Successful Real Estate Investors Need a Full Pipeline

Wednesday, February 10th, 2010 | Uncategorized

In order to be successful in the business of real estate investing, it is important that you fill your deal pipeline, and keep it full! One of the biggest mistakes a novice investor can make is getting a handful of leads, working those deals and ignoring any on-going marketing strategy or marketing plan until it’s time to fill the pipeline again. By then, the pipeline is dried up, and needs a lot of time and effort to get things rolling again.

As with any business, as a real estate investor you’ll need a marketing plan. Fortunately, it doesn’t take a lot of money to create an effective marketing campaign in our business. One of the best things you can do is use a multiple medium approach. Don’t rely on one way or marketing method to find leads – use many different ways, because each technique serves a different purpose. The end result will be the same – getting in contact with more people who are looking to sell their homes (homeowners in distress) and finding more buyers for those homes.

There are two general categories of marketing lead generating techniques that you should consider – passive and proactive. Passive marketing includes money spent on things such as television, radio and billboards. You put the message out there and the leads just come in – people approach you. It can be expensive, but frees up your time to concentrate on other things. Proactive marketing, on the other hand, gives you more control over your lead mining. It is generally cheaper than passive techniques, and includes things such as direct mail, cold calling, door knocking and referrals.

Let’s take a quick look at some of the different marketing approaches you should use. Remember, a combined approach is going to result in the most leads:

Postcards – This marketing technique presents a great way to reach a broad audience. Make sure your message is brief and direct, and includes a call to action.

Direct Mail – Another effective way to reach a targeted audience. Buy or build your own list of people going into foreclosure in your sweet spot, and focus on reaching them with your mailing. Start with the county courthouse for a reliable and comprehensive list of foreclosures. Direct mail marketing campaigns will bring in a wide assortment of leads each month. Remember, however, they generally have a 1-2% response rate, so don’t rely solely on this method for your marketing. Direct mail will require some sort of follow up.

Letters to Homeowners – Sending letters directly to homeowners threatened by foreclosure can help fill the pipeline. The trick is to make your letter appear to be handwritten (this includes the envelope!) and personal.

Door Knocking – yes, walking right up to someone’s front door and knocking. It can be scary and you need to brace yourself for some amount of resistance, but this marketing strategy can give you that “foot in the door” to build a rapport with the homeowner, identify with their pain and offer them a way out of their financial burden.

Cold Calling – is a tried and true marketing method. With today’s technology, the challenge is greater thanks to Caller ID, but if you have a strong message, distressed homeowners will want to listen. If you make 40 cold calls, you can expect 1-2 leads to result.

Referrals – using your centers of influence to identify leads for you can be your smartest marketing technique. Reach out to area realtors (this video explains how the MLS can be used to market for deals), mortgage brokers, attorneys, people in the construction business, and even family and friends. While it can be expensive in the form of commission or referral fees, it is a very reliable source of leads. You can’t afford not to use referrals. Your goal should be to obtain 50% of your leads through referrals. For a further explanation of using referrals, check out this video.

The list of marketing techniques above is not exhaustive, but should give you a starting point of things to include when setting up your own marketing plan. Check out the four-part video series where SREC’s Josh Cantwell breaks down short sale and real estate investing marketing in greater detail. Click here for Part I, Part 2, Part 3 and Part 4.

One in every six homeowners today is in some state of foreclosure. For you, the real estate investor, that’s good news. Now you need to find those people and let them know how you can help. If you’re a strong marketer, you almost can’t fail as an investor. The key is to have an unbroken plan to bring properties, buyers and sellers together to create a win-win situation for everyone.

To learn even more about becoming a successful real estate investor, sign up for our free Silver Membership today.

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