Advanced Option Strategies » Real Estate Investing

The 5 Most Effective Marketing Strategies for Real Estate Investors

admin — Wed, 13 Jan 2010 19:20:25 +0000

Having been involved in real estate investing for little while now, I’ve become very familiar with various marketing strategies. And along the way, I also found out which methods generated leads, and which ones didn’t.
One thing to note is that everyone will experience different results with their respective marketing campaign. Two different people in the same market could be doing the same exact thing and get very different results.
And two different individuals, in two different markets can get similar results. That’s just the nature of the beast.
But there is a secret to this; there is no secret! You have to test each strategy in your particular market to find out which one works for you. And when I say test, I mean test.
For example, don’t send out 5,000 letters to a mailing list that you’ve never tried. That defies all common sense. In that example, I would send out 200 letters and see what the results are before diving in headfirst.
I recommend that you apply this methodology across all the strategies below until you find the one that works the best for you.
So, in my opinion, the following are the top 5 real estate marketing strategies (in order of effectiveness and quality of leads):
1. Apparel/Human Advertising
2. Direct Mail
3. Cold Calling
4. Bandit Signs
5. Newspaper/Yellow Page Ads
Apparel/Human Advertising
This is my favorite way to generate leads. Why? Simple. Because leads come to me, instead of me chasing them. Let me first explain what “apparel/human advertising” is. I define it as “wearing your business,” meaning that you display and promote your services on your apparel and clothing.
I simply put on a shirt that markets my services whenever I go out — to the mall, grocery store, post office, doctor’s office, etc. — and people come up to me to talk about real estate and their specific situation. It will surprise you how many people will approach you.
And the quality of leads is also high. You know why? Because people instantly and clearly know that you are a real estate investor and will only approach you if they are serious.
For example, I wore my “Private Lender” t-shirt the last time I visited my doctor. Once he read my shirt, he couldn’t stop talking about real estate and how he has been looking for places to invest his money. Bingo, now he has the answer, and I secured another private lender to my stable.
And guess what? He has other friends who are doctors, dentists, and lawyers who have money to invest. Now you can see why I like this strategy so much.
-Most inexpensive method
-Instant, direct way of telling people what you do; face to face contact
-Only works if you wear the apparel
-Only works where you are
Direct Mail
There are several ways to employ a direct mail campaign. I’ve attended several seminars run by real estate “gurus,” and each guru will swear by their own program. So, being the pragmatist that I am, I tried a majority of them.
I’ve ran marketing campaigns using postcards, handwritten letters, professional letters, and even USPS priority mail. Out of all the campaigns, handwritten letters generated the most leads.
On a good campaign, I received 25% response, which is astronomical. Don’t expect this high of a response rate every time. My average response rate hovers around 10%.
-Direct mail isn’t cheap. It is the most expensive strategy.
-You must choose your mailing list wisely and get it from a credible source
-Depending on the list, you will receive letters that could not be delivered
-Most homeowners will respond only after multiple mailings (experts say 7 contacts is the magic number).
Cold Calling
How many people can truly say that cold calling strangers is something that excites them? Probably not many, because most people inherently avoid unfamiliar territory. It’s time to get past that fear and get out of that mindset, because cold calling is by far one of the most effective strategies out there, especially if you are going after the preforeclosure market.
First, you need to get a list of individuals to call. If you are marketing to preforeclosures, there are several services that will provide phone numbers of homeowners facing foreclosure. Second, you need to practice your call script. Know what you want to say and how to respond to objections. And practice this over and over until it is second nature–and then practice once more. You get the point.
Being able to respond intelligently to the homeowner’s concerns will build credibility and rapport. Those are the two most important things to construct during a cold call. Remember, you are a stranger who they know nothing about.
Thirdly, be able to prescreen each caller efficiently and effectively. Gain a true understanding of their situation, and obtain enough information to analyze the property to see if it fits your criteria. And finally, if the property meets your criteria, be able to close, whether it means getting an appointment to view the property or actually agree to sales terms.
-Very effective — when you get in contact with homeowner
-Targeted to only those you want to market to
-Easy way to build rapport with homeowner due to personal contact
-Calling strangers asking to buy their house is not on the top of most people’s list
-Can be time consuming and can only market to people you actually talk to
Bandit Signs
If you’re not familiar, bandit signs are those PVC signs you might see plastered around town, reading “I Buy Houses, Any Condition, Any Price.” They are usually attached to wooden posts near busy intersections.
Before you go putting these signs up, check with your city’s rules and regulations because bandit signs are illegal in many cities. You can be fined heavily if caught.
The effectiveness of bandit signs is up for debate. A few years ago, I would have said that bandit signs worked great. But now they are everywhere and commonplace, people might be numb to them. Nevertheless, if you are the only sign posted, people will notice.
And if you pepper your farm area heavily, you will generate leads from bandit signs. Bandit signs are relatively inexpensive, roughly $2/sign, and you can hire people to post them. But you might have to have to put the signs up every 2-4 weeks, depending on how fast the “sign police” in your market do their clean sweep of the area.
-Inexpensive strategy
-Can reach a broad audience if you want
-Not targeted; “shotgun” approach
-May be illegal in your city
-Frowned-upon by some individuals as “eyesores”
Newspaper/Phone Book Ads
Like all service providers, placing an advertisement in the newspaper or phone book is always an option. But let me stop you here. This type of marketing has been by far the least effective method for me. It is expensive, sometimes prohibitively costly depending on your market, and is not targeted.
Sure, it can reach a broad audience, but is not worth the cost of the ad for me. And like all other ads, you will be clumped together with all other companies that provide similar services. So it’s hard for you to stand out, relative to the other marketing strategies already covered.
Like I said, I’ve had very bad results from placing these type of ads. So bad, that for one of my phone book ads, I only received 2 calls over the course of a year. And one of them asked me if I buy mobile homes! That might be an opportunity for some investors, but that doesn’t float my boat.
-Can reach a broad audience
-Very costly
-Not targeted
-Doesn’t generate quality leads (for real estate investor purposes)
Now that I’ve covered the top 5 marketing strategies, I hope that you have a better understanding of what you want to employ in your business. But remember to test more than one strategy in your market to see what gets you the best results. This is the only way that you will find what works in your market. Go out there and make it happen!

Strategies For Successful Real Estate Investing

admin — Fri, 08 Jan 2010 19:24:23 +0000

The continuing rise in population all over the world makes real estate investment a very profitable option.
There is a continuing demand for quality living space as family and businesses continue to expand.
Logically, this scenario assures that a piece of real estate would inevitably bring in higher returns in the form asset appreciation and/or rental.
However, before you jump in and buy an investment property, follow these three simple ways to ensure your success in the market.
Set a budgetary limitation for the purchase of the property.
In any type of investment, you should make a realistic estimate of your financial capabilities.
You do not have to set aside cash for the entire value of the property since you can purchase on mortgage but surely lending banks would ask and evaluate your financial position.
Make a thorough investigation on the investment property.
Before making an offer on any property, make sure that the title is clean and does not have any encumbrances or liens.
Additionally, you should perform a detailed study of the trends and developments in the real estate market. In making a decision on where to buy: concentrate your search closer to your area or within your state; look for growth potential in developing areas; make it a habit to inspect the property personally and the general area before making the decision and limit your short-list to areas with good infrastructure and utility services as these bring in higher returns.
Set a realistic time frame within which to sell the acquired property.
Determine the probable number of months (or years) within which you can hold the property before selling it at a profit.
Make real estate acquisition and investment a continuing business.
Real estate investment is not a one-time affair if you are to seriously consider real estate properties as an important element of your investment portfolio. You have to be an active investor and continually on the lookout for lucrative and profitable opportunities ones.
If you do suffer a setback in one deal (a breakeven sale), do not let it dampen your spirit but learn from your mistakes. Use your mistake as a learning experience to make wiser and better choices.
Real estate investment is very much like a military operation, it requires careful planning, attention to details and systematic execution and it is the best way to make multiply your hard-earned money faster. As long as you do your homework and prepare systematically, everything should go very smoothly regardless of market conditions.

Jeff Adams Marketing Strategy in Real Estate

admin — Sat, 02 Jan 2010 19:22:57 +0000

Jeff Adams is a full time investor. He has completed more than 350 transactions. He is a prominent figure in real estate business. His view points & evaluations have always received extensive admiration & considerable applicability. In real estate industry, he is rated as one of the doyens whose words matter most in deciding he roof over the head. When a lawyer is chosen, he should be extremely knowledgeable in legal nuances & intricacies. He should be adequately talented in dispensing legal know how in times of need. Housing prices are on the decline due to economic downturn witnessed in capitalist countries where private industries are pampered by the respective governments all over the world. The huge losses experienced by major banks & the sacking o thousands of employees in many top notch industries indicate a precarious stalemate due to economic slowdown. Many companies are in need of “bail out” schemes introduced by respective governments. As a result, housing prices progressively fall down. The crisis in the mortgage industry caused the prices of houses to tumble down. Investing in single family homes would be an advisable proposition. As the number of houses in foreclosure mode in the present market conditions is making an upward trend, exploring the current scenario will make you a successful investor. Investing in real estate business is a wise decision as the land value always increases; the profit share also gallops exponentially. Futuristic estimations about market movements will fetch multiple profits. As the foreclosure options are prevalent due to economic recession, buyers can have a great deal. At the same time, investors are helping the hapless property owners & thereby they are stimulating the stagnant economy. Remodeling or renovating is a formidable challenge. But, after spending enormous amounts for refashioning the house & if it brings less than projected profit, it is not a worthy idea. Discussing different options about the house to be bought with a builder is not an idea to be avoided. By discussing with him, you can create a clear picture about your needs & demands. Even though the present times are not financially favorable, one need not lose hope. You have to plan other viable alternatives to make money. You may be considering the option of investing in real estate business but, you have to think about what type of real estate you want to invest in. It is a not a “Man’s World” as it is presumed to be. Thousands of women entrepreneurs are making a mark in business & industry, once supposed to be the domain of men. Elderly people are of the impression that they are too old to invest in any business. This is a wrong notion. In fact, maturity & wisdom are the results of seniority. They gain by making wise decisions. Land trust agreement is comparatively a new phenomenon which is often undervalued. Preferring to close a deal through this agreement is a simple method of ownership right management. Newspapers & online articles paint a pessimistic picture about the economic slump but, in reality, land ownership business is not dipping. Digital communication has revolutionized the concept of administration. Board room meetings have been replaced with online conferencing. In this era of technology domination, having a website will bring reputation & business flow. You must have avenues to utilize the services of a notary public with regard to documentation process. By referring to the websites of some of your competitors you can conclude about the usual terms & conditions which they employ. Real estate business is a quick & remunerative process of making big money in a short period, as accepted by many investors. Banks are not ready to loan out money due to the present economic slowdown. So, you have to find out other sources. Internet has brought the people closer, akin to other technological innovations like phones & fax. Social networking sites have become the order of the day. Entrepreneurs can chat with one another to improve their market share. Your sharp wits & shrewd sense will help you in defining your avocations & refining you strategies. All business ventures have a visual identity. Your business fingerprint or brand value will make you stand apart from some of your competitors. Creating a name, a blog or a logo will enhance your credibility & goodwill, globally & locally & your business promotion will reach a glorious benchmark.

Real Estate Investing and Lease Options

admin — Wed, 30 Dec 2009 19:30:35 +0000

There is never an ideal market condition to invest in the real estate market. The real estate market is open for investment through out the year. Successful real estate investors always make it their priority to understand what their designated target market is. Besides, it is necessary for an investor to understand the fluctuations in the market. However, there is another strategy that is always underutilized in real estate investing, the option/lease strategy.
A great method to purchase your real estate investments, the lease/option strategy requires very little finance. However, the lease/option is used more as an alternative than a financing strategy because you have not yet received ownership rights on the leased property. A pending foreclosure is one such example where the lease/option is used. There are many reasons why a lease/option is used instead of an outright sale. Home/property owners, looking to auction their property, favor a lease/option, as they do not have appropriate or enough equity for their property through traditional methods. For example, if the property were exceeding its market value, the owner would need to offer an increment in the real estate agent commission. On the other hand, homebuyers who are up against a financial crisis would want to test the profitability of the house or the neighborhood.
The Sandwich lease option is the most commonly practiced strategy in real estate. It requires two lease documents, one between the owner and the investor and the second, between the buyer and the investor. An investor would lease a property with an option to buy it in three years. A tenant/buyer would lease the property from the investor with an option to buy it in two years. When the lease of the tenant/buyer is about to expire, the investor can exercise his option, buy the property and sell it to the tenant/buyer.
Further, a basic lease/option strategy includes two legal documents, a lease agreement and an option. The right to possess the property is offered by the lease document, or, as an investor, you can offer the property to someone else for temporary occupation. Most investors who obtain a lease on a property at lower mortgage rate can sublease it for the appropriate one.
A lease offers the investor the right of possession. Stated under a lease agreement is that the landlord (lessor) offers the tenant (lessee) the right to possess and enjoy the property, which is considered the most important benefit of real estate ownership. Though, the tenant does not handle the property taxes and repairs. Once the right to possession of property has been acquired, an investor can profit by subletting or assigning his right to possession.
An option, which is offered with the lease, is the right to buy a property. It is considered a unilateral (one-way) agreement, where the seller is obligated to sell the property, but the investor is not obligated to buy. The investor receives the right to buy and control the property. The investor can market the property and sell it for a profit. Such a property, if controlled for long in an appreciating market, collects additional value. A lease/option is created combining a lease and an option.

Exit Strategy

admin — Sat, 28 Nov 2009 07:30:47 +0000

The most important consideration that you need to make while investing in Maryland Real Estate is how you will get out of the deal. But it is true. An investor has one target in mind — profit. But earning the desired profit and securing it requires a comprehensive plan, and this is what we call the ‘exit strategy’. Put in simpler words, it means when and how you plan to sell your property.

Apart from maximizing profits, an exit strategy can also help a real estate investor in Maryland cut losses if anything falls out of place. An investor can make an exit strategy for all contingencies like slump in the real estate market of Maryland, not finding the right buyer or tenant.

Various factors can affect the selection of the right exit strategy. The first thing that an investor needs to select the right exit strategy for his real estate investment in Maryland is clarity of goal. The investor must decide the nature of income he wants from his property and the time when he wants to cash his real estate investment in Maryland. External factors that affect the selection of an exit strategy include local infrastructural development, market behavior, nature of investment etc. Depending on these factors the investor can consider all options available to exit a real estate investment in Maryland. Some of the exit strategy options could be tax deferred exchanges, creating trusts, joint ownerships, installment sales etc. Let us see using an example how an investor can choose from these options.

Consider an investor who had invested in real estate in Maryland and has sold a property now. The sale has given him huge profits, but after making some calculations he realizes that he might lose a huge chink of this profit in tax. In this case the investor can opt for internal revenue code (IRC) section 1031. This exchange can be used for “property help for productive use in business”. Under this exchange the investor has the advantage of tax deferral on capital gains earned from the sale if he exchanges the property for a “like kind” property. This way the investor is not liable for paying the tax on his profit and can use his money to invest in other properties.

The investor can even plan for his heirs to inherit the property. He can gift it to them in portions don’t exceed the limit of annual gift tax exclusion, i.e. $12000 or even set up a Family Limited Partnership (FLP) and gift limited partnership interests to his heirs.

Let’s study a case where the investor is not looking for immediate liquidation of his real estate investment in Maryland. The investor has the option of opting for ‘tenancy in common’. Usually, investors opt for tenancy in common when they want to own a portion in a fast-developing high-end commercial property. It could be a multiplex, mall or even an office building. This way they also get rid of the liability to maintain the property and are free to sell it whenever they want.

An investor looking to create a regular stream of income from his property in Maryland can opt for installment sale options. This way he also ensures that the tax due on his sale is not payable at once and is divided on a yearly basis.

Another way of avoiding lump sum payment of tax is creation of trusts such as Annuity Trust (PAT) or Charitable Remainder Trust (CRT). These options also ensure a regular stream of income and the investor can also earn interest of the tax deferred over a span of time.

These are just a few examples. A real estate investor in Maryland can opt for various other exit strategies, alone or in combination. But he must take financial advice from an attorney and a tax advisor while selecting a strategy.

Real Estate Lease-Option Break Through

admin — Fri, 27 Nov 2009 23:44:23 +0000

One of today’s most profitable real estate investing tactics is using a combination of leases and options. Here’s how it works:You are an investor who buys and sells rental homes for profit. There are many ways to negotiate the purchase of a home. Of course, you can always make a purchase offer that includes your cash down payment coupled with a new mortgage loan.Even with low down payments few investors have enough cash to do more than one or two deals.No, it just not practical to tie up cash in each deal of you plan on buying 8 or 10 investment properties. These days many investors find a motivated seller who will listen to a more creative offer. The investor explains why it is in the seller’s best interest to lease the home to the investor with an option to buy in some set period of time. Often the term of the purchase option will be from 1 to 5 years.At some point the investor will want to sell a property to get to the cash profit. One of the ways to sell a home for top dollar is to sell it on a lease with option to purchase. Often the investor can offer a buyer with weak credit the opportunity to buy a home when no one else will.Because the buyer has a low credit rating the investor is entitled to a little more profit for taking the risk. This enables the investor to price the home 10% or 15% above market value and get a monthly payment 10% or 15% above normal.The buyer is happy. They are able to own a home and begin building equity. The investor is happy. He makes a greater profit and the tenant/buyer treats the home as if they own it… as they can within a few months.Often the trick is to find a buyer who is worthy of such a deal. Eureka! There is now a service, LeasePurchaseLeads found on the internet, that has list of tenant/buyers that are motivated, ready to move, already have a down payment, understand how a lease purchase works, and are serious about moving in?To narrow it down even further, the tenant/buyers on the LeasePurchaseLeads list tell you exactly what kind of house they need, and where it needs to be. The investor then looks the list over and selects the ones with the highest down payment, and/or the ones that are ready to move right now looking for a home like the investor’s. There’s no fee to join the service and no fee to look over the list of potential lease option buyers. The investor only pays a nominal fee to get the name and phone number of anyone on the list that seems to be an ideal buyer.If you’ve ever had to spend time search for suitable lease option buyers you’ll recognize the value of this service. It will cut your vacancy time factor way down.Long live the lease option strategy!