Over the last few blog posts (Direct Mail, Part 1 & Direct Mail, Part 2), I have been lauding the benefits of direct mail marketing, and discussing the strategies wherewith savvy real estate investors are able to generate a steady stream of motivated seller leads. While direct mail should never be the only tool in your marketing belt, it is certainly a formidable one that should be an integral part of any effective motivated seller marketing plan.
While many investors use a shot gun approach, and target specific areas with their direct mail marketing, perhaps the most effective strategy is to target a specific type of SELLER with a specific type of DISTRESS. Not only does this typically improve your advertising dollar ROI (return on investment), but it helps to ensure that the phone calls you receive will fit within your specific investment objectives.
In the next few posts, I will go through some of the specific niches that are available in the world of motivated seller marketing, most of which can be found free of charge on your local county’s clerk of courts website. A few of the strategies may involve paying a lead service or data harvesting company for the leads, but most of those services are extremely affordable and cost-effective when used as part of a larger marketing campaign.
Niche #1 – Probate Properties: Probate properties are homes that have been inherited by someone, typically a friend or relative of the deceased owner. Most people don’t NEED a 2nd home, and so oftentimes the inherited property can be more of a burden than a blessing. The new owner is now responsible for upkeep and lawn maintenance, property taxes, insurance, as well as securing the property from potential theft or vandalism. These additional expenses can be budget-busters for the home’s heir, and so oftentimes they become a MOTIVATED seller.
Due to the sensitive nature of the situation, those who pursue probate properties need to be a little more understanding and compassionate than they would normally need to be with another type of motivated seller. However, if you can be a sympathetic ear to someone in the grieving process, and you have the patience to wait through the potential legal bog, as well as the possibility of multiple squabbling heirs…then this could be an EXTREMELY profitable niche for you.
The exit strategy on most probate properties is going to be either rehab or wholesale. Many of the homes will be dated and in need of numerous cosmetic and mechanical updates, and so they will unlikely be “turn-key.” These are typically great properties to renovate and sell to a retail buyer, or wholesale to a rehabber for a quick assignment fee. On a rare occasion, you will come across an overleveraged probate property that will require a short sale before any other investment strategy can be pursued.
Niche #2 – Code Violations: Code violation properties are homes in which the owner has violated a county ordinance or building code, and so they have been issued a warning or had a lien attached to the property. Code violations can be given out by your local county enforcement officers for numerous reasons, some of which include a broken window, an unsafe structure on the property, or an overgrown lawn.
Sellers who have had a LIEN placed against the property because of their code violation are typically very motivated. If they had the money to remedy the violation, they would have most likely taken care of it long before it got to the lien stage, because the penalties for non-compliance are typically very hefty…sometimes $500 or more PER DAY. However, while this niche market is typically very motivated and responds to letters at a higher-than-normal-rate, you also never know what you’re going to find when you look at the property. Many of the homes will be “tear-downs” or vacant lots (homes that the county already tore down) and so some of the leads won’t be able to be converted.
The most common exit strategies will be similar to probate properties, because these will commonly be homes in very poor condition with little to no mortgage balance. So, once again, code violation properties will generate a large amount of potential deals for renovation or wholesaling to other rehabbers in your area. You might also want to connect with some small local builders in the area, or Habitat for Humanity, who might be interested in purchasing some discounted lots from you for new construction.
Be sure and stay tuned for our future posts, where I will be addressing a few more of the targeted niches in the motivated seller market. Until then, are there any niches you’ve had success with in the past? Have you tried probate or code enforcement lien properties? If so, what were your results? Let us know by commenting below!Read More
In my last blog post, we discussed the benefits of direct mail marketing in finding motivated sellers. There are numerous ways to generate motivated seller leads in the world of creative real estate investing, but I have found that one of the most effective is through mailing compelling marketing messages directly to their homes – whether via a letter or postcard. However, even within the world of direct mail marketing there are two main schools of thought regarding the most effective, and ultimately the most profitable, way to do it.
The shotgun approach is about casting a very wide net, to a large group of homeowners, in the hopes of finding those who are motivated to sell at an acceptable price. This is oftentimes done by targeting a specific zip code, area, or neighborhood. If there is a subdivision in your town that is known for very low days on market, or is a popular place to live, it might make sense to send a series of letters or postcards to the homes within that neighborhood. The down side to this method is that it tends to be a little more expensive, and certainly less targeted, since there will be numerous owners in that subdivision that have no desire to sell, or a reasonable MOTIVATED to sell.
The sharpshooter approach is much more targeted in its efforts. Similar to a laser scope that pinpoints exactly where it wants the bullet to go, a targeted marketing effort is going to pursue a VERY specific type of seller that has a SIGNIFICANT motivation to sell. A few examples would be to focus on those going through a divorce, someone who has recently inherited a house, or a homeowner that is in foreclosure. This approach oftentimes yields a much higher response rate (and return on investment), which is especially important to beginning investors who have a very limited budget with which to try and generate profitable leads.
In my next post, I will discuss in detail some of the many niches that investors can pursue in their marketing efforts, along with the pros and cons and each one. Every niche, and specific type of motivated seller, has a unique set of circumstances that will dictate both the buying strategy…as well as your exit strategy when trying to re-sell.
Until then, can you think of any good “motivated seller” niches to pursue? Have you marketed to any in the past? What were your results? Leave a comment below, and let’s start a dialogue that we can ALL benefit from…Read More
The biggest challenge for both new and experience investors is finding and creating a consistent source or quality motivated seller leads. Some newbies mistakenly think that there is a plethora of high-equity deals just hanging out on the MLS, just waiting for them to come snatch them up and make a fortune on them. Those of you who have been in this business for a while know that is not even close to reality.
In fact, experienced investors are not just realistic about the lack of high-equity deals on the MLS or other websites…they are leery about deals that are on the open market that have not been purchased yet. They ask the question, and rightfully so, “If this is such a great deal, why haven’t any of the other thousands of investors who scour the internet every day found this deal and purchased it already?”
It’s really as simple as the timeless business principle of supply and demand. If you take something that is in limited supply (a great deal on the MLS), and add in a massive volume of demand (every Tom, Dick, and Harry that wants to make money in the flipping business), then you are bound to see prices driven upward. More exposure always leads to more competition and a higher price.
In contrast, let’s say you implement a marketing plan, and you get a motivated seller to call you who hasn’t yet spoken to a Realtor, and their house is NOT on the open market. You now still have a limited supply (one house), but also a very limited demand….YOU! You’re not competing with dozens of people that are clamoring to pay top dollar for this seller’s home. It’s just you and them, and you will have a much easier time creating a win/win situation and a profitable deal in this scenario. That’s why it’s so critical for EVERY creative real estate investor to have a consistent marketing plan targeted at motivated sellers.
One of the most effective, targeted, and cost efficient forms of marketing to motivated sellers is through direct mail. Direct mail allows you to choose a specific niche or target customer, and then customize and send your marketing message (and irresistible offer) right to their front door. You can affordably create your own postcards or letters with standard programs like Microsoft Word & Publisher, or there are numerous templates you can edit and purchase online.
Another benefit of direct mail is that it creates a warm lead environment. Even though cold-calling “for sale by owners” or “for rent” ads can be very effective, most people don’t enjoy it very much. You can overcome that awkward conversation by marketing through direct mail. In this situation, the motivated seller is calling YOU (not the other way around), and so the ice is already broken…and you can just easily move through your call script to get the necessary information to analyze the deal.
In my next blog post, I will discuss some of the possible niches and target markets that are available in your area. We will also discuss how to find a database of these potential leads, and even outsource the mailings to a fulfillment company if you are too busy to do it yourself. But until then, let us know in the comment section below if you’ve ever tried direct mail. If so, what were the results? Would you do it again? Join the conversation, and let us know!Read More
In today’s entrepreneur-driven society, it’s not unusual to find that the owner of a small business is also the senior vice president of his one-man marketing department. Since most entrepreneurs enjoy the core operation of their business, it’s common to find them preoccupied with daily minutia and a list of tasks, rather than on the growth and promotion of their company. Add that to the fact that they oftentimes see marketing as a big, hairy beast with blood-drenched fangs ready to suck their wallets dry, and it’s not all that surprising that it permanently resides at the bottom of their priority lists.
Unfortunately, many entrepreneurs and real estate investors view marketing as a costly EXPENSE that is unlikely to produce results, and has a return on investment similar to a Vegas slot machine. Their only ideas of advertising and marketing are budget-busting strategies like TV commercials, billboards, and massive branding campaigns. However, what many small business owners neglect to realize is that their most effective (and cheapest) form of marketing is staring at them in the mirror.
Some of the most powerful and consistent sources of leads in my real estate investing business are as a result of relationships that I have built with other “influencers” in my industry. Relationship marketing is nothing more than meeting new people and making connections with those who can send you referrals in the future. However, while it may be “free” to meet a person, it’s going to cost you time and energy if you want to develop them into a strategic relationship that will be a future source of consistent leads for your business.
Making lasting connections and building strategic relationships is sometimes easier said than done, but here are a few quick tips on how to establish those key relationships that are more likely to produce the lasting fruit that you’re looking for.
1.) Look for the “Shy Yes” – When meeting someone for the first time, you don’t want to go all commando-salesman on them, and try to make an over-the-top pitch of yourself right away. That just turns people off and makes you look like a goober. You simply want to look for that “shy yes” to start the conversation. I always liken it to a dating relationship. The purpose of the first meeting is simply to get a second meeting, perhaps for coffee or even lunch. If you propose on the first date, you have a very high likelihood of being turned down, not to mention having a restraining order filed against you. But if you take the time to build a deep emotional relationship with the object of your affection, and show them you are worth having around, then your chances of a BIG YES are increased significantly.
2.) Tweet, Facebook, & Get Linked In! – The rise of social media has introduced a great non-threatening way to build strategic relationships slowly over time. It is another tool in your arsenal that can help get you the “shy yes” you are looking for, and make a lasting connection. However, the same warning about “pitching” to soon applies to social media as well. If I accept a new “friend”, and his next 12 posts are only about his new multi-level marketing “opportunity”, he will be un-friended as fast as he came in. Social media is meant to be just that…SOCIAL! So, take the time to post compelling content, and let your new connections get to know more about you personally before you ask for a meeting.
3.) Make Sure Everyone Wins – I have a lot of people who want to meet with me to discuss how we could “work together” on different businesses. However, it doesn’t take very long to realize that by “work together”, they mean they want to tap into my contacts and database I’ve spent years building for their own selfish gain, with very little in it for me. As you might expect, these are typically VERY short meeting.
After you’ve started the conversation with an “influencer” and built a relationship, you want to make sure to craft your message to include a TRULY win/win relationship. Everyone loves to talk about themselves, and since you know your business inside and out and are excited about, the unfortunate tendency is to have a one-sided conversation that’s all about you. Make sure you take a step back, and consider the needs of the person at the other end of the table, and answer the question for them, “What’s in it for us?”
4.) Don’t Be Afraid to rub a Few Elbows – While I can teach a lot of exotic ways to try and make connections, and employ an effective relationship marketing campaign, the fact remains that nothing works better than some good ‘ol fashioned networking. In my local area there are numerous groups to be involved with, such as LEADers, Biznetlink, Chamber of Commerce, Rotary, Prosperous Christian, and of course, the Professional Investors Guild. Groups like these allow you to get beyond the need for a “shy yes”, because those in attendance are already there for the purpose of meeting you, and networking together about sharing business leads and opportunities. So, don’t let the opportunity pass you by! The guy who sits in his chair and never talks to a soul is usually the one complaining about how his business hasn’t quite taken off yet. Shake some hands, rub elbows, and talk to some people you’ve never met…and you’ll quickly see the fruits of your labor.
Have you tried relationship marketing in your business? How has it helped? What advice would you give to a new entrepreneur in regards to making lasting relationships? We’d love to hear your thoughts below!Read More
In part one of this series, I discussed the first 5 essentials to achieving greater success in the New Year. These include setting ambitious goals, writing those goals down, consistently marketing your business, thinking positively, and staying away from negative people. And while this is certainly not an exhaustive list, below you will find the next 5 keys to taking your real estate business to the next level in the coming year. I hope you enjoy!
6.) Read Books – Charlie “Tremendous” Jones once said, “The only difference between where you are today, and where you’ll be a year from today, are the books you read and the people you meet.” My goal this year is to read one spiritual book and one business book each month, along with my other reading (Bible, devotions, blogs, etc.). While most of us may not be in formal school any longer, our education never ends. The moment people stop growing and learning, is the moment they start dying.
7.) Network with Influential People – The second half of Charlie’s admonition was in regards to the “people you meet.” Most of my real estate leads come from a few “influencers” and “lead sources” that I have connected with over the past few years. I have been involved in joint ventures on multiple properties in the last couple of years, earning me a great deal of money, due in large part to the strategic relationships that I took the time to build with other investors. If you want to see great success in the coming year, you must look for opportunities to network with influential people, and create win/win relationships in which both sides benefit from the connection.
8.) Find a Mentor – Book smarts are great. Street smarts are better. I’ve had numerous job applicants in my company who have proudly touted “marketing degrees”, but it quickly became apparent that they didn’t know the first thing about marketing. Thousands of people pass the real estate licensing course every year, and yet don’t know jack squat about selling a house. Earning a degree or a designation is certainly something to be proud of, but it doesn’t mean you know anything about real world business. The best way to learn any skill or trade is to sit under someone who is currently doing it, and learn from their successes and failures.
9.) Fail a few times…and then GET BACK UP! –We’d like to think that we will learn EVERYTHING from a mentor, and never make our own mistakes, but that’s never how it works. However, as long as you don’t put yourself in a position to make a fatal mistake, failures are some of the best learning experiences for aspiring entrepreneurs. I learned a lot more about myself and my business during the recent recession, than I ever did during the boom years of 2005-2007. The changes I made as a result of those lessons left my real estate investing business much better equipped to take advantage of any potential down turns in the market, and to make outrageous profits when times are good.
10.) Work Hard – Tim Notke is noted as saying, “Hard work beats talent when talent doesn’t work hard.” No matter how many ways you slice, the ultimate key to success in the New Year is just plain, old-fashioned, bare-knuckles, down-in-the-trenches hard work. I have yet to find a replacement for it, though I have certainly tried. In the end, it’s those who put forth the consistent effort (even when they don’t feel like it) that always seem to win.
Well, there you have it…the recipe to truly having a HAPPY NEW YEAR. If you put these 10 keys into practice over the next 12 months, I can almost guarantee you will be in a better place at the beginning of next year than you are today. However, no one can do it for you. You have to decide to make this year a great one…and I hope for your sake that you do!
I’d love to hear some of your advice for succeeding in the New Year. Let us know in the comments section below!Read More