What are your driving for dollars ratios?
Investor · Austin, TX · Member since 2013 · 443 posts · 174 votes
I drove around my market area today and collected 50 addresses of houses that appear to be distressed or abandoned. My plan is to look up the names of the owners on county records and cold call them to see if they want to sell their house. I am looking to buy the house at a discount fix it up and rent it out so not interested in wholesaling.
I am a sales guy and I understand that this is a numbers game. My question is what are your typical close ratios for cold calling vacant houses. For example if I have 50 leads 20 of them wont have phone numbers. Out of remaining 30 leads 25 of the owners will tell me to kick rocks. 5 leads will result in 5 appointments made and 5 offers made. Out of those 5 I will get 1 accept my offer. Obviously these are hypothetical numbers. For all you BPers out there what is your close ratio? Do I need to get more addresses for my sales funnel?
Great logic. Mine is pretty high; higher than most people will believe, or course, I'm lazier than most anybody would ever guess!
Putting a number on unqualified leads will only discourage you because it may be way less than 1/100.
Here are a few challenges to your approach:
Houses don't care what condition they are in and will deteriorate without assistance.
People who neglect their house's maintenance typically don't notice the problem on a day-to-day basis ("My roof doesn't leak when it doesn't rain"). Classic frog in a pan situation.
People who own (or are entitled to own) an apparently abandoned house are not usually concerned too much as to what happens to that house, at least at the moment.
So, your first challenge is to separate out the people who DO care from the people who don't. Unless and until you identify the catalyst which triggers a reason why they should care, you're working too hard to buy from unmotivated owners. And then you need to find the emotional reasons behind these and market with these real triggers in mind.
I see the conversion of owners into sellers and closing on those who are motivated as a process. People don't want to be manipulated, so your best strategy is to connect with them by mailing a series of letters, in sequence, that is informative. Give them a reason to call you other than just selling. Your are the info go-to guy. Get them to make an emotional investment by identifying with stories in your letters.
I would rather create my list and drill down to a small handful of people who have a "perfect storm" of problems: foreclosure, marital problems, adult children problems, big health issues, financial pressure, code enforcement citations; as many as you can find at one time. I prefer the guy who's head is about to explode to someone who "has to think about it".
I want someone who is willing trade equity at a discount for peace of mind. With MY list, my close ratio is well over 25% (I'm embarrassed to say how high).
What sales close ratio do you make in your daytime job (selling widgets)?
Great logic. Mine is pretty high; higher than most people will believe, or course, I'm lazier than most anybody would ever guess!
Putting a number on unqualified leads will only discourage you because it may be way less than 1/100.
Here are a few challenges to your approach:
Houses don't care what condition they are in and will deteriorate without assistance.
People who neglect their house's maintenance typically don't notice the problem on a day-to-day basis ("My roof doesn't leak when it doesn't rain"). Classic frog in a pan situation.
People who own (or are entitled to own) an apparently abandoned house are not usually concerned too much as to what happens to that house, at least at the moment.
So, your first challenge is to separate out the people who DO care from the people who don't. Unless and until you identify the catalyst which triggers a reason why they should care, you're working too hard to buy from unmotivated owners. And then you need to find the emotional reasons behind these and market with these real triggers in mind.
I see the conversion of owners into sellers and closing on those who are motivated as a process. People don't want to be manipulated, so your best strategy is to connect with them by mailing a series of letters, in sequence, that is informative. Give them a reason to call you other than just selling. Your are the info go-to guy. Get them to make an emotional investment by identifying with stories in your letters.
I would rather create my list and drill down to a small handful of people who have a "perfect storm" of problems: foreclosure, marital problems, adult children problems, big health issues, financial pressure, code enforcement citations; as many as you can find at one time. I prefer the guy who's head is about to explode to someone who "has to think about it".
I want someone who is willing trade equity at a discount for peace of mind. With MY list, my close ratio is well over 25% (I'm embarrassed to say how high).
What sales close ratio do you make in your daytime job (selling widgets)?
@Rick H. Some good points here Rick. So it seems that having a qualified lead is the number one issue. What do you consider a qualified lead? All the houses I put on my list had the classic signs of long grass in the yard, unrepaired damages to the house, no car in the driveway etc.
Its hard to imagine how someone that has a vacant house that is falling apart wouldn't be motivated to get rid of it. I guess I will get a feel once I start cold calling these leads. In my sales job I have a 25% close rate for qualified leads. Not sure how that will translate to real estate. I am very good at cold calling which is why I wanted to use that method.
What are your cold calling techniques? I am in the same spot you were in when you made this post!
Can you help me out with basic techniques?
@Cody Evans Just scrolling through this thread to get some D4D numbers. I just closed my first deal from cold calling after a lot of testing.
1) To hear how to talk to people I recomend looking up Brent Daniels or John Martinez. My script is pretty much what they say with a few tweaks.
2) Find a good/reliable/affordable skip tracer. Shoot for .30/lead if you plan on bringing them consistent business. I negotiated .30 with the promise of 1,000/month. I had him send me a video of him using lexis nexus with a name that I sent him. You want someone with TLO or Lexis Nexus. There are a bunch of them on Fiverr or Upwork.
3) Go BIG. We had to make approx 5,000 calls to knock out the first deal.
Can anyone answer the OP's questions? I'd love to see someone who has done D4$ deals break down the numbers and answer his question directly.
I've dabbled with it and my rough numbers are about 28 houses per lead. I count a lead as someone that agrees to a follow up call to receive a cash offer after the intitial prospecting call.
@Brandon Mitchell it's been a while since I drove for dollars, but about 3.5 years ago my ratio was 40 vacant house leads to a deal. This was when I was still learning A LOT about qualifying leads, negotiating, and truly running down leads.
I treat every vacant house as a lead right off the bat unless I disqualify after initial due diligence. So if I went out and found 40 vacant houses, I considered them 40 leads.
My ratio should have been better and would be if I were to go out and do it today. I say that because I'm much better at negotiating and following thru on every lead until I reach someone who can give me an answer. Back then I wasn't as methodical and would give up too easily on quality leads when the owner or their heirs were hard to reach. I know it cost me some deals.
The keys to a tight ratio are prioritizing your vacant houses with the truly distressed vacant houses having greater priority and following thru on every lead until you talk to someone.
I would not recommend LexisNexis for good leads. It's better than the cheaper stuff, but not as good as alternatives. The premium you pay for other providers is worth it.
However, if you're doing more of a true telemarketing strategy and not as targeted, LexisNexis makes sense. Even then I think you could pay less and use a cheaper source in that approach.
Very helpful guys.
Where would you recommend learning about qualifying and negotiating? Also if you were to buy a list what would your criteria be and is it a waste of money in your opinion?
@Larry Higgins Awesome info, thank you sir!
@Cody Evans by qualifying I really meant just verifying some basic things like no recent change of ownership and that there's apparent equity in the property.
As far as negotiating goes, the only person I would really recommend is John Martinez and his company Midwestrev . I know him personally and have benefitted from his training and know a lot of other investors who have as well. His training will hands down help you get more deals and get better deals. If you go to his website I think he offers some free tips and techniques. Not sure what he's charging these days, but I know he's got different offerings.
Regarding lists, I haven't purchased any in years so hard for me to say. I use a service local to Texas that allows me to customize and create my own lists based off of multiple indicators. Some options include: probate, estate, delinquent taxes, pre foreclosure, divorce, expired/terminated listings, out of state owners, loan mod. My preference for any type of marketing campaign is to be targeted and have no less than two decent distress indicators.
I'm VERY targeted in what I'm pursuing at the moment on the wholesaling side because a separate business we run is taking up most of my time. So for me to pursue a property right now it needs have the following three distress indicators:
1. Owner deceased - but not on probate list
2. Vacant
3. Delinquent taxes or loan
This requires work to find properties that meet all of this criteria and have a ton of equity, but they tend to be really good deals and a great lead to deal ratio. This isn't just a list you can buy to find these.
In January we'll begin scaling up our wholesaling side and moving into other markets. At this point we'll have focus and capacity to work more leads so we will not be quite as targeted in what we go after.
Thank you very much. How exactly do you scale up a wholesaling business?
Very helpful guys.
Where would you recommend learning about qualifying and negotiating? Also if you were to buy a list what would your criteria be and is it a waste of money in your opinion?
If you want big picture stuff and concepts/articles.... great resource. A lot of the better stuff is paid, but still good stuff elsewhere if you hunt hard enough
https://hbr.org/topic/negotiations
Thanks guys. I am calling people right now.
Thanks for the tip on those scripts because I feel much more confident. You made 5000 calls?! Were those UNtargeted leads like where you just go down the list of people in the phone book or people that were vacant,deceased,etc?
They were a mix of tax delinquent, high equity, pre-foreclosure, and a little driving for dollars.
It was a little over 1300 prospects but we called 2-3x and some of them returned multiple numbers. We use Mojo Dialer so we can make a ton of calls per night. If you have ever worked an inside sales job where you manually pick up the phone and dial/smile all day, you would really really really appreciate that app.