OK, you think you’re a real estate investor? Sorry, that’s not the case. You’re a marketing professional. Your vehicle just happens to be real estate (BTW, that also goes for any other business). Whether you are in the buying, funding, fixing or renting / selling cycle, each one is requires you to market to a specific group of people.
How you market to these groups of people is outside the scope of this article. But it’s safe to say that if you intend to make this a business (rather than a hobby) you will need to look at creating a Marketing Plan to systematically approach these groups.
Are you doing a bit of advertising and just hoping that a deal will fall in your lap, or are you operating in a way that makes certain it will happen. If you don’t have a process for making sure deals happen, you don’t yet understand the importance of having a marketing plan.
The sad fact is that even after all their training, less than one percent of all real estate entrepreneurs and investors actually have a marketing plan. Even though it’s very simple, don’t underestimate its power.
The Most Important Thing About Marketing is to Have a Marketing Plan!
1) It’s a concrete result you put out for your mind to seize on and strive to achieve.
2) It allows you to clarify exactly what you want to achieve in the coming 30 days.
3) It allows you map out the activities needed to achieve that plan.
4) It allows you to plan in advance to delegate off the lower paying activities, so you don’t end up doing them.
5) It allows you set time deadlines, to hold others accountable so everything gets DONE!
6) It results in you being free to concentrate on your highest payoff activity: Making Offers on Great Deals!
7) You have a business that operates consciously, not by accident.
More people fail in real estate because they simply do not have a plan or goals. You should have a detailed marketing plan of what you want to accomplish and how you are going to accomplish it.
And, don’t be vague, either. Things like, I want to make more money than I can ever spend, and I want to be rich, and I want to make $10,000 a month, are not plans. They are too vague, and they won’t help you get there. Be as specific as you can possibly be.
In planning for monthly revenue, try to put your money goals in cash income, not gross revenue. I know gross revenue is what you’re used to thinking in, but cash is obviously more important. It’s what you take to the bank, and it’s what pays bills.
First, examine your current numbers. More than 80 percent of all real estate entrepreneurs know how many houses they are buying each month, but they don’t know where those houses came from and how many leads they had to process to develop them into the single deal. And, this is a deadly sin.
You Simply Must Know How You Are Currently Doing.
You should know:
1) The total leads that call each month (each week is more manageable),
2) Where those leads come from,
3) How many “qualified” seller prospects (i.e. those that you are willing to invest follow-up in if they don’t sell now; they have motivation, you are interested in the house.) you get each month,
4) The ratio of total to qualified,
5) The number of deals you close,
6) The ratio of closed deals to qualified leads – for each lead source
7) How much you make from each seller,
8) How much it cost you to acquire a new seller.
With this information you can look at your current resources, look ahead, and then plan out what you want to have happen. The number of deals you want to do, the amount of money you want to make.
For example, let’s say you are bringing in around $10,000 a month and your average deal gives you $5,000. Yes, I know that’s low, but for the sake of example. That’s two deals a month. These are cash proceeds and after expenses you net 50 percent of your gross or $5,000 a month. And let’s say that you want to double your net income next month.
You will have to get twice as many deals to double your business. Goal? Four deals a month, or one a week.
Let’s say you currently get one deal a month from a classified ad, and one deal a month for mailing expired listings. But, you get ten qualified calls a month from his classified ad and 10 qualified prospects calling a month as a result of mailing expired listings. So, you currently close ten percent of your prospects.
First, you can improve on this situation by improving that twenty percent closing ratio. By improving your closing ratio by things like more precise targeting, the present lead-flow would stay the same, you’ll get your same twenty real prospects and achieve your goal of doing four deals next month.
But assuming that’s not something you have control over right now, the other way to double your income in the next month is to double the number of qualified prospects you talk to and make offers to. So instead of getting 20 qualified leads to call, you would need 40.
Your plan to get forty qualified prospects would need 10 to come from expired listing mailings, 16 to come from flyers in target neighborhoods, 4 from business cards handed out everywhere, 6 to come from signs placed in the ground at high traffic count intersections, 10 to com from classified ads that drive people to the website. Total: 46 prospects. Cool! That’s six to spare.
With this number of leads coming in you have what is needed closed four deals and reach your goal of doubling your net income. Actually, it’s more than doubling because your fixed expenses don’t increase with the income.
You should have a monthly plan. Schedule thirty or forty minutes out of one day to make up your monthly plan and see how you did last month. Schedule this time and keep to it. Don’t do any work or take any calls during this time. Keep it strictly for planning. If you do this and you allow yourself to get into the whole spirit of planning, and making things happen on purpose, you will easily double your income in twelve months.
Your Monthly Plan Should Include The Following:
1) A goal for total net income.
2) A goal for number of deals signed up
3) A goal for number of appointments made.
4) A goal for number of qualified, interested sellers.
5) A goal for total number of leads.
6) Average net income from each deal.
7) The number of prospects you have to generate to reach your goal.
A detailed plan to generate the number of prospects you need. Your plan doesn’t have to be typed out or put into a computer. It can be handwritten on paper. It doesn’t have to be pretty.
Scratch pad plans are good enough. The important part is that you do a plan every single week and keep on top of things.
This is a simple thing to do, but it is just as easy to not do. Blowing it off is the equivalent of you absolving yourself of responsibility for your business. On the other hand, taking the time to think through your goals each month, both for income, and marketing activity, then committing them to paper will make things start happening by plan and put you in control of your business.