We are back with V3 of the flipping fundamentals series – in this edition, we will be covering how to market for deals in any market. One of the fundamentals of any business is to have a product that you can sell at a profit, sounds simple right? In concept it certainly is, execution in real estate on this point is more complex than most. If you were to create a company that sells widgets you would naturally go to the widget wholesale in your area and then create an account, buy inventory, mark that inventory up, then sell it to customers that came into your widget store.
In real estate, there are no wholesale warehouses you can go to in order to obtain inventory at a discounted price. (see rule#1 in real estate – always get a discount) Therefore, you need to market to the public so that owners with distressed homes and/or distressing circumstances will contact you. After all, it would be a better method to have the business come to you rather than you chasing the business!
There are a number of ways to market for these properties:
- Direct Mail
- Online via social media, website, google ads
- Door knocking
- Networking with realtors
- Networking with mortgage brokers
- Creating relationships with foreclosure lawyers or insurance companies (IE Genworth, home guarantee)
- Kijiji and other free classified services
- Auctions called sheriff sale Canada
- Foreclosure listing services
- Driving communities to look for neglected or vacant homes
- MLS listings over 100 days on the market
- Wholesale Investors
Because they’re a lot of ways to market your intention to buy houses to potential sellers, I would recommend that you pick 2-3 strategies to focus on depending on what best suits your budget at the beginning of your real estate career in Calgary or your local market place.
Before picking the strategies that you think will work best, you need to define your target market – which means in our context a market such as “ugly houses wanted” or “any condition as is welcomed” these would-be owners that have very distressed properties and may not be able to sell the property the traditional way due to its condition. (you can pick any distressed circumstance that you like to market to)
Once you have your target market (or markets) picked out then you need to craft messages that will resonate with those homeowners to get them to take action and contact your company. In marketing there is a concept called test, measure, adjust. Think of your marketing machine like an old FM radio: you pick a station you want (your client) you tune the radio to where you think the best reception will be (your marketing message to be tested) then you see how you did (the reception on the radio or your conversion rate with your customers) then adjust accordingly to get better sound on the radio or more calls and emails from your target market.
This concept is also known as A/B testing where you may have 2 marketing messages running at the same time to see which one is working better then you keep the top performer and then create a new message to test/measure against.
Once you are getting leads, you need to come up with a systematic way to:
- follow up with the homeowners
- view and estimate the properties
- run the numbers to ensure profitability
- make offers quickly and efficiently
- Finance the property
- Flip the property
It is common to go over 100 leads shortlist 10 make offers on 5 and 2 will get accepted and 1 of them will be a profitable deal.
Real estate is a game that is won based on the numbers, we will dive into that area in the next edition with some examples of deals, the process for due diligence, and more!
Respect The Hustle
Tim Reid