[Editor’s Note: This is the first installment in Marko’s six-part series on investing in real estate foreclosures.]
I have heard many people say that generating leads for creative real estate investing is a numbers game. That may be very true, but there are definitely things that you can do to make those numbers work in your favor and greatly improve your odds with less money spent in the process.
Why do we need to generate leads? This is what I tell my students: You must learn and understand my axiom, proven time and time again:
LACK OF LEADS = LACK OF DEALS = YOU ARE OUT OF BUSINESS!
Now this is true of almost every business, but let’s look at a few strategies that I use to improve my cost per lead ratio as low as possible. The first thing I want to discuss is the “Shotgun” vs. “Targeted” approach for getting motivated sellers.
The “shotgun” approach to finding motivated sellers
The shotgun method involves buying a list of several zip codes and mailing to everyone on the list. Another name for this strategy is “blind archery” because you are essentially shooting a thousand arrows up into the sky hoping that they actually hit something.
You can make a business out of this if you are willing to spend a whole lot of money and are prepared to do this each month because your response rate will be very low.
The other problem is that it is impossible to tailor a message to this audience with this approach. Are you looking for people who are behind in house payments? People going through a divorce? Someone who just was laid off from their job?
With the shotgun approach, you’ll never know–and it is important to understand that each of these groups is psychologically very different and will respond to different messages.
It will be extremely hard, if not impossible, to achieve “message to market match,” which is the foundation of a successful marketing campaign.
Use a more “targeted” approach
What works much better is to get the most targeted list you can and write a message to that group addressing their situation.
You can get lists of people in foreclosure fairly easily because it’s public record, and there are probably people in your area who compile a fresh list every week and will sell you that list. In all cases, money spent on a well targeted message to a defined group will be money well spent.
You need a specific message for each list…
You can get lists of people who were listed with a Realtor and the listing has expired. Do you think that the message sent to people in foreclosure is likely to get any response from the expired listings? Probably not. That is why you will have a specific marketing piece addressing their concerns–showing them the local MLS statistics and getting their attention).
There are many kinds of targeted lists you can get. As you gain experience in real estate investing, you will get to know reputable list brokers who can obtain the kind of list you want to market to, and you can create marketing pieces directly to that group and greatly improve your response rate.
After a while, you will be able to reasonably predict a response rate to your marketing.
For example, if I know that in one month I can get 30 responses per 1000 marketing pieces, (a 3% response rate–pretty good) and I know that 5 of these leads will have the makings of a deal, and I know I can close 4, then I have the basis of a business that can provide real wealth in a relatively short period of time.
Therefore, the key is:
Identify the market segments, and
Market to them using a highly targeted message tailored precisely for that list
In my business, I have a very specific sequence of five letters with a precisely crafted message that is automatically adjusted over time accordingly to the progress of their foreclosure process.
I also use special “linked” letters to target expired listings. Again, they are planned in a sequence. They deliver the message that resonates with homeowners who have worked with a real estate agent before, did not get a result, and got disappointed when their listing expired without a buyer.
There are a few other high-response lists we market to, but again the key is the message to market match!
In my next article on evaluating leads, I’ll discuss how to evaluate responses to determine if there is a deal or not, so you won’t waste time talking to people when there can be no positive result.
About the Author:
Marko Rubel has completed hundreds of successful transactions in his over a decade long career. He has created a multi-million dollar empire out of nothing, and he has made it his mission in life to help others achieve the same freedom. He is an active investor in California, Nevada, Arizona, and Texas, as well as other areas of the country through his students and partners. Marko is known as the *automation guy* because he helps investors all around the country to automate their business and create wealth in their spare time! His turn-key systems have changed the lives of many:
Marko Rubel has completed hundreds of successful transactions in his over a decade long career. He has created a multi-million dollar empire out of nothing, and he has made it his mission in life to help others achieve the same freedom.
He is an active investor in California, Nevada, Arizona, and Texas, as well as other areas of the country through his students and partners.
Marko is known as the *automation guy* because he helps investors all around the country to automate their business and create wealth in their spare time!
His turn-key systems have changed the lives of many: