The Science of Flipping - Episode 176: Consistent Deal Flow & Scaling Your Business | The Science of Flipping Podcast

Episode Date: December 4, 2020

A big problem that a lot of real estate investors have is inconsistent deal flow. Especially as a wholesaler, this can become a serious problem for your business. So how do you create that consistent deal flow so that you can scale your business? Let's chat about that!

Welcome to the Science of Flipping Podcast. I'm your host, Justin Colby. What's up, everybody? Welcome back to the Science of Flipping Podcast. On this podcast, I've been asked, what is the secret to consistency and scaling. So I'm going to jump right into that. If you are watching this on YouTube, awesome. Happy to have you here. We also have all of the audio versions over at iTunes and Spotify if you are driving. So make sure you go over to iTunes and Spotify and download and subscribe to those podcast episodes right there, The Science of Flipping. But for those watching me, I am happy to have you here. This podcast

is all about systems, tools, strategies, tips, tricks, operational processes to run a successful real estate business. And so the question I was posed this weekend actually was, how do I get consistent deal flow that will lead to scaling my business? And so I'm going to simplify this for you because I think people put the cart before the horse. Everything boils down to how many leads are you bringing into your business and what type of marketing strategy are you using and then what type of converting ratio do you have. Now that's not always easy to answer but what I will challenge you is to find that out. A direct mail lead is different than a PPC lead which is different than a cold calling lead which is different than a text message lead which is different than a voicemail drop or a

rvm lead now there are some baseline rules that you need to understand and go by to figure out whether you are actually in par or in line with a consistent deal flow and that's just consistent marketing and lead bringing in so if you are cold calling and you have not built up a, you know, several hundred, if not a thousand person pipeline of leads already, then the proper expectation for you to have is you should be converting one lead for every either 100 to 200 leads that come in. That's right. You convert one out of every 100 to 200. Okay. Now, if you have a pipeline, your goal will be to bring that down into converting one out of every 50 cold calling leads. So how many calls do you need to make? How many cold callers do you need to hire? How many VAs do you need to hire? How big does your team need to be to make the amount of calls to bring in the amount

of leads that you need so that you can convert the deals into a consistent deal flow where you're getting two, three, four, five, 10 deals a month consistently. Now, direct mail is slightly different. Direct mail is one out of every 20 leads you should be converting. Simply said, direct mail, if you put out 10,000 mail pieces, you will likely get 0.004 return, which is roughly 40% of 1%, right? So you're gonna get 40 total calls. Of the 40 total calls, half of those are gonna be FUs, which brings you down to 20 actual real leads.

So roughly one deal. That's if you're doing direct mail, you should be targeting roughly 10,000 mail pieces to go out so that you can actually get 20 leads so you can convert one deal. Text messaging, we're seeing roughly 9,000 to 10,000 outbound text messages convert to one deal. That's roughly the ratio. Now, some markets aren't as tough as Phoenix so you might have a better ratio you might have like three to four thousand outbound text messages to one deal I do appreciate that I'm actually in Phoenix and so that market mom our market is is very difficult So I don't get the luxury of three to four thousand I'm more like nine to ten thousand for one000 for one deal. And roughly, you're going to be

dropping give or take 3,000 voicemail drops before you can get two viable leads. And then you should be able to convert roughly one out of every 20 viable leads for voicemail drops. So it's just a matter of putting out enough voicemail drops to actually make it worthwhile for you to convert the lead. So again, to boil this down, and I just did this off the top of my head because I've been doing this business for so long, to boil this down simply said you need to have a consistency in lead generating more than anything. So I would argue most people who have the question, how do you get consistent deal flow? They also don't have a consistent lead flow, meaning they're not marketing consistently. They do some marketing,

they get scared because they're spending some money. So they need to, they stop doing the marketing and then they, you know, try to go get a deal and scramble, and then they spend a little bit more money, but it doesn't really drive many leads. If you're out there, and you're either watching or listening to this, and you're shaking your head or laughing to yourself, this is the main reason people can't find a way

to create consistent deal flow, and especially the individual that asked me this question, they wanted to get a consistent 10 deals a month. And you just heard how much marketing has to go into your business, how many leads have to start flowing through your business, and do you even have the right personnel converting the leads? Now this goes into the next topic, which will be how do you actually scale the personnel? Well, I would tell you this. Every real estate investor who is running their own business should not be trying to scale personnel until they are doing five deals a month and or 250 grand a year, call it 25 grand a month coming into their pocket.

Because otherwise, you're taking the money out of your own pocket to try to scale an operation. Now, yes, the benefit of that is you will be able to have more time to yourself, but that is a slightly misguided truth. The reality is the more time you have to yourself really then has to go into guiding people, being a leader, training, managing to the KPIs so that they're actually performing at the level you want them to perform at. And so it doesn't mean you get to go on vacation. This is in large part a misguided truth, or least uh in my opinion it kind of it sets the tone incorrectly a lot of people want to scale so that you can have a time freedom lifestyle i love that i appreciate it i myself have a very nice lifestyle but it's after 13 years of building this business

i have managers in both of my main horses my real estate business in my education business They run the entire operational component of both businesses and I can be the lead horse in that And then I have you know, obviously other personnel like acquisition people, etc But I've built that over a lot of time and that has afforded me to have a certain lifestyle. With that said, if you can't put 25 grand a month in your pocket every month consistently, then I would really urge you not to jump out and go hire people. Could you leverage some virtual assistance for text messaging or cold calling? Absolutely. But would you want to go out and hire an acquisition person or a disposition person? Absolutely not.

Not until you've reached that point or you're doing four to five deals consistently every month and you're trying to level up to get to 10. At that point, you might want to look at bringing in maybe a personal assistant first and then starting to go beyond that. Personal assistant can take over a lot of responsibility that you might have as the business owner, so I, a lot of times, will suggest a personal assistant. If you are watching this on YouTube,

make sure you're smashing the like button. That gives the YouTube gods a little favorability to my videos. If you're on iTunes listening to this, also realize I do daily videos on my YouTube. Just go to YouTube, look up Justin Colby, or go to youtube.com forward slash Justin Colby. Start watching my videos. I do all things business, real estate investing, and entrepreneurship. Hopefully this finds you guys well. If you need

anything else, go over to thescienceofliving.com. Happy to help. I will see you guys on the next YouTube video, as well as the next podcast episode, which drops daily.com. Happy to help. I will see you guys on the next YouTube video as well as the next podcast episode, which drops daily. Peace.