BiggerPockets Podcast 081 with Michael Quarles Transcript
Josh: This is the BiggerPockets Podcast, Show 81.
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Josh: What's going on, everybody? This is Josh Dorkin, host of the BiggerPockets Podcast here with my co-host; the man, the myth, it's Brandon Turner.
Brandon: Hey. What's up?
Josh: What's up, Brandon? How are you?
Brandon: I'm good. Hey, I've got a serious question for you, very serious.
Josh: Oh, yeah? What's up?
Brandon: What is your favorite movie?
Josh: My favorite movie, ooh. That's a tough one. Because it's fresh on my mind, I'm going to say "Shawshank Redemption."
Brandon: Oh, okay. That's a good movie.
Josh: That's one of them. How about you?
Brandon: "That Thing You Do," Tom Hanks movie.
Josh: Oh, stop!
Brandon: I love that movie.
Josh: Is that really your favorite movie?
Brandon: That is my all-time favorite movie. I learned to play drums because of that.
Josh: That actually says a lot about you. Okay. It's all starting to make sense now.
Josh: It's all starting to make sense.
Brandon: I was destined to be a rock star and I ended up here.
Josh: I had faith in you and it just keeps dropping. Awesome, man. That is a good question. I'm glad you asked it.
Brandon: Thanks. That way, people want to know. That's why.
Brandon: Enough about us. Let's get on with the interview.
Josh: Yes, let's do it. All right, guys. Today we have a really, really great show. Today we actually have a follow-up from our show 77. Today's show is with Michael Quarles. We want to have him back because we didn't have quite enough time to delve into all the topics that we wanted to delve into last time and those topics are on the subject of marketing. We'll get into that in a second. Before we do, let's get in to today's Quick Tip.
Today's Quick Tip is BiggerPockets File Place. If you are not aware, we have a place on the site called the BiggerPockets File Place. You go to BiggerPockets.com/files. There you can find all sorts of files. You can find spreadsheets and forms and agreements. Ultimately, it's your peer sharing documents that they've put together to help them with their business and they're putting it out there to share with you.
Definitely check it out. You'll get lots of ideas. Definitely do not just go and use a contract, if somebody put a contract up there, we would absolutely recommend you run anything by your attorney before you ever use it. Just be careful on that stuff. Definitely be sure to take a look and see what's out there. There are a lot of great things.
Brandon: Cool. All right. By the way, if you're a regular free BiggerPockets member, you can download three a week. If you're a Plus, you can download five a week. If you're a Pro member, you can download as many as you want. That is our Pro Benefit of the Week. Check it out. Upgrade to Pro at BiggerPockets.com/pro and you can get, download unlimited files every single week.
With that, let's bring in Michael. You want to introduce him?
Josh: Yes. Really quick, Michael is an active investor out of California. He specializes in whole-tailing. He's done a ton of these whole-tail deals. It's kind of a cool strategy. Again, we talked about it back in show 77. Definitely check that out.
He's also the owner of yellowletter.com. It's this monster direct mail company. He's definitely one of the brighter minds out there on the topic of marketing in direct mail, which is why we really wanted to have him back because the last show we talked about negotiation and not direct mail.
Here we are. We're on show 81. We're going to talk to you guys about direct mail and marketing. There's a ton of really, really great information in this one. I know I said a lot but break out your pens and take notes on this one because you're going to get a lot. With that, let's bring him in. All right, Michael. Welcome back to the show. It's great to have you again.
Michael: It is absolutely great to be here. If this is half as fun as the last one, I'm just going to go home after this and relax.
Brandon: The last show was a lot of fun. People really liked that. Definitely one of most popular shows we've done and because of that, that is why you're back so soon. Usually, we wait a year between people.
Last time we had this list of 50 questions that I wanted to ask you. I kind of wrote up this list and got to the end of our interview and we've done six questions. We definitely want to explore more of those topics today especially on the topic of marketing. That's why we're bringing you back so soon.
Josh: We're about a month out and we've had well over 30,000 folks listen to your show, which is...
Michael: Is that good or bad?
Josh: That's good. That's 30,000 listeners, slightly, slightly above our average but you have a popular show.
Brandon: Yes. Why don't we start with a recap? Because not everyone would have listened to the last show. Those of you who haven't...
Josh: By the way, that was show 77 of the BiggerPockets podcast and you can find that at BiggerPockets.com/show77.
Brandon: Yes. Definitely listen to that after you're done with this one if you haven't listened to that one yet. For those people who haven't heard that, why don't you give us a two-minute recap of how did you get started and what kind of investing do you do?
Michael: I got started in real estate...gosh, that's a long story for two minutes. Buying that piece of dirt and writing that bad check and doing what I didn't know I couldn't do which is why I could do it because I didn't know I couldn't do it.
Josh: What are you talking about, man?
Michael: That's the recap about the last show.
Josh: That's the most cryptic thing I've ever heard in my life.
Brandon: Now it's going to make everyone wonder who's listening to this show.
Josh: Yes, that's true.
Michael: It was absolutely not the way to start. I think we spoke about that for an hour and a half. At the same time, it's allowed me to invest in houses and I flip houses. I don't rehab them. I think, Josh you'd coined the word on that show, "whole-tailing." I guess that would fit probably my marketing and my investment strategy of what I do with these properties. I'm not a passive income earner. I'm a massive income earner.
Josh: That's a tweetable topic right there. That's funny.
Michael: Well, my ADD gets in the way of my passive income. I enjoy buying houses and selling them for the "as is" value without doing anything with them. I buy them at 60 to 50% off value and turn around and sell them at 100% of the value that they're at.
Brandon: That's cool.
Josh: Got you.
Brandon: Cool. We talked about that a lot last time which was a fascinating model. The whole idea behind whole-tailing as they call it, the idea predicates you have to have a good deal.
You have to because...if you're going to go out and fix up a house, you can force, you can buy a halfway decent deal and put your own labor and do it and fix it up and make a little bit of money off of flipping. If you're going to sell it without fixing it, that's a lot more tough.
Michael: I don't see it as more tough actually. I don't have to learn how to paint. I don't have to learn how to put carpet in or tile in or whatever stuff is at Home Depot. I don't have to be there 6:30 every morning. I don't have to worry about if I have figured out my cost correctly because I'm not doing any of those items.
I don't know if you two have every spent hours upon hours in Home Depot looking for a bolt or a screw or a paintbrush type or what have you. Josh, that is outstanding cool.
Josh: I was just trying to mimic you there. I was trying to mimic you there.
Michael: Everybody, he just put his sunglasses on, his Ray-Bans. Wow. He did look like Vanilla Ice there for a second.
Josh: I've got this horrible glare outside my window and I'm trying to just decide if that's the way to do it.
Michael: It's either Ray Charles or Vanilla Ice.
Brandon: Home Depot, yes. I spent many, many hours looking for a...
Josh: Absolutely. It's no fun. It's no fun.
Michael: When I look at the opportunity to have an opportunity, I always look at it how do you get there. The phone doesn't ring by accident. It's not like there are wrong phone calls. Someone doesn't ring trying to call their aunt and then all of a sudden they get you by mistake and have a house to sell. We do all these things on purpose when we have that goal in mind.
The prospect for a wholesale deal or a flip deal or a rehab deal or a whole-tail deal, they look the same. They all have to have an equity base.
Josh: Yes, yes. Let's get to that. They all have to have an equity base. In order to get an equity base, we've got to find a deal that say, "distressed deal." As you were saying, we've got to get the phone to ring. How on earth do we get the phone to ring? That's really the subject that we want to cover today with you.
I know you're probably one of the folks that people on BiggerPockets and probably elsewhere look up to us one of the better marketers out there. Let's get in to the topic of marketing. I guess we'll start with kind of your bread and butter, at least, what I believe to be your bread and butter, which is direct mail.
What is direct mail? Let's just start with that.
Michael: In today's marketplace, I think direct mail is probably the number one marketing item that you can use. We're taking something, a piece of paper. We're writing something on that piece of paper. We're putting a stamp on it and address on it and sending it through the US Postal Service to someone. We're hoping that someone has a desire to sell their house. We don't know if they are.
If we had a list of the motivated sellers, we'd send out two pieces of mail because we wouldn't need to buy any more houses than that. We send a lot of mail and then they call us back. Inside the sending out of that mail, there are various types of mail and messages that create a response that we want to have created.
In my market, I only want to talk to people who can actually sell me a house. If I send a letter out to someone who's maybe upside down or has marginal equity or just bought the house even though it's free and clear, it doesn't make any sense to have them to call me which is why I don't like mailing and bandits concept because that's masses of marketing or mass marketing and you can't control who's calling you, whereas I can control who calls me with my direct mail which is the beauty of direct mail.
If we looked at 2007, 2006, in that time period where a lot of sellers could call us and most everybody had an equity base, we didn't have to use as much direct mail. We could use some of the other things out there to get callers. The year that I did 200 deals; I know I spent $600 marketing that year.
Michael: Well, it's all relative.
Josh: It is, I guess. Yes. It's amazing to think that.
Michael: We knew that we were going to make $52,000 per deal. That was our goal; or 25%, whichever is greater. $204,000, it turned from $52,000 to more. Anything under $204,000, it turned from the 25% to the 52. You take 200 times $52,000, what is that? Your marketing should start out somewhere between 8 to 12% depending on what you're wanting to achieve and what your goals are. It could get up to 20 to 22%.
Josh: Hey, Michael, really quick, you're talking 8 to 10 or up to 22% of what?
Michael: Of your spend. If I spend a dollar, I should get $8 or $12 back.
Josh: Got it.
Michael: Eventually, I know I'm going to get $20 to $22 back.
Josh: You're saying for every dollar spent specifically on marketing?
Michael: On marketing, right. On marketing.
Michael: Marketing looks like a lot of different things. Most people don't realize we are marketing and we are media here. A lot of people don't use themselves as a marketing tool but it's one of the best marketing tools that are out there.
If someone asked me today, "I have $500 and I want to start real estate investing, what do I do? Do I send out a postcard? Do I send out a yellow letter? Do I send out a zip letter? Do I get a bandit sign? What do I do?" My goal for them would be over the next 30 days, write down everybody that you know who lives in your market that can influence that market. They have a house or they know someone that has a house.
Write down their name, their phone number, if you have their e-mail address or their physical address, great. When you get that list done, divide that list by 22 because we only want to work during normal work hours.
A lot of investors think they have to work all the time and they don't. If this is a business just like any other business then we have 22 days a month you should work. Take that list. Divide it by 22. If you have 220 people on your list, you have 10 people a day that know you, can actually say "hello" to you.
You can call them on the phone and say, "Josh, hi. This is Michael. Just want you to know, after long and careful consideration, I've decided to be a real estate investor. I knew that you would want to help me out. I wanted to let you know and send you a business card of mine. I buy houses from this person and that person and those kinds of people. If you come across anybody that you know that needs to have my service, can you give them my information?"
If someone were to do that and that's free. All you have to do is buy a thousand business cards or more. They would never need another marketing piece. They wouldn't need yellow letters. They wouldn't need bandit signs. They wouldn't need TV, radio, newspaper, anything else.
The problem with that, they call that sweat marketing and network marketing, when people do that, they also can't go on vacation because their business goes with them. In the beginning if you only have $500, I think everybody should start doing that. They're embarrassed as well.
They can't tell Mom and Dad that they're going to do something else or wife that they're going to do something else or their boss that they want to take this other venture because maybe they sold Amway or life insurance or Tupperware or whatever it was and they've failed at that. They've kind of cried wolf.
Get over it. Everybody has failures. All of us raise our hands on failures. If you have failure that means you just have to get back up again. Falling down is just right before you get back up.
Josh: Yes, yes. I agree. I think that's a great technique. I know. When I was a real estate agent, I followed something similar. I literally put a list together of everybody I know and just started calling, started working the phones. It was a great way to get clients.
I think a lot people again, end up in that fear, mindset where embarrassment or something else where they just say, "Hey, I don't know. Maybe they're going to reject me." You're going to get rejected a lot in real estate so you better start learning.
Michael: Rejections are actually not necessarily rejections. They're a step towards doing a deal. Isn't it just like another step in the process of getting a contract signed? I don't look at rejection as a negative thing. You say no to me, that is great because if you say no to me, that's one step closer to a yes.
By the way, I learned this lesson the hard way for anybody on the phone. Just because we preach it doesn't mean we always use it, which is the hardest thing when you're trying to help someone. It reminds us to do it ourselves.
My gardener who is mowing the lawn on one of my houses, his real estate agent called me because I had a "For Sale" sign on that lawn. The real estate agent, now this guy is my gardener, called me and wanted to write an offer on my house for my gardener. I paid my gardener's real estate agent $4,500 to sell my gardener my house because I didn't tell my gardener all he had to do is come to me directly.
Shame on me. How many times does that happen? How many times do we have a conversation with someone who says, "Yes, I know that. They sold the house last month to a real estate investor." Why didn't I talk to you last month? What was it about me that stopped me from doing that? This is all about marketing.
Brandon: I'm curious. I think that's a really good point. I don't want to just move on. I do have something that you said earlier.
Josh: I love the gardener story. I think that's fantastic. It's true. I think we have to remember to talk to everybody. Talk to everybody because you don't know who's investing and you don't know who that next sale is going to go to and the next deal is going to be with. I love that.
Brandon: I can definitely identify with what you're saying about the maybe you sold Amway in the past. I never sold Amway but the idea of I'm a dreamer, is that the right word? An entrepreneur maybe, whatever; I like business ideas.
When I told my parents back when I was 21 that I was going to be a real estate investor, they thought I was crazy or just grab the rein and get-rich-quick scheme book or late-night TV thing. It was almost embarrassing. They just thought, "Oh, it's just Brandon and another one of his goofy ideas." I can definitely identify with that quite a bit.
Michael: Everybody has those. I always tell people those naysayers or those people that you're afraid to tell, those are perfect people to tell because if I can talk to my parents and tell them I want to do something and they want to laugh at me kind of thing or if I'm embarrassed because they'll laugh at me.
If I can talk to them, tell them and handle all of their objections, first they love me so they're never going to get mad at me. Secondly, when I handle their objections that tells me I'm one step closer to being able to handle the seller's objections. We need a bunch of those people. We have to role-play a lot.
When you market, when you send out anything, you put up a bandit sign or just send another yellow letter or a postcard or whatever you do, if you're not ready to receive the prospect's call or opportunity, don't do it.
You're standing in the grocery line and you're wearing an "I buy houses" t-shirt or shirt. The guy or gal in front of you or behind you says, "Hey, so you buy houses?" If you don't know what to say when they ask you that and if it's not a canned response and it can't be canned like you're reading from the back of a food item.
You have to say, "My name is Michael Quarles. I buy houses. I buy from these people, these people, these people, these people. I do all of these things for them." If you don't close with those things and tell them the story, shame on you for marketing. Shame on you for wearing that shirt because that's why we're doing it.
Brandon: It's funny. I wrote a post about that exact thing the other day on the BiggerPockets blog. It was called "How to write the perfect elevator pitch in under ten minutes." Whether or not my strategy for writing a pitch is exactly what everyone should do, people come up with their own ways.
My point in the article was this: for five years, that's exactly what happened to me. People would say, "What do you do?" This is what I would say, "Uh, I, um, I invest in real estate. What do you do?" That was my thing. That was my pitch. That was how I explained what I did in life.
Now when I look back, I'm like, man, I was so stupid. It only took me ten minutes to sit down one time, come up with a list or come up with kind of a sort of canned response but again, not like I'm reading it but come up with just an answer to that question that would help me out in my business and maybe help me raise money, help me find deals, whatever.
Again, I'll put a link to that in the show notes at BiggerPockets.com/show81. Definitely check that out if you want to know how to do your pitch.
To go back to something you said earlier, too. You said somebody will come to you and say, "I have $500. I want to get started with real estate investing. How do I get started?" You said make the list, which is awesome. Let me kind of rephrase that question. How much money do I need to get started with direct mail? We'll go back to the direct mail topic. How much do I need to get started? Will $500 do it? Will $500 a month do it? What do I need?
Michael: Before I can answer that, I have to know what someone's objective is. If their objective is "I'm going to buy on hold and I'm going to buy at 100% value. I'm going to finance all my purchases. I'm not looking to buy equity when I purchase," then that takes a limited amount of money.
Literally, you can finance your marketing within buying the house. I look at MLS and what realtors get paid. Some of what they get paid is for marketing. You can basically finance your marketing dollars. In that case, you don't need much at all.
Michael: If you're going to do shorts or if you're going to do leads options or maybe marginal sub-two's where you're not putting a lot of money out until you have to perform on the shorts situation, that takes less as well. I always looked at it as I said, told people, "What do you want to make? How do you want to make it?" I want to make $5,000 per deal wholesaling. "How many of those do you want to do?" I want to do 17 up of them.
"Can you do 17 of those in what period of time?" I want to do that monthly. "You want to make $85,000 monthly doing 17 wholesale builds that you make $5,000 on." They say yes. I say, "Okay." Keep in mind it's a one-tenth multiplier. Your $85,000, multiply it by 10%, that's what you're going to have to spend.
What if I want to make $100,000 in equity that I can flip? Fantastic. You have to spend $10,000 in marketing to earn that $100,000. That is the truest number there is irrespective of if you're a marginal person or a foot bearer or a wholesaler or a whole-tailer, you're going to spend 10% of whatever you want to make on marketing.
You could get lucky. There's a ton of people out there, they'll send out 300 postcards and they'll get a deal. Do you want to have a business that you can get lucky with and it's only sustained by how much luck you have? Or, do you want a business that you can say, "It's going to come in here every month? It's going to be a membership business. Every month, someone's going to give me a membership due."
We just call houses memberships but every month that's the business I want. If I know I have to have an on-purpose, predictable business then I know I have to spend marketing dollars. I know the marketing dollar that I spend today won't entirely benefit me today. It will come back to me in a year from today.
What most people don't realize is remember earlier we were talking about how do you start and you build that list, your sphere of influence is what it's called? In fact, if you read on BiggerPockets, which is an outstanding website...
Josh: Thank you.
Michael: It is. I don't know if the two of you have ever visited anybody else, any of the other arenas that are out there. I do every once in a while just to become so happy that I'm on BiggerPockets. It's like you look at and I'm going to take this personally. I see my fiancée and she's a beautiful female. When I go look at a not-so-beautiful female, I'm really happy with my female.
Josh: What you're trying to say is BiggerPockets is a beautiful female?
Michael: Yes. Clearly as it compares to the other places that you both know are out there.
Josh: Got you. Sorry to cut you off. I wanted to kind of dig back on the 10% a little bit. I think one of the things that I see and have seen over the years is you get these new guys and they think that they can start doing deals with very little money which they can do. We've talked about ways that you can kind of do it. Then, when they hear about the cost of marketing, they scoff and freak out.
I experienced that as well when I was an agent where new agents would come in. They say, "Well, I don't have the money to be an agent. How am I supposed to do this?" They don't want to do the legwork. They don't want to do the sweat equity stuff. They're stuck in this position where how the heck are they going to get any business. They, of course are the, I don't know what the failure rate is on agents but it's extremely high, at least I would guesstimate.
I think the same applies to investors as well for the same purpose. I think there's an unrealistic expectation of the amount of either sweat equity or cost that it takes to really start finding really, really great deals depending upon where you are.
If you're in an area, we talked about people in Milwaukee, you can just look in the MLS and you're going to find great deals. You're in Bakersfield right, Michael?
Josh: In Southern California, mid California, deals aren't falling off the MLS. You actually have to work to get those deals. The work is either money or sweat. I always try and tell people you have to have a good expectation. We'll have people who'll say, "Hey, I want to start today." We say, "Cool. How much money do you have?" They're like, "I have nothing."
Why don't you get a job? You can certainly go the creative route and that's a valid way to go. Why not get an actual job? Start building up reserves so that you've at least got cash in the bank whether it's for marketing, for flipping, for anything else just to have something.
Michael: If I can go back to your statement of the attrition rate for real estate agents, it is large. You rarely see that second year or third year agent. Once they become one, those are the successful ones. You can last 18, 24 months as a real estate agent if you haven't fallen off because of lack of funds. By that time, you've learned what you didn't know so you can start learning what you've learned now what you don't know.
Josh: Oh, man. You're confusing us again.
Michael: Wouldn't it be nice for real estate investors if we have that same opportunity? If we could go work for not the broker-investor but the guy or the gal and say, "I want to learn this business. I just want to learn it. I just want to be around like-minded people. I want to learn what contracts are about. I want to learn why you sit at the F desk or what do you say to somebody?"
We don't have that learn industry. We have all the people that call themselves mentors and gurus and those kinds of things.
Josh: You're talking about real mentors. You're talking about actual mentors, not the salespeople who label themselves mentors.
Michael: That was really a real advantage for me in the middle of my career when I did go get my real estate license and I sat at the desk. I watched the people filling up their coffee cups and hanging out at the donut box. I was asking myself, "Why aren't these people going to work?" They were at work.
That was the problem. They were at work but they weren't going to work. I learned real fast that in our life all we have to do is if you won't have the drive to succeed, watch people who are successful and do what they do. Most people watch someone who's successful and only want to do a part of what made them successful.
It's like I want to be a racecar but I don't want to put gas in my tank. You're not going to succeed. You have to kind of do everything that everybody that's succeeding is doing.
Brandon: I think that's interesting when you talk about the real agents that were just kind of standing around and eating donuts and drinking coffee. I see that in the real estate world as well. I don't know. They spend hours on their website or I don't know, business cards or designing the perfect business card or designing the perfect whatever.
It's like this idea of I feel like I’m being productive. I feel like I'm working. I feel like I'm making moves but I'm really not. All I have to do is actually go out there and do some work. I see that time and time again with people especially brand-new wholesalers or house flippers. I see that all the time.
Josh: Yes and you hear about it. You hear about guys who'll say, "Hey, I want to get started. I want to work in Bakersfield." What do you know about Bakersfield? "I don't know anything about Bakersfield?" What area do you want to target? Where do you want to farm? "I don't know."
Get down. Get out. Get in your car. Get on your bike. Get on your rollerblades. I don't care. Just get out and get to know an area and then you could start working on it and figuring it out. That's just time.
Michael: It's easier than that. When we buy houses out of town and we don't have legs on the ground out of town, but Google, you can drop down. You can see the house. Trulia and then I have some other data sources that allow me to actually see a lot of history on the houses and see the houses that are on the market, what have you. Being a broker, being a member of the board, I can join a board in California for $1,000 kind of thing.
I can get all the information that I need. What I can't get is that feel for value. I can look at a CMA and I can say, "This is the value of that house." I haven't seen the house except for the outside but I don't have a feel for the street because I've never been to that street.
All I do is I call a real estate agent, three of them-- Prudential, Century 21, someone else kind of thing. Agents will actually go out and look at houses for me for free in hopes that I'll list the house with them once I buy it, which I would and give me a complete write-up on the house. They'll do all my work. I love it.
I wish there were real estate investors who were like real estate agents. I wish there was a place we could go as investors who seriously buy houses and say, "I have four people in Baltimore that I could call up and say, 'Go look at this house for me.'" We don't.
Josh: Two things: one, CMA for those people who are listening and don't know; it's Comparative, I believe, Comparative Marketing Analysis. That basically will just kind of give you a...it's an analysis of the area around the property essentially.
Then, to your point, that really is kind of what BiggerPockets, one of the great things about BiggerPockets. I know tons and tons of people use it for that very purpose. "Hey, I'm thinking about going to Milwaukee. I'm thinking about going to Miami. Who's there? Let me talk to them. Now I have boots on the ground because I've networked and used the platform to do that." I think it's there.
To your point, I don't think there's...it's not necessarily formalized and it's kind of an organic thing more than anything else. I think it would be awesome if there were more of a structure which is what I think is what you're getting at where investors are more willing to kind of take folks under their wings in a mentorship role. Maybe it was even formalized with...I don't know. I'm a certified investor/mentor, something to that point.
Michael: We were talking about direct mail marketing earlier. The cost in direct mail sometimes is larger than the ability to actually receive the leads and fulfill those leads. Just because someone can spend X amount of dollars doing it doesn't mean they can actually do it from lead capture and lead fulfillment.
Some of us don't have that issue all the way up to that lead fulfillment because that's where the boots on the ground really comes in. "Tell me what the house is. Tell me what the social network in that is doing." Knowing that, we buy more houses.
Those people that have a large marketing budget that will just plot themselves in any area, they would absolutely enter that area without a problem because they know the mail is not an expense because of the rate of return that it has and they buy more houses.
They put a lot of these new investors who are just looking for how do I get started, what mentor do I go to, that's the best mentoring program they could have because having someone who's marketing to their area, who doesn't know their area, and what you are is the gofer which sounds horrible.
Be the guy or the gal for me right there and tell me everything you're eyes see. If I could put a camera on your forehead, that's what I'd want.
Josh: That's awesome. That’s awesome. I agree with you completely.
Brandon: Yes, I agree. You mentioned earlier about the 10% we talked about. You spend $1,000 on marketing. You'll likely make $10,000. However, if I go and take $10,000 right now…let's take $10,000 of my hard-earned money and I go and buy 10,000 pieces of paper that say I want to buy your house and I stick them in the mail.
I send them out to just every door direct mail, whatever, post office or just walk in my neighborhood and give it to every house, chances are I'm not going to make my money back probably, if I just send it to everyone, right?
Michael: We're still only about in 11% of our market. In my city, I have 116,000 units. By the way, if anybody's listening, know your numbers. It's really easy to learn in a city how many houses do I have. How many of those are single family? Of those, how many have been owned for four years or longer? Of those, how many have 30% equity or greater? Of those, how many have one to three bedrooms?
Brandon: How do we know those numbers? How do somebody do that research?
Michael: The easiest way is create an account with ListSource whether you buy it from them or not. Once you create an account, which is pretty easy, you can actually go in and play with the data. You can't see the actual result like the address and the name but they'll give you the counts. You kind of have to start with your counts. How many things do I have to market to?
I have 116,000 units but I only have 21,000 units that I should be marketing to. What's 21,000 and 116,000? What's that ratio? One in six?
Michael: One in six.
Josh: Yes, yes.
Michael: What percentage is that? 17?
Josh: 18 I think.
Brandon: What did you say? What was your first number? 22,000?
Michael: Right. I have 21,000 and 116,000.
Josh: 18.9. 18.9%.
Michael: If I looked at all my houses and I have 18% that could be a benefit to me, 82% of that wouldn't be a benefit to me. If went in to a neighborhood and just handed out flyers or did every door direct mail, 82% of it would be a waste of money.
Let's assume that a piece of mail costs $1. Now if you sent out 100 of those, you have $82 that was a waste. Then, you had $18 that wasn't a waste but you really have $100 spent on 18 people. That's an expensive letter. That's what the beauty of direct mail is.
In 2008, 2009 when RESPA came around again and it's been around forever.
Josh: Explain RESPA really quick.
Michael: Basically, the governing body that controls title companies and how they can give things away. Like in the old days of a title company, they would buy you dinner. They would buy you stamps. They would buy you stationery. They would buy you a car. They'd buy you anything you asked them to buy you as long as you were a productive agent and you could send them money.
What they determined was because the seller and the buyer are the two people that are actually paying for the cost of escrow and title and all that kind of good stuff, RESPA came in and says, "Well, you can only give limited things to these people for free because trying to entice them to do business with you, because it's not them that's actually paying for the cost of what you're selling." They did all that.
The CoreLogic merged with First American Title. Instead of using MetroScan for our property searches, we now went to the CoreLogic platform. The CoreLogic platform because now they could charge for it and not give it away because if you gave it away, it wasn't a worthy platform to build.
Now they're charging for it. Now we know when people have equity and it changed the whole marketplace from a marketing perspective. Am I getting too deep on marketing?
Brandon: You're saying that we can actually now tell how much equity somebody has. Is that what you're saying?
Michael: Absolutely. The algorithms that they use, and they don't let us know what the algorithm model is, but the algorithms are pretty good. When we have a fast increase and appreciation or decline in value, they have to adjust on our end when we look at something and say, "Okay, 30 is really 40 or 40 is really 30 depending on what's happening."
In the old days, I wouldn't go equity less than 20% but now I'm comfortable with 30 because I know that 30 is 40 because the algorithms haven't caught up yet.
Brandon: This is something like ListSource, right? Is that CoreLogic or are those two different things?
Michael: ListSource and CoreLogic is the same thing.
Brandon: Okay. All right. People can go to ListSource and they can actually look for people only that have equity?
Michael: Correct. Then, we removed corps and trusts. Some people will still stick to trusts thinking that trusts are owned by just Moms and Pops and not like-minded people. I don't like trusts. I don't market to trusts but that doesn't mean other people don't.
I'm not even sitting on the fence of whether I would do it or not but I do understand why they would do it. I would never dissuade them from doing it if that's truly what their marketing model is. We don't want to market to corps or LLC's.
Josh: Hey, Michael.
Josh: You're talking about marketing to folks who've got equity. That's kind of one target less. There are other ways that people can go as well. We can target folks in probate. We can target divorced. We can target all those other things.
Michael: I think the question that's coming is what is the best prospect groups out there, right?
Josh: I wasn't going to go there. I was actually going to say...
Brandon: I was going to go there.
Josh: I was going to say I think they all probably work and I think it's just a matter of becoming an expert on any one or all of those different ways and see what you're best at, see what your marketing works best at in your area. I would assume that if you would try your hand at probates and you stick with it for a while and you're not successful, try another one.
Generally, at some point you'll probably be successful, I would guess. It would be interesting to hear what, at least from your experience, the best bang for your buck is and maybe you could tell us about that.
Michael: I've mailed out to the inherited list. I've not marketed to the probate list. At one point, I was really big on 30-60-90 mortgage list, a bucketful of foreclosures. Naturally, equity.
Michael: Yes, absentees. There's absentees in general and there's absentees that are actually vacant. There's FSBO sold by owners. Then, the expired list, people that have a listing with a real estate agent that expired and now they're off the market for a moment. I've marketed to all those.
What I've learned in the marketing is they all are under the list of equity. I'll back up. The ones that I want are also on my equity list. I always tell people who come to me and they say, "What do you think about marketing to expireds?"
I say, "It's a great market to market, too but pull your equity list first. When you get your expired list, crosscheck your expireds to your equity. If you have an expired that has equity, that's the one you want to market to." Just because they're an expired doesn't mean they're a prospect. They're just an expired.
If you market to all of your equity list, you're marketing to everybody else anyway. You don't have to say divorcee on the equity list because well, you can be a divorcee but you're also an equity owner.
Brandon: That makes sense. Equity kind of covers everything.
Josh: You start with equity.
Michael: It's the fruit bowl. It holds apples and oranges and all this but it's still the fruit bowl. If you're serious about marketing, you market to that group. For the longest time, everybody preached absentee, absentee, absentee, absentee for a couple of different reasons and I get it. I'm not preaching absentee at all anymore.
I think it's equally as good as an owner-occupied equity. It's the Mom and Pop that has a house they want to sell to go move someplace else. For a while we were marketing to owner-occupieds where someone on the deed was 65 years or older and they lived in the house for 15 years or longer.
We put those filters on it so that when that person wanted to sell, if they've been there for 15 years or longer, there are some deferred maintenance. It's probably falling down. It was probably a family home and now there's no family at home so they don't need the four bedrooms that they had because there are just two of them now.
They're 65 or older. This 2,500 feet rundown home or home that hasn’t been maintained is now ready to be sold. Then, the other kicker is they typically don't need the money because their residence wasn't looked at as retirement income. Most people don't look at their personal residence as a thing they're going to retire with.
There were deals to be made there that said if there's an investor that wants to do that, don't go out there and do that in 100% right out of the gate. Find out if you can actually communicate with that prospect group because it's one of the hardest prospect groups from an emotion standpoint to communicate with. If you get along with them and you understand them, you want to help them then absolutely do it.
Brandon: Okay. You're saying, just to clarify there, we can market to anybody that has the equity obviously but if we want to, I don't know what's the word, pare it down I guess in to a group you feel most comfortable dealing with. Is that what you would advise them?
Michael: Right. If someone wants to go out like your probate list, your probate list doesn't mean they even have real property. The first thing you have to do on that is determine is it real property probate or just a probate transaction. There's real property attached to it.
The next thing I would look at is that property on the equity list because if it's not on my equity list, there's absolutely no reason to after that probate. Just because someone dies doesn't mean the loans go away.
Brandon: Yes. I like thinking about it that way. I never really thought about...because I do not, personally, I do not like dealing with certain types of people, certain types of sellers. It bothers me. I don't know. Maybe probate's one of them. I haven't been to a lot of probates. When people call me, I don't know. I just don't feel that comfortable doing it because it's not my personality to be there.
I like that way of thinking, of finding people that you enjoy working with. I enjoy working with out of town or absentee landlords. I like that because I'm a landlord. I can identify with them. I can work with them. Help them. I understand the numbers really well. That's just what I do. Other people are really good at dealing with probate. I know people like Sharon Vornholt. That's her bread and butter.
Michael: Sharon and Rick, if I were going to get into probate, I would absolutely be bugging the crap out of those two people because they have so much knowledge that they haven't even written down yet. I don't think they're trying to hide it from us.
It's just probate's not that big push so you don't see that big conversation about buying probates like you do on some of the other things because it's not a preached prospect group by a lot of the gurus on their weekend shows. People are always going after absentee owners, which is really getting overused.
Pick a group. Make sure if you pick the group that the group also has equity because...which is the problem with bandit signs. One of the problems besides being...
Josh: Amongst others, yes.
Michael: Yes. I have bought houses because of bandit signs but I've never put one up. Here's a little trick: if you don't want to put bandit signs up but want to buy houses from the signs, put a number in the phone book or under 411. Google "I buy houses" and "We buy houses."
Get two phone numbers. Pay for the little white page ad and say, "I am 'I buy houses' and I am 'We buy houses'" because what happens is people pass these signs and all they say is "We buy houses." "I buy houses." Everyone's signs say, "We buy houses." "I buy houses." With the phone number, they drive so fast then that thing is embedded in their brain.
Now they decide, "I want to sell my house." They go back. Someone's taken that sign down or the city's cut the sign in half. They can't read the phone number so they call information for the "I buy houses" phone number or the "We buy houses" phone number and there your phone number sits. What is it going to cost you? $25. It's like nothing but you're going to get free leads because someone else put bandit signs up.
Brandon: That's interesting. I never thought of the 411. People do the same thing with online marketing. People go. They see the sign for "We buy houses," the "I buy houses," whatever. They go online. They type in "I buy houses San Francisco." People try to get their website to rank for that because that's what people type in because they see the signs. Again, you're piggybacking off of what other people have done. Let's make that work.
The same thing applies to...I do a lot, not a lot but I do a little bit of Facebook advertising. Facebook advertising is kind of like bandit signs in that I'm advertising to everyone. I can't pick equity when I'm doing Facebook Ads. I get a lot of phone calls from people.
The other day, I talked to a lady who owed $142,000 on her house. I went and looked at it. The thing's maybe worth $90,000. I go and looked at it. There's nothing I can do for you. Maybe I could try to work a short sale but it was a two-bedroom house. I can't even do anything with a two-bedroom house in that area.
I like that idea about directing me. I'll be able to get a list like you talked about, a list that has equity that applies to the kind of person that you're interested in dealing with and then you market to them. That's how we get the list. What are we sending to these people? We got yellow letters, white letters. What are our options?
Michael: There's pretty much five options when you look at direct mail. We have the yellow letter, which can be...for people that don't know what the yellow letter is. It traditionally is a...it appears to be a yellow tablet lined paper that someone wrote on that says, "I want to buy this house. Call this phone number."
It appears as though you pulled it out of the yellow pad tablet, folded it in fours, and put it in an invitation envelope with a handwritten address on the front and a return address on the back typically tucked into the back flap. You don't lick the envelope and seal it. Stamp on it and send it in the mail.
What it appears to the person receiving it is coming from Grandma or Aunt Jane or someone that they know because it's in an invitation envelope. It's cute. It's friendly and it is going to piss the people off sometimes. It's what it does.
That is actually the power of the letter because although it's pissing some people off, it's making some people happy. You have both emotions at play. The yellow letter is a great thing to send out. I would always send it out in any marketing campaign I was going to do.
There are zip letters where if you've ever gotten a traffic ticket or a corporate check coming from a large company, it will be inside of this perforated envelope that you have to tear open and the check's at the bottom kind of thing or the summons is at the bottom or the traffic ticket's at the bottom. Those will get opened. They're great because it looks like it's important enough to get opened and then you can tell the story.
You have the postcard. The postcards in our industry where most industries like realtor industries they'll do a lot of pictorial postcards. They put a picture on it. Maybe they'll put some industry statistics on it. Then, they're going to put some sort of other picture on it. We call those pictorials.
You have text postcards which is really geared to what we do in life for an investor strategy that where we can talk to the prospect. Strangely enough, the market for text postcards...text postcard is literally just written format. It's just on a yellow piece of paper. Sometimes they're on white. Sometimes they're on blue. Sometimes they're on pink, sometimes on green, sometimes on orange, mostly on yellow.
The reason for the yellow and the reason that the text postcard came about is it appears to be like a notice from the post office like you have a package or something. Those are all little yellow postcard kinds of things.
Those get noticed because the worst thing about a small postcard is they're four by five and a half which is a lot smaller than a lot of other things that are coming in the mail. We're playing off the color as a color associates to something that is important being a post office notice.
What's strange about the postcards right now that's happening is the industry has its tendency to move sideways and up and down quite a bit. We're seeing a lot of no phone number postcards.
Josh: Somebody's sending a postcard with no...
Michael: I'll remove that statement. We're seeing a lot of postcards with phone numbers that are intentionally not being answered. The message on the postcards is "I'm not going to talk to you." When you call this number, no one will talk to you.
The people that are sending them out are getting really great results on it. It's a phenomenon. It's hard for me to understand and wrap my brain around. However, I try to wrap my brain around anything that's working.
There's a reason, by the way it works is because we're building such energy in to this mystical thing that's going to happen when you call this phone number because we're telling them call this phone number. You have a recorded message about your home. We're not even saying on the postcard we want to buy your house, which is what most postcards say. We're just saying we have an important message about your house. Please call.
Then, they filter out through the voice mail of this long voice mail of why they wanted you to call them. What drops out of that is an opportunity. What stays in that funnel is the ways of contacting all those people because all those people were on your prospect list. Now you might have a bucket load of something else that you can market to. I don't know.
Josh: People call that to get a recorded number and then now you have their phone number and you can follow-up with them. Is that what you mean?
Michael: Correct. In some, they're taking that phone number and then doing some SMS stuff and hitting them...if a postcard costs 36 cents, a text message costs probably a tenth of a penny, anything. You could set those up on auto-responders and what have you. I'm not so certain our industry is completely there yet. However, they are using a cellphone when they call so they probably understand text messaging.
The fifth piece of mail is the professional letter, which typically has logos on it. It's that normal-looking, not invoice-looking but normal-looking letter from an attorney kind of thing or someone important. Those have their place for certain prospects like if I were going to do probate marketing and it's one of the stages in my short sell marketing that I'd do.
They don't have their place in all prospect groups. I wouldn't send or solicit one as my first line of marketing to an equity list. It would be one of my later pieces. I'm a firm believer that we should be maxing up our messages to all the prospect groups.
Brandon: I was just going to ask you that. If one of these worked industry standard for everyone then we wouldn't have five. We'd have one but because there are five different ones work for different people for different times. You're suggesting to send a variety?
Michael: Yes. It's bigger than that. There was a question posted on BiggerPockets, that outstanding website we go to. I love it. I called it my mistress the other day. Well, it kind of is. If you think about it, you can go have fun with this thing and you don't feel guilty
Josh: That's our new marketing line.
Brandon: That it is right there. Anyway, there was a thing on BiggerPockets.
Michael: They were talking about branding and just handing out the same thing over and over and over and over and over again. I looked at the other side of the fence. Coca-Cola has 112 things you can drink. They have 112 items that you can drink.
Does Coke really need Tab? It's one of the things they sell. They have Diet Coke. Do they really need seven different waters? It's water. It's water. Why do they need them? It's real easy. They want the largest market share they can get because they know some people love Tab. As bad as Tab is, they love it.
Some people love Diet Coke. Some people will love the square bottled water. Some people will like the blue round bottled water. It's just water. They know.
Wow! If we want to talk to all of the people out there, what do we do? Will we send them a yellow letter? We send them a zip letter. We send them a postcard. We send them a different type of postcard. We send them a professional letter.
Now we have the opportunity to speak in to all of the different personality types that are out there because if we only marketed with the one thing that works, the yellow letter that works...let's assume that works the best for your prospect group. What's best? 7%? 8%?
What about the 93% that didn't like it? Why don't we also market to the 93% that didn't like it? We figure out what's the next chunk? The next chunk is postcard. Let's get that one. I'm sure we can't market to everybody because some of the people just don't like anything. They're just not going to drink Coke.
Josh: Hey, Michael. We covered the five types and that makes a ton of sense. What are we saying? Obviously, I'm assuming we're going to switch that up depending on where they are in our funnel. Is this our first or fifth letter to them?
In general, what are we kind of saying? I know you had kind of talked about that pre-recorded postcard but what about the other stuff? I know that's very generalized because you're going to be very specific depending upon the type of marketing that you're doing. In essence, what are we asking these guys? What are we telling to these people?
Michael: I've only done millions and millions of pieces of direct mail. I only know what I know.
Josh: What are you trying to say? You know more than us?
Michael: No, but I only know this answer from the perspective of doing millions and millions and millions of pieces of mail. I don't it from the perspective of doing a thousand pieces of mail. My experience tells me irrespective of the prospect group, you mail the same thing, the same message because our message is "I want to buy your house."
In a yellow letter, we keep it very simple, very to the point, very directed. We don't brag about our corporate or LLC status. We don't brag about that we're going to buy it in a trust. We don't tell them how we're going to buy it. We don't talk about sub-two or lease options, any of those things.
We say, "I want to buy your house at this address. Call this phone number." We can get a little bit more creative and add that "I'm an investor looking to buy a house in your market" or "My wife and I are looking to buy another rental in your market."
What we don't want to do on the yellow letter is make it so long that it loses the prospect in the first or second paragraph because handwritten fonts or live handwriting, if you took someone's handwriting that wrote, that's about a 21 font size. We type it at ten to 12 font size. We can only say about half of what we could say so it has to be pretty short or you just run off the paper.
Brandon: That makes sense. Speaking of fonts, you mentioned font handwriting. Is that what people do? How does that work versus handwriting versus typing a font?
Michael: In the old days, we would take a piece of white paper. We would handwrite the letter; leave a space for the address because I think adding the address in the letter is more important than the name of the person in the letter.
I can say, "Hello, neighbor. I want to buy your house on 123 Apple Street." The "123 Apple Street" is better than "Dear John." If I can do both, I want to do both. We'd write this letter up and whatever we want to.
We then copy it on lined paper. Then, someone would come back that wrote the letter and they'd write in the "John" and the "123 Apple Street." It would truly look like it was entirely handwritten.
I think it was Apple that came along with all of their font-ing ability and what have you and created some great things. Now we have the ability to create our own fonts.
From our perspective, we've created eight or nine of them. We can really take now someone's handwriting and make the letter look really handwritten but it's all font-ed. Then, we have the opportunity to say, "Okay. Do we want to font address in the envelope or handwritten address in the envelope?"
I've done some tracking and determination. Is it worth spending the extra money to have someone handwrite something or just font it all out? It is not worth writing something on the envelope over just font-ing it all out. Yes, you're going to get a better open rate. Are you not going to get a better close rate based upon the expense?
Let's call it quartered to have someone write and envelope out. If I could take that in a thousand letters, that $250 I would have saved and put more marketing out on the street, I now have more opportunity on the street to buy more houses because what we're doing is when we buy a house, our cab costs are so large which makes our profits so large that it far exceeds the cost of going that other route.
When you run the numbers like that, it makes sense. I'm not sure if that was your question or not.
Josh: That's right.
Brandon: Yes, yes. That makes sense. Yes.
Josh: Yes, yes. I know. It's fine.
Brandon: I just want to know, to dive more on the font thing. We have probably ten more questions specifically on direct mail that we want to fire at you real quick because these are really good questions that I want to get to but we're never going to have time. I'm going to fire them. Let's do these runs in Fire Round sequence sort of thing.
Josh: Yes. Here's the first one.
Brandon: What are the top mistakes people make with their direct mail.
Michael: Not answering their phone or having and answering system set-up.
Brandon: Okay. I like it.
Michael: Right next to that one is not being prepared for either for the lack of calls or the abundance of calls. Because they just want to do something, they want to be busy, but they don't look at the end perspective. What is it going to produce? When you send out 14,000 letters, are you prepared for all of these calls? No. If you only send out 50 letters, are you prepared for that?
Josh: Yes. That's great.
Brandon: That definitely makes sense.
Josh: I think it's great. This stuff is gold right here.
All right. How many times should you repeat a direct mail sequence before you see results? To kind of clarify that a little bit, I wonder if you could tell us through your date and experience for the average person who's closing deals, is it the first piece of mail that results in a closed deal? Is it the third, the fifth, the seventh? Or, is that just really going to vary so much?
Michael: It varies a lot because what happens with direct mail is if an investor starts marketing in to area that's being marketed already then their first letter isn't the prospect's first letter so they're piggybacking on somebody else's marketing which is great. We see it a lot in a bigger, larger area.
We see a lot of benefit to someone who couldn't jump in and start doing transactions on their first and second mail piece, but if someone's in a smaller area where they don't have their peer group marketing with them then they're going to be that two to eight sequence kind of thing.
I was sending out 16 letters within a 30-day period. I would get to an average of nine before I could pull them off my mailing sequence because we did something with them.
Brandon: Wait. You're saying you did 16 pieces in 30 days like you mailed them every other day?
Michael: We wouldn't do that today. That's been part of my history.
Michael: Today I'm mailing, I call it my 17 cycle. If I have an address...and this is important for people to understand. You have an address. How long should you market to that address? You market to that address until they sell to somebody else or they no longer qualify to be on your list. You determine if they're still qualified on your list every six months. You pull your list in January 1st and then July 1st you re-pull your list.
In the meantime, during that six-month period, you've sent them eight and a half pieces of mail. Over the next 12 months if they're still on your list, you're going to send another eight and half pieces of mail. You're going to be a 17 schedule on your marketing so every three weeks.
It used to be, before we had this influx of appreciation or selling, about a six-week cycle but now it's a three-week cycle. We should be taking and we should be moving when our market's moving. As the market gets hotter and hotter and hotter, and it is, we should be marketing more often. As it cools back down again, going backwards...we should never go over 90 days apart.
Some people, they look at their marketing budget, one of you asked earlier, "$10,000 -- what would they do with it?" When you look at the marketing budget, you look at a 90-day period of time. What can you do over that 90-day period of time? If you have a thousand dollars, you really only have $333 a month to market with.
Then, you have to be satisfied that month one, that could produce you ten times that amount or month two, it could produce you 20 times that amount or month three, it could produce you 30 times that amount where you couldn't have gotten anything the previous month. We should always look at that.
Then, keep going. It's not like you do three pieces of mail and stop. You keep going and going and going and going and going and then every six months you re-pull your list.
Brandon: If they're still on the list then you hit them again.
Michael: Some will. Some will have sold to somebody else which is why we redo the list. At that rate, because in most markets right now they're turning inventory about 25%. The lists are expensive. The mail pieces are expensive. The mail pieces start being more expensive than the list towards those six months so you just get a new one.
Brandon: That makes sense. That makes sense.
Josh: What would you suggest to people? Because we talked about piggybacking off other folks who might have already been marketing, how would people stand out against their competitors in those areas? What if I'm in the same area as you are? I listen to you. I'm like, "Oh, this guy knows what he's talking about." Now I start doing it. Is it just luck of the draw? Is it the message? Is it timing? Is it all of the above?
Michael: I think there's luck even when you're skilled and you have systems in place because we don't know who the prospect is. If we did, we'd only send out that letter. Or, the motivated prospect. It starts with lead generation. That's doing something that puts a lot of something somewhere for calls to come in.
Right at that point, it's how are we going to capture it. That's where a ton of people fall down. The call comes in and they're at work or they're doing something else and they're doing something else. Finally, they call them back. I'm sitting at the kitchen table buying the house.
Josh: That's because you're answering the phone and the vast majority of other people, you're saying are not answering the phones.
Michael: Yes. You could prove this to yourself. If you're in the marketplace, look on Craigslist or look in the newspaper for people that say, "I want to buy your house" and call him. No one's going to answer.
Brandon: I've done that a few times just because I think it will be funny to call somebody and just...I want to see how they handle the calls. I do it from time to time. I call bandit signs or call the ads. I've never had anybody answer. Ever. It's always the voice mail.
Michael: There have been times I've set up the kitchen table to get the contract signed. They say, "So and so was here yesterday and he gave us a better price." Back into the call, "So and so was here yesterday and he gave you a better price."
Josh: Then why am I here?
Michael: No. I ask them, "Why didn't you buy it from them? What was it about them that you've felt that they couldn't fall forward?"
Brandon: there was an article I read online the other day. It was a sales article in entrepreneur.com or something like that. It said people don't buy what you're selling. They usually buy because of who you are. I thought it was interesting.
Michael: It goes back to the first podcast where we were getting in to how do you actually communicate with people. Some people took offense to that which I was kind of surprised, but I guess that's normal. At the same time, it's so valuable. You really need to learn how to speak to people and what questions to ask and then ask the questions. Be prepared to buy a house. Most people aren't.
Brandon: Yes, yes. I agree. I think that's awesome.
Michael: Josh, did that answer your question?
Josh: It totally did. It totally did. Listen. Everything that we've dealt with, everything we've covered in this show so far has been fantastic. Truth be told, Brandon and I are sitting here on the shared doc that we've got our notes on and we keep crossing things off the list. Even though you're not specifically answering them as we ask, you're actually answering them as you talk. It's awesome.
Brandon: All right. We talked about voice mail a little bit earlier. You should try to answer your phone as much as possible you're saying. However, you can't always. Like you said, this is a job. This is a business. You don't work for 24/7, 365.
Michael: You can't answer your phone even if it is in a job 24/7. You always have to have the back-up plan in play. Sometimes the back-up plan in play is answering your phone. That's a weird statement to make.
Because if you can't answer all the calls all the time, shouldn't you set a system up that the majority of the calls that you can't answer are the primary calls and the ones you can answer are the other calls? Because if you can give everybody the same experience, then you have duplicable results.
Josh: I think he's talking about if you can't answer it at 6:00, maybe having a service that answers it...
Michael: Either a service, a voice mail, a system in play that answers the phone for you and carries out a series of tasks that you set up in advance. Those tasks feed you something that you've set up so you can fall forward.
Even if you answer all your calls during the day, let's assume that's the case, you can't answer all your calls during the day. You're going to be at lunch. You're going to be sleeping. You’re going to be doing something or you're going to be on the phone talking to a seller anyway.
If you're going to send everybody else to a voice mail then I think it's extremely important to set up that voice mail or that call answering service system and make that as good as it can be and then answer the calls that you want to answer.
Josh: I'm sorry to cut you off. I was going to say what does that mean. Are you talking about finding a way to actually filter the calls somehow before you...I'm imagining, which will be amazing, that there's some system that would actually...you can pre-program in all the phone numbers of the people that you somehow managed to get from the same list that you got from ListSource, say.
When that call comes in, you know it's this seller A that's got X amount of equity and then it flashes and you're like, "Oh, this guy, this call. He barely had equity. I'd let it go to voice mail." It would be amazing if that were possible.
Michael: No. Yes, it would be amazing if that were possible. That's not. What I'm saying is most people don't spend enough time with their call capture system. As equal amount of time that it takes to set up that marketing program, you should set up your call capture system because you can't talk to everybody at the same time.
If you can't, then what's the best experience you can give them? I think it really just depends on what your budget is. You can go to PatLive or a company like that and have them answer. They absolutely have their negatives.
You can go to a voice mail and need to do a real sweet, innocent fast voice mail, which has its negatives. You can do a long, drawn-out "why I want to buy your house,” voice mail which has its negatives. Everything has a positive. There are good and bad things with everything -- even live answer as much as you can, whatever you need to do.
I choose in my business because I think buying houses making $50,000 is pretty good that I choose to have staff members who sit there and they're paid to sit there between 8:00 and 5:00 and answer my phone. They're running off the scripts. They're doing the work that needs to be done with the calls that come in. Then, at that point we can take it from there and actually go and find out if we have an opportunity.
I also know they're going to miss calls. The calls that they miss, the go to a voice mail system that has a short message that the person can leave, comes right back to those attendants and they're told to call those people back within 15 minutes of that call coming in because we know that person's fresh and then following-up and set an appointment assuming they answer the five questions right.
Then, on weekends everything goes to voice mail because we don't work weekends. I know some investors, that's the only time they can work. If that's the time they can work, then they work weekends. I've always wanted an investment business that I wasn't a slave to my business. That kind of seems like slave business.
Josh: Hey, Michael. Good information. We're wrapping this thing up. We really have one last question for you and I think a lot of people can relate to this particular one. I think this explains why a lot of people don't answer their phones.
Josh: What would you suggest for a newbie who's trying to overcome the fear of answering their phone how to actually go ahead and do it? That first phone call is petrifying for a lot of people. What advice do you have for the newbies who are listening about how to prepare for that call, maybe or what to say or what to have at the ready for that first phone call?
Michael: I've always said that you should have a script and you should have the scripts on you, whatever script you want to use. We use a short one. We use the long one. Over my years of doing this we have three or four different scripts. Learn it. How do you learn it? I think you memorize saying it really fast ten times in the morning to yourself and then ten times at night to yourself. You'll learn it.
You try to memorize it but it still needs to be your voice, your tonality, your way of speaking because you need to be able to ask questions without looking at something. That fear is a great thing. We either have fear of being successful or we have fear of not being successful. You have to ask yourself, "What am I afraid of? Am I afraid that I'm not going to be successful? Or, am I afraid of being successful?"
Play on that. You go, "My fear is just fear because I don't know how to do something but I want to be rich." Well, get over it and just answer the phone. Practice. Find someone to practice with. Call strangers. Go call 312-555-1212 and ask someone if they have a house for sale. They're going to say all kinds of things to you and hang up on you and call you, "You're an idiot," and all these words.
Then, pick up the phone and do it again. Practice on people who don't matter to you so that when calls that you've spent learning on come in that do matter to you then you can talk to them.
Josh: Great advice.
Michael: These people have spent so much energy -- mind energy, money energy, time energy to get to where they are at and man, not being prepared is crazy.
Josh: Yes. That's awesome.
Brandon: I think that's a great way to end this thing. That's great.
Josh: All right, Michael, listen. We really, really, really appreciate the time. We're going to skip the Fire Round. We're going to skip the Famous For. We've done those and we've done them within the last month so I don't really see any point. This has been fantastic. We've covered a ton of content, a ton of material. We really, really appreciate you giving us the time.
We also, obviously appreciate you spending time with your mistress; that is, BiggerPockets of course. Anybody listening who has questions about marketing, direct marketing, Michael's always amazing. He's always one of the guys who'll jump in and help out. Feel free to do that, guys on the forums and obviously, on the show notes at BiggerPockets.com/show81.
Lastly, Michael before we kick you out of here, where can people find more about you? You do have a company that does this stuff, that does marketing so feel free to give a quick little plug here.
Michael: We didn't cover marketing, hardly at all. Shame on me for getting so long-winded because I'm passionate about it. If anybody wants to really learn about marketing, all you have to do is call me. I told everybody last time to call Norma. She now has a dartboard and a picture of me on the wall and darts. I have holes in my face from Norma throwing darts at me.
Call the office. Ask for me. They'll probably set you up a time to actually talk with me. I'll spend an hour, an hour and a half, two hours. I will absolutely set up a marketing program for you that you can fall forward with. I will absolutely be honest with them.
If I don't think they should do direct mail, I will tell them don't do direct mail or if they shouldn't do yellow letters and do postcards. Do postcard. I'm not in it for my success. I'm already successful. I'm in it for their success. Let's make them successful. Just call yellowletters.com. What wasn't I supposed to say?
Josh: You can say it now. We don't want the show to be a big...
Josh: There you go. Check it out, guys, yellowletters.com. Michael, thanks so much for your time. We'll see you around on the site.
Michael: See you around on the site. Thanks, guys.
Brandon: All right. Thank you, Michael.
Josh: All right, guys. That was show 81 of the BiggerPockets podcast with Michael Quarles. I'm sure you guys noticed there was not a Famous Four. We specifically did that because we'd already done it just a few weeks earlier and we didn't see the value of regurgitating said information to you.
Otherwise, that was great, Brando. I was certainly impressed with the amount of information that Michael had to share. As I always am, he's fantastic on the forums.
Brandon: Yes, yes. What I like about Michael a lot is he goes deeper than just the how to. It's not just do this, send this letter, here's why you send it. Michael always goes deeper like what does it actually mean because a lot of times just telling people you need to send this XYZ out doesn't always work. Everybody has got different scenarios. I love that he kind of shares the background of why we do things and how we do them starting from nothing. Great.
Josh: Yes. Yes. Obviously, we were kidding about it. Somebody’s answers tended to be verbose. I think that's because he's been around for so long and has so much knowledge and in fact...
Brandon: You called him old?
Josh: Yes. Now that he's not here, I'm calling him old. What do you say about that, Michael? No. He's been around. Listen. He knows what he's doing and yes, it was great. Anyway, big thanks to Michael.
If you are a BiggerPockets member, obviously, you know that you can connect and interact with Michael on the forums. He's on there pretty much every day. As he called it, BiggerPockets is his mistress. You could find tons of other amazing, amazing brilliant people hanging out on BiggerPockets, their mistresses as well sharing lots of great information.
For those of you who are not, that's why you need to be doing it. These guys, these folks are really, really good people. If you're not on there engaging, asking them questions, picking their brains, you're missing a lot of the fun and you're missing a lot of the value of this site. I definitely encourage you to do that.
It kind of breaks my heart. Sometimes you'll see guys jump on the site and they'll participate for a couple of days and then you never hear from them again. Then, you'll find out three, four, five months later that they quit the business.
You'll ask them, "Hey, what happened?" "I didn't have the support. I didn't have this." You stop and you say, "You have this monster support group. You have all these people who can mentor your and help you and be there to guide you. If you're sitting there silently, you're not getting that."
Here's my reminder to everyone listening who's either not signed up yet for BiggerPockets or who's on BiggerPockets and hasn't really stepped it up and started to connect with people, you got to do it because you're going to find so much value. You’re going to find so many great people to help you and help you grow your business. I definitely encourage that.
Sorry to go on and on but I'm really passionate about this. It's so exciting watching people's businesses grow because of their participation on our platform.
With that, as always, we'd like to remind you we've got our Facebook, our Twitter, our G+, our LinkedIn. Definitely jump in. Follow us there. We share all sorts of cool stuff and content and news and other fun things. Hopefully, you'll participate with us there and be on that. That's it.
This is show 81 of the BiggerPockets podcast with Michael Quarles. The show notes you can find at BiggerPockets.com/show81. I'm going to let my friend, Brandon take us out of here.
Brandon: Once again, BiggerPockets Podcast Show 81 in the books. This is Brandon and Josh signing off.
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