This is the 2nd installment in our epic investing journey. Read Quit Job…Check. Move Family out of State…Check. Become a Full-Time Rockstar Investor in 8 Months…? to read the first post.
The 20 Best Books for Aspiring Real Estate Investors!
Here at BiggerPockets, we believe that self-education is one of the most critical parts of long-term success, in business and in life, of course. This list, compiled by the real estate experts at BiggerPockets, contains 20 of the best books to help you jumpstart your real estate career.
The Big Move
I’ll spare you all the gory details since you didn’t come here to read a blow-by-blow of our move from California to Colorado, and I’m sure you have also experienced your fair share of nightmare moves. I could probably best summarize it by saying that I had an epiphany sometime after waiting for the moving company who was seven hours late and around the time they tried to con us into spending another $1500 and right about when I broke down sobbing in front of the 40 something mover who appeared to have stolen a 16-year-old’s clothing. I started praying for tonsillitis or appendicitis, or maybe something with my gallbladder (but nothing too painful) to send me to the hospital for a few days until it was all over. And in case you ever consider using a moving company that gives you AN AMAZING DEAL that you can’t pass up, run the other direction…
What’s much more exciting than the actual move is my husband’s permanent move from corporate aviation to our fulltime investing business.
The Big News
Let me catch you up on some REALLY exciting news since the last time I wrote. Within a day or two of my post going on BiggerPockets, we got an offer from a rockstar investor to coach us. Glenn Schworm (or maybe an angel sent from heaven who goes by that name, I’m not sure yet) will be helping us transition from wannabe to legitimate rehab investors. Glenn and his wife, Amber, have flipped over 100 houses in the 5 years since they started and have a long-term goal to coach and help many more like us. A big part of their business is marketing and their guidance has already been invaluable as we navigate our decisions. And they happen to also be really great people!
MLS vs. Marketing to Motivated Sellers
It was really a tough decision to decide to go from using the MLS to purchase properties to marketing to sellers directly, but since we spent a year and a half looking and that produced an amazing outcome of 0 HOUSES, our options were looking like,
1. Give up on the dream of taking control of our lives and putting in our resignation to The Man or…
2. Kick our relationship with the MLS to the curb like a bad deadbeat boyfriend and start marketing.
So I looked at my precious kids with tears in my eyes and decided I wanted a better life for all of us… Well, actually, I imagined continuing my life day in and day out in a constant insanity of screaming children, sleepless nights, tearing my hair out and having NO HELP.
I chose the marketing.
Ok, so maybe you’re stubborn like me and even though I and everyone else on BP is telling you not to, you’re still thinking, “Hey, there are so many houses on the MLS. There’
s got to be at least a handful for me, right?” Let me explain some of the things we’ve tried: using my husband’s broker license, not using his license and working with a well connected realtor, short sales, pendings, severely distressed homes, redtags, long DOM’s. We were on every lead immediately and used every strategy we could think of to make it happen. The problem with the MLS is…in an active market you will always be outbid by other buy and hold investors, homeowners or other rehab investors who are using risky profit margins to seal the deal. Yes, you may be able to pick up a house or two, but if your goal is to build a full-time rehab business, it ain’t gonna happen.
Get in the Chicken Suit
You spend your entire life trying not to look stupid, not to stand out. When all the other kids were wearing neon, you didn’t wear black, you wore the neon. You don’t just wake up one day and decide to put on a chicken suit and dance on the street corner to bring in the investing leads. But that, my friend, is the choice you have to make. I didn’t start out so much a fan of this whole marketing schpiel either. Sending a bunch of mail to a bunch of people who don’t want it, posting signs all over my town and then running away from mysterious sign police (really, these people exist??), leaving business cards, like everywhere. Weird, annoying, and definitely cheesy. I didn’t want to be “that person”. That weird sales guy (gal) with the awkward smile like he knows you and fake manipulative words that aren’t really that creative. Once I went to a timeshare presentation to get that “free trip” to Las Vegas and somehow ended up in a back room with The Hardseller. I felt like I survived an actual battle by the time I left.
But here’s the thing, marketing works. Reaching out directly to sellers works. It just does. We know that from all the hundreds of experienced investors on BiggerPockets who tell us it works. And it really isn’t all that bad. It’s not the same as cold calling or going door to door. Your goal in your investor marketing is to get your name, your brand, in front of the seller so that they can make the decision whether or not to call you. And the people who do call need help. They are overwhelmed at the prospect of listing a house, they have a need to sell quickly, the house is connected to an emotional situation, etc. And you get to help these people, that’s cool right? You like helping people and you definitely like the idea of limiting your competition. So GET IN THE CHICKEN SUIT. Send out the postcards, leave out business cards, network at business meetings, GET YOUR BRAND OUT THERE! You’re reading this aren’t you? See, my marketing’s already working! Now if I could just get you to pull into my chicken restaurant…
Lets Get to the Details!
Ok, so what’s this marketing gig going to look like? We plan to be flipping upwards of 5-10 houses at a time. That may seem like a lofty goal, but here’s the thing: If you set a “realistic” goal you may or may not reach it but you are much less likely to exceed it. However, if you set a big goal and make decisions accordingly you are much more likely to at least get to the same ballpark.
Take this as an example. An organized infrastructure, systems and a great team are needed to support a big business. Flip 1 house at a time, think, “Hey, I can just do this work myself. That won’t be too big of a deal. I can also answer my own phone calls and hang my own bandit signs” Plan to flip 10 houses at a time, think, “Are you kidding me? I don’t have time to hammer even one nail. I need to focus on generating leads and closing deals, line up a phone answering service (thank you Glenn, for getting our heads on straight about this one!), and outsource everything I possibly can”. Make decisions like you run a big business before you actually have a big business, it will be critical to your success.
We learned on BiggerPockets that if you plan to do marketing, you should do several different techniques (we’re doing five), do them well and do them consistently. Our budget is $1000/month. We’re rolling out one strategy at a time, making sure each one is well organized before moving onto the next. Before buying the trip around the world and the fly fishing cabin, we’re putting the money that we make back into expanding our marketing. The income to marketing cost ratio is astronomical if done correctly, so it would be foolish not to continually expand this part of the business.
In addition to our five main marketing strategies we will also implement these one-time or minimal time ideas:
So embarrassing, but sooo necessary, don’t you think?? Think, giant offensive whole side and entire back of 2 cars covered in stupid brief ads ala bandit sign messaging. I’m all in, guys, all in…
Several ads, reposted consistently and strategically.
BUSINESS CARDS: Leave. them. everywhere.
Our 5 Main Marketing Strategies
In order of priority.
1.) DIRECT MAIL
We launched direct mail first because we were able to do it long distance. I would recommend starting with bandit signs, however, they have the best cost to effectiveness ratio. (Note from the Editor: BiggerPockets only recommends using bandit signs if legal to do so.)
Objective: mail to 600 out of state absentee owners 6 consecutive times, 1 month between mailers. 300 mailers white with “handwritten” letter and letterhead and 300 also “handwritten” on yellow “lined paper” (I created the lines in a Word Document. I’ll upload the file to the BiggerPockets Fileplace for your use) to do a test run. The campaign will be letter, letter, postcard, letter, letter, postcard. Postcards will be black typing on canary yellow paper. After the 6 mailers we will wait 3 months and begin mailing to the same addresses again indefinitely until we either get a lead or someone asks to have their name taken off. During the three-month break, we will launch a 2nd set of mailers (the same mailers) to an additional 600 addresses. It’s important to not do all at the same time in order to test the original mailers’ effectiveness and make any necessary changes.
Envelope Specifications: Our letter mailer will be white and personal letter size. Think about this, if you opened your mailbox and there were 5 business-sized envelopes, some handwritten, some not and there was one small envelope that was handwritten and looked like a letter from grandma, which one would you open?? I put my bets on the small letter, but I’ll let you know how it goes!
Pricing: for 600 Mailers to 600 Addresses Including Materials, Printing, Stuffing, Postage and Mailing
Mailing House: $600
Letterhead only: purchase of letterhead only, in-house printing $150.
Elance: Just the printing for letters and envelopes $200.
Elance: Entire job $470
UPDATE: We went with an AMAZING bulk mailer on Elance who is charging us $470 for the entire 600-mailer job, including postage. Awesome! The first 300 white letters went out a week ago and so far we have had a poor response. Only three phone calls, but remember, this is only the first of five campaigns we will be launching and it typically takes someone receiving your mail at least 4-6 times before they respond. We are also tweaking the wording before sending out the 300 yellow, lined mailers. We’ll keep you posted!
2.) BANDIT SIGNS:
We’ve ordered the signs and plan to make our own Sign Stapler (found instructions online). I’m mapping out the routes now using a property value heat map I found on Trulia and Google maps. Then we will drive the routes, hire Craigslist posting person, and go to town. 50 signs out at a time, replace ones taken down, locate signs high up with sign stapler so not easily taken down.
3.) WHOLESALER NETWORKING:
Sooo, this has been a bust so far. I tried to contact wholesalers I found on BP and Google, heard back from only one who said they aren’t wholesaling anymore. Where are you people???
4.) DRIVE FOR DOLLARS:
Drive around and write down addresses of distressed properties. Actually handwrite notes to these until we have too many to keep up with. These should prove to be really good leads.
5.) REFERRAL PROGRAM:
$1500-$2000 finder’s fee to anyone who refers a house to us. We have verified this is legal through the CO Department of Real Estate.
Catch up with us next month when I update you on the progress of each campaign we’ve rolled out so far and explain our straightforward approach to building a website.
Did you have a hard time embracing the marketing process? What has your experience been like so far?