One core piece of a real estate business that sets you up for long-term success is your ability to source amazing deals before anyone else has squeezed the juice out of them. The problem with relying on Realtors, wholesalers, or members of your local REIA to help bring you deals is that everyone will want a piece of the pie.
Once you’ve paid a commission, an assignment fee, and a bonus to the bird dog who created the list, your amazing deal might not be quite as good anymore. So what does tracking down your own deals require? Marketing! You have to be broadcasting in as many ways as possible, “Hey! I’m out here and I’m looking for x, y, or z!”
This requires time, money, and consistency. (And consistency is probably the most important part.) One thing I and so many other investors have been guilty of is starting a marketing campaign and not doing it long enough or on a large enough scale to see results.
When you’re dealing with response and conversion rates that hover between 1 percent and 5 percent, you have to send out a lot of marketing to begin seeing results. (One thousand postcards may get you 10-50 responses but definitely not a guaranteed deal.)
Those responses may also begin coming in at month five after you’ve already sent out several thousand mailers with seemingly “no results.” The compound effect of consistent marketing is very real, which is why I’m introducing a concept that I’m pioneering in my business—one that I call “syndicate marketing.”
What Is Syndicate Marketing?
The concept is simple: Find the person who’s best at executing on the kind of marketing you’re wanting to do, help fund their growth and marketing reach, and capitalize on some of the upside without all the trial and error, follow-up systems, call centers, mailers, etc.
This does a few powerful things for your business:
1. You Are Actually Executing on Marketing
This is huge (and something I didn’t do at all the first two years I was in real estate). I was so consumed with learning how to flip homes, hire contractors, and design beautiful kitchens that I didn’t have the extra time or energy to build a marketing engine.
It would have made a ton of sense for me to find and partner with someone who could execute on this, and I helped actually flip the homes we purchased. I already said it, but will say it one more time: If you want to last in the real estate industry, you must be able to find deals before anyone else. You must be marketing.
2. You Are Accessing Higher Quality Marketing
Without using syndicate marketing, you likely wouldn’t be able to reproduce without months of work and tens of thousands of dollars in testing. Developing a marketing strategy is not an exact science or a straightforward path.
You have to learn about the data world, pulling lists, cleaning those lists, segmenting the data to find the properties you actually want, and sending legal marketing material. Let’s not forget receiving leads and talking to them quickly, long-term follow up, negotiations, etc. It’s not easy, and you may be able to skip a few steps by partnering with a proficient marketer already in operation.
3. You Are Concentrating on Your Strengths
In real estate we sometimes have the idea we need to do everything ourselves. We disregard that there are highly skilled practitioners all around us who can shorten the learning curve and financial investment.
Find what you are good at, get really good at those few things, and build others around you to execute on what you aren’t focused on. Perhaps you are highly skilled at construction or raising money, you don’t necessarily have to be a marketing genius as well.
4. You Will have a Broader Reach
This goes back to a point I made at the start of this article: Real estate marketing has a low response rate. The returns can be huge, but you sometimes have to do a lot of digging to find a solid deal.
There is some real truth to “The more money you put in, the better your result.” The total costs will go up, but you will be way more likely to get contracts, which is the only way to keep funding your marketing efforts.
5. You Will have a Lower Cost Per Lead
This is due to the fact that marketing requires specialized tools and access to programs, research methods, subscriptions for pulling data, and a million other things. Not everyone who’s doing a little marketing needs to have access to the exact same tools. The only people really making money in this scenario are whoever built the tools!
If you combine resources with fellow investors you can benefit from accessing these needed systems, and sharing the cost over a great volume of marketing going out. This can dramatically reduce your per lead cost at high levels of volume.
In summary, if your business is suffering from a lack of good leads or deals, the problem likely falls in the marketing realm. Perhaps it’s time to consider teaming up with a few fellow investors and forming your own marketing syndicate—or begin digging for a pro marketer in your area to help fund the growth of the entire organization.
We are much more powerful and effective working together than in small isolated pockets—you probably need a bigger pocket! (OK, that was probably the WORST joke ever written on BiggerPockets, but at least I made you roll your eyes and hopefully smile.)
What other ways do you think syndicate marketing can help grow your business?
Share with a comment below!
Note By BiggerPockets: These are opinions written by the author and do not necessarily represent the opinions of BiggerPockets.