competing against the big boys

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competing against the big boys

David Lunsford
Fort Worth, TX · Member since 2009 · 66 posts · 25 votes

In large markets what is anyone doing to compete with the guys that have a 20K per month marketing budget. Here in the Dallas Fort Worth area there are multiple Homevestor operations that spend this much or more. What are some of the more creative marketing things anyone is doing. It seems like everyone is mailing to absentee owners which is an area I have had very little success with.

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Richard Warren
Real Estate Investor · Las Vegas, NV · Member since 2008 · 1k+ posts · 447 votes
16y

There is one way you can compete without a huge budget. Get out and network. I’m not talking about REI meetings loaded with your competitors. I’m talking about business networking, chamber of commerce, and various business organizations.

This is very much a people business. Get out there and let it be known that you buy houses. Have professional looking business cards. On the back of the card you should list the type of houses you are looking to buy.

Everyone who needs to sell a house knows plenty of people. When they talk to their friends, associates, etc, you want the person they are talking to to say “Hey, I met a guy who buys houses, let me get you his card.â€

Networking is very much down in the trenches activity and it works. I have personally built several businesses through networking without spending thousands of dollars on marketing. It’s not easy and takes a lot of effort. That’s why they call it netWORKing.

:cool:

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  • Terry Royce
    Real Estate Investor · Baltimore, MD · Member since 2008 · 619 posts · 75 votes
    16y

    Just because they are marketing to them, does not mean they get them.

    Get out there and make it happen, and the results will come.

    3Reply
  • Curt DavisBusiness Member
    Flipper/Rehabber · Memphis, TN · Member since 2008 · 5k+ posts · 2k+ votes
    16y

    What does get out there and make it happen mean? This was the original question from the beginning. If people knew what to do then this would not be a question at all. Simply put, what can someone do on a no budget plan for marketing for buyers or sellers?

    In all reality you cant compete with the big boys. They are big boys for a reason.

    Curt Davis - KAIZEN Realty538 Reviews
    WebsiteView Page
    1Reply
  • David Lunsford
    OP
    Fort Worth, TX · Member since 2009 · 66 posts · 25 votes
    16y

    Curt, with that reply you beat me to the punch!

    2Reply
  • Richard Warren
    Real Estate Investor · Las Vegas, NV · Member since 2008 · 1k+ posts · 447 votes
    16y

    There is one way you can compete without a huge budget. Get out and network. I’m not talking about REI meetings loaded with your competitors. I’m talking about business networking, chamber of commerce, and various business organizations.

    This is very much a people business. Get out there and let it be known that you buy houses. Have professional looking business cards. On the back of the card you should list the type of houses you are looking to buy.

    Everyone who needs to sell a house knows plenty of people. When they talk to their friends, associates, etc, you want the person they are talking to to say “Hey, I met a guy who buys houses, let me get you his card.â€

    Networking is very much down in the trenches activity and it works. I have personally built several businesses through networking without spending thousands of dollars on marketing. It’s not easy and takes a lot of effort. That’s why they call it netWORKing.

    :cool:

    9Reply
  • Account Closed
    Landlord · Seattle, WA · Member since 2010 · 3k+ posts · 1k+ votes
    16y

    Richard,

    I agree that networking is a great way to get in front of potential buyers, sellers, business partners and lenders. It does take work and have seen it work for me.

    Networking is not telling people who you are and what you are selling. It is much more than that. It is about looking for ways to mutually benefit each other.

    1Reply
  • Terry Royce
    Real Estate Investor · Baltimore, MD · Member since 2008 · 619 posts · 75 votes
    16y

    By get out there and make it happen, I mean take ACTION. Getting off the bench is the hardest part.

    Network
    Post signs
    Submit offers
    Solicit buyers
    Cold call vacants
    Network

    I don't have the golden answer, but I feel like too many people think the big boys take all the deals and there's nothing left for them.

    For no budget I would troll craigslist, call vacants, low reo offers.

    0Reply
  • Elisha Lowe
    Homeowner · Philadelphia, PA · Member since 2010 · 123 posts · 66 votes
    16y

    Curt & David, surely you don't mean lay down and die because one can not compete with the big boys? I hope you mean to say be your own competition or hustle, hustle, hustle.

    Anywho, good question.

    1Reply
  • Curt DavisBusiness Member
    Flipper/Rehabber · Memphis, TN · Member since 2008 · 5k+ posts · 2k+ votes
    16y

    Elisha,

    I basically meant that people only really compete against others of similar size. Small one person wholesale guy can not compete against large turn key operation.

    Never lay down and die, just focus on what your doing and all will be fine. Work out a specific niche and you will do well.

    Curt Davis - KAIZEN Realty538 Reviews
    WebsiteView Page
    0Reply
  • Elisha Lowe
    Homeowner · Philadelphia, PA · Member since 2010 · 123 posts · 66 votes
    16y

    Thanks for the clarification and advice

    0Reply
  • Jackie Patterson
    Real Estate Investor · Kalamazoo, MI · Member since 2010 · 681 posts · 241 votes
    16y

    You have to remember that the guys spending 20K per month on marketing has to have a BIG return to pay their expenses. You on the other hand can make a decent living on far fewer deals. Everyone has given good ideas for marketing with no budget. I would add..... do the very best on the deals that you do get. This will build your credentials, and those buyers / sellers will talk, and you will start to get referrals.

    4Reply
  • Joseph R.
    Wholesaler · romulus, NY · Member since 2008 · 18 posts · 5 votes
    16y

    Mr. Lunsford;
    Genunine advice you obtained in your post, some very accurate - put this to mind "Dwight D. Eisenhower (1890-1969) Military Commander and 34th US President
    What counts is not necessarily the size of the dog in the fight, but the size of the fight in the dog". There are plently fish in the sea. Just keep your passion, stay motivated, and focus; you too will accomplished wondefull goals! May the best be with you

    2Reply
  • Dale Osborn
    Mobile Home Investor · Spanaway, WA · Member since 2008 · 1k+ posts · 578 votes
    16y

    One thing I have not seen mentioned yet that could help you:
    1. Find every "Big Boy" in the game for your area.
    2. Get a copy of all their ad materials.
    3. Check to see exactly what they are offering.
    4. You build your market on things they do not offer.
    I just read an ebook on the internet about an individual starting a business while attending college for pre-med school. He knew most places were open from 9-5 so he put his ad on the net for 24/7 operations. When calls came in at 2 AM from Australia - he answered, got what the customer was looking for and got him the item. When he started out this was a "new" concept - now it is ho-hum stuff. But the idea is the same: Find out what your competitors are not doing for their potential customers and YOU provide that service.

    2Reply
  • Don KonipolBusiness Member
    Investor · The Woodlands TX / Avon, CT · Member since 2009 · 6k+ posts · 10k+ votes
    16y

    Some very interesting suggestions. I've had success targeting a niche market. For a while, it was bankruptcy court. I got to know the bankruptcy trustees, and they would call me when a property they thought I might be interested came up. I also targeted auto repair facilities with environmental problems, and two of my most profitable buys were easily fixed environmental problems nobody else would touch. One niche I now target are service or retail business owners who own their real estate facilities with low or nothing owing but need cash to keep their business operating. I do a sale leaseback, in which I purchase the property for a below market price, say 30% discount, and then lease it back to them for a below market rent. After 5 years the rent reverts to market, and I have created a great buy for myself.

    Back a hundred years ago or so when I was buying residential properties, I targeted duplexes, as most residential investors avoid these. Some are easy remodeled into large single family residences, others in many area can be legally seperated and sold as individual units. Another niche I targeted in those days was probate situations - once again getting known by the probate attorneys and being able to move quickly when a deal came up.

    Networking and niche targeting can overcome any deficiency in advertising budget. Homevestor franchisees are not real estate investors, they are in the real estate business. With high overhead they need to churn 50 houses a year. As an independent investor 3 or 4 good to great deals a year is all you need.

    Private Mortgage Financing Partners, LLC
    WebsiteView Page
    1Reply
  • Account Closed
    Landlord · Seattle, WA · Member since 2010 · 3k+ posts · 1k+ votes
    16y

    For me it has not been necessary to compete with the big boys. I have been able to find all the deals I can handle currently. As one grows then it may be more necessary to compete.

    Part of it also depends on what you are doing as well.

    0Reply
  • Rachel H.
    San Antonio, TX · Member since 2009 · 3k+ posts · 1k+ votes
    16y

    I do things on more of a personable level. Those who have very large marketing budgets may tend to be larger businesses and/or have more staff which can be less personable. In my experience, I find most folks would much rather work with a person who has a face and cares about them than a faceless corporation who does not. Just my thoughts. Hope that helps!

    1Reply
  • John H.
    Real Estate Investor · Huntington, WV · Member since 2010 · 25 posts · 4 votes
    16y

    Someone mentioned Craigslist... it is an excellent place to find motivated sellers as well as people wanting to buy homes, etc. I have trolled the listings and found several that were looking for land contract deals... it is quite the place.

    0Reply
  • Sharon Vornholt
    Goshen, KY · Member since 2009 · 835 posts · 683 votes
    16y

    If I could add something to the discussion it would be to forget about the "big boys". Just get a marketing campaign in place that you do every month without fail. Be consistent and follow up with everyone that calls. That not so motivated seller (today) may become very motivated in the future. If you have been helpful in the past, there is a good chance they will remember you when they absolutely must sell .

    Also, do what you do "better than everyone else". Provide better service, faster service or something else the big companies don't do as well as the little guy can. Be memorable.

    Finally, like so many folks have said, network, network, network! People like doing business with people they like.

    3Reply
  • Jerry PuckettPro Member
    Wholesaler · Fort Worth, TX · Member since 2010 · 1k+ posts · 1k+ votes
    16y
    Originally posted by David Lunsford:
    In large markets what is anyone doing to compete with the guys that have a 20K per month marketing budget. Here in the Dallas Fort Worth area there are multiple Homevestor operations that spend this much or more. What are some of the more creative marketing things anyone is doing

    David, I also work out of DFW along with a hundred more AND all the "big boys". There are so many different niches and so many different stategies that I'm confident there is room for many more. Our goal is relatively small, one acquisition per month. Generally not a problem. We got so many leads last month - direct mailing to out of area owners - that I didn't know what to do with them all. We picked three plums to work, and I passed the rest of the leads to otheres for referal fees that more than covered our marketing cost. I say that to encourage some hope.

    But more to the point, one idea I don't think I saw mentioned was "post it note" marketing. You decide the territory you're going to farm, do you're due dilligence in knowing the property values, days on market, etc., then you can have post it notes with your message on it printed fairly inexpensively and walk your own streets posting them. You can hire it done of course, but what better way to get to know the neighborhoods you're working? Not to mention the neighbors you might meet?

    People business? You bet.

    4Reply
  • Sean Terry
    Real Estate Investor · Phoenix, AZ · Member since 2008 · 55 posts · 99 votes
    16y

    All great responses!

    I can tell you most of the big boys are looking for equity, and if a property isn't a "clean" deal with 30%+ equity they'll tend to pass it over.

    We've been very successful with marketing to sellers that have little to no equity. They can't be upside down but ideally they'd have $5K to $20K in equity.

    You find these sellers by targeting the expired listing in the MLS. The seller is motivated and is open to creative solutions.

    Here's the strategy which is nothing new: Send the seller a Yellow Letter telling them you want to buy the house. When you meet with them negotiate to keep the existing loan in place for up to 3 years and give them $1,000 to $2,500 cash.
    Your essentially buying the property "subject to" the existing loan.

    Once you have the deal tied up you can then market the property on Craig's Lists offering 'No Qual Seller Financing" your looking for a retail buyer that has $10K to $15K as a down payment.

    You then assign the contract to the new buyer for the difference between what you agreed to pay the seller and the down payment. ($15,000 down payment - $2,500 cash to seller = $12,500 profit)

    This in any market is a HUGE opportunity. Just be sure you have the title company service the loan by collecting the payments from the buyer and pay the sellers mortgage company. This way everything is audited.
    Do be aware that most bank have the right to call the note "due on sale" although I've never heard it happen.

    Hope this helps,

    Cheers :)
    Sean

    3Reply
  • Jerry PuckettPro Member
    Wholesaler · Fort Worth, TX · Member since 2010 · 1k+ posts · 1k+ votes
    16y

    Hey there Sean, I've really been enjoying reading your posts.

    Color me stupid, but there's one piece of your above strategy I think I'm missing. You said negotiate to keep the existing loan in place for up to three years. What happens at the end of those three years? Do you refinance a new loan? Then pay it with the payments you're collecting from your new tennant/buyer? Are your new buyers making interest only payments until you can get them refinanced? What if they can't? We just had a woman who had been in one of our houses for five years fail to get financing for her balloon payment. If that house had been sub 2, as in your scenario, we would have had to refinance on our own to pay off the original sellers note.

    I understand the get paid when you buy part, just wondering at the over all exit strategy. I get tons of calls from people with little equity. We don't generally do any subject to deals, and I've always passed those leads on to those that do. But if I've been passing on a good opportunity, I'd like to have that in my tool box.

    0Reply
  • Sean Terry
    Real Estate Investor · Phoenix, AZ · Member since 2008 · 55 posts · 99 votes
    16y

    Hello Edward,

    Thanks for the compliment, I really appreciate it. :)

    The NEW buyers responsibility is to refi the property after the 3 years is up or sell the property. By having the title company service the loan it removes US from the middle of the transaction. The title company will follow the letter of the law when it comes to collection.

    Remember you're ASSIGNING the contract to the NEW BUYER for a fee in the example $12,500. The new buyer will close on the property and OWN the property, they will be on title.

    The new buyers will do a "rate & term" refinance, after the 3 years is up, which for a primary residence is quite common.

    Remember disclosure is very important, we disclose EVERYTHING. If all parties are in full understand than I've never seen a problem. The new buyer will make sure they have the credit and income qualification to meet the lenders criteria to obtain the loan and pay off the sellers existing loan.

    I hope this helps, your throwing away thousands of dollars on leads that I'm sure you pay a pretty penny for.

    Cheers :)

    Sean

    0Reply
  • Jerry PuckettPro Member
    Wholesaler · Fort Worth, TX · Member since 2010 · 1k+ posts · 1k+ votes
    16y
    Originally posted by Sean Terry:
    .

    I hope this helps, your throwing away thousands of dollars on leads that I'm sure you pay a pretty penny for.


    Hey, not so loud. My boss might hear! :oops:

    Just kidding. Actually, we usually make quite a bit more selling those leads than we spent to get them. But still chump change to actually working the deal. Some how I missed the assignment part. When you said no qual seller finance I assumed that you were the seller doing the financing. But you're never actually in possession of the house.

    I would really like to see the contract you use so I could better absorb the structure of the entire deal. Would that be possible? We have another round of marketing set to go out the first of September.

    Oh, one last thing, who generally pays the closing costs in a deal like this?

    0Reply
  • Sean Terry
    Real Estate Investor · Phoenix, AZ · Member since 2008 · 55 posts · 99 votes
    16y

    Hey Edward,

    Sorry I wasn't clear on the assignment explanation.

    As for the contract I usually us the standard contract that realtors use. I just put verbage that states "sellers agrees to leave existing financing in place for up to 3 years from COE."

    Not knowing the laws in your state I would sugest consulting an attorney but you get the idea.

    As for the other documents your title company will prepare:
    1. The assignment
    2. The exact wrap dcouments
    3. The promisory note
    4. The deed of trust or mortgage
    5. The servicing documents
    6. We always have both sides sign a "hold harmless indemnification" document. I do this because I'm over cautious.

    I would track down an experienced escrow officer at Fidelity National Title and explain what you'd like to accomplish. I willing to bet they've done hundreds of these types of deals.

    Cheers :)

    1Reply
  • Jerry PuckettPro Member
    Wholesaler · Fort Worth, TX · Member since 2010 · 1k+ posts · 1k+ votes
    16y

    Thanks again Sean, you've been very helpful. We have a very Investor friendly title company and law firm to help us out. I'll be contacting them shortly as I'm now going back through some of our recent C leads looking for a fit. Two thumbs up to your concientuous cautiousness (say that 3 times fast!), I believe that's the only way to do business. I like to help people, and believe in what I do, so I see no reason to hold anything back. This looks like a great tool.

    0Reply
  • Larry Goins
    Real Estate Investor · Lake Wylie, SC · Member since 2009 · 16 posts · 7 votes
    16y

    Does it ever feel like the tools that people teach and/or sell are the one's that worked yesterday? I know that students ask all the time if I teach bandit signs or social media or whatever to find deals before your competition aren't they at least still competing with my other students.

    Yes, they are. However, not all my students, of course, are buying and selling in the same markets. The whole buying and selling using the internet without ever leaving your office concept evolved because I was a single parent and couldn't traipse around the countryside looking at investment properties.

    If your market feels saturated or overly competitive, move your business. It doesn't mean you have to physically move, but it does mean you are not obligated or required to buy and sell in your home town.

    I've done a slew of deals in Birmingham, AL and I'm located in SC. We have three properties right now in Forest City, NC which is over an hour away.

    Use online tools to find deals, evaluate properties and communities, and never ever let the "big boys" keep you out of investing.

    Larry Goins

    0Reply
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