How to Find Off-Market Real Estate Deals

0:00I guess there's two classes of people. Like somebody that you're finding your first one and you have money or you're finding your first one and you don't have money. I'm gonna I'm gonna guess most of the people don't have a whole bunch of money. So what I would do if I was starting I'd don't search Craigslist like places like that because — really — Yeah. I mean there's if if I look at it like this. You're either going to pay with sweat or you're going to pay with money, right? — Yeah. — So when you're starting there's some things on there. It's not as popular as it used to be, but I'd search there. Facebook Marketplace, things like that. That's free.

0:31I would drive for dollars. So, I would probably get something like PropStream or Deal Machine. They're super cheap. Drive for dollars, find properties, send them mailers, and skip trace them. Like you see a property that's all beat up, you can buy their phone number for like a buck and call that person and send them one postcard versus I think a lot of people when they start are like I got to go buy a foreclosure list and I get to send thousands of cards. You can do that really intentional and just mail one card to those specific people and keep your budget really low.

1:02— So I would do that. Then I would negotiate with the sellers, talk to them, and I would lock down a deal. And then I would pull some of that money from that deal and reinvest it, and I would probably start marketing then. — Okay. — With using the money from the first deal. — Got it. Okay. So, so don't even start like money out of pocket initially. Get a deal going first using sweat equity and then use your profits to market from there. — Yeah. And the reason I say that too is a lot of people like real estate's sexy, right?

1:34Everyone's going to get rich and all this kind of stuff. So, a lot of people get into it and they're like, I'm just going to go outsource and pay for marketing, but they didn't take the punches in the face yet talking with sellers. — Yeah. — Or or they didn't learn the thing. So, it's like you have leads coming in, but you didn't learn the process on what you need to do to take it to close. — Yes. — So, go stumble when you're not spending that much money. Once you once you figure out the process, now you can put money on it. Yeah. — Accelerate you. — Yeah. And this I mean this shows what what type of guy Brian is because he's running a a you know motivated leads company and he's saying you know figure it out first.

2:11Don't don't just spend a bunch of money on me or anyone else like to to market when you don't know what you're doing because it's just you're throwing money down the drain. I I totally fell in that category. You know, initially we did do a lot of sweat equity, but then we thought that, you know, everyone was talking about all the yellow letters and and postcards and all the different marketing strategies out there, the SEO and and so when I was flipping, we very quickly went from the sweat equity, which was working really well to find, you know, specific very motivated offmarket leads to throwing tens of thousands of dollars a month at these these paid strategies that, you know, everyone says works well and they can work well, but we

2:59Didn't know what we're doing. And so, we're trying to like set up this mini call center in our office. So many leads just fell between the cracks because the follow-up wasn't there, the script wasn't right when, you know, the phones were getting answered, if they were getting answered, you know, like it was just kind of a mess. So yeah, I love that that you kind of like organically grow into you know, adding more more marketing and more money into the funnel as as you get it perfected and figure out how to talk to sellers.

3:31So that's awesome. — and you know what? It's not the sweat equity is not fun. — Yeah, exactly. — Like it looks like it's going to be fun. Like spending the money and everything looks like the fun part. — You just got to be disciplined and do the work. — Yeah. And the funny thing is too, like I would talk to people who are sending out, you know, mass amount of letters and stuff and I was driving around on Friday night. My wife would drive the getaway car and I'd put up the we buy houses bandit signs, you know, and the leads that we were getting, I didn't even realize it at the time.

4:01We were getting unbelievable leads because I was the one person that this person who was a hoarder and didn't want to list their house. You know, they they saw the sign and they called me and it was the ideal how, you know, it was we had to do a huge cleanout. I mean, there was a lot of work to do, but it was the perfect type of deal for us to be buying. And, you know, I didn't realize how pinpointed that marketing is for the specific type of person that you're you're looking to talk to. Someone who has an amazing house.

4:32They're not they're not calling a wee buy house to sign. They're just listing on the MLS. But it was I was just talking to the right people and then I cast a wider net and it was things changed a lot in terms of the the calls that we were getting. So — yeah, bandit signs are huge. I'm glad you brought that up too because I should have said that. That's like almost zero budget. — Yeah. — And who who calls the phone number on a bandit sign? — It's like super targeted like you're saying. — Yeah. Yeah. Super motivated. There there's a reason why they don't want to list it. I I bought a house from a lady who the health department came and literally put a padlock on her condo door because it rireed so bad the rest of the condo was just like couldn't even go on their their units without gagging.

5:17And but it wor we bought the house and it worked out like we we were the right company to talk to because we could do anything. But but yeah, she knew she needed to to sell it. So — — all right. So, how how does somebody know then if a strategy is working? So, say they've they've done some sweat equity, they want to invest in some paid offmarket marketing, what metrics do you measure and and how do you know to say yes to, you know, turning on more fun or allocating more funds to this channel or pulling the plug on it?

5:50— So, first thing you're going to know, you need a CRM. So, for anyone who doesn't know what a CRM is, I think it's customer relationship manager. It's a tool where you keep track of your leads and you can follow up and you can make notes for yourself and you can send automations and text. If you're going to pay for leads, you need a CRM. They're super cheap. I like go high level. You can get a CRM for like 100 bucks. Doesn't have to be go high level. They're all good, you know. You need that because I see a lot of people diving into spending a whole bunch of money and they're using a Google sheet and then it's like someone calls you with an inherited home, they need to talk with their siblings, they're not ready for three months because they got to do all the probate and everything and then you forget to call them back.

6:33— Yeah. So, so the CRM, but then to answer your question, whenever someone's ready, I would say whenever you're too busy, like when you found success and you're now too busy to do anything, — now you're trying to buy your time back, — okay? — Like, okay, I'm doing all this kind of stuff and I can now spend money to have leads come to me. Maybe you're calling a lot of people. It's like, okay, instead of calling a thousand people a week, I can spend money now and have people call me. Now I don't have to do that. Now I can focus on negotiating or building out a team or putting an acquisitions manager in place, stuff like that.

7:08So I would say whenever you get too busy though and you find success though, you have to have that success. You have to know what you're doing before you spend the money like what to say to sellers. That's the point. It's like, okay, let's go buy some time back. Yeah, that makes sense. And what channel would you recommend people start with? So, yeah, like what what do you like for paid marketing? What what channel would would you recommend? — I would probably say Facebook. So, so here's what you got with paid marketing on the digital side.

7:40And I'll preface this with everything works if you do it consistently. Like if you go down the street knocking on doors, somebody's going to say they want to sell their house eventually, you know. So they're all work. If I'm talking digital though, when I go when I want to spend money, Facebook, you're paying per impression. So, what you're doing on Facebook is you're show saying to Facebook, "Hey, I'll give you, say, 20 bucks to show my ad to a thousand people. And if I have a good ad, people are going to click it and they're going to call me or fill out my form." You also have Google pay-per-click. You're paying Google per click though, not per impression.

8:12And it's expensive in some markets. Like, it could be a hundred or more dollars per click, and it might take 10 or 15 clicks to get a lead. So, it's like — different there. And then you have direct mail. A lot of people like direct mail. But in the digital side, I'd start with Facebook because you can start small and then you can scale it up. And I would start with Facebook. There's two ways to market on Facebook. One is you send traffic to your website. The second is something called lead forms where they click the ad and it pops up and Facebook prepopulates the leads info. I don't recommend that one.

8:44Push them to a website that's direct saying we buy houses, we pay cash. A multi-step form asking them like why they want to sell, how fast they want to sell, things like that. But you can start that fairly cheap for like I don't know probably like 30 to 50 bucks a day maybe. So 1,500 a month. — That's great. Yeah. Yeah, we've done that before too. And got several deals that way in the past. I is that can can you talk about like how targeted you can get with that?

9:16So you you said you can't do zip codes, but you can do sort of a region. — Yeah. So we used to be able to do zip codes and we used to target people living they had an option where you can press the living in well like five years ago or maybe six years ago some Zuckerberg got caught in front of Congress and they were he was getting in trouble for discrimination like advertisers discriminating saying maybe maybe I only advertise in the ghetto or maybe I only do this. So what they did was they made something called the special housing category in Facebook. And if you're in a real estate space, you have to click that button and it removes a lot of your targeting.

9:51So you can't target based on age. You can't target based on sex. You can't target based on zip code. So you have to basically say, I'm going to pick this county or or radius around a city and that's where I'm going to market. And it shows your ad to all the places. So you can't really like pinpoint like you would on a mailer. But it's just how it is right now. Yeah. Okay. So, yeah, that's that's great. And but you can narrow down other fields, right? Like based on age and you know, — no, can't do that either.

10:22So, that's why it's so important that you're creative like your your image or your video is good. So, if you're advertising on Facebook, — you want to it's like a bandit sign. You want the people — to call that you're looking for. So, a bandit sign, you're not going to make it look like Remax. It's yellow and black and it's just like bold. Same thing on your Facebook ads. You want to have a picture of a beat up house. You don't want people confusing you with real estate agent because you'll get those calls, but they're the wrong calls. So, you want beat up houses. Use verbiage like sell your house fast. We buy houses, we pay cash. We buy houses as is condition because you because you're paying per impression.

10:57You only want the people that are your audience to click it. Otherwise, you're gonna get a whole bunch of leads and just waste your time. — Yeah. Yeah. Exactly. That's that's a great point. And and as you're describing this, I think there's some people who are listening who are, you know, more tech adept and they're like, "Oh, yeah, Facebook ads. Yeah, I know how to that all works in the back end and all that." and there's other people who are like, "What are you t like this is like a foreign language to me. I don't even know what a Facebook ad is." so do you do you handle this portion? Like if someone comes to you and says, "I want motivated leads.

11:30I'd love to do this Facebook ad thing you mentioned, but I have I don't even know how to turn on Facebook. Like, can you do you do you manage that part of it or what do you recommend for them? — We can we do more on a paper lead side, which we'll we'll generate leads in your area and it just you pay us all a cart. Some people with larger budgets though, they want that custom marketing. So, we will manage Facebook and Google ads. So, I guess the answer is yes, [clears throat] depending. — Okay. So, so instead people could just say, I want X number of leads that fit kind of this criteria on a monthly basis in this area and you'll you'll just hand over the like basically just kind of hand them warm leads.

12:10— You do leg work. — Yeah. So, it's basically the same type of marketing. So, the way Facebook and Google work are the broader you target, the cheaper your lead cost is going to be. Now, also anyone listening, if you took any of these courses and you talked to the guys that are like, "Hey, you can do national wholesaling or things like that, you can get leads for like 40 bucks or something targeting national." Problem is, it's hard like you have to disp what what we found though is we're we're able to market nationally, get the leads cheap, and then we it's the same marketing except you would be doing it locally.

12:44And then what we do is we generate the lead and we pass it to you and you pay us a per lead price. So we can get that lead cheaper and allow people to — generate leads without having a $10,000 marketing budgets and stuff. — I see. Okay. And and when somebody gets that lead, have you already spoken with them or you're just saying here's somebody filled out this form saying they're they're ready to sell? — Yeah, that's a good question. So what happens in our company is lead comes in. Say someone fills out Google ad. It comes in and then it comes into our system. We call and text that lead and we're not trying to lead manage.

13:18It's basically like, "Hey, Kirby, you just filled out a form about selling 123 Main Street. How fast do you want to sell?" Then they tell us and it's like, "Okay, why do you want to sell?" And then once once they say they wanted to sell, we pass it. We say, "Okay, great. We're going to connect you with a local cash buyer." What we're trying to do is we're trying to block the leads that are like, "I just saw an ad online and I want to see how much my house is worth." — Or, "My house is already listed on the MLS, but I wanted a cash offer." So, like, you can't really do anything with those. So, we try to block them and then if we can't get them on the phone, we'll skip trace them because we don't want to hold the lead up and just confirm that their name matches who exit property and still pass those through.

13:53— I see. Okay, that's great. Yeah. So, you know, you're talking to someone who's who's already been a little bit, you know, tested to see that they are actually motivated and it's not just, you know, kind of hopefully this works out for you — type of thing. It's still a numbers game though. So it's like most guys are closing one out of 10 to one out of 15. It's like with online leads, six out of 10 leads, they want too much money or aren't a fit. Our most successful clients have multiple disposition strategies. So they can have a sit down with a seller and be like, "Hey, you know what?

14:27You want to sell? Let me find out what your problems are and then I can connect the dots." those guys do pretty well because even if someone wants too much money, they can noate it or list it or things like that. C I think you just lost a few more people here. Can you share what disposition means and then also what novate means or any of the others? — Yeah, sure. So so disposition, think about it like you got a tool, a tool belt like right. It's like you got all these different tools. So if I go into if I go into a property and I got a screwdriver and there's a nail on a wall, I can't do anything with it.

15:00Like I got to turn it around and like I could probably get it in but it's not going to work well. So dispositions, what I mean by that is having multiple tools in your tool belt. So you can wholesale a property, you can flip it, maybe you can do sub two or maybe you buy and hold or maybe you can also do noations which novations are a new thing that investors not not necessarily new but it's a way to buy a property but also involve getting them more money for it by listing it on the market. So point is though just having multiple ways to help the seller.

15:32So, it's like, hey, if you want a cash deal and you want to close next week, I can buy it cash, but the numbers have to make sense. Or if you want top dollar, I don't know, we'll list it. I'll get you top dollar, but it's going to take a month and a half. — So, just sitting down and having those conversations with people on you have a problem, I can solve it five different ways. Like, what do you think fits you the best? Those are the guys I see doing really well. — Yeah, I totally agree. And I think it's hard in in the beginning cuz you come into real estate investing and most people have a preference of like, okay, I want to get into rentals or I want to get into buying or wholesaling or flipping.

16:10And and so then every lead you're talking to, it's like, okay, is this a good flip? And and instead, it's like what? Just listen to the seller like what is the problem that they have and how can you solve it for them? Even if it doesn't involve you buying it, still make money and that goes back into your marketing budget. So that that makes so much sense. You mentioned number of leads like you know some for some people it's like 10 leads and then one closed sale or 15 leads and one closed sale. What does that typically look like on average?

16:44And then also what what's the cost of those leads then for most people? Just kind of give people a a ballpark budget. — Sure. So, so out of 10 leads, normally I find six one too much money or they're just not a fit. Four of them are deals you want. Normally guys are locking out one of those. So I would say base your numbers on most guys are doing one out of 10 with good processes and things like that, but on a conservative level, let's say one out of 15 close. And say you have an average lead price of say 300 bucks. That means you're looking at spending $4,500 to get a deal.

17:16So then you have to look at your business model. If you're wholesaling properties and you're only making five grand, doesn't make sense. If you're wholesaling properties for 10,000 and up, it does. And it makes sense for people flipping and buying holding because flippers are making decent money on a property. And what flippers will do is they will buy the property, flip it, but then the leads that don't meet their criteria or if they don't have enough money to do another one, they'll wholesale those out to get their money back. — Yeah, that makes sense. Yeah. Yeah. And and also like it it could sound like a lot. Wow. $4,500 to get a deal, but these aren't like you're not paying market value.

17:52So, it's it's not, you know, like you think about if you were to buy off the MLS, there's not going to be that big of an equity spread. There probably could be some, you know, depending on the deal. But I ideally, if you're buying a deal like this offmarket, you've got a big spread right from the start where there's a bunch of value built into the deal. Even if it's a rental that you're going to hold long term, but you're, you know, more than covering that price. So that makes sense. — Yeah. Normally you're looking to get like 70% of like the after repair value and you're and you're talking directly with the seller.

18:26So say on the MLS, you might be able to find it, but you can't even talk to the seller to find out what the problem is. You have to talk with the agent if their agent's any good. This you're talking with a seller. You get to walk through the house. Most of them are hammered or or there's I don't want to say most of them are hammered like you got hoarder houses, things like that. I had a guy bought his property. His motivation was he was buying a new house, but he needed to coordinate his closing and he needed to stay in this property for two months, but he needed to sell it to get the new one.

18:58— So, it's like, okay, I'll buy it and you can rent for me for two months. — Yeah. — You know, and it's like, okay, works for me. — Yeah. For the right price, it makes sense to do that. Yeah. Yeah. Yeah. Yep. Those are the interesting situations you'll come across and you I feel like I could write a book after flipping for many years of all the different seller stories. Man, it's it's interesting. — so what what are the most common mistakes that you see newer investors make when they're getting into offmarket marketing? — So some some of the most common mistakes are especially [clears throat] with inbound leads, like I said before, not having a CRM.

19:35So, and the reason I I stress on that is picture this. So, somebody's in their someone's filling out a form. They're filling out a form on Google. They click the first website, put in their information. Most people go back and click the second one and the third one if they're motivated. And what we want to do is we want to stop them immediately. So, it's called speed to lead. When a lead comes in, you need to call them, get on get them on the phone quickly, and get in front of them in their living room fast. So, first with a CRM, you can send a text message right when they fill out a form.

20:09It's like, "Hey, this is Brian. I saw you just filled out your filled out a form about selling 123 Main Street. How fast do you want to sell?" What we're trying to do is we're trying to pull them from Google or wherever they are into text message and then communicate there and not have them go back and fill it out because there's competition. — So, I'd say that's number one. Number two, I see a lot of guys getting into marketing in their space and they try to outsource lead management to say a $3 an hour person. So that works whenever you're cold calling maybe things like that.

20:41But when you're spending $300 a lead, that's not in my opinion the place where you skimp. You know, do that on a disposite maybe or something. — Yeah. — So I see guys doing that. But man, if you call people fast and you get in their living room, you're going to beat most of the guys just by doing those two things.