Lead Generation and Marketing

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And now, let’s get started with today’s show.
Hey it’s Mike Hambright and FlipNerd.com and welcome back for another exciting VIP interview where I interview successful real estate investing experts and entrepreneurs in our industry to help you learn and grow. Today I’m joined by Sharon Vornholt. She’s the owner of Innovative Property Solutions in Kentucky. Sharon became a full-time real estate investor in 2008, same time I did. I feel like I’ve been saying that a lot lately. A lot of people got in at the same time, I guess. But she’s become a very respected member of the real estate community and helps others learn how to get started.
Sharon is also a fellow podcaster with her “Let’s Talk Real Estate Investing” podcast and I always love having other podcasters on. But Sharon has a ton of experience. Today we’re going to talk about something she’s passionate about, which is the importance of lead generation in your real estate investing business. Sharon knows, as I do and many of you do, that if you don’t have leads, you don’t have a business. And today we’re going to talk about the importance of lead generation and marketing in your real estate investing business. Before we get started with Sharon though, let’s take a moment to recognize our featured sponsors.
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Hey Sharon, welcome to the show.
Sharon: Well thanks for having me, Mike. I appreciate it.
Mike: Yeah. You’ve been on our radar for a while now and we finally got you.
Sharon: Well good.
Mike: Yeah. Happy to have you here. It’s funny, I always talk to guests beforehand about what should we talk about. And of course, that was your first question, “What are we going to talk about today?” And it’s always interesting because there are a lot of directions we could take this, and you hit something that’s kind of near and dear to my heart which doesn’t get talked about enough, surprisingly, in real estate investing. People talk about how much money they made, or their exit strategies. Conveniently, or rather inconveniently, they don’t talk about what happens before all of that. And none of that stuff will happen unless they can generate leads and buy houses. So I’m glad we’re going to cover that today with you.
Sharon: Yeah, I love talking about marketing, because I think it’s a skill that not everybody has. If you’ve been in some type of business where you use marketing, you have it. But if you came from a job, like a 9 to 5 job, you often really don’t have a clue where to start with marketing. And it’s so important.
Mike: Yeah. And the biggest part that even people who start to figure out or they understand the importance of it, they tend to fail on the consistency part, which is, as you know, is critical.
Sharon: Well it is, and there are some components to marketing that I think go hand in hand. And one of them is you first have to know what your strategy is, and you have to then look over to the other side and say, well, how much money do I have? Because if you want to be a buy and hold real estate investor and you don’t have access to capital or cash, that strategy is pretty much out the door. Same thing is true with rehabbing. It takes more cash. So while you might have the skills to be a rehabber, if you don’t have the financial backing, then you’re stuck. But I think you have to know your strategy, and that helps to guide your marketing. I like to tell people, you’re either going to have to give your time or your money, and most likely some of both. Because it isn’t free.
Mike: That’s right. Sharon, before we dive into talking more about this today, why don’t you tell us your background, for those who don’t know you well or want to get to know you better?
Sharon: Okay. I’ve been investing, actually, since 1998. And January of 1991 I opened a home inspection company, which I owned and operated for 17 years. So around about 1998, a real estate friend of mine, someone I met through another business, took me to a REIA meeting. It’s the same story a lot of people have, I was just hooked. I don’t think I missed a meeting for years.
And it was shortly after that, so around 1998, I bought my first property, and I had a plan. I though, gosh, I’ve got this plan. I’m going to rehab a house, or maybe two. Get some cash, and then buy a rental or two. And I went along like that for a while. Actually, probably for about 10 years until the market changed. That’s when rehabs started sitting on the market a long time, here. And I thought, well I don’t know if I want to do this, I had my money tied up for a year. So that’s when I changed strategies.
Coincidentally, it was kind of about that same time that I had an “aha” moment. I just realized I really hated being a landlord. So I had a friend who had about 100 houses. And he said to me, “Sharon, you’ve got to own up to the fact that what you have is a painful hobby. If you don’t have at least 50 houses, you may as well forget it.” And in that moment I thought, there is no way I’m having 50 rental properties. I just gave myself permission to find passive income a different way.
Mike: Yeah. Not everybody is meant to have rental properties. And some people… I have rental properties, I have a portfolio. But I would never manage them myself. I have no interest ever, ever, ever in doing that. But I know that. I think the important thing is to know what you’re good at, but yeah. It’s a means to an end for a lot of people.
Sharon: It is indeed. And I think at that point in time, yeah, I could have probably got a property manager, and looking back on it… it’s easy to look back on it and say, maybe I needed a little bit different mix of properties. But, it was what it was. But I love real estate investing, that’s for sure.
Mike: Yeah. Why don’t you… you have a unique experience to have owned another business in the real estate space for a long time beforehand. Maybe you can share why you moved on, and then maybe also, in your evolution as your real estate investor, you started as a rehabber, moved onto wholesaling, maybe just talk about the importance of being nimble and really kind of finding your place in each market, I guess.
Sharon: Well, I think one business certainly helped me in the other one, because in the home inspection business, a lot of people say realtors can’t refer, and all of this for home inspection. But the reality of it is, they do refer good companies. So we had a very solid realtor base. In the process of moving over to the investing side, you figure out who the investor realtors are. Not every realtor is a good fit for an investor, because they don’t all understand. They certainly don’t understand wholesaling. But the two businesses were very complimentary.
And one thing I did learn from the home inspection business was about marketing. Now that was a long time ago, you look back at that time, and there was no internet when we started out. It was in its infancy. So we did direct mail. We did fliers, we did all sorts of what the young people call “The old fashioned marketing methods”. That’s what we did, but it taught us that you have to be consistent, and it taught a lot of the basic concepts of marketing.
So just after 17 years, I was just flat out worn out with that business. One of my good friends who’s a realtor said, “Sharon, you just need to face it. Somebody’s always unhappy, either the listing agent or the buyer’s agent.” And even when you… we did a great job. But the condition of the house was the condition of the house. And a lot of times there was someone who was unhappy. You found the roof was bad or whatever. You know, I loved that business for a long time, and then it just got to be a heavy weight on my shoulders and it was kind of a natural transition into real estate investing.
I started investing about 7 years into that other business, started doing that. And it was kind of a seamless transition. And then when we closed that business in 2008, I don’t know if it was that moment in Texas, but in Kentucky, that was the moment when the home sales plummeted. It was just the beginning of the end here for that couple of year period. Times were tough for realtors.
Mike: Yeah, and I guess for inspection companies, too. Because effectively you have less deals to evaluate, and more mouths to feed, because the inspectors, unless they shut down or do something else, there’s more of you fighting for scarce deals.
And I know that you primarily focused on rehabbing early on, and then kind of moved into wholesaling because it was easier. And of course that depends on the market, too. I think we were talking a little bit beforehand about how in a market like today’s market, if you can find good deals, you’re usually able to get more money for them now than you were, say, three years ago because there’s just a lot more investors in the game.
People are, especially probably in your market and in a lot of markets in the Midwest and the south, there’s a lot more people buying there for rental properties. And they’re not evaluating them as a percentage of ARV. They’re looking at a multiple of rent or comparing to something that’s not a percentage of ARV, at least. So you’re able to sell houses at probably surprisingly higher prices I assume.
Sharon: Higher. Well, there are people that are doing that. And on my property information form I actually, a long time ago had two ways of figuring the houses. I always figured the rehab, for the rehabber. Because that was, as a wholesaler, that was my primary buyer. My buyer is always going to be an investor. But then I did have some landlords, and their criteria was a little bit different. I always did the same numbers, but if there had a to be a little bit of fudge there, for instance, I had one guy that, I bought a house one time. It had knotty pine walls, knotty pine cabinets, knotty pine everything.
Now, most people would not have wanted that house, but he only had one thought. This house is indestructible and I’m not going to change a thing. So he bought that house, still owns that house today. And that was when it really hit me, just what you said. Landlords, even back at that time, sometimes if the numbers were close, it was still a great deal for them because they weren’t going to replace the cabinets. They weren’t necessarily going to change the countertops. Because it was all functional, it just wasn’t at the quality for a retail buyer.
Mike: Right, right. And if in doubt, if a roof has five, six, seven years of life left and you’re going to retail it, you’re more likely to change it. As a landlord, you’re going to wait until the things leaking, it doesn’t matter the life on the back of the shingles is, right?
Sharon: That’s right. So when I gave them a deal with figures that were really pretty close to what a rehabber would figure replacing it, and they weren’t going to replace it today. Now, that bill was going to come some day, like you said. But they just looked at it and went, “Boy that is a great deal. Do you have any more?” So it’s a little bit of a different mindset.
Mike: Yeah, yeah. So we’ll talk a little bit about marketing now, which is arguably always important. But probably more important then ever right now because most markets across the country are feeling probably the same pinch that you and I feel, that all of a sudden, everybody and their brother’s an investor again. And you’ve got to find a way to stand out, right?
Sharon: Yeah. You do, and I think you do that with marketing and consistency. We touched on that a little bit. There are some statistics out there that talk about the percentage of response you will get with each touch. Eighty-five percent of your deals will actually come from your fifth mailing and beyond. So I love it when I hear investors say, “Well I did three mailings, I quit.” and I’m going, “Well, you really shouldn’t do that…”, “No, I quit.” Okay, that works for me. Because, I had a lady call me, this is a true story… with absentee owners, people will say, “When do you quit marketing to them?” And I’ll say, “When they’re no longer absentee owners.” So long as they want the house.
I had been marketing to this couple since probably 2008. She called me the other day… the other thing I tell people is time and circumstances change all things. Well guess what? They’re getting a divorce. Now they’ve got all this property here, they’re in a different state. He gets half, she gets half, and they’ve got the one lone property that they’ve got to sell. So I told her, “In this instance, I’m not your best bet. You really need to list the house. But you’ve got these other properties over here that you’re getting…” She said, “And I don’t want any of them.” I said, “Then you call me.” She said, “I’ll definitely call you, because you just gave me good advice.”
Because you know, I wasn’t their best option for that house. That house needed to be a retail sale. But I market to people until really, I buy the house, someone else buys the house, or there’s a reason they come off my list. Maybe they ask to be taken off, or maybe I’ve just determined it’s not actually a house that I want. But it’ll be a choice. Otherwise I just keep marketing.
Mike: Yeah, and are you primarily a direct mail person?
Sharon: I do a lot of direct mail. But I also do… I’m getting deals off my website, it takes, lead generation website. I drive some traffic to my website with Craigslist ads, which my virtual assistant does. I network, I do other things, but direct mail has always been my number one source of leads.
Mike: Yeah. Maybe you could spend a minute talking about the importance of having multiple irons in the fire and having multiple lead sources.
Sharon: Well I tell people in an ideal world, you would have three to five ways to get leads. Now, if you’re working, let’s say… I have a friend who works in the Philadelphia area, where I think they have 70,000 vacant houses. And she does direct mail, but she does door knocking, she does bandit signs. They all work great in those types of situations. So for some people bandit signs would be maybe be one of your five. I think direct mail should be one of everyone’s three to five. Your website, and not just to throw up a website. It kind of a tricky thing to get a site that actually brings you leads. Because you have to drive traffic over there to that. But if you don’t have any money, you can cold call. I know personally of someone that made a $30,000 wholesale fee on cold calling.
Mike: Wow.
Sharon: You can go knock on doors. Another student of mine just got a wholesale check for $54,500 on a house that I said I don’t think I would buy that. It was a burned out house. But she was brand new, she had no fear, she found a buyer, got the house under contract, and made what was a really big fee. But I think you have to look at your personality, I think you have to look at where your skills lie, and where your market is. If you’re marketing for, let’s say, free and clear high woody deals. You don’t want to be sending those folks a yellow letter, or hammering up a bandit sign. You’re going to need a more sophisticated mail piece. And that’s the other thing. You need to tailor your mail piece to your market, to your target audience. So that’s another whole story. But yeah. Marketing, and consistency, and having a plan are the big things.
Mike: Sure, sure. Why don’t you talk about, marketing is… sometimes people think of marketing and they think of, more of some of the stuff we’re talking about, which is direct mail, what are the things you’re doing to generate leads. And then sometimes think of it more as branding, which obviously is important as well. Maybe talk about the importance of what you do to be consistent across all your lead generating activities so that you’re standing out from the people that are using yellow letters, or just stuff that looks anonymous where everybody looks the same.
Sharon: Well, I think you do have to think about that, because everybody does kind of look the same. I’m not a yellow letter person. Everybody that knows me knows that. I do a lot of probate investing. I think, for me, I only use white professional computer generated letters that have their name on them. I don’t use any, “Dear homeowner” stuff. I’ve had very good luck with probates, but I’m very aware of their situation and that they may likely sell months and months down the road. And I also know that one of their biggest stumbling blocks is cleaning out the house. They get out all the treasures that mom had, and then it’s like, what do I do with all this stuff? And then they just close the door, lock it, and walk away.
So one of the things I do is offer to clean out the rest of the house for them. There’s always people who want money, but there’s almost always some other problem you need to solve. So if you can get at that problem, and what I usually do is just say, “Can you tell me about your situation?” and just be quiet. They’ll very often just spit it out, what it is they want or need.
Mike: Yeah, and do you tailor that based on lead source? You said, for example, you focus on probates. Do your marketing pieces include anything about helping them clean out? Or is that something you find out after you talk to them?
Sharon: I will put that in there. And to go back to branding. So I put my company name on everything, but I sign it “Sharon.” I want them to know that I’m not just a random person that decided last week to get some business cards, but I want to be very approachable. The message I send out is always casual, there’s no corporate feel to the mail piece. But I think if you can come up with a way to brand yourself, your branding is certainly very unique.
I have a gal here in my area, a student of mine, who’s brand is “Sisters who buy houses.” Very unique. She’s got her colors. She puts that on everything. But I think one of my regrets, and I think people will look back down the road and regret they didn’t give branding some serious thought right from the beginning. You need to be branding right from the beginning. And it’s more than just… branding is certainly like your FlipNerd logo, that’s part of a brand. Your colors, your logo, and all of that. But branding is also what you stand for. Who you are, and why they should chose you. I mean, you can totally convey your brand when you speak to someone about their house.
Mike: Yeah, and where that really carries a lot of weight is when you work with somebody that you hope will refer you to other people, right?
Sharon: Exactly, exactly. So, I think people say, “Well, how do I do this? How do I become this person?” And I tell them, you can’t become another person. You are who you are and you have to create your brand authentically. That’s really just the best way I know to say it. But I think if you’re genuine, if you really care about people, if you care about solving their problems and you try to create a win/win situation, you will just automatically spit out a brand, so to speak.
Mike: Yeah, we’ve talked about that before, that your brand really is… a lot of people assume right off the bat it’s your logo, it’s the name of your company, or whatever. But a lot of it is your personal brand. What is it that you stand for that will stand the test of time? I mean, word gets out. There’s really nothing better… I love whenever we’ve bought a house where somebody we bought a house from referred us to somebody at their church and they call us. We’ve had people, literally, they’re adamant, “I only want to sell my house to you. You’re the only person we want to deal with” because so-and so said something about us or had a good experience, obviously. That really makes you feel good, doesn’t it?
Sharon: Yeah, it does. And probably a year or so ago now, it’s been a long time since I… You probably remember these days around 2006, 2007, if you were breathing, you could walk into an investor friendly bank and get a loan. It was just about that easy. And we still have a few investor friendly banks here. They’re criteria is harder now. But I had someone back about six or eight months ago say, “I’m buying this house from Sharon Vornholt…” And this and this and this. And the loan officer, who I had never met, said, “Oh, I know who she is. She’s good.” You know, it’s your reputation. Somebody I did business with told their loan officer I worked with this person. But you’re right, your brand will go wide. And like we talked about, I think before the show, it can also be disastrous in the same quick manner if you aren’t a good person, or do things the way you should do.
Mike: Yeah, absolutely. Absolutely. Well Sharon, can you tell us more about your podcast for folks that want to check you out?
Sharon: My podcast is called, “Let’s Talk Real Estate Investing.” Imagine that. And I do interview a lot of experts on there. Kind of like what we’re doing, they tell their story. I also do some shorter podcasts where, maybe shorter teaching podcasts. But I tell you, there is just a wealth of information when you interview experts in your field. It’s so interesting to hear how they build their businesses. So the podcast, you can find it on iTunes. You can also find it on my blog, which is LouisvilleGalsRealEstateBlog.com.
Mike: Okay, awesome. Well are there any kind of final comments here you want to add on, for folks that are getting started, or folks that have gotten started but maybe are struggling with the marketing piece and consistency. Can you give some advice on how to kind of lay out, whether it’s a calendar or some sort of schedule to where you’re consistent and you’re investing as much as you can, really.
Sharon: I can, and I’ll tell you what. I’m a big proponent of the big old giant Office Depot calendar. Because I like to keep mine. Now people say I can get a wipe-off board, and I’m also a whiteboard fan, too. But I like the calendars. The great big calendar. If you put it on the wall, I can tell you, it will change your life. So what you need to do is, let’s say you decide to do direct mail, and bandit signs, and go to your REIA meeting, and you decide on your three to five things you’re going to do. Well that’s all well and good, but it doesn’t do you any good unless you put it on the calendar.
So if it’s direct mail, maybe on Monday, you’re going to call and get your list. And on this day, you’re going to order your mail piece, if you use a company for postcards. But lay it out step-by-step. And if you have a job, you still have to market. So you’re going to have to give up NCIS and do the marketing in the evening. Or you’re going to have to wake up early on the weekends. I tell people, especially in the beginning, to think about two hours a day. That sounds like a lot, but you’re kind of stumbling around and you don’t have systems yet. But get it on the calendar. And if you get it on the calendar, and you hang it on the wall where you have to become accountable to yourself and that calendar, it will change your life. It really and truly will.
Mike: Yeah, and I think, people, and I’m guilty of this sometimes, there’s so many things I know I need to do. And unless you get it out of your head onto something that you can see, it’s so easy to look back a month later and think of all the things you forgot to do. At that point, especially in terms of lead generations and marketing, it might be too late. You’ve got to be consistent.
Sharon: Consistency is the key to success. Follow up and consistency.
Mike: Yeah, especially when you use direct mail like you do. Because there’s people that take that letter and put it aside. We’ve had people before that years… we’ll look at the letter and we kind of date them or they put something on their… we’ve had people that call us years and years and years after they got that letter. And at the time, you’re like, well my advertising’s not as effective. But when it happens years later, and you’re like, well I paid for that advertising years ago and now it’s benefiting me? That’s the power of direct mail.
Sharon: The other thing I tell people is, they’ll say, “Well it’s expensive.” And it is, and people will say, “You mean, you’ve mailed to somebody for five years?” And I’ll go, “Yeah, you do the math. I made $15,000. It was 12 stamps a year, so 60 stamps and 60 pieces of paper.” You don’t have to get but one good deal a year to pay for your marketing for the whole year. And then once you’ve got that machine in place, you’ve got leads coming in consistently.
Mike: Yeah, yeah. Awesome, Sharon. So tell us one more time, your blog, and your podcast is there. How can folks get a hold of you?
Sharon: You can reach me on the blog, LouisvilleGalsRealEstateBlog.com. I had somebody tell me today that they couldn’t spell “Louisville” So we’ll just put the link.
Mike: I actually live in Lewisville, Texas. So…
Sharon: Yeah, they say that, too. And “Let’s Talk Real Estate Investing” podcast.
Mike: Okay, and we’ll ad the links down below the video, here. Sharon, thanks so much for being with us today. Definitely a pleasure.
Sharon: Thank you, Mike.
Mike: Have a great day.
Sharon: You too.
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