Episode 198: Finding Motivated Sellers

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Show Notes

Today, In this episode, David and Mike talk about how to finding a motivated seller when it comes to Wholesale in Real Estate and they break down the 2 categories. You can learn a lot from this episode. Check this out!

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Things that will cover in this episode:

  • Finding Motivated Sellers in Wholesale Real Estate
  • 2 categories in finding motivated sellers
    • Non-list Marketing
    • List Marketing
  • Non-list Marketing
    • Driving for dollars
    • Networking
    • Radio Ads
    • Online Ads
    • Bandit Signs
  • List Marketing
    • Cold Calling
    • Cold Texting
    • Direct Mail
    • Voice Broadcast
  • Advantages of Non-list and List Marketing

SERVICES MENTIONED IN THIS EPISODE:

Welcome back to the Discount Property Investor podcast. Our mission is to share what we have learned from our experience and the experience of others to help you make more money investing like a pro. We want to teach you how to create wealth by investing in real estate, the discount property investor way. To jumpstart your real estate investing career, visit freewholesalecourse.com, the most complete free course on wholesaling real estate ever. Thanks for tuning in.

David: And we are live.

Mike: Dave, how are you man?

David: I am doing good Mike.

Mike: Good, what are we gonna talk about today?

David: Finding motivated sellers.

Mike: Awesome.

David: For your wholesale deals when it comes to wholesaling real estate.

Mike: Awesome, yeah so I guess-

David: Or just investing in general, I guess.

Mike: Motivated sellers, so again the number one thing when it comes to real estate investing, you have to buy right, right? You have to have a deal in order to make any money so finding a motivated seller is of the utmost importance or finding a seller that is willing to sell at a discount, hence discount property investors, right? Cool, so let’s talk about some of the ways that we are finding success or having success rather, finding motivated sellers right now.

David: Okay, so I’m going to break it down into 2 categories.

Mike: Okay, I like that.

David: I wanna break it down into list and non-list marketing.

Mike: Okay.

David: Okay.

Mike: I can play along.

David: Okay, so the two or I should say the three things that we do that are non-list based marketing, one is drive for dollars, two is networking and three would be our radio ads. Those three types of marketing don’t require a list. Driving for dollars, you actually build a list, your own list but it’s not a purchasable list, you have to create it.

Mike: Say again what you got. You got-

David: Driving for dollars.

Mike: You don’t need to buy a list.

David: You don’t need to buy a list, you’re creating it but you’re not buying a list. Everything else, you have to buy a list to do it, basically or create a list.

Mike: Keep going, which ones- what else you got?

David: So, driving for dollars.

Mike: Driving for dollars.

David: Networking.

Mike: Okay, networking yeah.

David: The radio ads that we have running.

Mike: Is that it?

David: And that’s the only- those are the three.

Mike: So, I’ve also put- you’ve also got- so, online ads, you wouldn’t necessarily need a list.

David: Okay, that’s a good point. That’s off market, or off list as well.

Mike: One more is bandit signs.

David: Oh, I didn’t think of those two.

Mike: [inaudible] There’s plenty of ways to market, that’s [inaudible].

David: That’s great Mike.

Mike: Plenty of ways to find it.

David: And then the bandit signs. Okay, no that’s good but that’s basically the ways without a list.

Mike: Correct.

David: That you can go and you can market, and there’s- we’re probably leaving some of those off but that’s the main ways.

Mike: Those are the ones that we are using currently.

David: Absolutely.

Mike: Having success with. Yeah, so those are non-list ones, okay.

David: So we got one, two, three, four, about five of them give or take, okay. And then we have the ones that are list- you know a better way to word it would be list dependent,. Is it list dependent or not, right? So the next ways are list dependent. Now, you can use a driving for dollars list or you can purchase a list, but the next ways require a list and what are those? Well typically cold calling, even if you don’t have a list made in advance, you’re making it when you go search for that stuff like what’s for sale and what’s for rent? Right?

Mike: Right.

David: Cold texting which is very in line with cold calling. Any type of RVM or voice broadcast, which is another-

Mike: So, RVM is a ringless voicemail.

David: Ringless voicemail.

Mike: And a voice broadcast is just like it sounds, it sends a recorded message so like you pick up the phone and then it just starts playing a recorded message, so a voice broadcast.

David: Direct Mail.

Mike: Got to have a list to mail to.

David: Got to have a list to mail to. We mentioned bandit signs above, online ads above.

Mike: One, two, three, four- and then the new one and we haven’t really utilized this yet but you had mentioned it earlier today to me is called GoKnock.

David: Yep, and you don’t need a list however-

Mike: It has a list.

David: It has a list in it.

Mike: Yeah, it’s kind of a different one, we’ll talk about it [inaudible]

David: Yeah, you pay to access a list that changes in real time, and then you can then go knock on their door or just use that to call them and text them. You don’t have to knock necessarily, but it’s actually designed for knocking.

Mike: Yeah.

David: But I would call that a list because even though-

Mike: It’s list dependent.

David: It’s list dependent. Even though you’re not importing a list, you’re purchasing access to a list.

Mike: Exactly.

David: So, it’s list dependent, okay. And that’s basically again the main ways to go about finding motivated sellers in my opinion.

Mike: Cool. so let’s go- lets talk about-

David: There’s about 40 other ways, maybe 50 more easily but 80/20 principle, this is 80% if not 90%.

Mike: This gets 80% of our efforts and attention.

David: Correct.

Mike: No, it gets 20% of our- I don’t know. It generates most of our deals.

David: It generates 80% of the leads, put it that way.

Mike: Yeah, 20% of our effort, 80% of our leads, right?

David: Effort’s totally different just talk about leads.

Mike: Well, 80/20, you’re doing 80/20, I’m stuck on that.

David: Yeah, I know but I’m saying is you got leads coming in, 80% of them are coming from this regardless.

Mike: Okay, yeah I agree with you.

David: So all the efforts, all of them, right?

Mike: Yeah, I agree with you.

David: Okay, so-

Mike: Let’s talk about each one a little bit then.

David: Absolutely, so when it comes to the non-list dependent types, radio, I think also could go with billboard and/or television, you can group that together as like a mass, call it a mass media. Those are great because you’re going to get a lot of eyeballs on those types of marketing however, they’re going to be expensive, that’s gonna be the downside.

Mike: There’s also very little effort which is nice.

David: Very little effort.

Mike: It’s like you set it up and maybe you gotta go record an ad or film a commercial or get your billboard figured out but then once it’s up, it’s very hands-off which is nice.

David: It is and I love that and you know- and the great thing about marketing to non-list dependent type of marketing is you may miss a lot of motivated people that aren’t on your list, so you know the idea with the non-list is it’s more mass. So, you may have somebody that doesn’t live in the city but owns property, but they come into town and then they hear that. Well, there’d be no other way for them to hear that messages if they were here cuz it’s radio right? Yeah might be 30, 40 miles but you still got to be here. So, I really like those because you know automated, widespread, not necessarily very targeted, but it’s great because it’s very wide, you’re casting a huge wide net. Now, on the flip side of not being targeted, next I would say PPC or really just any type of online advertisement, that could be an ad on Facebook, Google, YouTube, LinkedIn, saying that I buy houses for cash and I’m looking to buy some more, what you got? I’m here to help. So, that would be the online avenue, again, not list dependent, instead you’re targeting and you’re looking for keywords and clicks. Next, we talked about networking and you can get- you can find motivated sellers from networking. We get a lot of them, we probably get 10-20% of our leads from networking. All the other agents and investors know we buy houses and properties and flip them and rehab them and own rentals and we get a lot of leads that way, but networking is going to build, it’s going to snow ball. You’re not going to get a bunch of deals from it right off the bat but the sooner you start networking and telling everybody your business, the sooner you’ll gonna see, reciprocate, you know see a return on that.

Mike: Yeah, 100% and networking, another one, you guys are online watching us right now and another one is utilize your social networks as well. So, you can go into Facebook and Dave is very adamant, it’s true he posts once a month or so, once a week or-

David: I try to do it every 3 or 4 weeks, and everybody knows at this point and they laugh when they see it cuz they’re just like man, you are relentless and I’m like if you don’t know what I do, how can I help you? How can I get paid?

Mike: I want to buy a house.

David: I want everybody to know-

Mike: I want to buy a house.

David: That if there’s a house in St. Louis that I can get at 50 cents on the dollar, I’ll be there in 4 to 6 hours.

Mike: Well it’s true though, like a good deal, we jump on man, we’re there. So, networking, alright.

David: Okay, networking, bandit signs, non-list dependent, okay? Similar to the radio, anybody can drive by it. It’s all about traffic so you want to put those in areas where you can have a lot of traffic or near areas you’re going to see or- you want to invest in, but you may have a person driving in an area that sees a sign that doesn’t live there too, so really just bandit signs are just another mass media way of getting your message out.

Mike: I would say that yeah, it is and it’s kind of like a scale. When you start out, you’re probably not gonna have the money for your marketing to go straight to a billboard ad, but if you’ve got a few dollars, you can buy some bandit signs and you can put bandit signs out there. Again, it’s not the- you know, it’s not as high dollar and it’s not going to stay as long. It’s a bandit sign, it may last for a week, it may last for a month, it may last for a weekend, you know, out there on the side of the road but it doesn’t cost as much so it’s a cheaper way, there’s a lower barrier of entry.

David: Yeah, people can- you can make your own bandit signs. You got a bunch of cardboard, go card- go dumpster diving and find some cardboard you got for bandit signs.

Mike: Exactly, I know you’re ordering stuff on Amazon so cut those boxes up.

David: Yeah, every box is a bandit sign. 100%, absolutely.

Mike: Cut those boxes up and put them out there.

David: So moving on, moving on. So, we talked about the radio, we talked about mass media,  talked about online advertisement, talked about bandit signs, talked about networking, last but not least would be driving for dollars. It’s my favorite of the non-list dependent types of marketing for motivated sellers, number one.

Mike: Why is it your favorite Dave?

David: I love it because you’re getting properties that aren’t- they may or may not be on other lists that you can purchase but a) you’re building your own list, its unique to you so you can never buy that same list, right? Secondly, you’re finding properties that are distressed today versus doing a lot of mail. You can’t go drive every property you’re going to mail, why would you? That’s- that would be a waste of time but if I’m only targeting houses where they’re board up windows, the gutters are falling off, the grass hasn’t been cut in two to three months, not two to three weeks, two to three months like tall, tall grass, if there’s a broken down car in the driveway, all right. I figured that you know, there’s a problem happening somewhere. It may be with the person, it may be with the house, but it shows with the house, that’s for certain. So, those properties typically have a higher rate of getting you in touch with a motivated seller. Also, it’s very difficult to buy a property at 50, 60, 70 cents on the dollar when it needs no repairs, think of that too. So, if you can find houses that need repairs, it is going to be a whole hell of a lot easier to get a massive discount on it or even a slight discount, but a discount nevertheless. That’s my point when it comes to driving for dollars.

Mike: The reason driving for dollars is my favorite way is because you’re in areas that you are interested in buying in. So, we are investors here in St. Louis and we’re building a rental portfolio, we buy and flip, and sell turn keys, and we flip houses all that stuff but when we are in an area that we like, we’re- we’re in an area we like, it’s just that simple. So, then we can see which properties need a little work and might need to be sold so it’s great, we- yeah, I mean driving for dollars is awesome. So, what is driving for dollars and how you do it? It’s as simple as hopping in your car or getting on your bike, Dave I know sometimes likes to bike for dollars.

David: I love it.

Mike: I’ve run for dollars, you don’t get quite as far with that, but yeah so you get in the car and you drive around the neighborhood, you’re looking for vacant properties or distressed properties that there might be an owner who is motivated to sell and that’s basically what you’re doing driving for dollars, that’s step 1. Step 2, you are going to then locate that owner, so you have to find that owner. Step 3, make contact with the owner and offer to buy it and buy that house, that’s kind of how it works. So, you have to find a property then you have to dig up and figure out who the owner of that property is and then you have to make contact with them. So, each one of those steps takes a little bit of time and effort. What Dave I think is just posting is that we use this really cool app, it’s called the deal machine app, right?

David: Yup.

Mike: And there’s a free trial, I put a link there. We’ll put that in the show notes.

David: Here it goes, I got it up on the screen for you guys.

Mike: Sweet, so if you’re watching, you can see that. We’ll add a link in the show notes as well or you can visit DPIpodcast.com/toolkit, go to our toolkit side and we’ve got all of our links there.

David: Yeah, don’t worry about all that. Just go to the deal machine app and use the code Dave.

Mike: That works too.

David: And they’ll get 15 free credits to use to test out skip tracing and direct mail which is awesome, but also a 14 day trial too. So, deal machine’s great, the reason I like driving for dollars so much is because a) we talked about it earlier, you can find the properties that need the most repairs, but those people typically are happy to talk to you when you do reach them. When you do a lot of mass cold calling, cold texting, we do all these as well even mail, there’s not very much presumed motivation. Even if you have a list of death, divorce, disease, whatever it might be, there’s still not necessarily a whole lot of presumed motivation, but when you have a house that literally has a hole in the roof, regardless if it’s occupied or vacant, right? You would assume that they know that and if not, inform them,  educate them on it, right? And when they do notice they’re going to say, okay now I really need to do something with this because every day, every week, every month that I wait, that house is deteriorating and molding and getting worse and worse. So by driving for dollars, you can really really locate the worst of the worst and put that on a list to market to. Now, when we drive for dollars, that- the act of driving for dollars itself is just creating a list. It’s a non-dependent way of marketing, but it’s creating the list, then from there, you’re going to take it and you’re going to move it over to the list dependent types of marketing.

Mike: Right, exactly. So, then you have to contact the owner like I was saying or figure out how to contact the owner and work with that owner, etcetera, etcetera.

David: Correct.

Mike: Cool. Let’s do the next one, so I think we’ve covered all the-

David: So that’s the non-

Mike: Non-list.

David: Non-list dependents, yup.

Mike: So, let’s talk about some of our list dependent.

David: Absolutely.

Mike: Ways that we market or place- first off lets start with-

David: Lists.

Mike: How do you find lists, yeah.

David: Yup, absolutely.

Mike: What’s a list and why is it important?

David: So, one way would be to drive for dollars.

Mike: And you’re generating and building your own.

David: And you’re generating your own but if you- but there’s also lots of ways to get lists without driving for dollars. We do both, we love driving for dollars. I think our three biggest deals to date like 60, 80, and 100k, random that those numbers were like that but that’s I think the three biggest wholesales. We just closed a $60,000 fix and flip today, which is sweet but neither here nor there, wholesales all have come from the driving for dollars. So, one way to get the list will be that of course, the other way to go about getting a list we would recommend would be to get a Propstream subscription and the reason is because with Propstream, you can pull lists for about one penny. It’s about a hundred bucks a month and you get 10,000 exports. So, do the math, that’s $0.01 per motivated seller lead, but the cool thing is if you don’t pull all 10,000, you can also pull cash buyers and you can run comps with this software. So for a hundred bucks a month, I would say it would probably be the most useful thing, most useful tool in my belt.

Mike: 10,000 is a ton.

David: That’s the minimum package too.

Mike: Is a ton of leads too, like for a list.

David: Yup.

Mike: So, when I started and I think Dave you were more on the direct mail bandwagon when you started as well. I mean to send 10,000 postcards, I mean figure about $0.50 for a first class stamp for $0.50 to get a postcard and the postage on there, you’re talkin about almost $5,000 to send 10,000 postcards. Like, that is a huge cost so again, you’re probably not going to be mailing 10,000 postcards your first month, so that is a huge number of leads that you can export from their system, more than any one person is going to be able to work and some of the next ways that we discuss of finding and contacting motivated sellers. So, the next one.

David: Yup, well why do we use Propstream though?

Mike: Sure, go for it.

David: So, check this out guys.

Mike: Well, Propstream- yeah, yeah, yeah.

David: So check this out, this is great. So, when Mike and I started wholesaling full-time five years ago, six years ago, we were both using ListSource and occasionally Listability, and I remember when I first started, I was paying anywhere from like 17 to 25 cents a lead five years ago, and then we were introduced to Leeds for I think for 6 cents through one of our direct mail providers, but it was still through ListSource and Listability.

Mike: Right, they just got a deal because they bought so many.

David: Cuz they bought so many.

Mike: Right.

David: But for the last 12 to 15 months, we’ve been using Propstream because it’s $0.01 and we already are using them to run comps anyway.

Mike: Yeah, this is the coolest thing about-

David: So that’s the most amazing thing. That’s why we love them the most because we’re already using them for this other stuff but we get these leads for a penny. It’s amazing, it’s awesome.

Mike: Yeah, well and the thing about Propstream, the reason it’s so, I would say almost critical to someone who wants to wholesale or somebody who’s in the wholesale business. If you’re not an agent and you can’t access the MLS and get comps, you have to be able to figure out what a property is worth and Propstream does a really, really good job of compiling data, big data. So, they take in MLS data, non MLS data, and they give you a really accurate picture of what a property is worth, so very very cool Propstream. So yeah, that’s that’s very very good. So Dave, I was going to start moving down into some of our list dependent types of marketing. So we use Propstream to get the-

David: Get the motivated seller list. I mean, it’s great, you can filter by so many things and you can find very niched lists as well. Favorite list would be driving for dollars, but everything else coming from Propstream, we’re purchasing it. Yeah, so now that we have the list-

Mike: What do we do next?

David: What do we do next?

Mike: So next, your first option and again, this is what I mentioned I think we both started here was direct mail, and direct mail is a staple of real estate investing. I don’t see it ever going away. I get- I can’t even tell you how many letters that we get in the mail, I mean we have-

David: Oh here? to the office?

Mike: Yeah, we got about a hundred doors together roughly and we get I mean, it’s probably- Dave I throw them away now, so I’m sorting the mail almost every day. I come in and I grab the mail on top.

David: Yeah, there’s 5 or 6 a week.

Mike: Well, some days we’ll get like 10 or 15 letters.

David: In a day? Wow.

Mike: Because somebody has pulled the area-

David: Oh all the areas that we might own in?

Mike: Yeah, it’s like oh, looks like they yeah, didn’t filter out LLC’s.

David: Yeah, or duplicates.

Mike: Exactly.

David: Right, right. Okay.

Mike: So yeah, I mean we probably, I would say at least 1 or 2 letters a day. Yeah, one a day.

David: So, people are doing a ton of it.

Mike: It is a ton of mail going out. I still get some in my name to my house, I’m sure you as well.

David: We do a little bit of direct mail ourself guys but not much, most of it is to follow up with people or its really really really niched lists that are smaller. Direct mail is expensive, it works, it always will, but you have the use of the micro- you know the use of the microchip now, which you can automate stuff and send you know cold call, cold text, stuff like that for pennies literally, you know a penny or two to send a text message to somebody or call them versus you know, 50, 60 cents to send a letter and then wait. Again, both methods are great.

Mike: And they work.

David: They work, they all work. Absolutely, absolutely.

Mike: Okay, so that’s one way that you can use your list. The next way you can use your list and the next one-

David: It was direct mail, it was number one, right?

Mike: Direct mail I did was number one.

David: Okay.

Mike: The next three or four, or three, we use in our business, right?

David: Yep.

Mike: And I think we found the more effective, more cost-effective rather and that’s why we’re sticking with it.

David: That’s why we stick with it, right. So, the next 3 are cold calling, cold texting and the use of, we clump RVMs, ringless voice mails and ringless or broadcasts together into one type of marketing because it’s all done with software. You get the list out of Propstream or deal machine and you export them from there, you import them into Mojo dialer or smart dialer into BatchLeads stacker or Batch Voice which will do both the RVM’s as well as the broadcast. The broadcasts are for landlines, you can’t RVM a landline, so you can hit them with broadcast, but they also leave a message with that service as well too, so you’re leaving voicemails on answering machines for landline, so lots of great resources there. The cool thing about cold calling and cold texting is it’s very efficient and the response rates are very very high. When it comes to texting, we typically get about a 75 to 80% accuracy rate on getting the right person, which is really high and then we typically get about a 35 to 40% rate of them responding to us. Now, 90% of those are no, not interested, take me off your list, so on so forth but 30 to 35% of every text message that we send out gets a response.

Mike: It’s awesome.

David: Awesome and it’s about a penny to send a text message with an automated system.

Mike: Versus what was direct mail at last time we did it?

David: 54-

Mike: No, no ,no percent of response rate.

David: Oh, one or two, maybe-

Mike: 2%

David: Yeah, 2%, I mean maybe when we first started it was 3 or 4, but it’s been dropping, I feel like ever since.

Mike: Yeah.

David: You know? It’ll still work, by all means it’s a way to go about getting deals, but there’s  cheaper ways which is what I really liked, you know.

Mike: 100% man.

David: So, that would be the last couple. Again, there’s 40 or 50 other ways to go about finding motivated sellers to market to, but these are the ways that we use and/or like the most. We had mentioned the online advertising up above with the non-dependent as well as the bandit signs and you know, the apps.  GoKnock is another great app similar to driving for dollars.

Mike: It’s pretty new though, isn’t it?

David: Very new yeah, but instead of it- instead of you plotting, it’s list based like we talked about, where it’ll show you the foreclosures or the pre-foreclosures or the tax delinquents, and then you can then go target those as well, so another great resource. So, that would be it guys, two different types of marketing: list dependent, non-list dependent, all of it works. Typically, the stuff that’s going to be- that’s going to cost the most isn’t necessarily going to be best, right? We used to think the AdWords leads were the best, but they were a 150-200 dollars a lead and it’s not necessarily true, sometimes we can send one text message for a penny and get a deal from it, you know, so don’t worry necess- Like you know, don’t think that if you pay more for your marketing that it’s going to be better, it’s not always the case, there’s a lot of inefficiencies and I think that’s about it Mike, anything you want to end with?

Mike: I don’t think so guys. Again, I mean that’s one of the most important things in wholesaling is finding motivated sellers and those are pretty simple breakdown of how we do it. You’re either gonna find a list or not, so.

David: That’s right.

Mike: Or work with a list or not.

David: Alright guys, signing off. Thanks for watching discount property investor podcast.

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