With as hot of a market as it is right now, it’s common to hear the excuse that they can’t find any deals. Andrey Sokurec talks to us today about how deals are still out there if you’re doing sufficient marketing.
When you’re first starting out, you might not have a ton of money to spend on advertising but you still have to spend marketing dollars each month so that you have deals coming in. Andrey shares some cost effective ways to market in the beginning.
Mike:Welcome back to the Flipnerd.com REI Classroom, where experts from across the real estate investing industry teach you quick lessons to take your business to the next level. And now, let’s meet today’s expert host.
Andrey:Hi, Andrey Sokurec here. I own a company, Homestead Road, and today I’m teaching REI class. Today’s topic: how to find deals.
Mike:This show is sponsored by passiverental.com.
Andrey:A lot of you, especially new investors, I’m hearing this a lot, “Hey, there are no deals out there. The market is so hot. Nothing to buy.” Well, like, we can buy houses. This year our goal is to buy 174 houses to do rehabs. I’m in a mastermind group with other investors who buy 200, 300 homes. How do you think we find houses?
Well, the answer is marketing. If you want to start investing in real estate but you don’t plan to invest either money or time, you don’t need to be here. Because if you’re brand new, this is what you need to do. First of all, that’s my calculation. I found out that it takes me about 20 leads to close 1 deal. On average it takes about three hours, if I invest my time, to generate a lead.
Let’s say I go on YouTube or I go on Craigslist and I go to, like, driving around. It takes about three hours to generate a lead. It takes me 20 leads to close a deal. So, I need to budget about 60 hours to find a deal. Average profit in my market is about $23,000. If I calculate my hourly rate, it will be $250. Not bad, right?
Now I am more . . . If you’re brand new and have probably other job, you probably don’t have 60 hours. So, what you need to do, you need to supplement your hours with paid marketing. If you wanted to invest for long time in real estate and were not able to find a deal, this is what you need to do. You need to go online and order bandit signs. That’s the first step, the lowest priced marketing.
You need to get at least 500 bandit signs. In a weekend, instead of watching TV, grab your kids, put them in the van and drive around the neighborhoods where you see a lot of investor activity and put out the signs. You obviously need to check out the city ordinances, because a lot of cities don’t allow you to put up signs. But, a lot of investors still do that. They just simply do it on Friday night.
On average it takes about probably, like, an hour to put up 15 signs and spend 3 hours, put up like 45 or 50 signs, and you should expect probably 3 to 5 phone calls. The good thing about that is those people who call you, probably you’re the only one who they contacted. Because if you go online or if you do direct mail, a lot of people are using the same mailing address.
Bandit signs will be number one. It’s a very low budget. Probably costs about, like, $4 a sign. You spend, let’s say, $1,000 on signs. Put those signs around town. Don’t spam the neighborhoods. Don’t make mistakes, like don’t . . . Just be respectful to the neighbors, and you should get some phone calls.
Before you even do the bandit signs, you need to go on Craigslist . . . actually Craigslist, we buy probably a house a month from Craigslist, and just train yourself a little bit how to handle the conversation. Start making offers on Craigslist. My advice to you will be if you’re brand new, you need to budget the money to buy at least 500 signs. Number two, go on Craigslist. You have a little bit more money, then you can actually invest money in direct mail. But, the first step is signs and Craigslist.
And, networking. Let everybody know that you’re an investor, you’re a cash buyer, you buy houses, you flip houses for a living, and you should start receiving leads. When you’re receiving leads, you need to build a database. Excel is the free database for you. Follow up with people. I just closed a deal that somebody contact me seven years ago, and the only reason why they called me was because I followed up with them. Every six months I had a conversation. That’s what will be my recipe how to find deals in today’s market.
Guys, very important, when you find the deal, you have to make an offer. It doesn’t matter what people ask. You actually need to end up every conversation with making an offer. Write a purchase agreement on the house and hand it to the seller and then you can get the house. Because a lot of people driving around spend a lot of money and they actually never make an offer, and then they complain. You make 20 or 10 offers and you should get a deal.
That was Andrey Sokurec with REI Classroom. I’ll see you in the next class.
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