The real estate market is on fire right now. Listings hit the MLS then are sold the next day for $20k (or more) than the asking price.
This makes it almost impossible to thrive as a real estate investor in today’s market. That’s why many investors are turning their ads back on to fill their pipelines.
But there’s one big, fat problem: Your ads from several years ago aren’t working today.
In this episode, I’m revealing why your ads have become cash-eating machines and how to tweak them so they generate leads.
Show highlights include:
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You're listening to the “REI Marketing Nerds” podcast, the leading resource for real estate investors who want to dominate their market online. Dan Barrett is the founder of AdWords Nerds, a high-tech digital agency, focusing exclusively on helping real estate investors like you get more leads and deals online, outsmart your competition, and live a freer, more awesome life. And, now, your host, Dan Barrett.
Dan: All right, hello, everybody, and welcome to this week's episode of the REI Marketing Nerds podcast. As always, this is Daniel Barrett here from AdWordsNerds.com. How are you? I hope you're doing well, and, look, as always, if you are interested in working with my team to build out an online marketing strategy for your market, then you should do that. You can go to AdWordsNerds.com/Strategy to book time with us and we will help you get that done. [01:14.4]
Now, this week's topic came directly from a couple different conversations I had with real estate investors, spending significant amounts of money online and this is coming from the past couple of months. This is going to be a recent topic. This is going to be a recent kind of conversation that I'm going to talk about, but the underlying concept is not tied to the current situation or the current market or anything like that.
The underlying concept is going to be universal. It's going to be eternal. It's going to be something that has to do with human judgment. So much of this marketing stuff that I talk about, the reason that I love to talk about it so much is because it really has to do with human judgment and human misjudgment, and how we think and how we understand the world, how we understand our lives, and this topic is no exception, so let's dive in. [02:06.3]
If you are a real estate investor right now—I'm recording this. This is … good Lord, what one month is it? It's April. Okay, it's April 2021. It's kind of to tell ya, you know how this year has been going so far, but April 2021—and as I'm recording this, if you're listening to this in the future, the housing market is really, really bizarre in many different ways. Right?
There is an incredible amount of pent up demand. There is an extreme shortage in inventory, the logistical kind of supply chain, even for things like lumber and contractor labor and all this stuff is very, very jammed up and that's led to this sort of extreme overheating of many different housing markets. I’ve talked to investor after investor after investor, who has some variation of this story. [03:02.0]
They say, look, the problem is if you want to sell a house in this market right now, you can put it on the MLS, you put it on the market. Someone will come to you the next day and buy your house at more than the asking price. They're going to waive the inspections. They're going to pay your fees. They're going to give you cash. Basically just there's such a demand for these houses that anybody can sell on the market blindfolded.
And in a market like that, that affects what real estate investors do, because, of course, what do real estate investors really sell? Real estate investors sell convenience. They sell speed and convenience, right? Efficiency, it's going to be an easy thing. You're not going to have to worry about it. In exchange for that speed and convenience, you're going to take a bit of a haircut on the price, but, hey, you can't put a price on your time, right? This is basically the pitch that real estate investors have relied on for decades. [04:00.0]
In that kind of market where you're going to make a lot of money on the MLS, and you're going to make a lot of money fast, the speed and efficiency of selling to an investor, the marginal utility of that offer, it decreases. I hope this kind of just makes sense. If you're a real estate investor right now and you're investing, you are probably experiencing some variation on this, right?
What has happened as a result of that is that many investors and many investing companies, even the big companies, the iBuyers like Zillow, Trulia or whatever, they're reacting to this sort of tougher real estate investing market by stepping up their marketing, because what's happened is it has been harder to fill their pipeline with deals. They still want to do that, and so they're like, Okay, it's harder to step up our pipeline with deals, so I'm going to step up by marketing in order to get more deals into the pipeline. [05:02.0]
Of course, nothing happens in a vacuum and, if they're making that decision, then many other players are making that decision in that game simultaneously, and so that has led to a lot of competition. It's an extremely competitive market. On the housing side, that has created an extremely competitive market on the marketing side. And with good reason, right?
This is not irrational because, of course, when you do do a deal or you can do a deal, many investors—not all, but many investors—are reporting to me higher than ever profit margins on those deals, because, again, they're selling them for a significant amount of money. When you can get the deal, it's worth it, and so you can expect higher competition to get those deals. I hope that all makes sense, right? I'm probably not telling you anything you don't know.
I’ve had many conversations with investors who are in this situation. They are getting, let's say, back into the online marketing game after having done it, let's say, a couple of years ago or so, getting good results, and they're like, Look, right now the marketing, the market is so hot and these deals are so hot. I want to go get more. [06:13.3]
They relaunch these marketing campaigns after a significant period of time off and they run it, and then they schedule a call with me, right? They schedule a call with me and the question is usually something like, I don't understand why I'm not getting the results I used to. I ran this campaign. It absolutely killed it. It got me X number of deals at Y amount of money, and now whether it's running it by myself or I'm running it with a different agency, or my cousin is doing it or whoever, I'm no longer getting those results. Is this because they're doing it wrong? Am I doing it wrong? What is the reason? [07:03.4]
This question gets at a really fundamental misunderstanding that is so, so critical to get, and it's so, so critical, not just for understanding where we're at right now, but it's critical to doing a good job with any form of marketing online or otherwise, direct mail, text messages, RVMs, whatever. Email, anything, billboards, anything. You've got to understand this one cold-hard fact, and to get at that fact, I'm going to ask you a hypothetical question. We're going to take a step back. We're going to think about hypotheticals for a second, because it's going to shine light on what I'm about to say.
Let's say, you are a young, real estate investor. You're just getting started. Maybe you are. Maybe that's where you are in your career. Maybe you've been doing this for years. But just imagine back to that time where you didn't know. You didn't know yet. Maybe you haven't done your first deal. Maybe you did one. It's hard to get your second one and you're trying to build a career for the first time in real estate investing, and you're looking for answers. [08:12.6]
You're looking for solutions, right? Maybe you're looking at coaches. Maybe you're looking for books. Maybe you're looking for YouTube videos, whatever. You're trying to educate yourself and I sidle up to you. Let's say, we're at a REIA meeting or something, right, your local REIA, and I sidle up to you.
I want you to picture me. I’ve got the trench coat, I’ve got the hat pulled down, you know? And I say like, Hey, psst, hey, kid. Yeah, yeah, over here, over here. All right. Hey, I know you're trying to make it in real estate investing. You know Joe.
Joe. I was going to say Joe Homebuyer. I think that is a real real estate investor company name, so I'm trying to think of an anonymous name for a local bigwig. [9:02.6]
Okay, you know Joe Bigwig from our market, right? Yeah, Joe Bigwig is the most successful real estate investor in our market. He does hundreds of deals a year. He’s super successful and drives a fancy car. He's got a yacht. He's got the big house. You want to be like him, right? I’ve got a deal for you for only $1,000, I will give you a list of every single house that Joe Bigwig ever bought. Yep, that's right, a complete roadmap to what made Joe Bigwig the biggest investor in our market, what made him successful. Every single deal in this document, I will give it to you for $1,000. All you’ve got to do is do exactly what he did and you'll get exactly where he is. What do you say? [10:02.0]
That's hypothetical. I'm going to give you a document. I'm going to sell it to you, every single deal that the biggest investor in your market did, a complete roadmap to what made them successful. How valuable is that document to you? The answer is not particularly valuable, probably not worth $1,000. Now, if we say why, because, of course, this person, this Joe Bigwig really did become the most successful investor in your market. Why isn't that list of deals valuable to you?
The answer is, of course, it's not just what houses he bought that matters. For example, are those houses for sale now? And not only is it important to understand whether or not they're for sale. You need to understand the price at which he bought them. What is the price of those properties now? If it isn't the same, then that's going to change how valuable that deal is. [11:15.7]
Then, of course, you have to understand not just whether or not those houses are even for sale and not just the price at which Joe Bigwig bought those houses, but also you need to understand at what price was he able to sell them and to whom? Just because he was able to sell those houses at a significant profit based on his market at the time doesn't mean you will be able to sell those properties at the same price.
What do all of objections have in common? They have in common the exact same thing that my investor friends who are asking me, Hey, I ran this Google Ads campaign, I ran this Facebook campaign a couple of years ago, and then I turned it back on and it's not performing. What am I doing wrong? [12:13.0]
They are forgetting the same thing that all those objections have in common, which is time. Time. You don't live in a vacuum. You don't market in a vacuum. You don't buy and sell houses in a vacuum. We exist to get spacey and philosophical in a stream of time, and over any given period of time, our market, the housing market—or if you want to add a layer to it, the online marketing market—changes all a lot. A lot. People come into the market and leave the market. Housing prices go up and down. Inventory goes up and down. Buyer's market, seller's market. Bull market, bear market. [13:13.0]
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Warren Buffett has a wonderful quote. I can't remember if it's actually Warren Buffett or Charlie Munger, but they have a wonderful quote where they said if past performance was indicative of future performance, the Fortune 500 would consist entirely of librarians, but it doesn't. It doesn’t. [14:10.8]
Just because something worked in the past doesn't mean it will work today. That is a huge misunderstanding and it is a huge cause of deep error and sadness, and frustration and anxiety. One of the things I always say about AdWords Nerds, the agency that I run, is that we are the best, I truly believe this, the best in the world at finding motivated seller leads online for investors. We are the best in the world at that, at what we do. And it's a narrow range, right? But we're the best at it. But we're the best not because I know exactly what's going to work every time, because I don't and I can't, and anybody that says that they do is kind of following that. [15:03.5]
We are the best in the world because we have a systematic method of revising our approach based on the data that we are seeing. It isn't that we understand what's going to happen because we can't, because time is always moving forward and things are always changing. I don't know what the housing market is going to do tomorrow and neither do you. Right?
How many people really predicted 2008? Not many. Some did, but did you know to listen to those people versus the people that said everything was going to be fine? I certainly didn't and the fact that I couldn't predict that stuff in the past is a pretty good indicator to me that I probably can't predict that stuff in the future. I don't bet. I don't bet on the future. What I do is build a system that will help me adapt to the present. [16:00.0]
In any case, the reason that these people were having such difficulty relaunching their online marketing campaigns, it's not because their online marketing campaign was broken now or because the person that was managing it was doing a bad job. It's a different market.
In fact, I went back and pulled these numbers for a different client. The national average conversion rate, the percentage of people that contacted an investor after landing on their website, national average conversion rate in January 2020, so pre-COVID, was around 6%. In december 2020, it was around 1.5%. Is that a very different market? Yes, it is. Do you have to price everything very differently? Yes, you do. Do you have to have a completely different strategy in order to make it work? Yes, you do. [16:58.7]
It’s a little bit like people who say, Hey, I’ve made a lot of money in the stock market over the last three years. Yeah, you know who made a lot of money in the stock market over the last three years? Literally everyone, because the market has been up.
The only thing I want you to take away from this is that we have to remember that, when we do anything, when we invest, when we invest in marketing, when we buy a house, when we sell a house, when we do anything in our business, we don't operate in a vacuum, but we operate inside the stream of time. And, therefore, what worked in the past is not guaranteed to work in the future and past performance is no indicator of future performance.
I hope that makes sense because, to me, this has been a very important lesson I have had to learn the hard way over and over and over again, and if I can pass that onto you and save you some money and get you some deals, I’m happy to do so. [18:07.2]
As always, I really appreciate you listening to this episode. You can check out past episodes at AdWordsNerds.com/Podcast, and, look, if you ever want to talk to me or my team about developing an online marketing strategy for your business, you know where to go. It's AdWordsNerds.com/Strategy.
This is Daniel Barrett from AdWords Nerds, signing off. Have a wonderful rest of your week, and I will talk to you very soon. Cheers.
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