What my business is missing: Marketing for motivated sellers

14 Replies

Late last year, it dawned on me--after about a year of wrestling with what steps come next for me--that the right thing for me to do, you could perhaps call it a calling, was to take my investing from a side hustle, to a true career, a company. This would challenge me and force me to grow and to tap a deep reservoir of potential.

I'll spare you the details of that quest of inner discovery. The bottom line is, I began to ask, "What does a professional investor do differently than a side investor? What does my investing look like as a business, as a company, rather than as a hobby or side hustle?"

I wrote out an org chart of my development firm, what it needs to look like in the next few years, what the business model is, who my first second and third hires are, and what succeeding at this will allow me to do in terms of generosity and impact toward the world around me.

One piece that I admittedly have been avoiding, is dialing in my marketing. It is essentially the marketing of a wholesaler, except I don't have to flip it. I am the wholesaler and the cash buyer all in one.

I'd love to ask the experienced investors and wholesalers out there:

What have you had the most success with when marketing for distressed properties?

I'm most interested in exploring what I can do with letters, to start. I may be open to Facebook ads, down the line, and possibly billboards as well, when it is warranted.

My first big benchmark goal is to contract 3 properties per month to either renovate, scrape and build, or hold as a rental. I've been able to find roughly 1/month without investing time or money into my own marketing, but there is a definitely ceiling if I'm relying solely on the MLS and wholesalers.

I'm hoping that with a three-pronged approach, with 3 streams of leads coming into my business, I can find 36 deals in a year.

So 3 primary questions around marketing through mailers come to mind:

1. Content: What are your favorite pieces? What gets the most traction, what generates the most face-to-face opportunity?

2. Lists: What lists provide the best bang for your buck? (Worth mentioning, I'm in the Nashville area. Highly saturated metro area with investors everywhere.)

3. List source: Do you have a favorite site or service that you use to get your lists from? I'm not necessarily concerned with the cheapest, as much as I'm concerned with the most effective.

I appreciate everyone's help!

When I began this process about 6 months ago, I made one most important decision. The decision that, "I am doing this."

And my language changed:

I'm building a real estate investment firm that will create the opportunities in properties, as well as the funds, to put together a rental portfolio that will eventually generate over $100k/month in rental income. (I'm at $2k/month right now, so... almost there? Ha!) With that money, I will fund international adoptions for families every single month. Money is simply a tool, and it can be used to impact the world if there is a vision.

I appreciate your help as I move toward my vision!

congratulations on a wonderful start! Sounds like you have a great vision and I am inspired to read this! My husband and I just made the decision on " we are doing this". So this question is great for me. Thank you for sharing and Good luck to you!

what is your marketing budget for 36 deals per year?

@Brian Bandas

Good intentions, great start.

For the particulars, you'll have to try out your marketplace. We're working tax delinquent and code violations in our market, so far response rates have been lame on mail.

Based on everything my partner and I have been learning from experienced guys, you'll need a multi-pronged approach. Some will come from Facebook, some will come from google adwords, some will come from your mail, and some will come from word of mouth. 

We're trying to get that all built out right now. I would say this, however, your standard generic postcards, from our experience and from others in my marketplace, are at an all time low in terms of performance.

At the moment we're thinking about how we can stand out. Seems the 'tried and true' stuff isn't performing as well as we'd hoped using fairly conservative estimates.

Best of luck, sounds like you have an awesome start. Thanks for the read and keep doing the world some good.

Best,

  JTM

Originally posted by @Alex Cornwell :

what is your marketing budget for 36 deals per year?

Excellent question! The verdict is out right now, and I'll arrive at this number as my business scales. It will be a process of discovery.

Early on, I'll substitute marketing dollars with sweat equity/hustle by making consistent offers on the MLS (so far 1 of 3 deals has come that way), and networking with every wholesaler and investor I can find in my market.

So far I've been able to come up with roughly 1/month doing this and spending minimal time on it. So the next step would be: How many deals can I create spending 2-3 hours/day on these efforts? Next will be, what must I spend to supplement that work and create 3/month?

I'd be prepared to spend about 10% of my profit on marketing, some of that would go to materials/mailer costs, and some would go to paying an employee to do the work.

Do you have a recommendation or rule of thumb that has worked for you?

Not sure about your market but here in Boston 36 a year is about 108k in marketing per year. Probably more these days

@Brian Bandas  I love this. Great work on being so calculated and knowing what our metrics are so far and digging to dial them in further. Clarity is SO key (as I, and we all should be, continually re-telling myself/ourselves). 

I've done some direct mail (also in Nashville like you), mostly to the Woodbine/37211 zip code and 37208 North Nashville zipcode. My response rate has been about a 2-3%. Letters in a hand written font in envelopes, with a hand written font address on the envelope. That being said, some of my other investor friends use a very straightforward "business" looking letter and have gotten good feedback from those respondents saying it felt very professional (not that mine didn't). I pulled my list from ListSource, but so does everybody else so I'm not super differentiated there. 

I'm also SUPER interested in running GoogleAdwords though. The Internet it seems to me is a vastly underused asset for marketing campaigns among real estate investors. Not that no one is doing it, it just seems a lot of investors go "old school" direct mail. Which makes sense since many of the owners are potentially also "old school."

But then again, I know other guys in town who are doing 10,000 pieces a month and crushing it.

Just out of curiosity, what are your criteria for what you're buying? I know you said you're looking for rehabs and tear downs, but where are you looking? What's your price cap/range? Are you buying cash? Would love to help you out/work with you if something pops up on my radar on my end that fits your criteria.

I think the list is your most valuable asset. Nashville is super hot and there are lots of guys out there marketing but not a lot of them have a solid sense of direction. Everyone is using the same lists and bombarding the same people. If you know your area, house by house, block by block you can still have great success. Know which houses are vacant, rented, owner occupied, and in disrepair. I think it's better to send 100 personal letters or phone calls then to mass-market in Nashville right now.  

Great post Brian! My greatest marketing tool as a wholesaler in the Nashville area has been attending real estate investor meetings, and networking with other investors on a daily. I've also befriended some pretty good lawyers in the area who give me a heads up on certain deals. I recently made the decision to become a professional investor as well, so I'm always looking to find new marketing strategies. I might take a shot at bandit signs soon, I'll keep you updated!

Originally posted by @Alex Cornwell :

Not sure about your market but here in Boston 36 a year is about 108k in marketing per year. Probably more these days

 That's good to know--that means that the 10% idea is not too far off! I've been averaging somewhere around $30k per project in profit. 36/year would put me at $1,080,000 for the year--so 10% of that for a marketing budget would be $108k.

Thats great information and I appreciate you sharing it with me. My hope would be that I can improve those numbers by generating 1 deal/month via my network or the MLS. I also hope that if I'm playing wholesaler by doing my own marketing this way, that it would open the door to slightly larger profit margins.

@Tim Bergstrom Very helpful stuff! I agree, web-based ads are likely under-utilized in REI and I've also been curious about how that could be done well.

As far as what I'm looking for, it's fairly open on a flip (less so on one I'll hold). I'm mostly looking for the right numbers, which I know sounds cliche. The ones I've done so far have all been fairly different from one another.

The bottom line is, the key to selling it is pricing it right. If you get your ARV right, you'll sell it. So for me, I'm less concerned about an "avatar" for my flips, and more concerned about NAILING my ARV and rehab costs.

I live in Franklin so I don't go too far north or east usually, (even though there is $$ to be made out in Murfreesboro!). And I'm still growing in the level of rehab project I'm comfortable taking on, although that is expanding pretty rapidly. I've done almost everything aside from significant external work--blowing out an exterior wall or adding to the footprint, etc.

I appreciate you sharing your insights with me, particularly on list source, etc.

Originally posted by @Justin Browne :

I think it's better to send 100 personal letters or phone calls then to mass-market in Nashville right now.  

 Man this is right on, and great insight. And it stands to reason, people who do this will stand out, because it's more work, harder to automate--in short, most people won't do it.

Don't "they" say you have to be willing to do what others aren't?

@Rozelle Wilson first of all congrats on "going pro"! Meaning, no more day job, I assume??

I agree with you. I haven't started my marketing campaigns yet, but I have been putting energy into relationships and it has already been profitable, and I believe I've only scratched the surface.

I'm glad to hear I'm on the right track with that. My hope is that my relationships with other investors can eventually lead to around 12 deals/year.

12 more from consistent aggressive offers on the MLS. And 12 more from marketing efforts.

I'm sure these numbers are going to need to be adjusted. The nice thing is, I can scale my marketing efforts and budget if necessary, to supplement the deal flow and hit my goals for the year.

@Brian Bandas Thanks man! I had to take that leap of faith toward my future now that I'm a firm believer in real estate. Sorry I couldn't make the event last night, I didn't see your message until this morning but if you could PM your contact, I'd love to stay in touch and join your next meet-up!

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