Joe McCall:
I first want to talk about marketing by the numbers. It’s important that you learn to break down your marketing into goals you can control. It’s easy to say, “I want to make $100,000.00 a year.” Or, “I want to do two deals a month.” Can you really control that? I don’t think you can. You need to break down your income goals. If you want to flip a certain number of deals, whatever your goals are, you need to break them down into something you can control so that you know, “If I want to do two deals a month or four deals a month, how many sellers do I need to talk to every day?”
That gets a little more down into what you need to have, but that’s still hard to control. You need to break it down into, “How much marketing should I do every day or every week to talk to the number of sellers that I need to talk to, to get to the income goals that I have?”
I have a spreadsheet I want to review with you guys – and Jason can give it to everybody if you want on the list. Let me open up this spreadsheet here.
I’ll try to zoom in here to make it as big as possible so everybody can see it. I just did this spreadsheet the other day. I was on a coaching call with some students and I said, “Let’s say you want to make $120,000.00 a year.” That just rounds it off to $10,000.00 a month. Let’s be conservative. Let’s say your average profit per deal is $4,000.00. You take four divided by 10 and that’s about two and a half deals per month. Let’s bump that up to three, let’s say.
Now, let’s be conservative again. Let’s say you only sell half of the homes that you actually get under contract. I use what’s called a flex option, so my options that I have on my houses are flexible. That’s one of the reasons why I can do so many deals virtually is because it’s so easy to sell to the seller. They can cancel my contract if they sell it or lease it before I do. They can cancel my agreement and they won’t owe me anything. It’s very easy to sell what I’m doing to sellers.
Here’s my offer too, by the way. What do you need for your house? Okay, I’ll get that for you. When you’re doing a lease option, you just find out what the seller needs for the house, as long as they’re willing to wait a few years for it. I get it under a lease option contract and I sell that lease option contract to my tenant buyer.
Jason Medley:
Let me say something real quickly. Because what you do wouldn’t necessarily be called what’s “in vogue” right now. It’s not an REO, it’s not a short sale, that kind of thing. It could certainly be a short sale, but the way you’re structuring it is what’s called a lease option. For those of you who aren’t familiar with a lease option, don’t get lost in the fact that you’re not familiar.
Again, the goal of tonight, and we’ll give you Joe’s blog and you can go check him out and you can learn more about these options. I just don’t want you to get like, “Oh, I don’t know what lease options are so I’m going to bounce.” Again, the goal of tonight is, just like look at this spreadsheet. This is how an intelligent, driven person thinks about their business. There’s value in that and we’re going to tell you how he does all this stuff from a virtual standpoint. There’s going to be a lot to learn here even though you may not be familiar with lease options are.
Joe McCall:
Thanks for clarifying that because that’s important. This spreadsheet will apply to no matter what kind of business you’re doing, in my opinion. If you’re doing marketing, if you’re doing postcards, if you’re doing Craigslist stuff, this really, really helps. I’ll try to lay off on the lease option language that I use because really what I’m talking about can apply to pretty much any type of real estate investment that you’re focused on.
Looking at the numbers, again you want to get goals and things that you can control. Let’s say you only sell 50% of the houses you get under contract, or let’s say you sell 75%. Let’s break this up. I want to be conservative.
That means I need to get six houses under contract every month to make my income goals.
Let’s say you have to talk to 25 sellers to get one house under contract. That’s a good general rule of thumb. Maybe it’s 20, maybe it’s 30 but you can play with that number. Let’s say it’s 25 sellers you need to talk to, to get one house under contract. Remember, in real estate sometimes you have to dig through a lot of dirt to get to the gold. That means it’s a numbers game, right? These are all numbers and the law of averages.
That means if you need to talk to 25 sellers, you need to get six houses under contract. Six times 25 is 150. You need to talk to 150 sellers a day. That’s not cold calling 150 sellers a day off of Craigslist. That’s 150 sellers that are responding to your postcards, to your letters, to your different Craigslist campaigns and marketing that you’re doing. I’m going to be showing you the Craigslist marketing that I do so you can see that and start applying it tomorrow.
Jason Medley:
Another thing I want to point out real quick Joe is immediately when we’re going through this, when I look at line item number 10 the first thing I’m thinking is, “I don’t want to do that. I don’t want to talk to 150 people a month.” I hope that everybody on the line tonight is thinking the same way like, “That is not something I would want to do.”
That’s part of what we’re showing you on the call. He’s going to show you how he doesn’t really do it. I want you to start having your brain thinking that way. Immediately when he’s putting that number up there I’m like, “I don’t want to do that. I don’t want to talk to 150 people.” I’m already asking myself, “How do I get out of that?” Go ahead, brother.
Joe McCall:
Thanks for clarifying that again. Keep on bringing those things up because I forget those kinds of details. When you’re in this, sometimes it’s hard for me to see it from an outsider’s perspective.
You take 150 divided by 25 working days a month, let’s say. That means you or your VA or somebody needs to talk to six sellers every day. Now we’re getting down into a little more nitty-gritty. Let me be clear about this, too. While Jason and I don’t want to talk to six sellers a day, for a newbie, for somebody who’s just now beginning, I suggest that you do talk to six sellers a day and figure out how it works because that’s really not a whole lot. That’s an hour a day, maybe two hours a day talking to sellers. It is important that you learn how to do this stuff yourself so that you can train your assistants and people you hire under you – your realtors, your VAs, to do it for you. You’ll train them what to say.
By the way, I’m going to be going over in a few minutes the scripts and the things that I give to my VAs to say to these sellers. I’m going to give you the questions that they ask. I’m even going to show you how they put the leads into our database and how we follow up with them and stuff like that.
In the progression of my business really what happened was I was doing all this myself and then I outsourced just a little bit at a time. I started outsourcing the Craigslist stuff to the VAs, then I had the VAs do postcards. Then I said, “VAs, I’m getting all these calls in the voicemail. I want you to call them back and just get their basic information.” Then they started doing that.
Then I said, “Call them back and get their basic information and if they meet these criteria, then schedule an appointment for me to call them.” They did that for a few months. Then all of a sudden I’m getting my calendar full of all these appointments. I said, “Wait a minute, stop. I want you to actually close them now. If they’re ready to do a deal, send them my contract and get it signed.” All of a sudden before I know it, my VAs are getting sellers to sign my contracts and they’re sending them to me. I get them in an email and I send the email off to my realtor and she does the rest.
It’s kind of a progression and sometimes I want to be careful that people don’t get overwhelmed with, “Oh man, I have to have a VA to do my first deal,” or whatnot. If you’ve already done some deals, this is kind of how it progresses. You can outsource everything, really.
Somebody has to talk to six sellers a day. Let’s say 75% of your leads come from Craigslist. I’m going to show you how I do my Craigslist marketing here in a minute. Let’s say 25% of your leads come from postcards.
You can change this to 50/50 if you want. I’m doing more direct mail now than I ever have. I’m doing more direct mail.
Now that means I need to get 75 leads per month from Craigslist and 75 leads per month from postcards. If you look at the average response rates here, Craigslist I’ll just tell you, an average of 15% of the people that I send marketing to in Craigslist. This isn’t putting an ad in Craigslist. This is me sending some marketing out to somebody who’s advertising their house on Craigslist. I’ll show you how I do that here in a minute.
I get an average of 15% response rate who say, “Yeah, maybe. Tell me more.” With postcards I get about a 3% response rate and with yellow letters, about 8%. This is important. That means I need to send out 500 pieces of marketing to Craigslist every month, and I need to send 2,500 postcards every month.
If you look at the cost, there’s zero cost in my Craigslist marketing. There’s about $.46 per postcard.
In yellow, this is what’s important. If you want to make $120,000.00 a year, you need to be sending out marketing to about 20 sellers and landlords every day on Craigslist. Five days a week, that’s 100 leads in Craigslist. Somebody needs to go and find 20 different houses on Craigslist every day and send them something. The beautiful thing about marketing to Craigslist is that it’s so easy to outsource and get somebody else to do.
You also need to send out 2,500 postcards per month to Craigslist, and that’s about 625 postcards per week. I’m going to show you the postcards I use and how I train my VAs to send the postcards for me.
Jason Medley:
2,500 postcards off of Craigslist – are the addresses of the homes on Craigslist?
Joe McCall:
The postcards are coming from absentee owners that I’m getting from ListSource or RealQuest or something.
Jason Medley:
I gotcha.
Joe McCall:
The Craigslist, I don’t have the ads. I’m just sending them text messages, emails, voice blasts, stuff like that.
Jason Medley:
Right, and that’s what you were clarifying with me the other day. That’s what I want everybody to know. Think about that. I always say it’s better to be the hunted than the hunter. When you want to sell something or when you want somebody to do business with you, it’s always better to be the hunted than the hunter.
A cool way that Joe’s doing business, he’s going to show you exactly how to do this and how he uses Google voice to do it. He sends text messages to the sellers on Craigslist. At that point it’s kind of cold, but if they respond to him it becomes warm. It’s not nearly as harsh or as fear driven as a cold call would be because you’re only talking to the people who have interest.
Joe McCall:
Yeah, totally.
Jason Medley:
A lot of people have a fear of picking up the phone and actually having to have human interaction with other people. The cool thing about what you’re doing, especially from a Craigslist perspective is you use technology to reach out to them and then that human interaction is made that much easier. You’re only talking to the people who respond to you and who are motivated to talk to you.
Joe McCall:
Somebody put a question on here, “Is this a seminar or the Travel Channel?”
Jason Medley:
That’s funny. I’ll be frank. If you haven’t gotten some value out of what we’ve covered so far, go back to watching Desperate Housewives or something like that.
Joe McCall:
Go back to watching the Travel Channel. My favorite show right now is House Hunters International.
The point of doing this is – you want to make $10,000.00 a month. So what, what does that mean? You need to break down your goals into things you can control. That is postcards per week. Let’s say you don’t want to do any Craigslist. You just change this to zero. Let’s say postcards are 50% and yellow letters are 50%. Then you know, “I need to send out 2,500 postcards per month and 938 yellow letters per month, and it’s going to cost me $2,000.00 to do that.
That is going to give you, based on the law of averages, your six sellers that you need to talk to or somebody needs to talk to every day. I did this because it’s important. For developing the systems you need, you have to have marketing down so you understand that marketing is the most important part of this business. Once you figure out, “How much marketing do I need to do?” That’s the first step in creating the systems in place to train someone else to do it all for you.
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