Is There Such Thing As A "Saturated Market"?

20 Replies

Hello BP investors and alumni, My name is Lawrence Taylor and this is my first official post. I'm excited to get feedback so let's get to it! I've been marketing now for about 3 months and I've noticed a heavy presence of investors almost everywhere I look. My marketing includes driving for dollars, direct mail(yellow letters), and knocked on a couple doors but no one was home(at least I think). As a newbie investor I was curious if there was such thing as a "Saturated Market" or is that just a myth or excuse that people use when their stuff doesn't work or they don't get the "typical" results.

I'm not sure where I heard the term or how long ago I heard it but I would think in the Houston area that would be the case. I know 3 months of marketing isn't a lot to go off but to me when I go to my REIA and speak with the veterans of that group they all seem to be making it rain on marketing which creates some doubt in my mind as you can imagine. So my plans are to continue focusing on direct mail and either drive for dollars and door knock on the weekends.  I just can't help but notice the amount of bandit signs, post cards and overall marketing I see and wonder how many people (if any) feel this way and if maybe that's why people get discouraged from making the switch into Real Estate.

I have a full time job and small children (including a newborn) so I can't hit the pavement or stay up writing letters as much as I would like. I also don't have chunks of cash to drop on marketing so I know I'm at somewhat of a disadvantage. If there is such thing as a Saturated Market and in fact I am in one, is there any advice on dealing with it OR if it IS just a myth please let me know so I can breathe a little bit easier in my quest for finding great deals!

Thanks in advance.

Philadelphia is a VERY rough market but people still find deals. So Houston may be similar. 

The question is how many pieces are you sending out per month in addition to door knocking and driving for dollars. 

In Philly,  if you're just mailing absentee, I think it has to be more than 4K per month if not more than 6k. Other list (tax lien etc) aren't quiet as much required mailing but still as competitive so you have mail frequently (biweekly vs monthly) . That's me speaking for Philly. If Houston is ANYTHING like Philly you definitely may want to see about increasing your marketing budget 

Hi @Lawrence Taylor, I'm glad you decided to jump in with a question!  Whether the market is saturated or not, I do not know, but to me (also a newbie investor) it sure seems that way.

Have you been listening to the BP podcasts?  One of the things that caught my ear recently was a suggestion to look up eviction records, then contact the owners of those homes to see if they are interested in selling.  Maybe the owner is fed up with landlording after evicting a tenant and would be willing to talk.

It might help for you to define what you are trying to achieve. Because "saturated" will depend a lot on what you mean. Are you trying to fix and flip, wholesale, buy and hold etc.

Originally posted by @Leigh Ann Smith :

Hi @Lawrence Taylor, I'm glad you decided to jump in with a question!  Whether the market is saturated or not, I do not know, but to me (also a newbie investor) it sure seems that way.

Have you been listening to the BP podcasts?  One of the things that caught my ear recently was a suggestion to look up eviction records, then contact the owners of those homes to see if they are interested in selling.  Maybe the owner is fed up with landlording after evicting a tenant and would be willing to talk.

Yes I heard that too and that was a great tip! I think that was Mike talking about wholesaling houses. I actually forgot about that. Thanks for the tip!

Originally posted by @Bill Hamilton :

It might help for you to define what you are trying to achieve. Because "saturated" will depend a lot on what you mean. Are you trying to fix and flip, wholesale, buy and hold etc.

Sorry thought I mentioned that. I plan on wholesaling first but the goal is to fix and flip. From what I picked up it seems starting off wholesaling then transitioning would be easier me.

Originally posted by @Shariyf Grevious :

Philadelphia is a VERY rough market but people still find deals. So Houston may be similar. 

The question is how many pieces are you sending out per month in addition to door knocking and driving for dollars. 

In Philly,  if you're just mailing absentee, I think it has to be more than 4K per month if not more than 6k. Other list (tax lien etc) aren't quiet as much required mailing but still as competitive so you have mail frequently (biweekly vs monthly) . That's me speaking for Philly. If Houston is ANYTHING like Philly you definitely may want to see about increasing your marketing budget 

If that's the case I'm not doing nearly enough marketing to make a dent which is my fear. I only send about 4-500 pieces a month.

Truth is, YES, Houston is very competitive right now.  But unless you are thinking about moving or blowing off your interest in real estate, I do think the over-saturated idea could talk you out of taking action or staying on the course you've set.

Guys that drop 10K pieces of direct mail will get more calls and do more deals than those that drop 1K.  But that is no reason to stop and talk yourself out of being aggressive and wanting something more for your family.

Every day, play with the cards you are dealt and grab opportunity wherever you can find it, even if it takes MONTHS to find a deal.  The guy that dropped 10K pieces of mail started out just like that - working with what he had, refusing to give up when he discovered it was way harder than he thought.

This is a marathon, not a sprint.  Settle in and do what you can with what you have.  There are deals happening every day out there and someone is getting them.  Why not you?

“Always bear in mind that your own resolution to succeed is more important than any other one thing.” ~ Abraham Lincoln

@Dev Horn

The market can only be saturated for those who aren't running a systemized business.  

Your marathon term fits well.   Most are in the pac of wannabe investors  The true marathon investors are so far ahead they aren't bothered by the mass. 

@Lawrence Taylor

Hi there! I picked up on two things:

GOOD PLAN: "So my plans are to continue focusing on direct mail"

and NEEDS WORK: "I only send about 4-500 pieces a month."

Make that closer to 4 to 5,000 and you should happily feel the results. And make it a good mailer - i.e. personal, 2 page, decent offer, etc. Get good data, merge/sort down to your ideal seller list, and use sometime like Yellow Letters to get it out. If you stay with it you will be too busy answering the phone to event think about driving around and knocking on doors.

Hope that helps!

Hey Lawrence Taylor welcome to the Houston market. We do a lot of mail in Houston, and yes it is very competitive. Dev Horn said it perfectly. Don't let competition or a lot of it prevent you from taking action. We started just sending a small amount of mail and ramped up as we grew. Don't get discouraged, stay the course. We have found that if you can get to 1k per month in direct mail spend, you should be able to start bringing deals in (maybe 1-2/ month). Feel free to hit me up with any questions or help. Good luck!

Originally posted by @Dev Horn :

Truth is, YES, Houston is very competitive right now.  But unless you are thinking about moving or blowing off your interest in real estate, I do think the over-saturated idea could talk you out of taking action or staying on the course you've set.

Guys that drop 10K pieces of direct mail will get more calls and do more deals than those that drop 1K.  But that is no reason to stop and talk yourself out of being aggressive and wanting something more for your family.

Every day, play with the cards you are dealt and grab opportunity wherever you can find it, even if it takes MONTHS to find a deal.  The guy that dropped 10K pieces of mail started out just like that - working with what he had, refusing to give up when he discovered it was way harder than he thought.

This is a marathon, not a sprint.  Settle in and do what you can with what you have.  There are deals happening every day out there and someone is getting them.  Why not you?

“Always bear in mind that your own resolution to succeed is more important than any other one thing.” ~ Abraham Lincoln

Definitely not thinking about moving since I just got here from NY but I'm starting to realize that marathon mentally seems to be the one that I should have adopted from the start. I definitely will be staying long term in the business but dropping that much(to me) right now is unfeasible obviously so I guess the real question is, is it worth sending such a small amount of mail out or should I do other techniques until I can afford to ramp it up?  

Originally posted by @Jill DeWit :

@Lawrence Taylor

Hi there! I picked up on two things:

GOOD PLAN: "So my plans are to continue focusing on direct mail"

and NEEDS WORK: "I only send about 4-500 pieces a month."

Make that closer to 4 to 5,000 and you should happily feel the results. And make it a good mailer - i.e. personal, 2 page, decent offer, etc. Get good data, merge/sort down to your ideal seller list, and use sometime like Yellow Letters to get it out. If you stay with it you will be too busy answering the phone to event think about driving around and knocking on doors.

Hope that helps!

Thanks Jill. Once I get the opportunity to send that many then I definitely will! Unfortunately right now that's all I can do.

Originally posted by @Michael Quarles :

@Dev Horn

The market can only be saturated for those who aren't running a systemized business.  

Your marathon term fits well.   Most are in the pac of wannabe investors  The true marathon investors are so far ahead they aren't bothered by the mass. 

Thanks for the comment Michael, I've listened to your podcast quite a bit and was hoping to get you on the phone once I spoke to more people and got some more experience under my belt. I guess I would be in that pac of wannabe investors right now since I haven't gotten a deal yet. So I have somewhat of a system set up as much as I can and I have no problem(fear) speaking to people in person or on the phone since I used to sell electricity door to door and I was a car salesman for 3.5 years. I understand its a numbers game more than the average newbie and I understand marketing is the foundation of my business. At some point I'll be using your post cards because I've heard many times in the podcasts and seen many people say that the post cards get better response rates and give better quality leads per piece. 

Hello @Lawrence Taylor

Welcome to Houston, Texas

If you are just sending 500 letters/postcards a month , you may get frustrated real fast, as the marketing is not working as you have planned.

the investors that I know in Houston they get 0.5% to 1% calls from their marketing and out of 25 leads they get a deal in average

if you send 500 cards, you will get 2-5 calls a month and it mat take several months until you get a real deal

What I suggest is to drive for dollars in older subdivisions built in 1980 and below, look for vacant homes or distressed properties and send them post cards, call all FSBO and rent signs. Do this every week for 2-3 months non-stop and you will be surprised with results you get. Save your hard earn $$ and by using this method you will have faster results

Right now IMHO the markets in a lot of areas are actually very challenging, your seeing this.

On the buy side their is all of a sudden a lot of competition on deals that wasn't their a few years ago. This naturally will push prices up.

On the selling side, at least in my area I'm not seeing any appreciation on the back end to support higher purchase values. 

At the end of the day every market has its challenges and you can make money regardless.

Originally posted by @Hector Perez :

Hello @Lawrence Taylor

Welcome to Houston, Texas

If you are just sending 500 letters/postcards a month , you may get frustrated real fast, as the marketing is not working as you have planned.

the investors that I know in Houston they get 0.5% to 1% calls from their marketing and out of 25 leads they get a deal in average

if you send 500 cards, you will get 2-5 calls a month and it mat take several months until you get a real deal

What I suggest is to drive for dollars in older subdivisions built in 1980 and below, look for vacant homes or distressed properties and send them post cards, call all FSBO and rent signs. Do this every week for 2-3 months non-stop and you will be surprised with results you get. Save your hard earn $$ and by using this method you will have faster results

I think this is really solid advice and I appreciate it! Thanks.

@ lawrence taylor 

One thing to consider when you are at these REI events is that many people who seem like they are "making it rain" with marketing or picking up properties, exaggerate what they're doing, how much they have and what they've done. This causes spectators and followers to have unrealistic expectations, especially if they're new in the industry. I see it all the time. I meet someone at an event. They openly tell me how many properties they've done or how much money they have, or how much they spend on marketing. Then later they end up applying for financing through us or having to provide proof of funds and 75% of the time they were exaggerating or just straight up lying. 

The reality is, there are more home investors and wholesalers than ever in history, including wannabes. This is simply because our population is more financially educated and has more access to marketing avenues, internet & education. Everyone is always looking for an edge and easy way to make money. There is this common false idea that wholesaling is easy and it leads to big gains really quick and this falsehood is enhanced by people who put on these seminars or start these collective real estate groups catered to new investors. It's borderline predatory and if you think that going to a weekend seminar will get you ready to wholesale- be prepared to be disappointed.

While you can make money quickly, its not nearly as easy as these jimmy seminars or GURUS try to tell you. The market is saturated with wholesalers and investors and will continue to be saturated as long as real estate becomes easier and easier to buy. The way to mitigate being treated as one of these wannabes- have all of your ducks in a row. You must have a system in place that makes your buyer and seller feel comfortable with the process and they must know that you are a professional and know what you're doing. Then you must prove it. 1000 letters DOES NOT equal 1 or 2 buys. It's all about your system and your service.

Originally posted by @Trey Watson :

@ lawrence taylor 

One thing to consider when you are at these REI events is that many people who seem like they are "making it rain" with marketing or picking up properties, exaggerate what they're doing, how much they have and what they've done. This causes spectators and followers to have unrealistic expectations, especially if they're new in the industry. I see it all the time. I meet someone at an event. They openly tell me how many properties they've done or how much money they have, or how much they spend on marketing. Then later they end up applying for financing through us or having to provide proof of funds and 75% of the time they were exaggerating or just straight up lying. 

The reality is, there are more home investors and wholesalers than ever in history, including wannabes. This is simply because our population is more financially educated and has more access to marketing avenues, internet & education. Everyone is always looking for an edge and easy way to make money. There is this common false idea that wholesaling is easy and it leads to big gains really quick and this falsehood is enhanced by people who put on these seminars or start these collective real estate groups catered to new investors. It's borderline predatory and if you think that going to a weekend seminar will get you ready to wholesale- be prepared to be disappointed.

While you can make money quickly, its not nearly as easy as these jimmy seminars or GURUS try to tell you. The market is saturated with wholesalers and investors and will continue to be saturated as long as real estate becomes easier and easier to buy. The way to mitigate being treated as one of these wannabes- have all of your ducks in a row. You must have a system in place that makes your buyer and seller feel comfortable with the process and they must know that you are a professional and know what you're doing. Then you must prove it. 1000 letters DOES NOT equal 1 or 2 buys. It's all about your system and your service.

I'll have no choice but to take your word for it tho I'm confindent that there are facts in your statements. The systematic concept is one that I can appreciate it since I'm not interested in spending all my free money on marketing so with that being said my system for now is driving for dollars and door knocking until I can afford a more prolific approach. Also FSBO and eviction lists seem to be popular with beginners so I do have a few good options to get something going. Thanks for the feedback. If you have any other advice please keep it coming!

@Lawrence Taylor

That's good that you're willing to knock on doors and put in the hustle to get the contract, but that's not what I'm saying. 

I am referring to a system of service. You need to think about how you're going to handle the transaction once you already have the sellers contract. Then on top of that you have to think about how your're going to handle it on your buyers side. You need to have a plan and system. 

If you don't have that system in place, and you don't have your paperwork right, how can you expect any seller or buyer to trust you enough to sign a contract with you? You're talking about the biggest transaction of most peoples lives- a house. 

A smooth, seamless transaction is what people want, on both the buy and sale side and that is what will set you apart from other wholesalers in this saturated market.

@Trey Watson I hear you and I guess that part of the obstacle I have. Not being able to get in front of many people to get that experience to get to a smooth transition. I've done the reading and watched the videos and listened to the podcasts, now I have to do it.

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