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Saturday, December 19, 2015

Telescope, Binoculars, Maginifying Glass or Microscope - How Do You View Your List?

I had a great conversation with a consulting client today about lists. (For a consulting session, you can book it on my website at www.AarontheHouseBuyer.com.) We were discussing marketing lists and what he is mailing to versus what he should be mailing to. His current list was absentee homeowners with a few small variables in place. Let's analyze that list from the telescopic, to the microscopic and see if we can't find some niches to bring more riches into your marketing machine.

Telescopic - Absentee homeowners, 30% or more equity, no corporations or trusts and maybe a few more minor variables like property age (year built), 3-4 beds

Binoculars - Absentee homeowners living in a zip code other than the subject property zip code or even a different county!, 30% or more equity, no corporations or trusts, year built 1995 or older, single story,  3-4 beds, 1-2 baths, 800-1,800 sq/ft

Magnifying Glass - Absentee homeowners living in a county other than the subject property, 30% or more equity, no corporations or trusts, year built 1940-1995, single story,  3-4 beds, 1-2 baths, 800-1,800 sq/ft, no trust deeds recorded in last 10 years and owned 20+ years

Microscope - Absentee homeowners living in a county other than the subject property who are 65 years of age or older, 30% or more equity, no corporations or trusts, year built 1940-1995, single story,  3-4 beds, 1-2 baths, 800-1,800 sq/ft, no trust deeds recorded in last 10 years and owned 20+ years, haven't paid property taxes last year/code enforcement notice/eviction filing, etc.

If you had an opportunity to mail 100 marketing pieces to each list, which do you think would have the highest response rate? Which would be the most difficult and costly to obtain? Which would you rather be working? Answering that question, is it worth it to do more work on the building of a a targeted list or later on the fallout of mailing to a broader list? Do you think you would say the same thing and mail the same piece to each list? What would you say (message) and in what method would you get that message to your prospect?

You can do this type of analysis on any list you are currently marketing to. When the well runs dry, is it more costly to dismantle the well and move to a new location or drill deeper? This is how you drill deeper in the same market to get more and better results from your efforts. If you have any questions or suggestions, please leave a comment below and feel free to share this post with any of your fellow marketing investors and post a link to this on your favorite social media.

Tuesday, August 25, 2015

An Easy Way to Split Test

You've been hammering away on your marketing and think it is time to change things up a bit. Should you change the color, size, a headline, try a new picture, send letters instead of postcards, try a different sized envelope for your letter, or maybe an invitation style with a card? How do you decide? You don't want to change the whole piece. It is important to have some connectivity between your pieces so your audience remembers who you arre. Where do you start?

I like to look at and learn marketing from the biggest names in the marketing world. No, not the gurus. They don't amount to peanuts. I'm talking about the companies that have been in business for decades, and make their money by constantly pushing their products in your face. Companies whose marketing budgets are higher than many small countries GDP. One of the biggest of them all is McDonald's - $988 Million spent on marketing in 2013! Of course, that isn't even 1/3 of what Coke spends, but since they are only selling Coke, they utilize more logo recognition by plastering it everywhere and hiring high profile spokespeople.

McDonald's knows exactly who their target market is, how to best reach them, and what to show them to make them want their product. Although the commercials and menus have changed over the years, they utilize mascots to reinforce their brand recognition. They really have their marketing dialed in and you can learn a lot by paying attention to them.

Since we're not dealing with McD's marketing budget, but want to conduct a split test we need to figure out something easier than running a commercial with the Hamburglar in Texas and one with Grimace in California to see which sells more cheeseburgers before going nationwide. So, what do we do?

 Most likely you don't have two phone numbers or two extensions you can use. And, asking "Exactly which mailer did you receive?" can really put a damper on your negotiation, especially when dealing with older people who don't always understand complex questions, never mind the address of the property they own.

Let's say you are mailing postcards and want to try a new headline. What do you mean you don't use a headline? Some examples from the many mailers I receive on my rentals and have sitting here on my desk include, "Urgent Notice," "Attention Homeowner," "Houses Wanted." By the way, these all suck, but I bet they still get houses in escrow. So, you put pencil to paper and come up with a few dozen new headlines. You show them to a few trusted advisers (could be your kids, spouse, dog) and narrow the field down to just two. Problem is, you can't decide between these two remaining contenders. You're sure they are both going to make sellers hand you deeds and keys faster than you can write checks.

An easy way to split test your two new headlines is to send a batch of cards out with your new headline and use your first name at the end of your call to action. "Call me now! Thanks, Aaron" What do you mean you're not using a call to action? On your other card, you use your middle name, "Call me now! Thanks, Michael"

Just by answer the phone and listening for whomever the caller wants to talk to, then keeping a simple record on a Post It note somewhere convenient, you'll quickly learn which headline is more effective.


Tuesday, July 14, 2015

When is When?

There is a popular saying that floats around the real estate investing circle:

Do what you have to for 5 years so you can do what you want for the rest of your life.

Great saying right? In this business I see a lot of people get wildly successful, but it usually takes about 10 years. There are the exceptions to the rule though. What I don't see is the "do what you want for the rest of your life" group. I can name on one... actually, I can only name one person I've ever met in this business who made a killing and now travels around the world doing charity work and meeting new friends.

Only 1.

Lots of people have business goals, but I don't often hear about people's life goals. I think life goals are way more important than business goals. Unless, the "do what you want for the rest of your life" is work. That's not what I want for my life.

My buddy called me today and said his 66 year old cousin recently passed away. He's 51. He said he woke up and realized he's been working in real estate for the last 20 years and has basically been a workaholic.

The timing of his call was quite coincidental. Just last night I watched the unwatchable film While We're Young with Ben Stiller. I don't believe it was every released at the box office. Yeah, it's that bad. In that movie he says, and I'm paraphrasing, "I'm 44 and I've come to accept that there are things I'll never have in this life." Wow. Very powerful statement.

After my friend called, I was thinking about that statement, and as I type this Nirvana is playing on the local radio station. Is it "things" we should be pursuing? That can't be the goal in life. Maybe as a young person, I/you/we want things such as a large house, expensive sports car, brand names, etc., but do those things bring any quality to our life? I think not. They certainly bring more responsibility in terms of care, maintenance, debt service.

So, what are your life goals? Do you want to do things or accumulate things? Do  you even have any life goals? How about creating a life goal list and putting that up on the board over your desk? I've always had work goals. I have small things/events that I'd like to accomplish, but I think I'll put some more time and energy into planning what I really want for my life outside of work.

Wednesday, June 17, 2015

Just Make The Offer Already!!!

After reading the highly recommended book, The One Thing, I did a lot of meditating about what it is that really IS my one thing as a real estate investor. My first very wrong conclusion was: MARKETING!!

If I didn't launch my marketing, I didn't get any leads. Without leads, I didn't get any deals. But wait! I could have all the leads in the world, and there have been times in my early career when I certainly had more leads than I knew what to do with, but that didn't necessarily mean I had lots of deals. What is missing?

Even though I came from a background of sales, and I mean very high digit sales and contract negotiation, I had NO CLUE what to ask a potential seller when he/she called. I even went so far as to hire someone to handle calls for me. While this is a great idea to help you build a business, most investors don't need that much overhead when first starting out and definitely don't have the lead generation in place to justify a person handling your trickle of leads.
It was only out of pure, desperate need of income, and lack of performance by my then lead handler that I got rid of him and started doing it all myself. Because what I learned from reading The One Thing is that making offers is MY one thing. I need to make offers to buy houses. I need to buy houses to make money. I then can use some of that money to launch more marketing, generate leads and MAKE MORE OFFERS.

At first, I had all kinds of crazy scripts printed out and in a pile on my desk. It was like a Choose Your Own Adventure of negotiation. If the seller says this, I can say this or that. If the seller then says this, I can respond with this sentence on this sheet over here, or that statement on the sheet over there. Can you imagine walking into a meeting with a script and trying to have a conversation with someone?! It would be absurd!!
So, what to do? Well, when a seller calls it is a conversation. Nothing more. It is not this mythical negotiation only hardened experts can handle. If you have ever talked on the phone and purchased something at a yard/garage sale or flea market where you have to ask what the price is, guess what? YOU ARE QUALIFIED TO BUY REAL ESTATE! (If you haven't, I highly suggest you go to a flea market or stop at the next yard sale and give it a shot. It's fun and worst case scenario, you buy something you don't need for fifty cents!!)

You are supposed to be the expert in the transaction. The person you're talking to might have only purchased one or two houses in his/her entire life. He/she has less of a clue what to talk about on the phone than you. Really!

You need to know exactly one question in order to buy a house:

Would you take $XX,XXX for the property?

"No"

How about $XX,XXX (that is a slightly higher number)?

"No"

How about $XX,XX?

Or, if they say "Yes," to your first question, you can do the exact opposite and lower the number each time. Just because you asked if they would take $XX,XXX the first time doesn't mean you were offering that much and feel free to tell him/her that. (I don't recommend this strategy for beginners though.)

Here are a few simple questions I ask and then, while I'm listening to the seller talk, I'm quickly checking title, comping the house, and plugging my numbers into my handy-dandy deal analysis spreadsheet. I can have an offer together in minutes. Seriously.

1. What is the address of the property you are interested in selling to me? (This is an NLP question as it implies they actually want to sell you a house.)

2. It was built in 19XX. Have you done any updates to it or is it all original inside? (I honestly don't care because I factor a full rehab on every house I buy. I just need to keep them talking while I work my system.) If you don't know the age, you can certainly ask that question first.

3. What are you asking for the property, you must have a number in mind? (Again, I don't care. Many times they say they are calling me for a price since I'm the one who wants to buy. I like to respond with a snarky remark sometimes such as, "I can't sell it and buy it!" but I can get away with it. You might not want to try that until your extremely comfortable talking on the phone with people you don't know.

At this point, I am ready to throw out a number. Now, I'm sure you've heard "He/She who says the number first loses." Well, I buy a lot of houses and the last one I bought, as of this writing, I paid $70K for it and I will resell it for around $130K. The seller had no idea what it was worth and there wasn't anyway he was going to give me a number, so I'll let you decide if that is a true statement or not.

4. Would you take $XX,XXX for the property? You can dress this up a bit and say: "Based on the age/location/condition (or a combo of all three), would you take...." I sometimes mix this up with "I'd be a buyer at about $XX,XXX-$XX,XXX" and give the seller a range of about $5K. I might follow that up with, "If that sounds like it might interest you, I'll take a look at the outside/inside and write it up." Or, if you're one of those that needs to meet with people, you can say, "If that sounds like it might work for you, let's meet...." This is a soft close and it will save you a lot of wasted time meeting with people who are not really sellers. There is nothing worse than driving all the way to some non-sellers house and wasting time talking about a property you are not going to buy.
Now, after you've said some version of #4, you be quiet and listen. If he/she says "No," I then ask, "I thought you didn't have any idea of value? Sounds like you do have a number in mind. So, what were you thinking?"

Does all this sound like I'm some master negotiator, or just a person having a conversation about a house? Maybe that is what makes me a "master negotiator," is that I am able to turn a high dollar transaction into a simple conversation? I don't know. Next time you get a call, have a conversation. If you can't throw out a number as quickly as I can, you need to: A. Learn your market better so you have an idea what houses are worth.

B. Tell the seller you'll call back tomorrow after you do some research and come up with a number that works for you.

C. Call the seller back the next day and...

JUST MAKE THE OFFER ALREADY!!

Having trouble talking on the phone or don't know what to say when you meet the sellers in person? Let me know how I can help by commenting below.

Friday, March 20, 2015

Liars & Thieves

Once you get past the applications, the next most important step is to not believe their lies. When a tenant has stopped paying rent, you have to understand that this person is no longer a tenant. He/she is a liar and a thief. If you believe the BS, you will delay the inevitable and only cost yourself more lost time, money and unnecessary heartache. Here is a perfect example of what I am dealing with now:

 Tenant didn't pay rent on the first of this month. I had a 3 day posted on a Tuesday. The tenant didn't contact me at all and wasn't home when the notice was posted. I contacted my attorney to start the eviction proceedings when the 3 day expired. The tenant left me a voice mail late Thursday night (probably knowing I wouldn't answer) stating rent would be paid first thing Friday. I check the account and no rent. I called the tenant who did answer and said he would pay during his lunch break. Luckily, I repeated his statement to him, "You are going to pay the rent before 1pm. Is that what you are telling me?" He said 'no,' he takes lunch from 3-4PM and would pay then. All tenants who don't pay are liars so I did nothing to stop the eviction. Of course, 4PM comes and goes and no rent - just as I expected. He then leaves me multiple voice mails on Monday morning stating he is in the bank parking lot, waiting for me to call him back to give him the account number. (The account number is on the 3 day.) I sent him a text replay stating, "If you really want to pay the rent, contact my attorney." and gave him the number. He never contacted the attorney... as I expected he wouldn't.

Moral of the story; if you are unlucky enough to let one of these losers into your property and he/she/they stop paying rent, you have to realize the tenant(s) is/are stealing from you and lying to you. Do what you have to do regarding filing the paperwork to protect yourself. If they pay, great. If not, you haven't lost any time. ​