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How to Create a Steady Stream of Income from Your Real Estate Business

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By Joe Cooke

RISMEDIA, May 29, 2008–Whether you are new to real estate, entering a new area or even a seasoned professional, you can still fall into the dreaded P-C-P (Prospecting-Closing-Prospecting) cycle. That cycle starts when business drops off for some reason. Naturally, you start prospecting. Maybe you hold open houses for the other agents and brokers, you make phone calls to past clients and unrepresented sellers. You mail out postcards, send e-mails and network like crazy. Out of all this prospecting, you finally get a listing, and then you write up an offer or two, get another listing and suddenly you are so inundated with the details of multiple closings that prospecting falls by the wayside. Pretty soon all the sales are done, the paychecks collected and you can breathe easy for about three days before you realize that you now have to get back to massive prospecting. If you are in this kind of P-C-P cycle, be it mild or severe, know that you are not alone. Also know, however, that you don’t have to live like this.Breaking the P-C-P CycleReal estate professionals who have overcome the P-C-P cycle generally cite three factors that contribute to a steady stream of income: technique, touch and time.joecooke.JPGTechnique

Technique revolves around your data management system. First and foremost you have to have some kind of system, and in today’s complex world, that means a software solution, like Top Producer, Act! or a system that your brokerage provides. In choosing a database, think about factors such as:

• Portability – If you move from one brokerage to another, will you be able to take your system with you?
• Ease of use – If the system is too complicated, you won’t use it.
• Power – Can you send mass e-mails that don’t look like spam? Does it have a tickler system and a way to record personal data, like birthdays, children’s names, etc…?

Once you have your data management system in place and have it filled with names, you can stratify your database into layers that will help you follow up consistently. That is the element of touch.

Touch

When prospecting for buyers, there is a conventional wisdom in real estate that has been around for a long time. I heard it back in the early eighties and it made sense-my broker told me to pre-qualify my prospects and only work with those who were ready, willing and able to buy right now. Twenty-five years ago, this approach may have made sense, but now this can be a sure-fire way to get trapped into a P-C-P cycle.

Here’s why: Today’s buyer shops differently and is still just as fickle as ever. If you only pick the low-hanging fruit, the “ready to buy now” buyers, two things happen. First, they are the least loyal buyers, because they have been looking for a while, and if you are just now making contact with them, it means that they have no loyalty to any agent, including you. Not that you shouldn’t pick the low-hanging fruit, just don’t base your business model on it. Second, they are going to be your least reliable source of referrals because of their lack of loyalty. Again, when you need a paycheck soon (and we’re talking about months here) these free-agent buyers can be a lifesaver. But, for long-term, stable business-building, you need to prospect for loyal, long-term patrons.

In order to establish and maintain these long-term relationships, you have to systematize your follow-up so that you follow-up fast, follow-up often and follow-up forever. That means stratifying your database and then creating follow-up strategies for each strata.

For instance, your top level will include your very best clients, such as investors who buy on a consistent basis and past clients who refer you business. For them, your follow-up procedures will be personal and frequent. You may send gifts, personal cards on holidays, birthdays and anniversaries and you may even take them to dinner or stop by their homes or places of business to deliver something special.

The next level down will be the people who are qualified to buy or thinking about selling but not quite ready. Some of these clients will wait for months or even years before they sign on the dotted line. Your key to staying in their mind is consistent, valuable follow-up, such as market updates, newsletters and other general real estate related information. If you can, try to personalize this follow-up with hand-written notes, occasional phone calls and client-specific market information.

The third level represents clients who may have bought or sold in the past or who have expressed some interest in who you are and what you do. They receive your quarterly market updates and other mass-mailings, but may not warrant too much personal attention.

Obviously, within this structure, clients move up and even down, and some will perk up and become your current listings and buyers, at which point they will receive a ton of your personal attention just because they are active.

The advantage of this system over the “cherry-picking” system is that it feeds your business on a consistent, level basis.

The final factor for creating a steady stream of income from your real estate business is time.

Time

There’s no way around it-you have to invest time into your business. During your first few months, or during the period of time while you are swamped with the details of closings, you have to invest a portion of each day into prospecting. You may not achieve your steady stream in six months or even a year, but if you dedicate yourself to systemization and consistent follow-up, and if you make prospecting your highest priority for each day, you will eventually find your steady stream.

In fact, in interviewing brokers and agents around the country, something even more surprising came up-the real estate professionals who had worked for years to develop a steady stream of income had actually created something even better-a steadily increasing stream of income. Many of them reported that they made more money in 2007 than they had made in previous years.

So, if you feel that your income stream is not as consistent as it should be, start focusing on prospecting as your highest priority. You still need to find the buyers and sellers who are ready, willing and able, but you also have to tend to fruit trees so that you can harvest year-in and year-out, and store up for the winter seasons.

Joe Cooke is an author, speaker and entrepreneur with over 25 years of experience in real estate, marketing and management. Visit www.joecooke.com for more information on state-of-the-art real estate marketing techniques.

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