While you’re minding your investing business, the world is changing around you. Advertising prices skyrocket, iBuyers devour leads and investors flood the market.
How can you survive without millions in venture capital? Not by throwing your hands up and saying “woe is me”–but by adapting your business to fit the times.
In this episode, you’ll find out what to do about the shift in the REI industry and how you can survive, thrive and build the life you want to have.
Ready to step over your fear and be one of the winners of this transformation? Listen now!
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. [00:33.4]
Dan: All right everybody, welcome to this week's episode of the “REI Marketing Nerds” podcast. As always, this is Daniel Barrett here from adwords nerds.com. How are you? I hope you're having an awesome week. I am. I had a short vacation with my family up in Boston and had a wonderful time. And, if you have been following along, you realize that the last two episodes of this podcast, we've been talking about something I've called the shift. In the first podcast we talked about the sort of increasing importance of SEO in the current competitive landscape. And I talked about the shift a little bit there. Then we backed up, we talked about what are the elements that are contributing to the shift, whether that's ibuyers coming into the marketplace, increased competition from other investors, some technological issues like the general decline in advertising supply in sort of a inventory in the advertising word, what will we call declining inventory, which means declining supply of places to show your marketing to sellers. And we talked about what that does to prices. [01:49.6]
And we talked about how this makes it increasingly difficult for the traditional model of how investors talk to sellers to work. It's just something that gets increasingly more expensive that gets increasingly priced out of the range of affordability for most investors. So that brings us to this episode, which is all about what we do about it. Because it's one thing to point at a trend to point as out a potential issue or problem and say, whoa is me. We're doomed. You know, there's nothing we can do about it. Yada, yada. Data's not my thing. I am here to educate this marketplace as much as humanly possible and I'm here to provide solutions to the biggest number of people I possibly can. That's why I'm in business and that's why I do what I do. That's why I love what I do. [02:41.2]
So it would be malpractice for me to just come on here and say, whoa it’s me. And I see a lot of investors doing that and wring their hands and that's understandable. But we have got to look for solutions and my suggestion is going to be that we look at industries that have undergone a similar transition and we look at what they've done that's worked to adapt to the way that the things are for them now. And ironically, the people I look to the most in this instance are real estate agents. And I think investors, investors look down at agents. I mean there's some a understandable antipathy there between agents and investors. So I think both groups are kind of suspicious of one another. And I get that. And there are a lot of terrible real estate agents. I mean, I think even agents would admit that it's a very low bar to get into that industry. [03:39.9]
And so there are a lot of people that just kind of, I don't really know what they're doing or they're doing one or two transactions a year and that's cool. That's totally fine. But what I'm saying is let's look at the agents that are really competitive, really doing a good job. What are they doing in order to counteract some of the elements that we are now facing because the agents got what we are now getting in terms of this kind of technological disruption and increased competition. Agents have had that for a long time. Agents have had that going on for much longer time. I mean, man, you talk about, you know, real estate investors worried about Zillow entering their marketplace. Hey, Zillow has been crushing the real estate agent space for a long time. You think about what agents typically have provided, and for the average person, what agents did was give you access to information, they give you access to the MLS. [04:32.2]
It was impossible to figure out what was going on in the market without working with an agent. Well, Zillow turned all of that on its head and took the primary competitive advantage of agents away. It just took it away. And so what was left for agents was to figure out why would a seller or a buyer work with me rather than going through let's say Zillow or Trulia or whoever. And that's the question that investors have to answer. Now the question that investors have to wrestle with is, why is someone going to go with me versus all the other investors in my marketplace versus these massive technical disruptors? What are they going to go with me when they can get an offer from Zillow by filling out a form, why will they go with me? And obviously we still have to compete, you know, with our own technology; we still have to compete with speed and offer. I'm not saying that goes away, but that's not the advantage that investors have any more [inaudible] that is not the advantage that investors have anymore. [05:35.1]
Cause I'm telling you guys, guys and gals, right? These venture backed firms, they don't care if they lose money, they don't care if they lose money. Trulia, Zillow, open door, knock, none of these companies care if they lose money right now. What they want is market share, that's what they want. So they will make offers that to a sort of the mom-and- pop investor would seem absolutely bonkers, absolutely ridiculous offers. They will make them all day long if it means they get to eat market share. So it's not offer. This is not the offer price that we are competing with and certainly not speed that we are competing with. So how do we compete? We'll look at what agents have done. [06:26.0]
Agents have rebuilt their entire industry around the strength of their relationships. And look, being a real estate agent has always been a relationship game. I know that's the case, but if you really think about it, relationships are primarily what agents sell. What do you get when you work with an agent? When you get someone that's going to help you, someone that you trust, someone that you like. Someone that knows more about this than you, someone who can educate you, someone who can walk you through the process. You get a friend, essentially you get someone to hold your hand, that's what you pay for. And for many people that is very attractive, much more attractive than the whole form thing. Yeah I can get the offers fast as possible, but is it a good offer? How do I know? How do I know what to do with it? What do I do from there? You know it's complicated. [07:15.7]
And Zillow or Trulia or open door, they could try to walk you through the process as much as possible, but short of sending someone down to sit at your kitchen table, it's not going to be as good as an experience. This is the thing that you can't outsource and you can't automate. You can't automate human connection. People want to sit down across from someone and here is the key, someone that they know, like and trust in order to figure out the complicated decisions, the life altering decisions that they're trying to make. Now here's the thing investors sit down at kitchen tables all the time, but what are we missing? No one knows likes or trusts a real estate investor. No, I say no one of course there are investors out there, you know, they do this every day and I get that. But as an industry, as an industry, we have not put in the time; we have not put in the reps to build the muscle around building strong human relationships. [08:16.4]
And this may sound like all kind of like touchy feely or whatever, but it isn't, this is a strong business argument. Because quite frankly, this is the only competitive advantage that investors are going to still have five or 10 years from now. If you do not have a brand, like if you do not have name recognition in a marketplace, if you do not have people referring to you all the time, if you are not ‘the guy’ or ‘the woman’ who occupies this space in your local market, someone else is going to come along and take it from you. They're going to straight up take it from you and they're going to do that by being the person that people like that people know that people trust. Now part of this is not our fault because part of like investing, the whole sort of foundation of it, right, is that we're generally paying out less than the property is worth, this is the entire business model. So people already distrust the industry and I get that, but investors can do a better job of building these relationships over time. Well, how do you do that? [09:24.7]
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There's a lot that goes into the actual transactions sitting down and how you build trust with people, how you build rapport and putting other people's interest above yours. I'm not going to talk about that, there are coaches out there that talk about this. Right now, Tom Kroll, someone who comes to mind that’s a really good example, John Martinez is someone that comes to mind. People that do a really good job of teaching this kind of give first mentality. [10:18.9]
I'm going to talk specifically about marketing because of obviously marketing is what I do specifically online marketing for motivated sellers. So how does this filter down into marketing? Well, organic marketing becomes incredibly important because it is a long lasting assets that can continuously teach the marketplace. SEO becomes incredibly important and not just SEO like let me put keywords in the website that does nothing to help anyone. Instead thinking about how can I create really high quality content that legitimately helps people? How can you create a blog post on your website that is so useful, people actually share it. Like who shares blog posts from real estate investors? Nobody, because they don't provide value to anybody. They're simply there to trick Google and showing your website more often. It's a waste of time. How do create pieces of content that are legitimately useful? [11:11.3]
How could you create pieces of content that position you as the authority? What if you did like a weekly housing market report where you just broke down all the data that was in Zillow and all the data you can get everywhere, you know had your own market score and really, you know, broke it down into some easy to understand advice. Whether they worked with you or not? That would position you as the authority. That's something that over time is incredibly hard to disrupt. Right?
What about the types of marketing for example, where we do informative videos on Facebook and show those videos to people in our market over time and we say, look, there's nothing to click. I'm not asking you to go to my website. I'm just providing value, but I'm also saying my company name saying what website I'm from. I'm getting you to know my face. I'm getting you to know my name. Over time we are building recognition. Recognition is the precedent to someone converting. I will not give you my information unless I know about you. I have to recognize that you exist. I have to recognize you from somewhere else. I have to remember you. I have to have a positive connotation with you in my head. [12:21.4]
Sell your house fast as an ad does none of that. It is a marketing methodology that is purely based on the fact that like I can give you the best offer in the shortest amount of time. I'm telling you that may be the case for you today. It will not be the case for you 10 years from now. So if you want to build an actual business, you need to think about every type of marketing that you do as being based on the idea that is forming relationships based on whether people know you, like you and trust you. The conversion will come down the line and you can still run. Look, I'm a direct response marketing guy at heart. You still run direct response campaigns. I'm not telling you to stop that, but what I'm saying is that you need to start building your role in your community, your authority in your community, your sense of being the player in your community. Because if you don't, Zillow is going to occupy that space for you and there just isn't going to be enough room to do what everybody has always done. [13:26.2]
Send the postcards, do the ads, do the Facebook ads. Just say, give me your house, give me your house. Sell your house fast. It's just not going to be feasible, so you need to start thinking long term. You need to start thinking about how am I going to get there and it isn't tweaking the copy on the app. It's thinking about how useful can I be in the channels that people consume information and that those people that I want to reach, how useful can I be in those channels, whether it's Facebook or Instagram or tick-tock or whatever, whatever people end up using. How can I occupy the top of mind space in my market. And I'm going to be honest, it's hard for investors, it's hard for me to make this shift because it is a shift away from a type of advertising that has very clear return on investment. You spend a dollar, you get $3. [14:18.2]
I can point to data and Google ads, point to data in Facebook and say this is what you've got. But things like building authority and building awareness and building and building recognition and building goodwill, they don't have a clear ROI. Sometimes you're not going to get a deal from that act for a year or two years or five years, but I'm telling you if you don't have that as a base, you won't have anything. That's the shift. It's the shift away from an industry that is predicated on competition around price and speed to an industry that is predicated around who can form the most valuable relationships in their target market. And if you can do that, if you can make that shift, I'm telling you the vast majority of investors are not going to be able to. This is a teaching an old dog new tricks scenario that we are in. [15:08.7]
We got to get with the times people, I'm talking to myself just as much as you, we got to get with the times because that shift ..it is happening, it is coming. And we have to be ready for it if we want to be able to make money, serve people, help people, and make the world a better place, 5, 10, 15 years from now. So let me know what you think. I would love to hear your feedback on this. AdWords nerds.com/group will take you to our free Facebook group. You can go on Facebook and type in REI marketing nerds, you'll find it, but AdWords nerds.com/group will take a straight there, it's free to join. Join the conversation, we're talking about this a lot. I would love to know what you think, if I'm wrong, I want to know about it. If you think I'm right, I want to know about it. Because I am definitely going to be sharing the ways that we find to address this issue there and I want you to be a part of that. [15:56.9]
As always, guys, this is Daniel Barrett here from adwords nerds.com I hope this series was valuable to you. It was certainly fun to do. And I am very optimistic about the state of real estate investing. I think we are moving to a better place, a powerful place. I just want to make sure that you come along for the prize. All right, everybody, I will be talking to you soon. See you next week. [16:18.4]
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