Every Ugly House Is Worth...

I just finished up a blog post about my system of Driving For Dollars - click here to read that. In that post, I explained how my first day of Driving For Dollars went, the system I had studied about, and how I was applying that to my own REI business.

But there's something WAY cooler than all of that (at least I think so!).

I am sickly addicted to hypotheticals. Perhaps to a fault, as I always think about things in business like..."If we do THIS MUCH of THIS THING, we can make THIS MUCH money and then we can retire early!!". I'll then go to town, furiously whipping up a fancy spreadsheet with all kinds of impressive calculations, and share them with my brother or whoever else I'm working with, and talk to them about how sick it's going to be when we're sipping pina coladas in St. Thomas.

It's all fine and well to get motivated and have some goals to strive for, but in my first 33 years, I haven't been able to sit back and sip a pina colada yet.

HOWEVER...as I mentioned, I think it's a great idea to have systems and goals as long as I ACT on it passionately and with extreme consistency. So that's my plan. And as for the metrics...here's some basic metrics and calculations that will tell you EXACTLY (at least based on your averages) how to determine how much every single ugly house you find is worth (whether they even call you or not). For starters, here are the factors you'll need to accurately chart from the beginning...

1. 1. Number of ugly homes you find. How many addresses did you write down when you were "Driving For Dollars"? This is the number you absolutely have the most control over. 
2. 2. Number of responses. How many people call or email you back (positively) to talk about their property? 
3. 3. Number of offers. How many offers were you able to make after discussing a person's situation with them? 
4. 4. Number of purchases. How many homes have you purchased as a result of "Driving For Dollars"?
5. 5. Total Profit. How much did you sell these properties for versus you amount you purchased them for? 

Each of these metrics have a story to tell, and can be adjusted along the way to hone in on the most effective approach to Driving For Dollars.

Here are the fun calculations you'll want to pay attention to (at least for me, as my brain always thinks in numbers), and learn to adjust over time to become more efficient. These are extremely simple to calculate as long as you're charting all of the metrics listed above. Although they involve very elementary math, do not mistake that for the value these numbers bring, and the importance of tracking and following them...

1. 1. Profit Per Ugly Houses = Total Profit / Number Of Ugly Houses. This dollar figure is, for me, the absolutely most exciting number to look at! This is the motivator (similar to the next one), versus a  metric you can adjust to get better results. Simply put, this is the number you tell yourself is entering your pocket every single time you write down a new address of an ugly house! Whether or not the person even calls you back, based on your personal averages, you can know without a shadow of a doubt that because of the work you're putting into this process, this is the average dollar amount you will be earning for every single ugly house you identify. PRETTY SWEET! 
2. 2. Ugly Houses Per Deal = Number Of Ugly Houses / Number Of Purchases. This beautiful number will tell you, based on your personal averages, how many ugly houses you need to put on your spreadsheet (and mail!) in order to find another deal! This is extremely motivating because you can rest assured that you'll be getting a tangible result for every ___ houses you see! Very cool. 
3. 3. Responses Per Ugly House = Number Of Responses / Number Of Ugly Houses. This is a very telling and actionable number for your business. This is the number you will want to pay attention to in order to tell you if your letters are effective or not! If people are responding, it's because they liked what they say and are motivated to work with you. Feel free to ask around to other people who are Driving For Dollars and ask them what their percentage of responses is in order to compare to what you're doing. This number should be fairly equivalent if your marketing pieces are effective. If they are lower than you want, switch something up with your mailers! 
4. 4. Offers Per Response = Number of Offers / Number of Responses. This will tell you a lot about the area you've chosen to work in, and/or the houses you've chosen to add to your list! If this number is lower than you think it should be, perhaps you should give another area a shot to see if people are more motivated. Or, perhaps you are not using the best criteria for adding a house to your list of ugly houses. Feel free to become more or less picky with the types of houses you add to your list while Driving For Dollars based on the number of offers you're receiving. 
5. 5. Profit Per Deal = Total Profit / Number Of Purchases. At the end of the day, this is the grand-daddy of them all...how much bacon are you bringing home?!? Some of these metrics will keep you motivated, and some of them will show you where you need to adjust either way. THIS metric will tell you exactly how much your family and friends will like you and how well you will sleep at night. :-) If this number is not satisfactory to you, perhaps you will need to consider improving your negotiating skills and/or becoming more picky with the properties you choose to pursue. Work hard to find the MOST motivated sellers you possibly can, and this number will typically rise accordingly. 

So, you can see that there is a lot of tracking and analysis that can go into a simple Driving For Dollars campaign. Regardless of all these nerdy numbers, the main thing to remember is to be diligent about consistently adding more houses to your list and being very consistent with sending effective mailers to them. Remember that most people don't respond until they've been contacted 5-7 times. Always keep in mind that the first surge of activity is the hardest, but once the momentum starts to swing your way, you'll become known as "the guy" (or girl!) in your area, and people will start spreading the word for you! At that point, you can choose to keep the hammer down and remain consistent, but you won't have to work hard forever! 

Keep Drivin'!