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Cold Turkey Update
In case you haven’t been glued to the last two posts I wrote, let me catch you up.
My husband Aaron and I are stability-challenged and now stability-deprived, as we decided to leave his well-paying – and life-sucking – career as a corporate pilot in California to move into my parent’s basement in Colorado to pursue real estate investing full-time.
We pursued real estate investing for 2 years in California without a single purchase and had six months living expenses saved up to flip our first couple of deals and get on our feet.
We also had a large amount of capital for purchasing houses and construction costs.
My hubs and I split time between the business and our other business of raising two precious children.
The business, since we moved here, has been a dream come true!
It has been a breeze and we have sailed smoothly and easily into full-time real estate investing.
I don’t hardly know what to do with all the money we’re making and the song Somewhere Over the Rainbow has become the theme song for my life. It’s AMAZING!… and then I woke up from the dream into my reality.
It’s been FREAKING hard, guys, let me catch you up and hopefully save you some of the struggle we’ve experienced.
I continue to write and rewrite this post, as things have changed and shifted quickly and drastically.
We have now been in Colorado for nine months and although we initially had a bunch of leads (from bandit signs which we discontinued a couple months ago due to every city contacting us to take our signs down and few of them threatening to arrest us) none of them were converting to deals and we were discouraged and quickly becoming broke.
Aaron interviewed at several flying jobs and although he is highly qualified, nothing was panning out.
Our situation was down to the wire when our first deal came through.
We got a lead from a local investor (and now friend and sometimes partner). He got the property under contract and we wholesaled it to an investor for $24,000!
Even after splitting the profits, not such a bad first deal, eh?
We realize this amount is an unrealistic expectation in general, but hey, we’ll take it.
Since then, we have gotten two listings, transferred three wholesales and are under contract on our first rehab (we close next week for a $35,000 profit).
I know crazy, right??
So let me summarize what we have learned in these past months and what we plan to do going forward.
1) Don’t Set Static Marketing Goals
You have to set marketing goals, right?
Definitely, but don’t set static-type marketing goals, set growth-type marketing goals (I’m sure there are fancier names for these, I just made that up).
A growth-type goal may be to increase your direct mail marketing addresses by 500 mailers a month, every month.
A static-goal would be to reach 2,000 mailers a month.
See the difference?
My general growth plan is to continue to grow the marketing until we have mailed to every distressed property address in all of Denver and to explore every form of marketing available and either implement or eliminate the type of marketing we try.
You HAVE to continue to grow your marketing and as soon as you place a ceiling on your marketing, you will put a ceiling on your business. A portion of every profit you make on a deal has to go back into expanding the marketing. Treat your marketing like it is its own business.
2) In a Competitive, Active Market, Consider Becoming A Jack-Of-All-Trades
Our original plan was to solely buy flip investment properties but we have quickly realized that in such an active, competitive market, we need to be a jack-of-all-trades.
It practically kills me to receive a bunch of leads that we end up having to turn away (or when we are turned away by the seller) almost all of them because they don’t fit our narrow margins for a flip.
In response, we have switched gears to being a full service real estate operation.When we get a lead, we ask a bunch of questions and fit the seller and home situation to the best of three options: wholesale, fix and flip, or pass the listing to a Realtor for a referral fee (in CO you have to be a Realtor to collect a referral fee).
Yes, we would prefer to be flipping houses, it’s really the best fit for our experience and passion, however, this market with its level of competition does not support that narrow focus (it’s important to note here, that we could be flipping houses even in this market if we were to narrow our margins significantly but we feel responsible to protect the source of our funding and don’t have that option).
If you are in a difficult market, you have to learn to listen to the heartbeat of your market. Tune your strategy to what you hear.
And when you have a multitude of leads coming in, you can hone into your core business plan.
3) Skip the Absentee Letters
If your marketing budget is small, you can only mail to so many addresses. So start with addresses you have dug deeper for, don’t use the list that everyone else uses.
You will have more competition and there is a smaller percentage of motivated sellers in an absentee list than, for example, probate or past due taxes, etc.
You can obtain leads with the absentee list, but you’ll get more if you do more work than the next guy. And, once you’re business is cranking you can still add in the absentee addresses!
4) Don’t Fix What isn’t Broken
We were getting roughly 8-10 leads a week for several weeks and decided to make some changes in our street sign program. It was a huge mistake in hindsight!
If what you are doing is working don’t get greedy, just keep doing what you’re doing.
I kind of hate networking. My husband goes to REI night meetings and I hate them. We work so hard all week and then also go places at night? We deserve some time off!
Well, I don’t know who I think is going to give me all these things I “deserve” but while I’m waiting my business will be wasting away. AND, we’ve met amazing people through networking.
6) Don’t Quit Your Day Job
If you have an option at all to keep working while you’re building your business, even if it means working nights and weekends, do that.
You will quickly run out of time if you go cold turkey. Oh, and you’ll be really stressed to boot!
In our specific situation, it was a decent decision, but don’t do it unless you don’t have another option.
Don’t give up… this business is not easy!
Part of what makes many successful investors, successful, is perseverance.
Persevere longer and smarter than those around you and you will make it out on top. We haven’t gotten there yet but we will…
I promised some guidance on how to build the graphics of your website and I don’t want to leave you hanging.
However, I think it’s really important to note that you can and probably should get started without a site. You can certainly start making phone calls to Craigslist, send out direct mail, and connect with wholesalers all without a site.
However, some potential sellers will want to research your business further and a website will eventually be invaluable for generating leads when you work on your Search Engine Optimization (SEO), so it will be important to develop your site at some point.
But where the heck do you even start?
And if you don’t have a design background and can’t afford to hire a designer then you may as well not even have a website, right?
It can be super overwhelming to build a site but it doesn’t have to be!
Lets break it down and see (side note: you can create a visually pleasing site without a designer but if you have the cash, a designer will take you to a whole new level of cool and save you valuable time. I am not a graphic designer. My background is in architecture. My thoughts come from that somewhat dormant design recess of my brain).
I highly recommend following Brandon Turner’s post to get started. We built the first draft of our site in August and although it took a little longer (ok a lot, but I’m pretty detailed and we built a fairly big website with several pages) than an hour, the www.wix.com drag and drop type of site that Brandon recommends and I used was ridiculously easy!
Here’s some things I conjured up from my design background/learned along the way
Basically the gist of designing a killer website is to start broad and add detail as you go. Use examples of other websites for just about everything, but make sure to make your site your own.
1) Content Type
Do a little research and find 5-7 real estate investor websites that you like.
Look at the types of content that they have. Decide what type of content you want for your site. You’re not writing content in this step, you’ll get too bogged down.
Decide if you want an FAQ section, do you want an introduction about your business, do you want to explain the process of how you do things, etc. Decide whether or not you’re going to start with just one page or will you have several.
2) Page Layout
Now you’re ready to make some decisions about the page layout. By layout I mean the general look of the site.
Start with your Home Page.
Use your investor websites as examples and search in Google images for “great simple website designs” for more ideas. You will definitely want to include a contact form on your home page, so start with locating that and work around it.
Use rectangles to represent your content to get a rough idea of where it will go.
Look at what sites look appealing to you and decide what about that layout is appealing. Model your site after those. Use a lot of examples and then MAKE IT YOUR OWN.
So you want the site to have cool colors but where the heck do you start?
Even with a design background in architecture and pretty good knowledge about color, etc., this part was SUPER hard for me, too.
So here’s what was really helpful to me.
Select a color that you know you want to use. For me it was green (since that’s the main color in our logo).
Go to Google images, and type in “green color combinations” and a gazillion pictures of rooms, etc. will pop up with that color combined with other complimentary colors. Choose a combination that you like and build your site colors around it.
Pretty easy, right?
Make sure to use a simple color palette, no more than 3 colors. You can add a wide range of neutral colors on top of that and wallah!
You have an awesome, dynamic color palette.
4) Other Pages
These can be pretty easy. They typically include a lot of verbiage and can be a really simple design that is standard for all your pages other than your Home Page.
5) Content Development
Writing your content is going to take days if not weeks, won’t it?
It doesn’t have to!
If you want to write totally unique content and are going to have several pages, then yea it’s going to be overwhelming.
BUT you can pull up like 6 or 7 investing sites that you like and grab inspiration from those sites. Don’t worry! We’re not joining the Plagiarizer’s Club!
Use their content to inspire your own – but do not copy it. Simply look for the kind of content they included and use it to inspire your own writing. Do the same for each of your sections and you’ll be done before you know it. The hardest part of content creation is coming up with ideas to talk about, so using this strategy takes the guessing out of the main themes. Draft an outline of important topics you want to cover, and simply fill in the outline with a paragraph for each section, written by you.
For example, most sites have a Frequently Asked Questions section. So, you’ll have a bunch of FAQ’s listed from a bunch of different sites. This will give you a good idea of what others feel is important to talk about.
This part took me like an hour or so before I had a rough draft for the entire site, that clearly depicted what we wanted to say.
And you want people to actually read your content, right?
Make sure to choose font sizes that are large enough that you don’t lose people’s interest, and don’t get too wordy.
This should give you a decent overview. It will take some time but it’s definitely doable!!!
How are you doing these days in your business?
What ways have you seen your attitude affecting your business positively or negatively?
What advice would you give that has been helpful in your journey?
What trials did you have to persevere through to gain success as an investor?
And here’s where I insert my shameless DESPERATE REQUEST for advice and thoughts on how a little-bit-less newbie-ish newbie goes from a handful of deals to a thriving sustainable business and eventually to conquering the world… or at least Denver!
Our vision is HUGE, but our understanding of how to get there (other than continuing to increase our marketing, thinking outside the box, outsourcing everything like crazy and keeping our perseverance) is struggling – HELP!!