Several weeks ago at a family get-together, I ate the best homemade meal I’ve had in years (my mother-in-law cooks a mean lasagna). As I gorged on a second serving, a relative at the table asked, “So… it looks like you guys just bought another rental, huh?” Seeing as I was struggling with a mouthful of lasagna, my wife stepped in and answered for us.
She shared a few details on the ins-and-outs of our rental business and divulged how our most recent acquisition was going to need a major facelift. After a few minutes of answering several questions on the topic, another relative steered the conversation away from real estate. Dinner wrapped up uneventfully about an hour later and everyone departed for home.
Fast-forward two weeks…
My wife received a voicemail message saying something to the effect of:
“It was great talking to you and Arthur a few weeks ago. Listen, I’d love to talk to you guys a bit more about your strategy. Give me a call when you have a moment.”
We returned the phone call and discovered that her relative was interested in investing with us. As it turns out, he’d been considering investing in real estate for some time, but was apprehensive about property management and the rehab process. We agreed to set up a meeting to discuss our business model and how we might be able to help him with his investing goals.
Up until this point in our investing career, we had never used private money, or even hard money for that matter – so we educated ourselves.
My wife and I spent countless hours googling topics such as trust deed investing, creating notes and raising private capital. We combed through nearly every forum thread here on BP (side note: thanks BP for all the solid FREE content).
I even went so far as to practice a mock interview with myself. We tried to anticipate every possible question he would ask about our business, our exit strategy, the terms of the agreement, etc.
In the end, we over-prepared for the meeting. I imagined we were going to be answering questions for at least thirty minutes before we’d be able to discuss our latest deal. What happened instead was a brief Q & A session that lasted literally five minutes.
It was so brief that I had to re-direct the conversation back to the logistics of our prospective deal. I wanted to make sure he understood the risks and terms of our agreement. After we discussed this in more detail, he remained enthusiastic about the opportunity and had agreed to fund our next deal. Several weeks later, he wired the money to escrow without a hitch and we closed on our most recent property.
My wife and I are by no means gurus. In fact, we are not even full-time real estate investors. However, one thing we learned from this experience is: indirect marketing can be just as effective as direct marketing!
The Power of Indirect Marketing
It is no coincidence that my wife’s relative approached us about investing in real estate. For the past several years, we’ve been vocal about our rental business. Through a combination of blogging, speaking at local real estate clubs, posting rehab updates to my Facebook page and simply sharing the details of our business to anyone who asks, we’ve created credibility within our social sphere of influence.
While I would love to say this was all by design, it wasn’t. What I can say is that all of these indirect marketing strategies have helped to brand us as the “real estate couple” in our various social circles – friends, relatives, co-workers, etc. Often times at group settings, one of the first questions we receive is, “How are the rentals doing?” or “What’s going on with the real estate market?”
This has provided us a platform to share what we are doing – and it made us approachable to anyone interested in investing. We’ve successfully done one deal with private money and are already in talks with our private investor about doing a second deal. Now that we’ve learned the basics of trust deed investing and creating notes, we are going to pursue this strategy more aggressively over the next few years.
If you are looking for private capital, developing credibility is a MUST. Whether it’s via blogging on BP, posting updates on Facebook or attending your local REIA, you need to be visible. Take a look at your business and ask yourself if you are maximizing your visibility. Are you creating opportunities to highlight your investing experience to others? I’m not suggesting you go out of your way to brag about your success, but the next time someone asks what’s new in your life, why not share a few details of your real estate business?
Just think – next time you ask your aunt Cathy to pass the mashed potatoes, you might be talking to your next private investor.
Readers – what are a few of your indirect marketing strategies?