There is no such thing as an overnight success story. We all love to believe that they exist, if for no other reason than to leave us with the hope that one day success will also find its way to our doorstep. This possibility, regardless of how remote, keeps us hanging on; shuffling our way through each day until that monumental moment happens to us…just like it happened to that nice young man or woman we know who “hit it big” or got “lucky”.
As hard as it may be for some people to grasp, financial freedom and economic prosperity does not simply fall in our laps. (My temptation is to write about how I don’t want my words here to burst anyone’s bubble, but that would be disingenuous of me, because that’s exactly what I want to do!) Until we prepare our minds for action, and then ACT, we will never see the success that we so fervently desire. It’s the mindset of waiting, watching, and hoping that has kept many would-be-entrepreneurs destitute, ineffective, and unable to succeed in business.
From the beginning of time until today, every successful business, invention, ministry, or organization has been built the exact same way; small step-by-small step, difficult decision after difficult decision. The reason why we think overnight success stories do exist in our society is because we’re not privy to the blood, sweat, and tears that goes on behind the scenes before that multi-million dollar company goes public, the famous actor gets his big break, or before the world renowned speaker becomes, well…world renowned.
The other night my wife and I were flipping through the channels and came across a show called Gladiators 2000, a teenage spin-off of the mega-hit American Gladiators, originally filmed back in the 1990’s. As a student of all things successful, my interest was not necessarily peaked by the fast-paced, dramatic nature of the competition, but rather by the name of the 19-year old host of the program: Ryan Seacrest.
For those of you who have not been sucked in by the reality singing competition known as “American Idol,” allow me to give you an update on pop culture. Ryan Seacrest is also the host of that particular program, which just so happens to be the #1 rated television show in America. Accompanying those high ratings is also an extremely high paycheck for one Mr. Seacrest, who made in excess of 20 million dollars last year, as well as landing some other high-profile gigs such as hosting the Emmy Awards, Dick Clark’s “New Years Rockin’ Eve,” and the American Top 40 radio program, just to name a few.
Most people are familiar with the fame, success, and glamour that surround stars like Ryan, but few people know of their tireless work ethic and undying commitment to their craft that is typical of successful people in any industry. Those close to Ryan tell stories of his passion for radio, and how he had crafted a smooth presentation early in his teen years. After a few years as a DJ in his native Georgia, Ryan moved to L.A. and began hosting a radio show for just $15 an hour (which in Southern California has you living well below the poverty line). However, Ryan didn’t despise his small beginnings, and kept pushing towards the success that he knew could be his if he stayed committed to the process. This same story can be found in countless successful businesses, even those that were started in the middle of recessionary periods of our country’s history.
The oil crisis of 1973 sparked the largest recession in our nation since World War II. The high gas prices would have deterred nearly any entrepreneur from starting a business that relied heavily on transportation. Apparently nobody told that to Frederick W. Smith, founder of the mega-shipping giant, FedEx Corp (or perhaps they did tell him, and he just wasn’t listening). Beginning its operations on April 17, 1973 as Federal Express, the company delivered a mere 186 packages to 25 cities on its first night of operations. Not exactly an overnight success story (no pun intended). However, with a strong business plan and an even stronger work ethic, FedEx grew into the financial juggernaut that it is today, now managing more than 7.5 million shipments everyday worldwide.
Our fast food, microwave-ready, instant coffee society has conditioned us to expect immediate gratification, but in business things don’t always work that way. Successful enterprises are built the same way in recessions as they are during times of abundance, and that’s through hard work and dedication. As you begin to pursue your entrepreneurial dreams, don’t become discouraged if things don’t happen for you right away. The day of small beginnings should not be despised, but rather embraced as a time of trial & error…a chance for learning, growing, and developing a master plan that will launch you into success in the years to come. Being an entrepreneur is not always a bed of roses at first, but over time it can create a wonderful life for you, your family, and those you choose to bless with your wealth and financial increase.Read More
In this series of blog posts, I’ve been pointing out some of the “insider secrets” to successful real estate investing, that don’t necessarily make it into most seminar presentations or infomercial scripts. It’s the real “gut-honest” truth about what it takes to be profitable on a consistent basis. In part 1, I addressed the fact that everything doesn’t go right all the time, while in part 2 we discussed the reality that it’s just not as easy as they say in the infomercials. In part 3, we talked about how it actually takes some money (even if just a little) to make money, while in this post I want to examine the importance of a personal budget in the success of your business.
You may think that a business budget is critical to your success in business, and yes, it will eventually become necessary. However, most people never get to the point of considering a business budget, because they’ve never even taken the time to establish a personal budget. And unfortunately, that one ill-fated decision oftentimes leaves them unable to take advantage of the very real opportunity that is available to them in the world of creative real estate investing.
One of the first things I encourage new real estate investors to do is to establish a marketing plan to generate new leads. Obviously, the more money you can throw at this new marketing plan, the greater the chance it has at generating the leads necessary to quickly take you from a start-up IDEA to a profitable BUSINESS. However, most people feel like they can’t “afford” the extra money that it takes to truly get things off the ground, and so they just throw their “leftover” money at this new business, instead of establishing a budget and being INTENTIONAL about their marketing.
As Dave Ramsey (the king of personal finance) always says, the key to an effective budget is giving EVERY dollar a name, and deciding ON PURPOSE where you money will go. Otherwise, money will consistently “leak” out of your budget on frivolous and unimportant things, and there will never be anything leftover for the important stuff…like generating leads for your new entrepreneurial endeavor. Very few people intentionally CHOOSE to spend $800 on eating out, and only $20 on marketing their new business. However, that’s typically what happens when we don’t pay attention.
So, here’s your homework assignment…and a call to action of sorts. Sit down with your significant other (or your dog if you’re single), and write at the top of a piece of paper how much money you bring home (net income). Deduct out the essentials (shelter, clothing, etc.) and then decide how much you will spend on any discretionary items, like entertainment, dining out, etc. Lastly (and most importantly) make an intentional decision regarding how much you will INVEST into your new business…and then STICK TO IT! If you decide on $100, then spend $100 every single month on some form of marketing (direct mail such as letters or postcards, bandit signs, etc.)
When you give every dollar a purpose, and assign all of your income to a category, it helps you see things in much better perspective. When you go over budget on dining out, you have to make a decision as to whether it will come out of your clothing budget –OR- your “building-a-business-for-the-future-so-I’m-not-stuck-in-the-rat-race-my-whole-life budget”. When you consider your spending decisions through that prism, suddenly that extra dessert or appetizer just doesn’t seem all that necessary.Read More
In part 3 of this series on direct mail marketing to find motivated sellers, we began discussing the idea of targeting specific niches in real estate in order to improve our return on investment. Each niche that you choose will usually generate a specific type of lead that fits into one or two particular exit strategies.
For example, targeting probate properties typically unearths a great deal of free & clear homes (no mortgage) that need a lot of updating and renovation. At the risk of sounding like Captain Obvious, this is due to the fact that many of these homes were owned by elderly couples who had paid their homes off over time, but did very little in the way of updates during the period they owned the home. While you will sometimes find mechanical updates (roof, HVAC, electrical, etc.), these homes will typically require a great deal of cosmetic work, such as new flooring, cabinets, bathrooms, etc.
In this post we will focus on two niches that, due to the nature of the seller’s situation, will yield a lot of overleveraged properties that are perfect for short sales. After successful short sale negotiations, an investor could pursue whatever exit strategy fit his/her investing objectives, such as renovation, wholesaling, or buy and hold.
Lis Pendens or N.O.D. – When the foreclosure lawsuit is filed against the homeowner by the lender’s attorney, it is recorded in your county’s public records. In most states, this public filing is known as either a “Lis Pendens” or a “Notice of Default” or N.O.D. Because it is public record, you can search out properties in this predicament, and send them a letter or other marketing piece to try and purchase their home.
The best thing about reaching out to this audience (at least at the time of this post) is that the inventory is PLENTIFUL. While the market has been healing over the past few years, the number of foreclosure filings is still WELL above traditional norms for most markets, and so the opportunity is ripe to pick from what I like to call the “lowest hanging fruit.”
The positive side of marketing to new foreclosure filings is that you typically get a very high response rate as long as your letter is worded effectively. The filing serves as a wake-up call for many sellers who are delinquent on their mortgage(s), and it usually serves as the impetus for them to take action and try to stop the foreclosure.
Bankruptcy – Another niche that commonly yields a large number of overleveraged buyers who need the services of a savvy real estate investor and negotiator are those who are going through bankruptcy proceedings. Filings for federal bankruptcy protection are also public record through an online searchable database know as PACER (www.pacer.gov).
Targeting this niche can also be very effective at generating short sale leads, for many of the same reasons as the Lis Pendens list. Additionally, many investors don’t realize that you can do short sales on properties involved in a bankruptcy, and so they avoid these properties altogether. That opens up a huge opportunity for those who know how to effectively market to this list through direct mail, and guide the homeowners in navigating the short sale process.
What are some other niches that you have targeted with direct mail? Which ones have yielded the highest response rate and/or R.O.I.? Share your thoughts, and let’s keep the conversation going!Read More
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