Marketing Reminders!

[Dan Auito]

Ken Holmes suggests:

Marketing and how it works
By: Ken Holmes (ken in sc)

OK- for all of you out there wondering how marketing works, I will once again post our real numbers. This info will hopefully help you in making marketing decisions. Of course, your numbers will be different.

We use 6 main sources to locate deals. They are yellow pages ads, mailers to people early in the foreclosure process, newspaper “I buy houses” type ad, referrals from flippers or other sources, general flyers, and internet web page.

Here are the numbers for the year as of the end of June - half a year. Yellow pages brought in 34 calls and we closed 8 deals. Foreclosures brought in 85 calls and we closed 5 deals. The newspaper ad brought in 44 calls and we bought 6. We received 49 referral leads and bought 9. General flyers only brought 2 calls but we closed both, and the internet brought in 1 call and we bought that.

So for us, the yellow pages have been good (we are in both books total about $425 per month) and referrals are good. We get lots of foreclosure calls but close a smaller percentage. The newspaper has always been steady for me at around a deal a month. There are over ten “I buy houses”ads every Sunday but my ad still produces. I run my ad every day, not just Sunday. At around $400 per month cost, that is a bargain. When I buy from a referral, any cost to purchase the contract or referral fee I always associate as an expense of the purchase, not a marketing cost. To me these are “free leads”.

I spend in total around $2,000 per month for marketing. As you can see, we bought 31 properties in 6 months. That comes out to around $387 per deal. Not bad. I post these posts to show people that marketing is key. Spending money on marketing is needed to really grow into a full time business in my opinion. Note that I don’t buy from making numerous MLS offers, and I rarely buy at the foreclosure sale. That is what everyone wants to do. I like the posture of sellers coming to me for my help.

Good luck-

[Dan Auito]

Kens follow-up for those who use the excuse that "I don't have the money"

You say that you turn down deals for lack of financing......not good! This is a huge problem and must be solved. It can be solved in many different ways. Let me tell you this: Once you have been in business for a year or more and therefore have a business (LLC, Corp) tax return showing that your business is profitable, you can get all the money you need via banks. When I say banks, I mean the commercial loan department. It may take 3 or 4 banks to fullfill your needs, as one bank may not want you to be "that deep into them".

So, your problem, if you have not been in business that long, is to get through that 1st year or so. Get out a legal pad and write down on the top: I need to finance the deals through a year or so and not lose them for lack if financing. Then, start to write down every idea you can come up with to find financing, then start to work on those ideas. Your list could include:

1. Find and owner financed deal.
2. Find money partners.
3. Find hard money lenders.
4. Find alternative collateral instead of 10% down.

There are certainly way more ideas than that. I don't want to write too many for you so that your brain can think for itself. Your list should be at least 10 long and get bigger. Every day, try and add an idea to this list. Keep working on it until you fund every deal. Believe and know that a great deal attracts money. If the deal is good enough, you should be able to get the financing. It is true. Even if the financing is more expensive, it doesn't matter as your goal is to get through this 1st year or so until the banks start bidding on getting your deals. That will come, and believe me, it is sweet when you get there.

Ken


So very true folks. Dan