Relationship Based Marketing
In my office I have an old aluminum pantry closet that I bought at a flea market and refinished for fun. Housed inside that back cabinet are piles and piles of spiral notebooks and legal notepad. The notepads are filled with phone numbers, leads, doodles and also some pretty useful information.
More often than not, these notepads contain the seeds of ideas. The excerpt I’ve shared below was the beginning of a change in the way I approach marketing for motivated sellers. It led to a change in the money I spend on marketing and the results my marketing produces.
Take a look:
Home Buying Process Analysis –
The process starts with marketing. You advertise and the leads come in. You screen leads, inspect properties and make offers. Some of your offers are accepted. If you’re wholesaling, you search for a buyer. If you’re buying you line up your financing. Title work is ordered. Settlement is completed. You get paid or you start the repairs or you look for a tenant. Once that’s done, the process starts again.
There are between 8 and 9 major steps in the home buying process between me spending money (on marketing) and making money (on the wholesale, rental or retail sale).
Then I start over.
8-9 steps to get back to the beginning.
Just to start over again.
What took me almost 5 years to realize is that all of my leads were coming in the form of piece mail marketing. Each lead came from someone that owned 1 or 2 properties. The biggest contact might sell me 3 houses during the life of our relationship. As a result I had to constantly spend more money contacting more people to complete 1 or 2 transactions.
Of course there were anomalies. I had one seller who inherited 16 single family rentals. Another seller was in foreclosure on 11 properties. But the anomaly that completely captivated my attention was a phone call from a local bank. That called changed the game.
Last spring I received a call from a local asset manager at a small local bank. He found my number through one of my “We Buy Houses” ads. It led him to my website. One of his REO properties was sitting on the bank’s books for too long. It needed to sell. Twice there were offers that had fallen through. Twice the bank reduced the price.
Thirty days from our first conversation, the house was off the bank’s balance sheet, I had an extra $10,000 in my pocked from the wholesale fee and one of my clients had a great deal on a rental property. The transaction was a win all around.
Two months later I received an email from the same bank. They had a similar situation, but now they had 3 properties to sell.
A pattern began to emerge. I had built a relationship with this ongoing source of discounted properties. I’d proven I could perform so they continued to seek me out to purchase their REO’s.
Cost of marketing? $0.
Relationship based marketing has become a larger and larger part of my core business. I’ve found that building relationship with other small banks and other sources of repeat sellers allows me to invest less money and get better results. That’s a perfect combination.
I still send out mailers, post bandit signs, pay for online ads and produce other advertising for 1 and 2 property sellers. But my relationship based marketing has become the foundation of my Real Estate investing business.