Market for Sellers

One of the important lessons I've learned in business is that most big businesses happen as a result of big lead generation. That means that suc-

Business Cards Direct Mail Internet/Email Flyers

Targeted Letters Newspaper Ads Magazine Ads Signs


Business Cards Direct Mail Internet/Email Flyers

Targeted Letters Newspaper Ads Magazine Ads Signs

Billboards cessful businesspersons leave no method out unless they have to. They both prospect and market for leads. There are limits to your reach with prospecting that don't exist with marketing. Prospecting is something you do; marketing is something you unleash. Once you've set it loose, it works without your having to be there to drive and power it. When you put up a sign on the side of a busy thoroughfare or tack a flyer to a pole, it does lead generating 24 hours a day, relaying your message to everyone who drives past. Prospecting stops when you do, but marketing lives on and on.

A great example of the awesome power marketing can unleash is HomeVestors of America, Inc., a real estate investing franchise company. Ken D'Angelo was a real estate investor in Dallas, Texas, who specialized in fixing and flipping properties. He had a well-proven strategy, and in 1995 he actually (and amazingly) flipped over 170 properties. That was when he knew that he was onto something significant and that it was time to take his model nationwide. The next year D'Angelo parlayed his unique, simple, and highly effective real estate investment marketing program—bright yellow billboards that read "We Buy Ugly Homes" and "Ugly's OK"—into a Top 100 franchise business.16 His great little investing business became a great big investing business because of great marketing that really worked.

What D'Angelo understood was that to find big financial success through investing in real estate, he would have to have a big lead generation program. Many new and even experienced investors miss this point. For some reason they overlook marketing as a way to find real estate investment opportunities. Millionaires don't overlook it, and neither should you.

In the world of real estate investing marketing is all about attracting motivated sellers. It's a game of problems and solutions. Like the "We Buy Ugly Homes" billboards, you want your marketing to announce to the world that you're an investor and are prepared to solve someone's problem. People have situations that sometimes translate into a need to sell their property and sell it quickly. Maybe the property was inherited and needs more repairs than the owner wants to deal with. Maybe the owner's job or family situation has changed and he needs to move quickly to a larger or smaller home. The owner's problem could arise from a

16 As ranked in 2004 by Entrepreneur magazine.

positive circumstance such as a new job opportunity in another town or a negative circumstance such as a company going out of business that has left her short on cash. Regardless of the circumstances, you must realize that you are not the cause of those situations. You are not the problem. You do, however, represent a possible solution if the seller is willing and able to meet your Terms.

Millionaire Real Estate Investor Barbara Mattson shared a story that illustrates this point. A gentleman she had never met came to her one day and asked her to take over six properties he owned that were on the verge of foreclosure. He had approached other real estate professionals, but they had passed on the opportunity; he wanted to keep his credit and was at the end of his choices. Barbara, unlike the others, was thinking like an investor and saw an opportunity for a win-win deal. She agreed to take over the properties and assume responsibility for their debt and payments by using a simple quitclaim deed. Six weeks later Barbara sold the properties for a net profit of $85,000, and although the seller only wanted to avoid foreclosure and asked for no money, Barbara gave him $15,000 in addition to saving his credit. Here was an individual with nowhere else to turn who was helped by a real estate investor who cared enough to help and who understood how to solve people's real estate problems. He won. She won. Everyone won.

Contrary to what some people think, this type of circumstance is not a predator and prey situation. I don't believe in or advocate for dishonesty or deception of any kind to anyone. You want to help, but you're an investor, and by definition your goal is to remove risk from the transaction. You have to get an appropriate discount or Terms on the property, or you can't do the deal. I even encourage you to let the seller know you're an investor and do not plan to live in the property. It's an investment, and although you'd love to help out, it must meet your strict Criteria and Terms. The rest is up to the seller. You have plenty to offer in this type of situation: you're a willing and reliable buyer who is prepared to act quickly and solve the problem. The solution you offer may not be exactly what the seller wants, but it may be the best option he or she has.

The rule of thumb for marketing is that you should always send your message about being a solution to other people's property problems. There are many ways to get the word out. We talked to investors who did massive targeted mailings to subdivisions and neighborhoods. Others advertised in newspapers and real estate journals. Some distributed flyers, put up signs and billboards, or handed out their real estate investor business cards everywhere they went. A few obtained courthouse or publicly available lists of out-of-town property owners, local landlords, and even, in one case, minority owners in companies that held real estate. However, no matter which approach was used, these groups were all sent carefully tailored messages designed to announce a solution to their potential problems and attract motivated sellers.

For example, out-of-town homeowners were sent messages that highlighted the problems of managing a property long-distance, such as screening renters, managing maintenance contractors, and dealing with routine upkeep. All those things can present challenges to out-of-town owners. If your marketing represents you as someone who can solve this problem, maybe two or three out of every hundred people you mail to will inquire about your Terms. That's when the opportunity to make a deal shows up.

Remember to keep the message straightforward and simple. You buy properties. pay cash, and can close quickly. These are the three things someone with a property problem hopes to find—a quick cash solution to his or her troubles. By the way, when investors advertise that they pay cash, they aren't talking about a suitcase of money. They mean that they have set up lines of credit and quick private financing so that in a matter of days or even hours they can have a cashier's check ready for closing. That's what they mean when they say they will pay cash for properties. It's about how quickly you can supply "good as cash" funds to pay for a property.

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