Sometimes we as investors get focused on new marketing techniques or technologies that we tend to forget about other methods that work just as well or even better. Let me ask you this: When was the last time you got a lead out in the field? This case study is going to show you how I snagged a great deal in the competitive Dallas – Fort Worth Market using some simple notebook paper, a pen and some tape. No, these are not yellow letters; they’re old-school guerrilla marketing tactics. I will explain more about it as we dive deeper into this case study.
About the Deal
After you have been in the real estate investing game for a bit, you will likely find yourself regularly visiting certain areas/subdivisions over and over again, as I was one afternoon a few months ago. That particular day I was visiting a section of one of the most popular neighborhoods in Southwest Fort Worth to invest in. The neighborhood was making a roaring comeback thanks to investors revitalizing and transforming the neighborhood. This location at one point was home to a lot of affluent folks in the late 1960s early 1970s, but had gone downhill a little bit until rehabbers stepped in.
This particular area is notoriously difficult to get good deals in – as you will see in a moment firsthand from me – and it’s an understatement to say it’s heavily marketed to. The reason it was popular was simple: great area, great schools and depending on which phase of the subdivision you were in, there were houses perfect for flips or rentals. The problem was finding the deal with our very low months of inventory supply to make that happen. This is the type of neighborhood where you might come in for an appointment, sit down at the dinner table with the seller and see a whole table covered in your competitors’ postcards and yellow letters — and that’s no exaggeration, I mean covered.
At the Appointment
Anyway, I was on my way to an appointment, keeping an eye out as I drove the neighborhood, but nothing really stood out until I arrived at the subject property. I noticed that the house next door to the subject property looked like it had some deferred maintenance and needed a little TLC. I walked up to the subject property and as usual introduced myself to the seller and began to walk the house.
Now, when I’m on these appointments, I always stress that it’s less about numbers and it’s more about building a relationship with the seller. That’s exactly what I was doing there. At the end of the appointment, I made my maximum offer, but the seller politely declined. As it turned out, an investor who had been in the house just before me had offered $8k over my maximum.
On this particular house, I went well over the 70% rule on my maximum offer because I knew the neighborhood and what margins most flippers were operating on and what they expected to make on the back end. Sometimes I get the deals even if my offer isn’t the best due to trust and rapport building, but I wasn’t lucky enough on this one. You can’t win them all. We still had a good conversation, and I didn’t just cut and leave when I found out I wouldn’t get the house. Instead, I made sure that he knew I was available to him – and if he had any questions or should the offer fall through with the other investor to feel free and give me a call (deals fall through; it happens, trust me).
Before I left, he started talking about the house next door – his neighbor. Turns out the neighbor had inherited this property many years ago, but for the last few years had been living out of state, which explains the deferred maintenance. Not only that, but it sounded like the seller was sick and tired of paying the holding costs on a house she wasn’t living in or had tenants occupying. I asked him if he had any contact information for her, and he didn’t — just a name.
Usually at this point I might consider skip tracing the owner or searching the central appraisal district for more information (and I did), but that’s not how I got this deal. I did something a little bit more primitive. Here is the secret, something that has gotten me quite a few good deals. Just leave a message on the front door. Pretty basic, but it works.
The Guerrilla Marketing Method
To do this, you can go for one of two approaches. Each works pretty well – maybe mix it up or do both and see what works best in your area. The first begins by grabbing a simple notepad, a pen and some duct tape. Just write a straight forward message that you were in the neighborhood and noticed the house and you would be interested in buying the house for a discounted price.
I let my marketing do a little bit of filtering up front for me; I never try and hide my message. It’s nothing fancy, you just want to get your message in front of the right person. The alternative is to do something that is a little more sophisticated, but you can still just use regular office paper. Print out a logo, contact information and the website of your company and do the same thing – just stick it to the door with some tape. Maybe shorthand a small message on there with pen so when the person sees the message, it will be more personalized and doesn’t look like you blasted each door in the neighborhood with one of these.
Now, like anything else, this isn’t a get-rich-quick scheme and will take time. But one thing is for sure: You can be certain that your message will be read. From the date of that appointment to having the seller contact me and finally closing on the deal, it was about 5 months. But if you are already out in the field anyway, it would be silly to pass on leads like this. You can even add these leads to your lead database to send them mail as well. But I find that if a potential motivated seller sees a brief personalized note on their door, they are much more likely to respond. For this particular house, I had just used my last office paper printout so I just used a notepad and pen. In the message I quickly introduced myself and mentioned how the neighbor had referred me.
Make the most of your time any time you are driving into a neighborhood that you are marketing to. Take a little time to drive the streets. Show up early or stay a little bit later if you need to – these are great deals. It’s sort of like driving for dollars, but with a little bit of a twist.
Investors: Have you ever used this method to generate deals? What tactics work best for you?
Leave a comment, and let’s discuss.