If you’ve been in business for more than 10 minutes, you’ve probably heard enough “fail forward” quotes. And successful investors will tell you that failing is part of the process and how you should embrace it.
They’re not wrong, but the cold, hard truth is: If all you do is embrace failure and be prepared to fail—you’re going to fail. Turning failure into success isn’t as easy as pretending it didn’t happen.
In this episode, you’ll hear how to deal with failure so it turns into success and helps you build a six or seven figure business instead of being a roadblock.
Show highlights include:
– The biggest difference between investors who make hundreds of thousands of dollars and investors who barely close enough deals to get by. ([1:45])
– Why you can fail even when you do everything the experts tell you—and how you can turn it into a positive. ([4:20])
– The two methods almost all successful investors use to deal with failure. ([17:40])
– What you can learn from Thomas Edison about building a successful REI business. ([21:20])
To get the latest updates directly from Dan and discuss business with other real estate investors, join the REI marketing nerds Facebook group here: https://adwordsnerds.com/group
Need help with your online marketing? Jump on a FREE strategy session with our team. We’ll dive deep into your market and help you build a custom strategy for finding motivated seller leads online. Schedule for free here: https://adwordsnerds.com/strategy
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 Ad Words 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.
Daniel: Hello everybody, 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? Hope you're having an awesome week so far. I got to be honest I came up with the topic for this week's podcast after kind of a rough week. [0:01:00.6] It was a rough week for me and it was a rough week for some of my clients. Not because of anything in the market or any major Adwords changes, it was just a tough week. Like statistically everyone is going to have one sooner or later.
It really got me thinking about what determines which of our clients – most of you know this and if you don't know this or you're new to me, new to the show – I do online lead generation for real estate investors. All I do is go online and try to find way to find a motivated seller leads. I have clients who come in and have incredible success and do hundreds of thousands of dollars worth of deals with us and are over the moon. I've got clients who come in and don't have that same local success. I think a lot about why that is and what are the factors that determine whether a client comes and succeeds or fails. [0:02:06.4] That's what I want to talk about today because I think a lot of people don't like to talk about failure. They don't like to admit that it's a possibility that things might not work out. I know I'm that way.
I like to believe that I have the best team in the industry which I believe is true. I like to believe that we have more data points about motivated seller leads than anybody on the planet outside of Google. I believe that is true. I like to believe that our systems and our processes, the methodologies that we've created over the past six years of doing this kind of marketing give us a distinct advantage and thus give our clients a distinct advantage. I think that's true. If you're think about your real estate investing business, you probably have advantages of your own – maybe it's that you understand the market better, maybe it's that you understand how to price your deals better or how to understand what repairs are really going to cost and that allows you to build those savings, that buffer, that profit margin into your deals. [0:03:12.0] It could be that you have an incredible team or you have backend processes or that you're great at marketing or that you're great at following up or you're an incredible sales person. Everybody who is in this business has got something that they are uniquely good at. We all like to believe that this thing – this super power that we have is our guarantee of success. That's it's a guarantee that if we do our work and we do our best and try really hard we're not going to fail. But that's not always the case. My guess is that if you're listening to this, you've had moments in your business where you were not successful. Maybe it's like you sent out your direct mail and you didn't get anything back. Or you tried ringless voicemail for the first time and you sent out like a thousand ringless voicemails and nobody called you and the people that called you just said that they were calling because they didn't like your voice. [0:04:01.6] You know the fact of the matter is that a lot of times, we don't understand why we are not successful. Maybe you crossed all of your Ts and you dotted all your Is, you did exactly what your coach told you to do and you weren't successful. You don't understand why.
Well, there is kind of a hidden reality behind all that and it certainly effects me in my business and definitely effects you in your business and I feel like understanding this is the key to long-term success in anything; in business particularly; in real estate particularly definitely in marketing but in anything. In anything, this hidden, underlying reality, this truth, whatever you want to call it, this is the key to trying to stack the deck in your favor and making sure that you have success over the long term. That is understanding randoms. Randomness, chance, chaos, whatever it is – whatever you want to call it. [0:05:11.1] Randomness plays a huge role in understanding what's happening to you and understanding what happens to your business and understanding what's happening in my business and to my clients so let's talk about this. Let's talk about it.
Let's break it down in terms of marketing because I think this is The REI Marketing Nerds podcast and we want to talk about that. This is going to directly apply to your marketing right now. This is not theoretical. This is an immediately applicable thing that is going to make you money and save you a lot of pain. I'm not going down a philosophical rabbit hole here. This is concrete and real. Let's say you're doing online marketing for motivated sellers. Let's say you're doing Adwords. We'll talk about Adwords that's my favorite channel. [0:06:00.2] But it applies directly to Facebook or Search Engine Optimization, it doesn't matter. Let's talk about Adwords. You launch a campaign in Adwords for motivated sellers. Let's say you get list of keywords. Recently I published a list of really profitable keywords. So let's say you take that list of motivated seller keywords directly to Adwords and you target it and you take let's say the best ads in the market and you run those ads. So you've got the best ads and the best keywords and then you run the best landing page designs from the entire industry. So you've got the best ads, and the best keywords and the best landing pages – this is actually what we do. We constantly check different landing page designs. We are constantly testing different ads. We are constantly testing different keywords. The best is what rises to the surface. The best is what we end up rolling out for our clients. So every time we roll out a client, they get the best of the best of the best. That's the model. You can do this on your own too. [0:07:02.2] Just look around and see what works. So let's say you roll all these out into Adwords. You should be guaranteed success. Right? You used the right ads. You had the right keywords. You had the right landing pages. Now let's add a layer onto that, let's say you hire a really smart person to run those ads for you. I can use my business as an example for you. Let's say you come to Adwords Nerds and you say, "I want you to run my ads for me." You know we have years of experience. You know that we have done this for hundreds of investors all over the world, millions of data points every single month. You should be guaranteed to get deals. That's the feeling. That is a completely natural, human instinct. I did everything right. I should get the result that I want. But the fact is that not every single one of our clients has success. [0:08:00.8] The fact is clients that have success one month might have a really tough month the next month. Why is that?
Why is that? Well, if we're sticking with Adwords here. Adwords is a market. It is a marketplace. It's an auction house. When you go into Adwords and you bid on keywords and run ads what you're doing is bidding in an auction. You're competing. Markets are chaotic. All markets are chaotic. We have this economic theory that all people are rational and markets are rational and efficient. But if you go to the stock market and you look at the stock market at any given moment, you are probably looking at a completely wild and irrational picture of reality. You are looking at what people think about what other people think about what people think about what is really happening. [0:09:01.9] The stock market isn't the economy. The stock market isn't how these companies are doing. The stock market is how people are behaving, how people are thinking in the moment. That's what the stock market is. That's actually good. That's a good thing because if the stock market was completely rational and a completely realistic picture of how everything worked you couldn’t make any money. I'd give one dollar in stock and get one dollar back in company value. Everything would work exactly the way it's supposed to, everyone would know that. There would never be any highs or lows and that's where you actually make your money in the stock market. You make your money by buying something valuable from someone who thinks it isn't that valuable. That's how you make your money. So if the stock market was completely rational and efficient, there wouldn't be any opportunities. [0:09:55.6]
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Now Adwords is a market. It is very similar to the stock market in a lot of different ways. If you have a keyword, let's take the classic gold standard keyword "sell my house fast". "Sell my house fast" perfect motivated seller keyword, probably the best in a lot of different ways, now if you say – okay I'm in Cleveland and I am picking Cleveland at random – I'm in Cleveland, I'm an investor in Cleveland, I want to bid on this keyword. [0:11:02.4] Will I make money? Will I get deals if I bid on that keyword? Now if that keyword was completely rational, if it was completely normalized, if it exactly matched reality, you would pay exactly what you made. All the other investors know exactly what its worth. Everybody knows exactly what its worth. Everybody knows exactly what they are going to make. If I'm going to make $2500, I’m going to pay $2499 for it and everybody is going to do exactly the same thing and that's how it's going to work. But it doesn't work like that because the market is irrational, because people are irrational. People are in many ways random. We can go into this market and say if I bid on this keyword because of what my competition is doing, because of what Google is doing, because of what motivated sellers are searching for and clicking on, I know I can pay $300 for this keyword and I'm going to make $2500. [0:12:05.6] I'm going to make a profit of $2200. That's awesome. In other markets, that keyword you might have to pay $5000 to get a deal from that keyword and you're only going to make $2500 – guess what? It is not profitable. You should not target it. The same keyword in Cleveland that's getting you a $2200 profit over here in Houston you're going to lose $2500.
Now those two situations are relatively easy to understand but does it stay like that? No. It doesn't stay like that because once the people in Houston start realize that they are losing money. They stop bidding on it. Then what happens? Then the price comes down. Now, maybe I can spend $1000 instead of $5000 and I can make a $1500 profit. These prices swing up and down just like the stock market swings up and down. [0:13:03.7]
Now that's one layer; understanding that we deal with people and people are irrational and that things change and people react to each other and it's this whole complicated system that's kind of going back and forth. It's not necessarily about what the market like the housing market is doing. It's not necessarily about how much money you can actually make investing. It's about what other people think about those things. Then on top of that, you have a layer of pure statistical randomness. You can have a keyword in your market that makes you hundreds of thousands of dollars a year, super profitable, super amazing. You're getting incredible deals from this keyword. Then all of a sudden, one month that keyword can just stop working. No one searches for it or they search for it and no one clicks or they click and no one becomes a lead or they become leads and no one becomes a deal. [0:14:00.6] This keyword could go from the best of the best to the absolute worst over night. Why?
Why? Well the reality is I don't know. The reality is nobody knows. The reality is when you're dealing with motivated sellers; we’re dealing with a relatively small part of any housing market. It is just a mathematical fact that when you deal with small samplings, small bits and pieces of a larger whole, small sample sizes, you are more likely to get really outsized, weird statistical results. That is just a fact. This is why it's better when you do an experiment to have large numbers. That's why it's better when you're surveying or polling a large population of people, you need a lot of people. If I went out and did a political poll and my political question is "What do you think of how President Trump is doing? Good, bad or indifferent." I only polled three people. They all said that he's doing great. Can I then say 100% of Americans think President Trump is doing great. He's got 100% approval rating. Well of course not, you know that. Of course not because you only asked three people. What if those three people just randomly like Trump? What if everybody else in the country doesn't like him? I'm mean we really don't know, right? Same exact thing happens with motivated seller leads because motivated sellers are such a small percentage of the entire population of everybody that wants to sell a home and even within that the marketing channel that you're using Adwords, Facebook or Bing or SEO, whatever it is, even that's only a small percentage of the small percentage. You are more likely to get weird results. This is why Adwords Nerds as a team we can look at all the data across all of our clients across the entire country, across the entire six years that we've been doing this and we can say, "Sell my house fast" as a keyword does really, really well on average but I parachute into your market on a given day and I bid on it, it might be amazing, it might be terrible. [0:16:17.2] When you deal with averages, when you deal with large numbers, it tells you what tends to happen but it doesn't actually tell you what is going to happen in your market on this day, on this week, in this month. It's random.
Now, what do we do with that? How do we deal with randomness because if everything is random and there is nothing I can do about it then I don't have any control. We all as people, we need control especially in investing. You can't just invest randomly. You can't just throw your money in every deal. You can't throw your money at every marketing channel. You can't just throw your money at every keyword. Right? We can't just be random, we need some control in order to make sure that we make money. [0:17:03.3] We need make money to provide for ourselves, for our family, for our kids, for our communities. So how do we deal with that? How do we deal with the randomness? There are two ways. There are two ways that I have found. Nearly every single client we have worked with and there have been many that have had large amounts of success that have done deal, after deal, after deal that have been successful in multiple markets, multiple marketing channels. A lot of times these people are very successful in their personal lives. They are successful in building great relationships. The two things that I have noticed across all those people; they are number one understanding the statistical nature of randomness and number two treating failure as data.
Now let me break those down because these are so important. They are so important at the micro level. [0:18:01.1] They are important to optimizing whatever marketing you are doing right now that could be direct mail, it could be online, it could be anything. Getting the most out of that marketing is going to rely on these two factors. At the same time, making sure that you're successful long-term over the course your lifetime is going to rely on these two factors as well. So number one, understanding the statistical nature of randomness; simply understanding that the ups and downs you see everyday, every week, every month are not necessarily caused by for example the market being terrible, caused by an advertising channel being terrible, caused by the people you hired being terrible, caused by the internet being a scam, caused by Google trying to screw you over – when we look at a situation we see numbers going up and down, we have to understand the effect that randomness has, the effect that an irrational market has, the effect that the time of day, the day of week, the time of the month, the time of the year, the seasonality, the market, the Euro, the Brexit, whatever. [0:19:12.2] We need to understand the effect those things have. If you can understand those things, you can understand that statistical nature of randomness, you can understand the effect that these things have, you can say, "Alright, look I can calm down, I can relax." I can understand that I shouldn't look at my stock portfolio every single morning instead maybe I will review it once a month. Maybe I will review once a quarter, once a week, whatever your schedule is. Understand that you are trying to look for trends rather than saying how do I do today? Because saying how did I do today is going to cause you to make irrational decisions. It's going to cause you to jump to conclusions. It's going to cause you to pull in or go in more heavily at the wrong time. [0:20:02.3] We don't want to make irrational decisions. I want you to profit off the irrational decisions of others. Understanding the role that chaos has in our lives helps us to do that.
Now the second factor, I think is probably the most critical one of all. That's treating failures as data. See the people that have success whether it's in investing or entrepreneurship or marketing or trying to find motivated sellers, the people that have success build on their failures. They understand that if something is worth a lot of money, it is probably not going to be easy. If I had an easy way of making hundreds of deals appear out of the sky, well guess what? Someone else is going to find it out. Someone else is going to do the same thing. It's going to get less effective. [0:21:00.2] That's going to keep happening until it just kind of works the way that everything else works. So the key is not to start strong and stay strong forever and if it doesn't do that, it's a failure. The key is to understand that failure is data. I don't know if this is a real quote or if it's a made up quote but you've probably have heard the Thomas Edison thing where he is trying to make the light bulb and he's got all these prototypes and they keep failing and failing and failing and somebody says, "You know, Thomas Edison, you got to just hang it up, man, this is getting ridiculous. You've got all of these broken light bulbs everywhere. It's dangerous to walk around here. It's a darn shame, I tell ya'" Thomas Edison said, "You don't understand, I haven't failed, I've just discovered another way to not invent the light bulb. Sooner or later, I'm going to figure it out." Now I don't know if that's a real quote, paraphrase, whatever, I don’t even know if that really happened but the principle is there. [0:22:03.6] To succeed you need to understand that your failures are not failures, what they are is data. This is like Tony Robbins thing where he says, "There are two teams in competition, there is the winning team and the learning team." If you see your missteps, you see the lack of success as a reason to just a bullet in every new project that you try, you are never going to stick around long enough to learn from your mistakes and to improve. It is all about improvement especially in online marketing. To bring us back to motivated seller marketing, it's all about long-term improvement because even if I launch you with an account that absolutely crushes it, I cannot guarantee the markets going to be the same tomorrow, it's going to be the same next week, it's going to be the same next month. You're always going to have to read the data and adapt. [0:23:00.2] You're always going to have to understand your failures and improve. So if you get into a tough situation and you experience failure and you get frustrated and you quit that means you experienced the losses but you never experienced the gains; that means you sold when your stock was low instead of when it was high. No, I'm not saying stick with everything forever. Obviously, there's got to be a point where you stop something that is not working. I never tell my clients to keep doing marketing that isn't working for them. I'm not perfect. I may be the best in my industry. I truly believe this. I don't think there is anybody who operates at the level we do in the motivated seller space but that doesn't mean we always have success. What that means is we've got the best system, the best process, and we give you the best chance for success. We don't guarantee success. Because that would be like saying, "Warren Buffett is the best stock investor that has ever lived, the richest value stock investor that has ever existed, he's a Wall Street god, okay I'll tell you what Warren Buffett I'm going to give you a $100, I want you to guarantee me that you're going to put it in the stock market and I'm going to make money." [0:24:16.3] Well guess what? He won't do that because Warren Buffett loses money all the time. He is wrong all of the time. He fails all the time. So how has he been so successful over the long term? He understands that he needs to learn from his failures. He needs to understand that things can look up and down and look chaotic and that a lot of times that's just statistical randomness. He understands that he's looking for trends and then he wants to bet on those trends against the irrationalities of everyone else in the market. That's what I want for you. I want you to understand that if you can implement these two principles understanding the statistical randomness of the world and then number two, understanding that your failures are not failures they are data. [0:25:07.7] If you do that you will never fail again. You will never fail again because you will understand that what these things are; these problems, these occurrences, these fluxuations, what they are is data and data is what will lead you to success.
Hey guys if you like this episode, let me know I would really love to hear from you. This was one that was very, very close to my heart and I really hope you got some value out of it. If you want to stay in touch with me, I've got a Facebook group, it's free. It's called the REI Marketing Nerds Facebook group. I'm in there every single day during the week, making posts, talking to people, answering questions, we do Facebook Lives. It's a really fun place to be.
There's a ton of really high quality training so I want you to go and check that out. You can get that at AdwordsNerds.com/group, that's AdwordsNerds.com/group and as always you can get this episode and all of our past episodes at AdwordNerds.com/podcast, that's AdwordsNerds.com/podcast. Leave me a review if you like this podcast, you got some value out of it, give us a like, give us a subscribe, give us a review on the podcast channel of your choice. I will see you next week. As always this is Daniel Barrett signing off. I'll talk to you soon.
If you could create your perfect real estate investing business, what would it look like? It would probably have a system that generates qualified leads on autopilot. You might add employees who take some work off of your shoulders. Whatever your perfect REI business looks like, it might feel like a distant dream. The truth
If I asked one hundred real estate investors what their most significant pain point is I can guarantee that 99% of them would say that it’s finding the best seller leads in the right neighborhood. Investors know what they want to accomplish and they create an elaborate plan to get from point A to