As a real estate investor, you will analyze dozens of properties a day at least. It’s going to be crucial for you to establish a system of organization to track your leads and the progress you make on each lead. One way to maintain a high level of structure is to invest in real estate CRM software.
CRM stands for customer relationship management. CRM software is a helpful tool for many different types of businesses, including real estate investing, to keep track of their contacts, leads, and other important information related to their everyday tasks. It helps keep a team on track and aligned with their goals, and it provides a visual workflow of your work. For real estate investors specifically, the CRM software could follow a lead from the point of first contact all the way through deal closing, and even further along to leasing or resale.
CRM software also stores a wealth of information related to each lead. For real estate investing, this could mean any of the following fields related to a specific deal: agent contact information, property location, property details, purchase price, resale value, appraisal value, inspection results, contracts and addendums, tenant screening documentation, rental lease agreements, title company information, mortgage details, property management fees, offers and counter-offers, and much more.
A quick web search will provide you with a multitude of CRM options related to real estate that you can customize and build to your specific business needs. Some of the better-known CRMs for real estate include Top Producer, Lion Desk, and Follow Up Boss. Each of these CRMs have unique features that could serve different aspects of your real estate investment business.
For example, as a real estate investor, you scour through dozens of properties a day at least. You analyze the property, the neighborhood, and the financial aspects of each new lead, and you need somewhere to track all of this information. You need to be able to pull up these details at a moment’s notice, and they need to be accessible from anywhere since you’re often on the go. You’re also constantly looking for tenants, contractors, title companies, and other professionals near the property in question, so it would be helpful to have a tool where you can set up drip campaigns – scheduled email communications that have customizable messages and parameters. You come across dozens of people a week that could be helpful contacts for any aspect of your real estate investing business – fellow investors, business leaders, property developers, lawmakers, and mortgage brokers. You need a solid address book to maintain their contact details and specific notes – and maybe even a picture so that you can better remember your contacts before an in-person meeting. A quality CRM software can do all of these things and more!
Alternatives to a CRM
If you feel that your volume of business doesn’t substantiate the cost of a CRM or the time it will take you to train yourself on the CRM, there are a few notable alternatives.
The first, of course, is good old pen and paper. There are surely many real estate investors who prefer to maintain their business on notepads and index cards. The drawbacks to this method are obvious, in that it can be difficult to stay organized and you are limited as to how much information you can reliably maintain. You also lose the technological capability of automated reminders and the mobility of the product. Sure, you can carry your notes around wherever you go, but what happens when you spill coffee on the only version of meeting notes you took when you met with that important real estate developer? You don’t have the benefit of automated backups that you have with electronic record-keeping. On top of that, you severely limit yourself as to how much business you can take on, as you have to maintain all records by hand. This method can lead to unreliable record-keeping, not to mention the fact that if you were ever audited by the IRS or any other governmental organization, it would be very difficult to prove the legitimacy of your business if all records are kept on paper.
A more advanced, but still imperfect, method of record keeping is to use a software like Microsoft Excel to track your leads and deals. You can use a calendar software like Microsoft Outlook to set appointments and schedule reminders. You can also use products like Microsoft Word and Microsoft PowerPoint to draft marketing materials and include them in your scheduled drip campaigns. Of course, managing your real estate investment business across a number of different software products could prove to be difficult and cumbersome. You, again, rely on your manual entries and updates and forego the benefit of having an automated system that remembers to take certain actions on all of your leads, instead of just those that you remember to update.
Another alternative to purchasing a CRM is to utilize their free trial version. Many CRM software companies offer a free trial of their product on their website in order to market their service and generate interest among a wider group of people. This could be a great way for you to have a “test run” of multiple products in order to decide which one suits your needs best. It’s also an opportunity to test out the support services of the company to answer your questions, give you tutorials, and just provide overall support to you and your team if needed. The drawback to this method is that you may be limited as to the range of services the company provides for their free trial product. It may suit your current needs, but as you grow your real estate investment business you may require greater functionality and/or storage space. These are just a few of the considerations you will encounter if you use free trial CRM software products.
Benefits to a CRM
There are numerous benefits to utilizing a CRM for your real estate investment business. For one, it provides a centralized location for you to track the data and extraneous information for your potential deals. At any one time, a prudent real estate investor may have a dozen or more properties on their radar. A CRM software helps keep you organized and structured as you navigate the waters of the real estate industry.
Real estate contracts have deadlines and lifecycles and missing one of these important dates could be deadly to your deal – and your wallet. By tracking each of these dates in your CRM, you’ll be reminded before every major deadline which greatly reduces your chances of letting one of these meetings fly by unnoticed. You can schedule automated emails to be sent to follow up with your title company, for instance, just to get a timely update. You can set up a marketing campaign to be sent to potential tenants when you buy a new rental property. You can track the dates of rent payments against the dates they were due to better understand your collections lifecycle. The tools available in any CRM software are far greater than the functionality you could maintain if you were handling your business by hand.
Another benefit of using a real estate investment CRM is that you improve your records retention for purposes of resurrecting old leads and for audit purposes. If you come across a property that seems to be a great investment opportunity, but the price is just a bit too high, you could schedule a reminder within your CRM to follow back up on this lead 6 months down the road when the market may have taken a downturn. If you were managing your leads on paper or in a spreadsheet, you wouldn’t have the benefit of automated reminders. You probably also wouldn’t have kept all of your notes related to that property in one central, easily accessible place. Moreover, if you were ever audited by the government or needed to provide business records to a bank or any other authority, having all of your records maintained in a CRM greatly reduces the hassle needed to gather the pertinent information.
Drawbacks to a CRM
One common drawback to a CRM software is that you might find yourself in what investors commonly refer to as “analysis paralysis” – this is what happens when you are presented with so much information that you cannot determine what is important and what isn’t, and you end up taking no action at all. This is common with real estate investors who are just starting out, because investing can be incredibly risky and confusing if you are not properly educated. Much of real estate investing is predicated on your inherent understanding of a property’s location and ultimate potential, so if you are overwhelmed by the details in your CRM specifically related to financials, you may overlook some promising opportunities.
Another drawback is the fact that, in order for a CRM to be most useful to you and your real estate investment team, it needs to be utilized consistently and accurately. This requires you and your team to be diligent about recording information about your leads, ongoing deals, and long-term opportunities. It requires fact-checking and it means that you need to trust yourself and your team to enter accurate, timely information on a regular basis. It also means that they need to update this information in real-time should things change, as things tend to do very often in the real estate world.
The final major drawback to using a CRM software could be the cost. It’s important for you to shop around to understand which product features are a necessity and which are a luxury that might not warrant the extra cost. For example, if you operate as a solo real estate investor without a team, it probably does not make sense for you to pay for the extra support package that offers unlimited support members to serve your team. You could probably get by with using the free help center, or at the very worst, paying per instance to the company’s in-person support team. It all depends on what the company offers but be sure to analyze the price of the software against all other expenses you incur as a real estate investor. The real estate CRM should be a tool that enhances your productivity and expands your reach, not a tool that costs a fortune but barely gets used.
Tips and Tricks
The first trick to having a CRM software for your real estate investment business is to actually use it! This will take time and, of course, discipline, but your business will reap the rewards. If you are consistent, you’ll find that the CRM soon becomes irreplaceable, a treasure trove of information for your real estate investment business that you can’t imagine working without. It will become a crucial part of your business, but only with time and practice. It will naturally take time to uncover all of the great functionality that is offered with your CRM software, but these features will become integral parts of your day-to-day functionality. Each software is different, so be sure to check out all of the unique features that yours provides.
The second trick to having CRM software for your real estate investment business is to take advantage of the CRM’s support center. Many CRM software products offer a support center full of virtual trainings, webinars, how-to articles, and tutorials. These can be invaluable when it comes to learning how to use your new CRM software, and this section of the software should not be overlooked.
If the scale of your real estate investment business is large enough to warrant having a team or partners, the third trick to having a CRM software is to train your team to use it. Their knowledge is likely just as relevant and important as your own, and you should aim to get as much of their knowledge out of their heads and into the software. This will come in handy when deals are being transferred from one hand to another in that the person working on the deal at the current moment has the benefit of reading the deal history in the CRM.
Now that you understand the importance of maintaining a system that works for you and helps keep you on track, it’s imperative that you choose a method you are comfortable with and implement that system in your everyday life. It is very easy to get wrapped up in the excitement of new software, with all of its bells and whistles, only to find months later that you aren’t using the product as intended. It will take discipline and time, but over time you will find the benefits of using a real estate CRM software far outweigh the drawbacks. Take advantage of your newfound organization and scale your business up today!
Charles Carillo is the founder and managing partner of Harborside Partners. He has extensive knowledge in renovating and repositioning multifamily and mixed-use commercial real estate. Prior to launching Harborside Partners, Charles founded an online payment processing company with partners and clients in 4 continents across the globe. Charles holds a BS from the Connecticut State University.