Increasing Marketing Options
I had an interesting observation the other day as I was going over some of our 2018 marketing numbers. Earlier in the year, we decided to expand into Florida. After we became familiar with the area and met some of the local people, we felt that we had a strong enough team that we could begin our marketing campaign. The last thing we wanted to do was send mail to an area without a proper team in place to handle the projects. Mostly we want to feel comfortable with the contractors and realtors that we will be working with. With that in place, we began our marketing campaign. There was only one problem. We didn’t have a good list to mail to. We didn’t have much of a “driving for dollars list”, our tax delinquent list wasn’t finished, and we didn’t have any more tricks up our sleeve. So, we decided to mail to a standard equity list. We didn’t expect to buy many houses, but we knew that we wouldn’t buy anything if we didn’t send mail out. So, we mailed. Over the course of the next two months (from early February to late March) we sent out just over 20,000 pieces of mail to Florida.
The other day, one of our investors wanted to know how long it takes to get his money back (and profit) after he pays for the initial marketing piece for cash flow purposes. So, I dove into the numbers to see what the lag time was. I looked up each house that we purchased and traced that house back to the day that seller received our marketing piece and calculated how long it took us to purchase, rehab, market and finally sell the house. Interestingly, during the months of February and March, we didn’t buy a single house and we didn’t have a single house under contract to purchase as a result of that list. As I recall, we had a few sellers that were close, but we never could come to terms and make a deal work.
The takeaway for me was this: just because your marketing, doesn’t mean your marketing right. I’m sure that the Jacksonville equity list works. I know investors that have used it in the past and have found deals there. For whatever reason, it didn’t work well for us during those few months. Maybe it was because our marketing piece wasn’t written right, maybe everyone decided to market in Jacksonville during those months, or maybe we had a deal but just didn’t say the right words, or pushed in the wrong areas. Whatever it was, we didn’t buy a house. The error in Jacksonville was not that we weren’t marketing, we just were not doing it right. And the worse part was, we didn’t have another option to shift to. I think it’s critical to keep a sharp eye on the data. Adjust when necessary and double down when appropriate. For 2019, we want to have more marketing options available than marketing dollars.
Justin began his real estate career in early 2015 when he and his brother Brad purchased their first SFR investment property in Bakersfield. Since then, Justin has helped PrimeBuyers grow into a solid real estate investment company with a focus on buying property at below market values. Justin fo See more >>
Justin began his real estate career in early 2015 when he and his brother Brad purchased their first SFR investment property in Bakersfield. Since then, Justin has helped PrimeBuyers grow into a solid real estate investment company with a focus on buying property at below market values. Justin focuses primarily on the financial aspects of the company: finding new sources of funds from lenders, managing the company’s financials and working with tax advisers. He is married to Layne Bone and has 2 small boys. See less >>