Epic Real Estate Investing - EPREI 005 : How to Become a Lead Generating Machine!

Episode Date: July 3, 2011

When it comes to success in real estate investing, the investor with the most leads has the greatest opportunity. The quality of the leads is in the "quantity." In this episode, Matt shows you how to generate more leads than you know what to do with by becoming a lead generation machine. Get your free real estate investing course at http://FreeRealEstateInvestingCourse.com Learn more about your ad choices. Visit megaphone.fm/adchoices

Epic Real Estate Investing Podcast, episode five. You're about to meet a man that can show you how he took control of his life and financial future and how you can do the same. He's never been on TV. He's not a millionaire, and he does not know Donald Trump. He is a full-time real estate investor, newly discovered author, and family man. He does not report to a boss. He creates his own schedule and takes his family on a few vacations every year. He got started investing in real estate with almost no money in a really crummy credit score.

And he's going to show you exactly how he did it and how he continues to do it. You will have to work. You will have to be responsible. However, laying by the beach sipping fruity drinks is a reasonable goal without further delay. Your guru. Your guide to a better life through real estate investing. Matt Terrio. Hello and greetings from the epic real estate investing podcast,

the podcast that will show you how to create wealth through conventional and creative real estate investing, so you will have the option to realistically retire in the next 10 years or less, and enjoy the good life while you're still young enough to do so. My name is Matt Terrio, author, full-time real estate investor and family, If this is your first time listening to the show, if you just found us, you're going to want to do two things. One, I want you to go back and listen to episode one to get the gist of why this show is here, what we're all about. I mean, everything that we discuss is going to make a whole lot more sense after you do that. And two, I want you to go download the free real estate investing course, how to do deals, no money required.

It's an easy step-by-step course of which I reveal everything that I do, everything that I say, everything that I use, including the documents and contracts, to invest in real estate using no money or credit. and that's yours for free at free real estate investing course.com. So today, it's likely the day many of you have been waiting for. But I got to commend you. If you've gotten this far, meaning you've completed the homework up to this point and you're still listening. I mean, still listening without losing your patience causing you to search somewhere else

for the answers. Congratulations. You are in the minority and you know what? I actually have hope for you. If you can follow instructions, practice a little bit of patience, and be open to always learning, be open to never seeing failure as failure, but as an opportunity to practice your skill and perfect your technique, you can do this. Stay with me and do the right activities, do them consistently, and do them long enough,

and all of the time and money freedom that real estate investing can provide is yours for the taking. So here we are. The moment I know many of you have been waiting for, where and how do I find? deals well I'm glad you asked because on today's episode I'm about to answer those questions for you where do you find deals and how do you find deals these are two very important questions you see in order for you to be a successful real estate investor you're going to need leads you're going to need lots of them the more leads the better because with lots of leads comes lots of opportunity and with lots of

opportunity you get the pick of the litter you get to pick only the best deals. And when you have lots of leads, your negotiating position is strengthened as well. Meaning, if you have enough leads, you'll never be in a desperate position. And often it's desperation that causes an investor to get involved in a bad deal,

to get involved with a bad price, or to get involved with a bad property, with bad terms, with bad partners. I mean, anyone or any combination of those can result in you losing, and they frequently do. If you've got enough leads, you won't have to worry about that too much. And as we go on, you'll understand.

When it comes to finding good deals, it is a numbers game. And I'm sure you've heard that expression before. But really, when someone says something is a numbers game, what they're saying is, be prepared for lots of rejection. Be prepared for lots of failed attempts. Finding good deals, it is a numbers game, meaning most deals will not be good ones. And when I say most of them, darn nearer.

all of them. So just expect that. But there are good deals to be had. And that's why we do what we do, because when we find a good deal, as real estate investors, we are paid handsomely. So to be paid handsomely, you need to find deals. And to find deals, you need to generate lots of leads. And when it comes to leads, the quality is in the quantity. Now, finding good deals, it's not easy, but it's not complicated either. The first step is to know what you're looking for. Are you looking for a deal that is going to produce cash, or are you looking for a deal that is going to produce cash flow? You see, the cash is produced in a short-term strategy like wholesaling,

fix and flipping, and some types of optioning. Cash flow is produced in your buy-and-hold strategies, but which one you choose to execute depends greatly on your own personal situation. So do you need cash, or do you need cash flow? Your answer to that question will dictate which strategy you will likely implement, of which will determine the second step, and that is to determine what type of property you will look for that will produce what you're looking for,

cash or cash flow. Hopefully you're following me there. Along with the type of property you will look for, you're going to want to identify the area of which you want to work and the price range of which you'll work within. You've got to know what you're looking for. It's much easier to sort through the hundreds of properties that most investors have to sort through

when you know exactly what you're looking for. I mean, it's been said that the average investor is going to have to look through, through 100 deals to narrow it down to 30 to make the offers on 10 and maybe he gets three of those. I'm not sure if that's the exact ratio, but it works out something like that. You have to look at a lot of deals. And if you know what you're looking for and makes the sorting through deals much easier. For example, if you need cash, you'll have to execute a short-term strategy like fix-and-flip or wholesaling.

So if you know you're looking for a property that will enable you to execute that short-term strategy, you'll know you won't be looking at multifamily properties for the most part. If you're really clear on your criteria, a considerable portion of your property analysis, of your deal sorting, it's already done. I mean, it's almost counterintuitive, but the more narrow your search criteria, the more successful you're going to be.

So many new investors and some seasoned ones too, they get distracted by opportunities outside their criteria. They chase the shiny things. It's like the dog that sees the squirrel and takes off running. Squirrel! And the dog takes off. Fido, no, sit, stay. Don't do that. We're hunting rabbits, not squirrels.

Real estate investing can be like that. You've got squirrels. You've got rabbits. You've got hamsters. You've got pigs, chickens, raccoons. You've got rats. You've got snakes. Running wild and loose everywhere. Stay focused on your game. Distractions are literally everywhere, and they come on all shapes and sizes. Keep your focus narrow, as narrow as you're comfortable with, and resist all temptation that doesn't fit within your scope of focus. you've been investing for a while, you will likely be able to come up with your own criteria of what you're looking for. If you're brand new to investing or even reasonably new, I'm going to recommend. You don't have to do this, but I'm going to recommend that you look for single-family residences within a five to 15-mile radius of your personal residence, at or just below the median sales price for the area of which are owned by people who need to sell. I emphasize need to sell. You're going to come across a lot of people that want to sell. You're going to come across a lot of people that are interested in selling, but I want you to focus on the people who need to sell,

often referred to as motivated sellers or distressed sellers. This basic criteria, it puts you in the best position to flip properties fast because it represents the biggest buyer pool in any given area. Because in order for you to flip the property, you're going to need to be able to sell it. So you want the biggest buyer pool in any given area available to you. You want that buyer pool interested in what you've got for sale. And when you have the biggest buyer pool interested in what you're selling, it enables you to flip fast. And in the result, enables you to be paid fast. The third step is to identify the people who can connect you to the type of real estate that meets your criteria. Preferably, you'll want to directly connect with the motivated and distressed

property owners themselves. And secondarily, you'll want to connect with the people. And secondly, you'll want to connect with the people who regularly come in contact with these type of property owners, who come in contact with the motivated and distressed property owners. And some examples are wholesalers or accountants or attorneys, realtors, loan officers, financial planners. Once you know what you're looking for and who can help you find it, you're well on your way to generating high-quality leads and doing deals. Now, where and how do you find the people connected to what you're looking for?

Well, millionaire real estate investors, they're a creative bunch who are constantly innovating and improving their lead generation methods, but they all agree on what their top three methods of generating leads are. And I was fortunate to find a poll online of where 100 millionaire real estate investors were asked, where do you find your deals? And I already know that most of you, you're not going to like the answers. You're not going to like the answers because they actually involve work. And what I really mean by that is there's just no easy button in real estate.

There is no silver bullet. So stop looking for it. Okay, stop expecting to find it. It's not lurking around the corner. It's not at some seminar. It's not behind some guy's real estate website. Just stop looking for it. There isn't one.

Now, the results of this poll, they revealed the top lead generation sources of millionaire real estate investors. And I'll start from the bottom up. 5% categorized as other. So I guess that's the random and insignificant ways of finding deals. But up from there, and I think you might find this as a surprise,

a surprise because so many gurus teach this as a form of finding deals. Just 2% of their leads come from targeted direct mail. Just 2%. So don't fall for the magic postcard and the letter writing campaigns. Well, actually there's a caveat,

and I'll get to that in just a minute. But don't fall for that magic postcard. Don't fall for the letter writing campaigns as just 2% of millionaire real estate investors' deals come from this approach. Now, I've used this approach with some success, but it's expensive and it's time intensive. Now, 3% of their deals come from internet markets.

Just 3%. Now, I've used the internet with some minor success, but I can relate to where they're coming from. You've got to sort through a bunch of garbage to find a deal. And again, this can be expensive too. 4% of their deals came from FISBOS. And if you're not familiar with that term, it means for sale by owners, property owners who are selling their houses directly.

Now, I actually like FISBOS though. Not so much because I get deals from them, but more because they're fun to practice on. For sale by owners present a great opportunity to practice presenting offers to practice negotiating. Fisbo's, however, they can be a rather, shall I say, unique group. For the most part, they are cut from a very different cloth. But hey, every once in a while, one will pop.

7% of their deals come from foreclosure listings, of which I've never been a big fan of as it generally requires cash to play that game. And I'm all about not using my own cash. but that doesn't mean you can't play in that arena. I know many that do, and there's no reason why you can't also. But I choose not to, and you're probably not going to learn how to do it here. 9% of our millionaire real estate investors deals are found in the newspaper and classified ads.

Actually, it doesn't state whether that includes online classifies, but for it to be 9% of the deals, I would have to imagine that it does. So that's six different areas of where millionaire real estate investors find their deals, and they account for just 30% of their members. methods of finding deals. Now, there are only three methods left of which add up to 70% of their deals. I mean, it's almost the 80-20 rule at work here, right? But it's more the 70-30 rule. And what I mean by that is 70% of the millionaire real estate investors' deals come from just 30% of their efforts. Now, of those efforts that create 70% of their deals, driving and walking neighborhoods

accounts for 10%. 28% of their deals are actually found through real estate agents in the the Multiple Listing Service. Now, I actually have to interject for a second because if you're looking for deals with a lot of equity that you intend to flip fast, personally, I don't think the multiple listing service has a great place to look at all. I think real estate agents in the MLS made this list

because you have to remember what the fourth stage of becoming a millionaire real estate investor is. It's to receive a million dollars of annual passive income, right? So that's their primary intent is to find properties that cash flow. And in most parts of the country, it is infinitely easier to pluck properties right off the multiple listing service that cash flow than it is to find properties on the multiple listing service with equity, at least enough equity that enable you to flip the property quickly for cash. So, in my opinion, that's why real estate agents and the multiple listing service made the list. I don't know for sure, but that's my hunch.

As a new investor, without a lot of money to play with, I mean, the multiple listing service can make a good practice ground to analyze properties, and it can make a good practice ground to submit offers. but it's very much a numbers game in of itself, a big numbers game. There'll be lots of rejection and failed attempts if you're looking for properties on the MLS with lots of equity. Now, the number one place where millionaire real estate investors find their deals, it accounts for 32% of their deals, almost one-third. They find 32% of their deals through networking. And I agree 100%.

You know, as I look back on my 50-plus deals in the last, 18 months. I would say a good 75% of them came from my network. Now, I know that's not the answer most of you are hoping for. I mean, most of you are looking for that secret. I know. And I have to admit, I was too when I first stumbled upon the survey. I was pretty excited to see where they find their deals. Well, that is the secret. The secret is that there is no secret. And here's another thing I've noticed over the years. And you'll notice that the top three sources of deals for these millionaire real estate investors, they take no money at all. I mean, it's absolutely free to network. It's absolutely free to peruse the multiple listing service. And it's absolutely free to walk the

neighborhoods. What I've come to learn over the years is the more money a lead generation source costs you up front, the less effective it is. I mean, the cost effectiveness drops fast as the investment in that advertising, the investment in that marketing goes up. The law of diminishing returns is well at play in real estate investing lead generation. I'm sure there are some exceptions where a few savvy investors have figured something out to produce massive amounts of leads for a really low cost, and they'll probably box it up and sell it to you once it doesn't work for them anymore. That's typically how it goes.

Once the profit scales tip in favor of selling the information versus implementing the information, that's when you're going to hear about it, and they're going to get your $597 too. Okay, sorry, let's get back to lead generation. Leads and leads sources are going to fall into two categories. Category 1, people you already know. And category 2, people you have yet to meet. Start with the people that you already know, the ones that like you and trust you. Go through your own Rolodex or database, and if you don't have one, you're going to need one.

And I'll give you a couple of recommendations in a minute. But start with your own contacts, like your own accountant, your own attorney, and contact the realtor that sold you of your last house. Contact your mortgage broker. You get the idea. And let them know what you're doing. Let them know that you're buying houses and you're looking for distressed property owners that could use some help.

Start there and begin to organize your contacts in a database. Now, in the survey I mentioned earlier, they had asked these millionaire real estate investors several questions. And one of the other questions they asked was, what program do you use to keep track of your leads and referral sources? And among the most popular databases used by millionaire real estate investors, the number one answer was MS Outlook. And that's understandable, very universal, it's totally free,

It comes bundled with MS Office, in fact, I think it even comes installed and darn near all PCs these days. Not sure, though. I just recently converted to Mac, and I'm very happy that I did. But MS Outlook was the number one database that they used. The second one was ACT,

ACT Customer Relations Management. Now, I'm not too familiar with it other than I just knew what it was when I heard the name, but it is more of a professional customer-relation management system, and I think it's a couple hundred bucks. Personally, I use Epic Database by Oprius.

It's really simple to use. It's online, so I always have access to it, regardless of what computer I'm on. And it has a really easy-to-use built-in Internet and email marketing feature, of which I'll talk more about later. And inside the free course I mentioned at the top of the show, free real estate investing course.com, I give a pretty extensive tutorial on the program and I show you how easy and efficiently it actually is. I think it's like $14 a month, but you can get a free 30-day trial at Epic Database.com. Now, if you want, go activate your free trial and tinker around with it, and by the time we get to how it will help you build your buyers list through an automated system, I mean, you'll have some familiarity. So, as you're letting your professional network know what you do, let it be known within your social circle as well. I mean, the next time someone asks you, what's up or how's it going, there's your opportunity.

Let them know. Don't keep what you're up to a secret. Secret agents don't make much money in this business. So don't be a secret agent. Let everybody know that you're buying houses and that you're looking at. for distressed property owners that could use some help. That's how you'll interact with the people or the leads you already know. With regard to the second category of leads,

the people you have yet to meet, there are two approaches to meeting them. You can hunt for them or you can fish for them. Now, hunting for leads consists of activities like asking your network for referrals, being proactive about it, cold calling and door knocking. Not really my methods of choice,

but many investors do it and they do it with great success. Fishing for leads, however, that works best for me. And because it does, that's what I recommend and teach. It just fits my personality more. I do better when people call me as opposed to me initiating contact by calling them or by hunting for them. Fishing for leads, it consists of activities like classified advertising, direct mail, internet marketing, and networking. Getting people to either call you or ask you about what you do.

And as I mentioned, I get the vast majority of my deals from my network. I'm very proactive on building that network, on maintaining that network. and that's where I spend most of my time. But I do get plenty of leads from other sources as well. In fact, I have a system of which has literally transformed me into a lead generation machine. Here's the system. First, I post classified ads on Craigslist, back page, and eBay classified ads.

I use a few other sites, but those are the three main ones. That's where most of my activity comes from. Every morning, I post a fresh ad on each of those websites. And I actually show you how I do that and what I post, specifically what my ads say, and I show you how I do that at free real estate investing course.com. Second, I conduct a direct mail campaign using specialized targeted lists, and I send something called a yellow letter. Now, if you've been paying attention, you're probably wondering,

why would you be sending letters to targeted lists when only 2% of millionaire real estate investors find their deals there? Well, I don't think they knew of this yellow letter, or at the very least they knew about it, but they didn't use it. Now, I've never been a fan of direct mail, as the professionals in that business, the professionals in the business of direct mail will tell you, if you're getting a 1% return,

you're doing really, really good. What that means is, if I send out 100 letters and I get one call, I'm doing good. Of which means, if I want 10 phone calls from motivated sellers, I would have to send out 1,000 letters. And at today's postal rates, that can get expensive really fast.

Those types of numbers, that type of return, that doesn't excite me at all. Remember what I said? The more expensive your lead generation is, typically the less effective it is. I only recently started using this yellow letter, and I first learned of it about four months ago from a guy named Sean Terry,

and I learned of it on his podcast, Flip to Freedom. Go check that out. It's a really good podcast. I learn a lot from there. Remember what I said, commit to your education, keep it going.

Just because you think you have all the answers doesn't mean there isn't more to learn from other sources. So go to Sean's Flip to Freedom podcast. I think he's ranked number three or number four for real estate investing on iTunes. He shares a lot of great information, plus he gets me pumped up about my own business. I mean, he's got a great energy and he keeps me motivated. You know, motivation, it's just like bathing. You need it every day.

And yes, your coaches, your gurus, your mentors, they need it every day too. Anyway, I put these yellow letters to the test just this past May because Sean said, I could expect, a 10 to 15% call to letters. ratio. And if I received 25 calls, one of them would be a deal. That's what he told me. So, I just did the math. What's the minimum letters I have to send out every day to make sure I get at least 25 calls this month? Well, 25 calls at a 10% ratio, I decided to give Sean a break and not press him on the 15%. So 25 calls at a 10% ratio, I'd have to send out 250 letters in the month. So I divided that by 20 days. I took weekends off, and that equates to about 12 letters a day that I'd

have to send. And then I just rounded it down and made it simple, 10 letters a day. So in the month of May, as soon as I got up every morning, I'd read a chapter of my Bible, I'd read one of my scrolls from Ogmandino's greatest salesman in the world. I'd hit the gym, and then when I got home, I'd have a cup of coffee and write 10 yellow letters. And I did it exactly how Sean told me to. I mean, there's a very specific way you have to write the letter and a very specific way of how you stuff it in the envelope. And I show you that in slow motion, in fact, in how to do deals, no money required at free real estate investing course.com. That was my system. I wrote 10 letters a day and then just went on about my day.

I mean, every one of you could do that. It only took me about 20 minutes every morning to do. And I've got to tell you, I was really surprised. I mean, almost from day one, I was averaging about one and a half calls per day from people wanting. to sell their house. I was getting a 15% response. Now, most of the people that call me, I will admit, were a bit, should I say, loco. They're a little crazy. But after my 21st call, I had my first deal under contract. It was a fourplex, right in urban Los Angeles, fully tenanted, and cash flowing. The owner, he was in a bit of a jam, and he basically said,

take it. I don't want it anymore. Just take it. Don't want a foreclosure on my credit score. That's what he said. So, I honored his request and I took it. It's mine. You see, my main strategy is to fix and flip or wholesale here in California, and then I take those large checks and I buy cash flowing real estate in the Midwest. I've got properties right now in Illinois and Detroit, and that's where up to this point I've been building my passive income. It's a good system that's been working for me. But I've really wanted to pick up a piece of California real estate that cash flows, because I know we're going to experience massive appreciation again. When, you know, who knows, But as long as my California real estate would be cash flowing in the meantime, I can wait it out.

But one, it's tough to cash flow in California. And two, if you want to cash flow in California, it's going to take a big chunk of cash. So the barrier of entry has been a little high for me. But thanks to the little yellow letter that Sean Terry introduced me to, I've got my first piece of California real estate. I like the yellow letter, and I now teach its implementation in my L.A. workshops. several of my students, they're experiencing very similar success, at least the ones that are following the instructions.

Third, I do use Internet marketing and landing pages to generate leads, but I got to tell you, that's a skill all of in itself. And if I explained how I do what I do, I mean, this podcast would quickly turn into a how to make money on the Internet podcast. But if you're interested, I learned almost everything that I know about marketing online from Internet Business Plan 123.com. internet business plan 123.com.

And I've received an abundance of inspiration and ideas from many sources, but the foundation of my marketing practices come from internet business plan 123.com. It's not real estate specific. It's more internet marketing specific, but I've been able to take those principles and apply it to my real estate investing business. I mean, perhaps I'll do an episode just on that in the future. Now, as I mentioned earlier, what has produced more business for me than any other method,

it's attending networking events and seminars, it's building my network. And there's a tool that I use that attracts people to me. Let me clarify, it tracks the right people to me, like bees to honey, really. And I call it the audio business card. And I show you exactly how to construct your own and how to do deals, no money required, of which you can find at, guess where, free real estate investing course.com. And I know I've already mentioned this several times on this episode. It's not my shameless plug fest.

but there's just so much that I can't show you with just my words. So I created video for everything that I've discussed today, and it's all in my free real estate investing course, how to do deals, no money required. Now, I can show you a number of ways to generate leads as just about any guru can, but what none of them are showing you is the most valuable skill of a real estate investor.

Of which without it, all the lead generation strategies in the world are virtually useless. When your number one skill as a real estate investor is your ability to connect with people. And what I mean by that is, did you know that every piece of real estate you ever purchase will be from another person? And your success will be in direct proportion to your ability to get these people to like you, trust you, and believe that you are competent, that you know what you're doing.

And that is a skill. But don't be afraid of it. The great thing about skills is that they can be learned. Skill beats talent every time. So don't feel like you can't do it. Yes, you can. There are several books and programs that will help you with your people skills, and I'll give you a couple titles in a moment, but I want to give you something to put your teeth in right now. I'm going to give you the fastest path to creating rapport with people.

In order for people to be interested in you, you must first show interest in them. And you do this with two basic practices. The first one is to listen. Listen until it hurts. Listen as if there's going to be a quiz at the end of your conversation. I mean, God gave you two. ears and one mouth and to successfully build rapport you should use them proportionately and the second practice is to ask a lot of questions ask a lot of

good relevant questions you see when you're telling somebody something it's pushing them away but when you ask them something it's pulling them towards you so ask a lot of questions those are two people skills to be mastered and they'll get you by those two skills empathetic and authentic listening and asking good, relevant, and discreet questions. And these aren't called people skills by chance. They are skills, and just like any skill, they must be practiced and rehearsed. Just as a basketball player practices free throws and layups, a child practices riding a bike or a skateboard, and perhaps how you practiced driving a stick shift or a golf ball, your people skills must be

practiced in the same way, as your success in real estate investing will be in direct proportion to your ability to connect with people. The better you are at this, the more money you're going to make. In fact, if your people skills as a real estate investor, if those skills are comparable to that of an NBA basketball player's free-throw skills, there's no doubt in my mind you would make more money than the basketball player. And you don't have to be seven feet tall either. Whether you choose to hunt for your leads or fish, you will need this skill.

I mean, it's no wonder the top three lead sources of millionaire real estate investors involve this skill. They require this skill. One, networking. Two, working with real estate professionals like your agents and your lenders. And three, walking neighborhoods. You've got to know how to connect with people. They know it's the number one skill, so they developed that skill. And it's why they are millionaire real estate investors. I mean, if all it took to be successful in real estate investing was to hand out some business cards, mail some letters, and post a few classified ads, everybody would be a successful real estate investor. It's your people skills that will separate you from everyone else. It's what's going to separate you from

the observers, the pretenders, the excuse makers, and the quitters. And I know that ain't you. I could create an entire episode on just this skill, too, as I could with internet marketing. And I likely will in the very near future. But to get started developing your people skills right now, don't wait for me. Pick up these two books. Dale Carnegie's, How to Win Friends and Influence People, All-Time Classic. Great place to start. That could have essentially be just darn near everything that you need to know. And Lyle Lounds, how to talk to anyone. Two great books.

And if you missed any of the resources and websites I mentioned today, I'll include a link to everything in the show notes of which you'll be able to find at, can you guess? Yes. Free real estate investing course.com. And I'll show you more ways to generate leads as we go along, but I wanted to show you the most effective ones first. Start networking.

Start sending out your yellow letters. And start placing online classified ads at Craigslist and Backpaste. and eBay classifieds. And I'll see you on the next episode of where I'll show you how to overcome every investor's biggest obstacle. So, until next time.

And as a very wise man once said, determination today leads to success tomorrow. To your success, I'm Matt Terrio, living the dream. Thank you for spending this time with Matt Terrio and the epic real estate investing podcast.

When you have a moment, stop by iTunes to leave your comments and let us know what you think of the show. And if you haven't done so already, get started investing today by visiting free real estate investing course.com to access Matt's free course, how to do deals, no money required. Until next time, to your success. This podcast is a part of the C-suite radio network. For more top business podcasts, visit c-sweetradio.com. Thank you.