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00Prologue Ultimate Beginner's Guide to Real Estate Investing!
01Chapter 1 How to Invest in Real Estate: An Introduction
02Chapter 2 Real Estate Investing Education
03Chapter 3 Real Estate Investments: Niches and Strategies
04Chapter 4 Create your Real Estate Investing Business Plan
05Chapter 5 How to Find Investment Properties
06Chapter 6 Real Estate Financing
07Chapter 7 Real Estate Marketing
08Chapter 8 Real Estate Exit Strategies
Real Estate Marketing
No matter what aspect of real estate investing you choose to engage in, you will probably need to use marketing in some fashion. Marketing is the process of reaching outside your normal sphere of influence to propel your business forward. Where you take your business is entirely dependent on you and your marketing skills.
In this chapter, you'll learn:
|Your Greatest Marketing Tool: Yourself|
|Marketing Through Networking|
|Networking in the Online World|
|Your Marketing Funnel|
|Marketing Through Direct Mail|
Marketing takes a day to learn. Unfortunately, it takes a lifetime to master.Tweet
Your Greatest Real Estate Marketing Tool: Yourself
As a real estate investor, the first and most important thing you'll be marketing is yourself—your own personal brand. It doesn't take a lot of money, and it doesn't take a lot of time. You will begin building a brand around yourself the moment you begin talking to others about real estate.
You never know where these conversations are going to lead, so guard your brand fiercely. Let's look a little deeper at how to effectively market your own personal brand.
As a new investor, you won’t know everything and that's 100 percent OK. One of the quickest ways to tarnish your reputation is to speak about things that you don't actually know much about. When you try to come off as an expert, other real investors will know immediately and will not waste any time dealing with you. Admit what you don't know and use that to learn. In fact, one of the best ways to grow as an entrepreneur is to ask a lot of questions and, in humility, listen to those who are willing to teach.
Also, don't misrepresent yourself. We often see new investors do this here on BiggerPockets and elsewhere online. What you'll sometimes see is a new investor coming on the scene and introducing themselves as such. Then, in just a few days (sometimes less), they talk about having "properties in all 50 states" that they are willing to sell on discount.
Unless they suddenly inherited dozens of properties overnight, that person is likely misrepresenting themselves. In most cases, that person is merely a wholesaler following the advice of a guru somewhere and trying to build a buyer’s list for their future deals. Yes, building a buyer’s list is incredibly important. Doing so under false pretenses, however, is the surest way to never make a deal.
You'll also find new investors marketing deals via Craigslist or other sites, but these are deals that that same person has no interest in. Like in the previous example, these people are lying about deals to lure in other investors who might be interested in them. If you get busted lying about a deal, you can rest assured that you'll never do business with the folks who discover it.
Do you do what you say you will do? Your integrity is the thing that will keep people coming back to work with you time and time again. As an investor, your reputation will precede you wherever you go. This means that you need to continually act with the highest level of integrity.
Imagine a lender who promises to lend but then backs out at the last second. Would they continue to grow their business?
How about a real estate agent who undercuts his clients and swoops in on all the good deals, yanking them right out from under his client's feet? Would he continue to grow his brand? Your integrity is an integral part of your brand and can easily be tarnished. Maintain the highest standards of integrity, and the business will find you.
Are you planning on running a hobby or a business? If you want to be seen as a business professional, start right now. Every decision you make, every relationship you build, and every item you buy: be professional. You don't need to be a million dollar business to look like one.
Showing up to a house with a dirty Hawaiian shirt and shorts probably isn't going to give you the professional image you need to succeed. The same goes for the business cards you order, the voicemail message on your phone, and the appearance of your vehicle. People trust professionals—so start acting like one.
Real Estate Marketing Through Networking
One of the most important marketing tactics you can start implementing today is networking. Networking is simply the process of getting to know others for the purpose of moving both individuals forward. It doesn't need to be a formal meeting, but your day-to-day interactions should be part of your networking strategy. Networking is often thought of as something that take place at an event, where dozens of people get together to mingle, exchange cards, and tell industry-specific stories. While yes, this is a form of networking (most often seen at industry-specific conferences and meetings), networking is actually a lifestyle.
Some of the most noteworthy connections you'll make will come from impromptu conversations about your real estate investing. I'm not suggesting that you simply walk up to strangers and start telling them about your dreams and goals, but take advantage of talking about your business when the opportunity presents itself. You'll be surprised at how many people are interested in real estate and how often one quick mention leads to an entire conversation.
Not only is networking valuable for meeting people and businesses that can move your business forward, but it's also effective for building your real estate team (which we covered extensively in chapter 4). No person can succeed entirely on their own, so finding the best people to work with is one of the most important tasks you can do at the start.
Speaking of important, one of the places you can start networking is your local real estate investing club. Located in nearly every major city, people gather at these clubs on a regular basis to discuss current market trends and investing strategies; to swap tenant horror stories; and to make connections. Many of the most important people on your team will probably come from your local investment club. Real estate investment clubs differ dramatically in size and quality, so if there are multiple clubs in your city, be sure to check them all out. For a list of local real estate investment clubs, see the BiggerPockets Real Estate Investment Clubs page.
Do keep in mind that many of these clubs are also designed to be profit centers for their owners. So, you may need to endure sales pitches from gurus and other salespeople. That said, there is nothing more important than connecting with your local peers, and these clubs are a great place to find them.
There are other networking events that are great for meeting like-minded investors, including landlord association meetings, meetups, and small live events organized by your peers. Many of them are listed on the BiggerPockets Real Estate Events and Happenings page.
A final note on networking: get yourself some professional business cards. While many aspects of old time marketing are fading away, the business card remains a staple in the real estate industry. Be sure that your business card contains the following information:
- Your Name
- Your Company Name
- Your Company Position Title
- Your Website
- Your Phone Number
- Your Email Address
- Your Wants/Needs if Applicable (i.e., We Buy Houses)
Networking in the Online World
The world is becoming more digital each day. To be a top performer in the real estate investing industry, you’ll need to, too. Let's look at a few places you can begin networking online.
BiggerPockets.com— BiggerPockets is an online community of real estate professionals who network with one another every day to help each other learn, grow, and prosper. Begin your networking here.
It is important to note that when networking with others, it is not about wondering, "What can I get out of it?" but rather, "How can I contribute to the conversation?" Hang out on our forums. Ask questions when needed, and answer those of others when you can. Comment on blog posts, send colleague requests, follow popular users, and engage whenever possible. Networking on BiggerPockets is just like networking in the real world—it shouldn’t be a one-time thing. Seek to become a familiar (and friendly) face on the site. This means completely filling out your profile and uploading a photo. Would you want to network with someone without a face to identify with them—and whose story you did not know? Never. Relationships are built with trust, and trust is built through transparency. For more info on getting involved (and for links to helpful tutorials), check out our Start Here page.
Your Website— Having a website is a sign of professionalism in the industry—think of it like a storefront for your business. In order to attract people, it has to look inviting, professional, and clean. In today's tech-friendly world, a great website is not hard or expensive to build, even if you are terrible at technology.
Social Media— Facebook, Twitter, LinkedIn, Google+, and dozens of other social networks are out there and are ripe for networking. You don't need to have a presence on every single network, but focusing on one or two is better than being non-existent on all of them. The trick to networking via social media, however, is to not use it as an advertising platform. Social media is about fostering connections, so spend your time building solid relationships and sharing valuable content that will help others see you as a knowledgeable expert, not a salesperson.
Blogging— A blog can help you establish credibility in the investing field. It can also be a great tool for sorting out your thoughts on paper (well, on the screen) and hashing out ideas. Furthermore, blogging can be a fun way to give back to the community. If you are interested in hosting your own real estate blog, you can do so for free right on BiggerPockets.
Your Marketing Funnel
Marketing funnels are designed to grab the attention of people who may have no prior knowledge of your company and encourage them to engage in a business relationship with you. People use marketing funnels in nearly every form of business, and real estate investing is no different.
Think of an actual funnel, often used for pouring large amounts of liquid into a small space—like putting oil in a vehicle. At the top, the funnel is at its widest, collecting the most amount of whatever substance. As the substance moves down the funnel, it gets smaller and smaller until it comes out the bottom. In the same way, your marketing funnel will be set up to bring in the most amount of people at the top, and through progressive steps, your funnel will get more specific until you have a much smaller number of people left to produce your desired goal.
The kind of marketing funnel you set will depend greatly on the kind of investing you get into. A marketing funnel for a wholesaler is going to be significantly different than that of a note buyer, but perhaps with similar themes. For example, a wholesalers funnel may look a lot like this:
- Send out postcards to individuals who are past due on their mortgage, including a 1-800 phone number to call for foreclosure help.
- Allow people to leave a voicemail if they want more information about selling their property.
- Call individuals who left messages and screen for possible good leads.
- Meet with the good leads and make offers.
- Get offers accepted and sign a purchase and sale agreement.
- Do due diligence.
- Close on the property.
Notice that in each step, the funnel narrows. At the start, perhaps 5,000 people receive mailers. Out of them, perhaps only 100 people make the phone call to the number on your postcards. Out of that 100, only 20 leave voicemails, of which only four warrant a personal visit and an offer. Finally, perhaps one or two of those offers may actually result in a signed deal for the wholesaler.
While it may seem like a drastic waste, one or two deals may result in a huge financial windfall for the wholesaler. This is merely one example of a functional marketing funnel. As mentioned above, your marketing funnel may differ quite a bit.
As a real estate investor, you need to be constantly measuring and tweaking your marketing funnel. You can, and should, test your funnel to continually increase conversions—the percentage of people who make it all the way through the funnel to your desired outcome.
For example (to draw from the wholesale funnel example above), you could get two separate phone numbers, split the group of past-due homeowners in half, send half the postcards to one group and half to the other, and then measure the results.
Do you get more calls from postcard A or B? If postcard A received twice as many calls, then use that as your baseline and test again with another postcard C. As you can see, your marketing funnel can continually be tweaked, tested, and measured to make it run like a well-oiled machine.
Marketing Through Direct Mail
While we are on the topic of postcards and mailing letters, let's discuss direct mail in greater depth. Direct mail is simply the process of sending information to targeted individuals through the mail in hopes that a small percentage will respond. Whether you are a wholesaler, flipper, or buy-and-hold investor, your business will be dependent upon finding great deals and having a consistent supply of leads. For many investors direct mail is their number one source of leads.
How Does Direct Mail Work?
Direct mail campaigns are designed to build awareness of your product or service over time. Think back to one of the last purchases you made—maybe a drink at Starbucks, a movie you rented, or a song you purchased from iTunes. Chances are, you didn't buy it the first time you heard about it.
Most folks simply don’t buy something the first time they come across it. Therefore, a direct mail campaign cannot be a simple one-and-done endeavor. By sending messages over the course of time, as recipients become more familiar with you and your service or product, some will respond if you present a solution to their needs.
How Do I Build a List to Send to?
You can build your list by using public records provided by your local county assessor, or you can hire a company like ListSource. While using public records is free, using an online company may save time, so keep your goals in mind as you begin creating your list. Acknowledge that you should update your list every six months or so to keep it fresh—the market is continually changing. You will need to get rid of folks who are no longer candidates for your particular list, and add in new people.
What Do I Send?
There are two primary options that investors tend to mail to potential leads. Let's look at each briefly.
- Postcards— These can be either large or small, but the benefit is that the recipient doesn't need to physically open an envelope to read what's inside.
- Yellow Letters— Written (or typed) on an actual yellow piece of paper, these letters are typically mailed in an envelope. The response rate is often very high, due to the personal nature of the letter.
Who Should I Send Direct Mail to?
Both the frequency with which you mail and the length of the campaign will vary depending on the type of marketing funnel you set up and the type of investing you engage in. Direct mail can be sent to virtually anyone, so you'll need to look at your funnel and decide. The following is a list of a few different types of people you may consider targeting:
Absentee Owners: For those looking to get a great deal, absentee owners are great targets—particularly those who live out of town. In many cases, these owners may have moved and may be looking to get rid of their property.
Abandoned Properties: People may abandon a property for a variety of reasons, but in most cases, they don't care enough about the property to keep it and spend the money required to maintain it. Contacting owners of properties that appear dilapidated or abandoned may lead to fantastic opportunities.
Probates: Probates are properties that are in the process of being distributed, along with the assets of a deceased person to the heirs. When investors talk about probate investing, they mean identifying properties of the deceased and attempting to buy them at a discount.
Pre-foreclosures and Foreclosures: People struggling with losing their home are usually highly motivated to sell (and sometimes they are highly unmotivated and choose to stick their heads in the sand). You can oftentimes find a way to create a win-win situation to help these individuals save their credit and snag a great deal for yourself.
Apartment Owners: If you are looking to get into apartment buying, mailing to apartment owners can be a great way to stay on their radar. You don’t need to necessarily target your mailers toward distressed or motivated sellers but perhaps individuals who are willing to finance the property themselves using seller financing.
Expired Listings: Your real estate agent will have access to all the properties on the MLS that did not sell when listed with an agent. These individuals may be more willing to sell at a discount after their property was listed and didn't sell. Additionally, the owners may also be further motivated now that they no longer need to pay real estate agent fees.
Whichever niches you choose, be sure to keep organized records of your campaigns, so you can measure and test your results to maximize your efforts.
Marketing Through Online Advertising
As more and more people spend their time online, you may be left behind if you don't move your real estate marketing into that arena. The internet provides numerous ways to market your real estate investing business, and the marketing style you choose will depend greatly on the type of investing you engage in. The following are several tools you can use to market on the internet.
Facebook/Google Ads for Real Estate
Facebook and Google make the majority of their revenue by serving as online advertising platforms. As an investor, you can use these sources to target potential sellers, buyers, or other business interactions. While Facebook and Google ads may look fairly similar, they differ in a couple key ways:
- Facebook allows you to target who sees your ad based on interests, location, demographics, and Facebook connections.
- Google allows you to target who sees your ad based on searches, web history, and location.
The benefit of these kinds of online ads is that you can set them up so you only pay when the ad is clicked.
Imagine asking a local newspaper to only charge you when someone calls about your ad. There's no chance of that happening. However, this is exactly what online advertising allows you to do. Pay-per-click advertising means you only pay when someone clicks on an ad and is directed to your site and into your marketing funnel.
Benefits of Online Pay-Per-Click Advertising
Most online pay-per-click advertisements allow you to be location specific, which means you can choose to have your advertisement seen only by individuals within a certain-mile radius of a specified location.
Additionally, Facebook ads are interest specific. (You didn’t think Facebook’s “like” feature was only for the user's benefit, did you?) Facebook uses likes and friendships to help marketers reach certain people. This means, as a real estate marketer, you can choose to show your ad only to people who have shown interest in a certain topic.
Finally, most pay-per-click advertising (especially that of Facebook) is demographically specific, so you can advertise to certain ages or genders. For example, you can create a well-written advertisement to attract first-time homebuyers by choosing to advertise only to people between the ages of 22 and 32 living within 10 miles of a property you’d like to sell.
How Online Ad Pricing Works
“How much does it cost?” is a more difficult question to answer than it may seem.
Pay-per-click marketing prices are based on an auction, meaning that advertisers bid on a price to display their ad. Marketers then compete for either keywords or interests, based on targeted criteria. When you set up a new ad, you will tell Facebook or Google what price you’re willing to pay per click, and you'll generally never be charged more than that. If you bid too low and other marketers offer to pay more, your ad will not be shown. Thankfully, the major pay-per-click companies provide a general range of prices to help you determine how much you'll need to spend to reach a specific demographic. You also have the option to set a daily or monthly budget, so you can control how much you want to spend on your marketing.
Tips for Creating Online Ads
Where Will Your Ad Send People? This destination could be your own website, your business Facebook page, or whatever site you’d like. Just be sure this destination is part of your marketing funnel.
Create a Title That Pops: You are allowed only a limited number of characters for your title, so make it stand out. It is helpful when advertising to specific localities to use something local in the title. Ads like that tend to pop.
Intrigue Them with Appealing Content: The part of the ad that is not the title is known as the body. Appealing to both fact and emotion when you write the copy for your ad's body can help trigger interest in both sides of the brain and increase clicks. Promote benefits over features.
Use an Eye-Catching Photo: If using Facebook, the image is the most important aspect of your ad because it is generally the only thing viewers pay much attention to at first. Catch their eye with the image, which will lead them to the title, which will lead to the body, which will lead to clicks. An advertisement, in itself, is a funnel.
Determine Your Price: To avoid massive spending, be sure to set your budget. Decide what your monthly or daily budget will be and bid on your ad price from there. Monitor the results and adjust your bid price if you don’t spend your complete budget.
Split Test: Split testing is the process of creating multiple ads, each with minor changes, to determine the best response rate from someone looking at the ad. This is the same process we mentioned earlier when talking about sending different direct mail postcards to different groups.
Creating a Website or Landing Page
A website is not a necessity to capture leads, but it can be highly beneficial. Some investors simply use a telephone number to collect leads, but having a website provides another avenue to collect potential opportunities.
If you don’t have the technical know-how to create a professional-looking website, use a template from a company like Wix or simply hire a freelancer to build the site for you (find freelancers on sites like Odesk, eLance, or 99Designs). You can also create a Facebook business page to accomplish your goal, but having your marketing funnel to your own website will give you more control.
For more information on marketing and creating a marketing funnel, see the post called “Using Facebook Advertising to Super-Charge Your Real Estate Marketing” on the BiggerPockets blog.
As you can see, real estate marketing is not a simple process. An entire book could be written on each of the categories mentioned above. We did not cover every option available but did touch on those that we feel are most commonly used today.
The important thing when just beginning is to focus on one or two marketing strategies and to implement them carefully, while simultaneously monitoring the results. Once you find something that works, stick with it. If you want to generate more leads, expand it or move on to another marketing strategy. In the same way, not all marketing strategies are going to produce effective results. This is why maintaining accurate records and continually testing your marketing campaigns is key.
Up until this point, we have looked at how to choose your investment strategy and niche, how to plan for your next investment, how to finance your property, and how to use marketing to make it all happen. In the next chapter, we are going to discuss the way you actually begin making serious money from your investments: executing your exit strategy.