If someone asked you what some of the keys to real estate investing success are you might say something like “buying in the right location” or “good negotiation skills” or possibly even “great network”. And, you’d be right, but you would also be missing one really important skill that is critical to real estate investing success – direct marketing sills. Direct-marketing skills are essential to almost every aspect of real estate investing… from finding motivated sellers… to buying a property… to finding your ideal buyer… and more.
In fact, mastering direct marketing can help make practically every step of the real estate investing process more profitable and a lot less risky.
When my husband and I were new to real estate investing, we had loosely defined goals. We had decided that we wanted to get rich as quickly as possible, and real estate seemed like the best way to do that without much effort. We’d even set a “goal” of earning $2,000 per month in positive cash flow from real estate within a year.
However, just because you have a measurable outcome and a deadline for achieving it doesn’t mean your goal is feasible.
Our lack of clarity led us to buy properties because they generated a lot of positive cash flow or because we could get the deal done with no money down. We didn’t really think about what we would do with the property when we owned it or who might want to rent it from us.
In fact, one of our no-money-down, positive-cash-flow properties turned into a complete nightmare – landing us in court to defend fire code violations, dealing with a property manager charged with manslaughter, and having 3 of 6 units vacant for more than six months.
This property, which initially seemed like an investors dream because we were able to buy it with practically no money down and then it put $1000/month in our jeans pockets, turned into a $30,000 lesson in what NOT to do.
We couldn’t find new tenants, nobody would manage it for us and then, of course, there wasn’t a single person out there that wanted to buy it from us when we couldn’t handle it anymore!
Had we focused on some fundamental marketing principles before buying that property, we’d have never considered it.
Here are three direct marketing principles you should know before you buy a rental property:
Direct-Marketing Principle #1. It’s Always About Your Target Market
As a real estate investor, one of the biggest risks you’ll ever have to deal with is carrying the costs of a vacant property. Empty units can suck the profit from a property in a single month, and consecutive months of vacancies can sink you.
How do you minimize this risk? You figure out who is most likely to live in your prospective property what they want in a home.
Spend a bit of time figuring out what your prospective tenants will want. Visit open houses in the area and chat with realtors or call a few property managers in the city. Ask them about must-have features. Ask them about the people who are renting. Why are they choosing this location (is it a local school, easy access to transportation or some other feature that is attracting them to the area)?
Then walk around and chat with people in coffee shops and parks. Find out where they work, what they like about the area, and other general information. And pay close attention to apartment buildings with no-vacancy signs. What size are the units? Where are they located – near a subway or bus stop, across from a park or something else that might be drawing tenants? Do they have any special amenities?
Pretty soon it will become apparent what it is that tenants in the area are hungry for. You might learn that air conditioners are a critical feature for a rental or maybe any 2-bedroom units with dishwashers, or 3-bedroom homes near George Washington Jr. High School always rent out quickly. That’s the kind of property you want to buy.
Had we done more research before we purchased our six-unit disaster, we’d have realized that a crowd of drug users, drug dealers, and other shady characters were happily occupying that entire block. Even if we’d fixed up our property, the neighboring properties would deter good tenants from renting from us. We didn’t consider who our ideal tenants were. Instead, we made the mistake of focusing on the fact that we could strike a deal that enabled us to buy the property for no money down.
Direct-Marketing Principle #2. Create a Unique Selling Proposition (USP) for the Property
Creating a USP for a rental property doesn’t mean that you are looking to find a property that has some feature no other properties in the area have. But you do want to ensure that the property you’re buying has appeal to your ideal tenant. The more appealing it is to your target market, the higher the rent you can command, and the easier it will be to sell at a great price in the future.
So find the USP for a property before you buy it. Imagine yourself placing ads to attract tenants, and even imagine yourself selling it in the future. What will you say about it? Is it positioned for perfect sunset viewing? Is it a short walk to fabulous shopping? Does it sit on a peaceful and beautiful street? Does it have a gorgeous yard that brings a country feeling into the city?
If you’re looking at a property and you can’t find or create a USP for it, you could find yourself struggling to rent it if the competition for tenants gets tough. Or, in the case of our property, you will have trouble finding tenants, property managers and future buyers of the property.
Direct-Marketing Principle #3. Focus on Benefits Not Features
When you write an ad to attract tenants to your property, base it on the juicy USP you created – and include plenty of additional benefits that tenants will enjoy by living there.
The typical ad – “Freshly painted 2 bedroom 1 1/2 bath apartment on Beach Street, dishwasher, washer/dryer, hardwood floors available September 1? – is all features. Instead, you want to focus on things like the spectacular view or the apartment’s easy access to award-winning schools or that it is steps from the trendy shopping district in the city.
It’s important to appeal to the positive emotions that might make someone want to buy your house. Remember you aren’t trying to rent your property to just anyone. You have a target market – an ideal tenant – in mind. And you’ve created your USP thinking about what will attract that person to your property.
Place that same emphasis on your prospect’s emotions when you write an ad to attract the best tenants at the highest price. Describe how convenient and comfortable your apartment will be for your prospect. Allow them to imagine themselves enjoying their life in their new home.
Apply the above direct-marketing techniques to your real estate investing efforts, and you’ll find yourself buying easy to rent properties and making a lot more money from them along the way.
About the Author:
Julie Broad created a multimillion dollar real estate portfolio in her spare time. Get a copy of her free report for making money with real estate at: http://www.revenuewithrealestate.com/
