The Science of Flipping - Episode 6 – Marketing | Real Estate Investing Podcast

Episode Date: September 27, 2013

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Welcome to the Science of Flipping Podcast. I'm your host, Justin Colby. Welcome to the Science of Flipping.com Podcast, Episode 6. Guys, if this is your first time coming to this podcast, we strongly urge you here at The Science of Flipping for you to go to our website, thescienceofflipping.com and download our free e-book. Guys, this is not your average e-book. This e-book is the number one e-book on the market today. This is the e-book that all real estate investors must have. It is called the 15 Most Costly Mistakes a Real Estate Investor Can Make in This Market. Trust me guys, if you are a rookie and you have never done a deal before or if you

are a very experienced investor and have done hundreds of deals over your investing career, you will find something in this e-book to make your business run more efficiently. Or for those of you who have not had any deals done, you will read this e-book and say, oh, thank gosh that I downloaded this. This way I don't have to go through these mistakes that Justin and Eddie did or countless other investors have gone through. If we would have had this e-book when we first started, guys, we would have made more money in a much faster amount of time. Today's lessons, guys, I'm very excited about today's lesson because right now in today's market, it's all about your marketing.

So today, we're going to be reviewing marketing on our podcast, and we have done a lot of different marketing, so I have a lot to say, and I'll try to fit it in here so you guys don't get too bored with my voice, but today, we are going to be going over marketing. The podcast though is created really, it is meant for, again, a rookie or a very seasoned investor. This podcast is so that you guys can invest on your own time, so that you can invest in a different state, when you're in a different country, when you're on vacation, when you're sitting on the comfort of your own couch, so that you guys can have the time that you want. Because real estate investing, fix and flipping does take a lot of time.

And this podcast will teach you the systems that you're going to need throughout your business so that you can systemize your business. So again, like I said, guys, go on vacation, go into a different country, and you'll still be able to run your fix and flip business as usual because you'll adhere to what I am saying on these podcasts. And you'll be able to run your business instead of working in your business. That is the key. That is what we all want, don't we? Don't we all want to be on vacation getting paid for it? Well, we've structured a business, so three or four times already this year, we have been on vacation, and we've either acquired homes, sold homes, been in the middle of rehabs, and not even been here in Phoenix, Arizona. So that's why you guys need to be listening to this podcast week in and week out. I strongly urge it. If you guys don't know, I'm your host, Justin Colby. I'm here each and every podcast. And we are Phoenix Wealth Builders. My business partner, Eddie Rosefield and I

created Phoenix Wealth Builders years ago. and we've been flipping homes here in Phoenix since 2007 or so and it has all not been gravy. Right now, you guys are able to take a look at our business and you hear us on a podcast and you see us on the internet and you see some of our videos and maybe you are even students of ours. But it has not always been as great of a picture as it is today. We've taken our lumps. We've gone through the hard economic times. Me, myself, I've slept on the couches. We've lost homes.

We've been in hard positions. But we fought time and time again. We've stayed in there and we fought for what we wanted and now we are eating the fruit of our success, so to speak. We're at a point now where we built our business to where we did 96 deals last year. We're seeing the fruits of our labor. I'm sorry. I think that was what I was trying to say. I said eating the fruit of our success. That's funny. Really, we're reaping the success right now. So it hasn't always been that way, guys.

I got a little bit off track. I apologize. It hasn't always been that way, guys. 96 deals last year, almost 50 deals this year. We're a developer now. We're doing 79 deals down in Mesa, Arizona. Guys, now we are at a place of success. But again, it hasn't always been that way, guys. I want you guys to know, again, if you're a rookie investor just trying to get some of your wheels turning or even if you're a seasoned investor and you can relate to some of the things I'm saying, this podcast will be for you. You will get golden nuggets out of each and every

podcast. So stay tuned. Subscribe to the podcast because you're going to want to hear each and every one. They're not too long. They're all under an hour for the most part. Some are closer to 30 minutes. So stay tuned to each and every podcast. So guys, I'll leave it at that, but let's get into today's lesson. Today we are going to be talking about marketing. And there's a lot of different ways to market out in this economy right now, in this real estate market. So two things that we're going to separate marketing into, paid marketing and unpaid marketing. There's really, you know, my business partner Eddie says it time and time again, there's really only two ways to get deals

or get buyers or, you know, is network or marketing. You got to do one of those two. And really, that's how I break down marketing in general. You either pay for it or you don't. Well, if you're not going to pay for it, that means you're going to network. So let's start there. Unpaid marketing, for the most part, is going to be getting yourself out there. Now, I've talked time and time again about networking, but the reality is it is super important in your real estate business and you need to be doing it. So I've told you the stories of when we first started, I would start sitting there and cold calling real estate agents and I would just simply line up meeting after meeting at a Starbucks and network with these agents so that they would represent us on their listings. So cold calling is a way to simply set up your networking meetings.

You could simply be cold calling real estate agents, title companies, loan brokers, hard money lenders. You name it and you could be networking with these people. Now depending upon what you're looking for, right? In this economy, in this real estate market, we're looking for the deal. Right now, there's very little inventory. So that's really what everyone's focus is on is where do we find the deal? Well, if you're going to be networking with someone, who else has deals besides real estate agents, other investors, title companies, loan brokers, hard money lenders.

Listen guys, hard money lenders, a lot of people don't even think about sometimes about calling them. They have to default on fix and flip investors at times because they haven't been paying their loans. Talk about a ninja way to find inventory. Why don't you start networking with your hard money lenders to see if they have any homes that they're going to have to take back that you could simply buy from them. Take over the loan, whatever that may look like. But go out there and network as far as cold calling everyone in the industry that you

can possibly connect with. If you're going to these networking meetings, the REIA meetings, if you're going to the title company meetings anyways, continue to network with the people that you meet there. If you're looking to build a buyer's list, that's how you're going to build your buyer's list without paying for it. If you're looking to find deals, networking with real estate agents, hard money lenders, loan brokers, those are people that are going to find you deals that aren't necessarily always on the MLS. So again, back to this is all unpaid marketing. You're going to have to spend something. You're going to spend money or you're going to spend time in your marketing. What I'm

telling you now is these are ways to network so you don't have to spend money. Now, sometimes you can get away with what I would consider is a paid marketing, but still do it yourself, which helps you save money. So what I bring up now would be something like bandit signs. You can go out there and get boards, little simple white boards or white little, I forget the name, corrugated boards, I guess is the name of them, that you can go at Lowe's or Home Depot and you can go get 100, 200 of them and do them yourself rather than hiring someone to do it, right? So again, it goes back to you're going to spend one of two things. Maybe you're going to spend both at the same time, but to limit you spending a bunch of

money, you're going to have to spend time. So even if I get into the paid marketing, which we're going to wait for a little bit because there's other unpaid marketings, you can utilize bandit signs as a good one or even your direct mailers. Instead of hiring someone to do it or paying a company to do it, you do it yourself. You're going to have to spend time networking, cold calling, setting up meetings. Now, simply ask for referrals when you're in those meetings, when you're at those networking meetings, when you're in the one-on-one meetings. Referrals are a huge portion of anyone's business in real estate. If you're a real estate agent,

loan broker, hard money lender, whoever. If you're an investor, treat it the same way. Ask for referrals. Let's say you get a really hot seller lead and you go to their home and you're able to get them in contract and you're looking to either flip the home or you're able to buy the home and rehab it and flip it. Why wouldn't you ask,

hey, do you have any friends or family looking to do the same thing in the same situation you're in? Do you know anyone else that could benefit from me buying their home? Ask for that referral because almost every time I ask for a referral, guys, I get what I'm asking for.

You'd be amazed what you can get for, you know, what you can get for just by simply asking. Now here's a little, guys, this is a little ninja tip that I'm going to give you guys today about unpaid marketing. YouTube. YouTube right now is the most ninja way for you to go out there and market for sellers, buyers, lenders, whatever you are looking to market for because guess what youtube guess what guess who owns youtube youtube is owned by google so if you go out there and you're producing high quality good youtube videos with great content and you're able to seo that youtube video with ninja ways of seoing it with the right title and then the right subject description,

you will start getting ranked on Google. And you can drive people from your YouTube video to a capture page. And so if you're looking for sellers, if you're looking for buyers, if you're looking for lenders, whoever you're looking for, whatever you're looking for, utilize the power of YouTube because it'll rank you on Google. And then when someone simply types in their quickest way to sell a home or more inventory in Phoenix, Arizona or whatever they're going to be looking for on Google, your YouTube video will be highly ranked within their search. Or maybe they Google lending on real estate.

Or maybe they Google real estate investors in Phoenix. And there you are. There's your YouTube video. That is my real gold nugget for this here, guys, because I know a lot of people, guys, you don't know that Google owns YouTube. You don't understand the power of YouTube videos in Google. It doesn't cost you anything to make a YouTube video. You simply just got to make it,

get some SEOing tips on what to make the subject and what to make the title. And then you throw it up there and people who are looking for the same subject matter will find you because you will be ranked on Google. Again, guys, that is so important for you to understand. That is the golden nugget for this episode. That is it right there. Take notes. Create YouTube videos. Don't worry about what you look like. You look like that every day.

Create the video. Get out there. Now, let's move on to paid marketing. Now, when you're first starting out and when we first started out, we didn't have a lot of money to pay for marketing. So we did exactly what we're telling you to do is we did our grassroots networking. Anyone I met, I would ask for a referral. I went to all the networking meetings. I went to all the title company meetings. I would consistently try to network. And because of that, we got our first two deals done. And then because we got our first two deals done, we continued to grow our network. And eventually, we were able to get more realtors, more leads, more buyers.

And it was all through networking. Now, once we created some income for ourselves, we started paying for our marketing. So we started utilizing direct mail. Direct mail is our and my favorite way of marketing right now. I can tell you right now I know of three or four investors in here in Phoenix that are spending anywhere from $10,000 to $40,000 a month on direct mail. Why? Because they're wholesalers looking to find deals. That's why.

And so they need to out-market everyone else. So if they want to keep a volume of 30 or 40 homes every single month, they need to market to find those off-market deals. And they use direct mail. I also use direct mail. Now, I don't tend to spend $30,000, $40,000 a month, but we'll spend a good amount of money every single month so that we can keep a high volume of fix and flips going here at Phoenix Wealth Builders. So direct mail is our number one way.

Now, if you don't have a lot of money, you can simply get the list of absentee owners, high equity owners, free and clear owners, divorce situations, inheritance, probate. You can get lists. I have database that I have, and that database gives me high equity, free and clear, and absentee owners. So I bought the database. Every time I send a mailer out, I think I spend something like 91 cents per mailer. And the reason why that may sound high, guys, it includes everything. Postage, mailing, the copy on the mailer, the material, everything. It's a database.

It's a one-stop shop, and we send it out, guys. It works and it's incredibly effective. We just sent out 200 mailings, which is not a lot. We got two deals from those 200 mailings. Can you imagine how many more we're going to send out from those mailings? The copy's already written. Everything's already set up. It's very, very effective. We love direct mail. Direct mail is also another way we find cash buyers or build our buyers list in general. We have a similar database that scrubs all the public records for cash buying individuals, investors, and we simply add them to our database because we send out a mailer to those individuals or LLCs

simply saying we saw that you bought a property for cash at 123 Main Street. We bought 1234 Main Street. Would you be interested? Give us a call. Go to our website and give us your information. So we bought another database and these databases scrub the public reports every two to three weeks so they have the most up-to-date information. We can look per zip code. It's good all the way across the country.

So if we decided to start investing in Pittsburgh, Pennsylvania, we could do it and still utilize this, right? We love direct mail. But if you don't have the money to buy the databases or to buy the list, you're gonna have to buy some sort of list. But if you don't have the money to do, to hire someone to do the mailings for you, you're gonna have to write the mailers. You're gonna have to stuff the envelopes

and you're gonna have to mail them. It will save you a lot of money. We choose not to go that route. We choose to go to the one-stop shop. But still, the database is great and it is not very expensive. And so, you know, again, direct mail is our preferred way of marketing for buyers and sellers and lenders. You name it, we like to do that. We also send a mailer out for lending, for lenders, people who are giving private loans on real estate transactions. Again, this is all public record, guys. We're not doing anything that you can't do, but we end up buying a database. That same

database does exactly what I was explaining. They scrub the public records, find all individuals, private individuals that have put in a deedidas trust on a property here in Phoenix. And we mail to them saying, I saw that you put Adidas trust on 1234 Main Street. I just bought 12345 Main Street. Why don't you give me a call so we can talk further about what you're looking to get back from your investment. So guys, direct mail is our number one avenue for everything, buyers, sellers, lenders. That is how we work it. Now, there's a lot of other avenues for marketing, guys, a lot of other avenues for marketing. What about a website? If you're able to do a good website, an SEO website,

you can drive a lot of traffic to yourself, whether it's buyers, sellers, lenders, depending on what you're looking for. If you know how to organically SEO, which means search engine optimization, your website, guys, I have a lot of investors who are very good at that and they get a lot of traffic to their website to build their buyer's list, to build their seller's list because that's what they SEO'd it for. Now again, it's going to create some time involvement and you're going to have to spend some money having someone do that unless you know exactly how to do that. But websites are great ways to build your buyer's list or build a seller's list or even find lenders out there online. What about pay-per-click advertising on Facebook, LinkedIn, Google? Use pay-per-click advertising to drive

them to that same website, right? So I run pay-per-click advertising for a multitude multitude of things, whether it's buyers. We coach for hundreds, if not thousands of students. If it's an event that we're putting on, whatever that may be, a product that we are an affiliate for, and we will drive them to a website. So we pay, I think something like, you know, 25 cents per click, something of that nature. And then we cap how many people can click it and what we're willing to spend, right? So they'll click, you know, a hundred times a day. And so we'll say, you know, we're only willing to spend a hundred dollars a day on this pay-per-click advertising. But what the pay-per-click advertising is doing is driving them right into that website that we were just talking about, right?

Driving them straight into that website for you to capture their information. Newspapers. Newspapers are kind of a dead industry right now, but they're still alive, but they're not utilized the same way as they used to be. Pay-per-click ads on Google and Facebook and LinkedIn are much more effective these days than newspaper advertisements.

However, newspaper and magazine advertisements still work, but you need to figure out exactly what you're marketing for, right? Have a game plan. Where is that ad going to drive them? If you're looking for buyers or sellers, what is that ad going to say? We buy ugly houses, we close quick cash, whatever the advertisements say. Then you have to, again, drive them back to that website so you can capture their information so that you can speak to them. So the newspaper or magazine article needs to be very specific. And they can be very expensive.

But then you need to drive them back to the website that you've already created, guys. Door hangers. You know, when I first started, I have a funny story. When I first started in real estate, I was up in Northern California. And I was working as a real estate agent. And I felt like door hangers and actually going out there and hanging them myself was going to be the most efficient because I didn't have a whole lot of money when I first started.

And so I figured, well, why pay for someone to send out these mailers? Why don't I just go put them in the mailbox or put them on the door myself? Well, quite frankly, guys, that led to leads because people would be around. They'd just be getting home. They'd be in their driveway. They'd be mowing their lawn and they'd simply ask me what I'm doing, what am I giving this to them for and they would get engaged by me. So again, door hangers take a little bit of money to create, but if you're going to do it yourself, now you're just investing your time now you're investing something that you have

that you don't need to spend more money on and you can go create those leads because you're out there and you're able to engage these individuals what about bandit signs this is one of my favorites again these work like crazy you put bandit signs out there looking to find deals, saying

something, looking to sell your home, we close quick cash, your phone number, and you put them on hot intersections where you know there's going to be a lot of traffic, it absolutely works. Now again, I mentioned you can have someone do all of it from A to Z. They will write the sign for you. They'll place the sign for you. They'll place the sign for you. All of it. It's going to be more expensive. In fact, I just did that and I think I spent like $1,000 a couple weeks ago on 500 bandit signs to be placed. I paid for the materials. I paid for their time and I paid for them to place them. So it was a little bit more expensive. It probably would have only cost me about $500 total

for 1,000 bandit signs if I was willing to just buy them, or even less than that if I was going to just buy the materials and write them myself, right? So it is a paid way of marketing, but you can really limit how much you're paying, and they absolutely work. Radio is another one of my favorites. I love using radio. In fact, you guys are listening to me. I'm doing a podcast. This is a free podcast obviously,

but radio is more expensive, right? So you're going to have to go out there and you're going to have to pay for your airtime. They have all different situations, peak hours, not peak hours. People, when they're driving in their car, consider peak hours and then not peak hours would be dinner time is not a peak hour. What you're going to pay and for how long is always going to waver, but radio is very, very effective. Some of my friends who are in a different industry use radio. And they spend a lot of money on radio.

But their return on their investment is incredible. Incredible. So that was probably the last thing that I was going to bring up here is what is going to be your return on your investment when you're actually paying for your advertising? That is what you're going to have to look for. That is what you're going to have to crunch the numbers. If you're going to spend $1,000 on direct mail and you're looking to get a 1% to 2% return on that, are you going to get a deal out of that? You've got to work

it backwards, right? The key to your marketing, the key to your marketing is you got to track what is working. No matter what you do, that is going to be the key to your marketing. So if you're going to go spend $1,000, how many leads are going to come in? And then out of those leads, how many deals are you going to get? Now you know how many mailers you're going to have to send out, right? So you need to track it, but you need to see what type of rate of return

you're going to get on your investment. You're investing in your company. That's what marketing is. And I highly suggest you go and crunch some numbers. If you're going to spend $500, $1,000, how many deals can you get from that? How often are you spending it? Part of marketing is A, tracking it, but B, being persistent. When we send mailers, we don't go out there and we don't send one mailer to one person and that's it. So if we choose 1,000 people to mail to, we don't mail that 1,000 people one time.

We hit them a minimum of three times. That's a minimum. Sometimes it's four or five, but a minimum of three times. That way we feel that they've been hit. You know, the standard in the real estate industry of three times. That way we feel that they've been hit. The standard in the real estate industry is three times, so that's why we stick with that. Then we move on to another group of individuals who we will also hit three times. Now it goes back to that. If we're sending out 1,000 mailers at a dollar a piece, that's $ a thousand dollars. How often are you sending out those mailers?

And then how many times are you sending them to the same people? So you have to break that down. Now you need to know how many deals you're getting from those mailers. The same is going to be said for something like radio advertisements or newspaper advertisements or pay-per-click advertisements or bandit signs or any paid marketing. You need to look at the investment you're making, how many leads did that bring you, and out of those leads, how many deals did you get? So then you're going to know how much you paid per lead. So if I get two deals after spending $1,000, I paid $500 for each of those deals. That can be a cost that is part of that fix and flip

deal that I just got. So I add the $500 into the cost of each of those deals. Very important that not a lot of investors or marketers think about is how much are you paying per deal? So you need to track that. Now let's say we do some pay-per-click ads or mailers or any of the direct ads, newspapers, bandit signs, rad radios and we get very little traction very little traction well something's wrong but you don't necessarily give up the first time and i'm going to stick to mailers because i love mailers so you send out a thousand mailers and get one call well that's a horrible percentage But you send it again to the same people. Because again, remember, I'm telling you, you got to send them three times to the same people. So if you don't have a lot of money and you're a rookie out there,

don't send a thousand mailers. Send 200 mailers. Send 300 mailers, 400 mailers, 500 mailers. Whatever you can afford. You also need to look at your budget because you need to plan to send it to the same people a minimum of three times. I would say send a mailer literally once every three weeks to the same people three times. Meaning after a month and a half or so or a little over,

or I'm sorry, a little over two months, you're going to be done mailing to those individuals. But then you need a budget. If you have $500 budgeted for marketing, you might only want to do $200 or 200 mailers at a dollar a piece. Or maybe you need to spend a little bit more time and write your own mailers and send it out so you can save some money. So you can do higher volume. But the key here guys, no matter what type of marketing you're doing, budget how much you have every single month to spend on marketing. Send it consistently, meaning if we're talking about direct mailers, send it three times. Run a pay-per-click ad for a consistent amount of time. Be in the newspaper more than just on the weekend or once. Put out multiple panda signs.

Have a radio ad that runs multiple times. Have a website that's SEO'd. Have hundreds of door hangers you put out there. Frequency is going to be huge. You need to be frequent when you are marketing. And you have to be consistent. Have to be consistent. So once you are consistent and you're not getting the results you need, then you maybe need to redo your copy. Maybe

what you are saying and how you are saying it is not resonating with these people. So you need to redo your copy and send it to them, whether it's a newspaper or a radio ad or a website or whatever. Put different copy in there and give them a different message. Give them a different message. Because if I'm focusing for people who want to sell ugly houses or sell fast, well, maybe I'm going after the wrong people in how I'm saying it because they want to sell, but they're not going to be able to close because they just inherited a property from their grandparents. So they can't close fast. They have to be a little bit more patient. Rearrange what you're saying to them. What is your message? Be consistent and then track your results, guys.

Track your results. Track your results. I can't say it enough. Because if you're not getting the return you're wanting, if you're not getting 1% to 2% and you're not getting your deals and you're not tracking them, you don't know really what's working.

So make sure you're tracking them. Make sure you know what's working or make sure you know what's not working so that you can change it for the next go around, for the next set of mailers, for the next newspaper ad. If you get a deal or two or three or four out of the marketing that you did, make sure to attribute how much you spent in that marketing. If you had to do three or four mailers to get two deals, so you spent three or $4,000 to get two deals, say that you had to end up spending $2,000 on marketing per deal and put that into the cost of that deal. It's part of your cost is marketing cost. All right, guys. Well, that's about it for us here at the Science of Flipping podcast. Marketing is a great subject and there's a lot to marketing

and there's a lot of different ways to market. So I get excited about it. And if you want to hear more, guys, go to our website, thescienceofflipping.com. Get your free e-book. Give us your information so we can get you four or more free stuff because we're constantly giving away great educational products. Get over that website. Log in. Give us your information.

We'll give you some free information. We're here each and every week. Make sure you subscribe to our podcast, guys. For that, that's all. I'm Justin Colby, your host, and I'm out of here. Peace.