This the third post in a series I am writing on finding distressed properties. Posts 1 & 2 can be found here.
Marketing
Marketing to owners of distressed property is the third method of finding distressed property.
Marketing Costs
For purposes of this post we will define marketing as the process of informing owners of distressed property, that you are interested in purchasing their property.
Almost all forms of marketing will have an out of pocket cost, before you see a return on the marketing investment. These costs may include printing, postage, design, or mass media expenses.
Marketing Budget
It is important to prepare a marketing budget prior to investment in any system. A budget will help you track marketing effectiveness and control spending.
Consistency is key to any marketing strategy. Most marketing takes time to show results. Dividing your marketing budget over months or weeks, will help to develop consistency and prevent you from “betting the ranch” in one marketing blast.
Market to Your Sphere
Each one of us has a sphere of influence that we touch on a regular basis. Our sphere includes friends, family, neighbors, clients, employees/employer, service providers, etc.
The easiest way of informing your sphere of influence that you are in the market for distressed property is through the use of business cards.
Business cards are an inexpensive way of informing others of who you are and what you want. By including a list of desired property characteristics on the back of the card, you remind the holder of what you are seeking.
Direct Mail
Direct mail consists of mailed advertisements to potential sellers. Direct mail is a proven marketing method, but has in general only a 2% response rate.
Printing and postage costs are both associated with direct mail. If first class postage is used, costs can be in excess of $0.50 per marketing piece. These costs add up very quickly and may limit the number of people you are able to reach.
Direct mail will have a greater efficiency if it can be targeted to individuals that have been pre-screened for relevant criteria. Criteria that may be helpful could include property owners, age of property, length of ownership, and building age. Title companies may be able to provide this information to you.
Signage
Bandit signs, fliers, and other types of signs can be used to garner the attention of would be sellers. This type of advertising is more likely to be utilized for residential properties than for commercial properties.
Fliers with your commercial property description could be distributed to local commercial brokers. This may be a way to inform the brokerage community of what you are searching for.
Classified Ads
The classified ads of your local newspaper may be a cost effective means of advertising your desire to buy distressed property.
Typically, those reading the classified section are in search of something specific. Classified users tend to be in the market.
A classified ad stressing that you buy real estate of all shapes and sizes may draw the attention of someone in need of selling or tired of dealing with tenants.
Mass Media
Mass media includes radio, television, and billboards. Though these methods have a broad reach, not everyone that sees or hears your advertisement will be a suitable customer. Thus, in general they are not a cost-effective means of advertising for distressed properties.
Conclusion
While there are many different marketing channels, you must find the method that works best for your property characteristics and fits within your budget. Once a channel begins to produce results, you should re-invest in that channel in order to produce even greater results.
Marketing takes time and requires consistency. Invest in marketing over the long haul in order to reap the rewards.
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