I should be, that they are saying that there is low hanging fruit in the form of referrals from other people, maybe even wholesale deals that appear might have tied up that this, this person could get access to those deals by networking. So multiple listing service, you know, listed properties, wholesalers, things like that. Well, so is that low hanging fruit? Well, I would say that fruit does indeed hang low on the tree, right? It’s, it’s right there. But that fruit, because it hangs low presents a couple problems, which I think are fairly obvious. And most people have experienced this to some degree. The problem with that low hanging fruit is that everybody can see it. It’s just right there, it’s just hanging right in front of everybody’s face. Everybody can see it. And just about everybody can reach it because it’s hanging low. And so that means that everybody can see it everybody can reach in everybody is trying to reach it. If it is a piece of fruit worth picking. There’s a lot of hands reaching for that low hanging piece of fruit because it’s very obvious it’s very, it’s clear you can see it with your with plain eyes. With plain eyesight, you can see it there. And And lastly there, I would say that if you have some kind of a special fruit picking skills,

or fruit expertise, they’re largely irrelevant in this case, because you don’t need special skills to reach up. And in first of all see something everybody else is seeing because it’s just super obvious and grab it or grab at it or compete with the other hand is to grab at it, because everybody else is grabbing it. So if you have special fruit picking skills, they’re kind of rendered useless here, because it’s there’s so much competition for the low hanging fruit. So the fruit that hangs low offers those problems. And those problems make that low hanging fruit hard, it is hard to find a piece of fruit in the form of a property that makes sense that that is easy to see, without having everybody else in your market reaching for it. It’s hard because there aren’t a lot of those pieces of fruit that are that are worth picking. And all the ones that are worth picking every hand in the market is reaching for them. On the other hand, when you have leads that are once you’ve generated directly with the seller, those leads are like fruit on a tree also, but those leads are like invisible pieces of fruit on the tree. Nobody else can see them. Now I’m not talking about a Fizbo a property that is basically on the market but just for sale by owner those are visible. But when you have sent you know a direct marketing piece that’s done thoughtfully with the right strategy and positioning to a seller and they’ve called you back. They haven’t called everybody back they nobody else knows in the market that this property is potentially for sale. Except you. So now you are looking at fruit with like special glasses special lenses where you’re the only one who can even see the fruit is there and no one else can see it. No one else as a result. Walter even knows that they should be reaching for that fruit because they don’t even know it exists. So here is my thesis for you. Taking this analogy of fruit or this metaphor of fruit and how it hangs, the lowest hanging fruit is the fruit with the fewest other pickers trying to reach it, and the fewest gatekeepers that you have to go through in order to pick it, right. So even when there’s obvious fruit hanging in the form of a property that’s on the MLS, there are gatekeepers you have to go through to get at that fruit rep. Other Realtors would be a very simple example of that maybe you have a Realtor you have to go through has to go through another realtor, the listing agent to get at that property. So there’s people standing between you and the fruit that you want. And there’s a million other hands grabbing at the fruit you want. But I would say the lowest hanging fruit is the fruit with the fewest other pickers trying to reach it, and the fewest gatekeepers that you have to go through in order to get at it. I personally, never even look at the MLS, no matter how easy it is to see the available properties in my market. Securing and financing them is just too hard. I don’t even look at what’s on the MLS, I don’t say I’m going to exhaust what’s on the MLS and then I’ll turn to my direct to seller lead generation strategies. No, I don’t even look at what’s on the MLS because I don’t want to be competing with other hands to grab the low hanging fruit. Because by the very nature of it being easy to grab, easy to see and easy to grab that makes it hard. And there’s a little irony in there, I realize the fact that it’s easy and accessible, ends up making it very hard when I don’t want to do those things that are hard. It’s funny, I don’t normally say this about myself. But when I think of it in this sense, it’s like, I’m too lazy to go and try to compete with everybody on the market and to learn how to navigate all the gatekeepers and play their game the way that they want to play it and navigate the rules of getting a mortgage and all of that kind of stuff. I’m too lazy to do all that. There’s no point in me doing that that’s a whole lot of work. It is easier for me to find fruit that nobody else can see. So I want to go back and answer the question that we stated at the beginning of this episode. That’s even the title of this episode. When should you transition to off market acquisition and finance strategy? I’ll tell you what, it’s not the answer that question is not that you should make that transition once you’ve exhausted the obvious fruit that anybody can see. That’s not the answer. The answer is, you should make that transition. As soon as you decide that the game you would rather play is learning to see invisible fruit, rather than fighting over the very visible, low hanging fruit. Let me say that again. When you should transition to off market acquisition and finance. The time is when you decide for yourself that the game you would rather play is not the game of fighting over obvious visible fruit, but instead playing the game of learning to see the invisible fruit. And just going after that. Because here’s the simple, simple, simple truth. Fighting with the marketplace of any type, whether it’s a wholesalers marketplace, whether it’s the multiple listing service, fighting with the marketplace, to get obvious and easy to identify properties is one form of hard. Learning to see invisible fruit is another form of hard. And so I asked you this question. Which form of heart do you want? It’s not about avoiding heart, there’s going to be hard. Either way. Which form of heart do you want? In other words, which game do you want to play? Do you want to play the hard game of fighting with everybody for the obvious properties? Or do you want to play the hard game of learning to see invisible properties that nobody else can? I choose the ladder, I hope that you consider choosing the ladder as well. And if you do choose the ladder, then we should continue to talk because that’s exactly what I help people do. And that is it for another episode of racking up rentals. So again, show notes for this episode can be found at thoughtful rt.com/e One 48 Please do us a big favor by hitting that subscribe or follow button or whatever it’s called these days in your podcast app. And please take a second to rate and review the show. I really literally please take just a second right now to do that, if you haven’t yet, I see each one and I’m super grateful and it really helps the show grow. Thank you so much for that. Did you know that we have a Facebook group for thoughtful real estate entrepreneurs as well. It’s called rental portfolio wealth builders. We’d love to have you join us there. You can search for rental portfolio wealth builders in Facebook. Or you could just take the easy route and type group dot thoughtful r e.com. into your browser and the magic of the internet. We’ll take you right to that page on Facebook. If you liked this episode, please take a screenshot of it posted to Instagram or wherever you like to hang out and tag us if you’re on Instagram that’s at thoughtful real estate. I will see you in the next episode. I really appreciate you being here. Until then. This is Jeff from the thoughtful real estate entrepreneur signing off. Thanks for listening to racking up rentals where we build long term wealth by being a win win deal makers. Remember, solve the person to unlock the deal and solve the financing to unlock the profits.