It’s Situational Marketing, Stupid!
From Franklin Cruz, Real Estate Drill Sergeant …
Before you get your underwear all in a bunch, just know that I’m not calling YOU stupid.
This is actually a spin off from a comment where Clinton’s campaign advisor said:
“It’s the economy, stupid,”
...during the early 90s presidential election.
The comment was a reminder to his internal audience of campaign workers to focus on to bring home the big win... and it worked!!
My reason for opening with such an abrupt headline will serve as a reminder from here on about what it’s going to take to win in this market. This little reminder isn’t just for newbies either. Those who are fresh in the real estate investing game almost have an even playing field with the hard core house flippers who cranked out 200+ houses last year. Both groups are sucking all of a sudden because of this sudden shift that requires a strategy called “situational marketing.”
“Lemme splain you how come, Lucy,” (...in my best Ricky Ricardo voice.)
I recently stumbled across a blog post by my buddy Jason “The Money Man” Medley posted on his website where he went into detail on Situational Marketing, what it is and how it works...but basically here’s the gist of it:
Making money in real estate has gone back to the way it was years back where the person who made the money was the person who could locate and put a deal together. And the biggest fundamental shift in putting a deal together is that you actually have to have skills in marketing to generate money making leads.
Gone are the days on running an analysis-based investing business and it’s now back to a relationship-based business. One where you actually have to market and locate people in desperate home-selling situations that need a solution of a pro like you.
At first, this might sound like bad news because you can immediately see that this will require a lot more direct mail marketing as well as a lot more human capital.
But it’s not bad news if you’re not one of the real estate sissy’s that refuses to change with the market or learn something new.
(*BTW, if you’re thinking of holding your breath and waiting out this recent shift... hoping that it will go back to the way it was for the past 5 or so years, then by all means do. The rest of us will happily cash your checks instead.)
For those of you who are willing to learn something new about marketing and deal structuring here’s how to make money doing this.
Ex: Michelle Russell, one of my mentoring students, met with a homeowner to make an offer on a property. They pretty much wanted full asking price. Based on their situation and their motivation, we saw how to turn this into a win for everyone involved.
4 options to choose from were drafted for the homeowner. All included a sales price that was at or close to full asking price and an upfront down payment.
But here’s where it gets creative - because we leveraged situational marketing we knew what made the seller tick and tied that into the creative offers we presented.
And out of all the offers listed below guess which one they picked...
If you guessed #4 then you would be correct. To the untrained eye that looks like the 2nd highest down payment and overall price and the highest monthly price. But in reality, it’s the option that allows Michelle to buy the house with ZERO interest. That’s right. $1500 a month not only allows her to cash flow and have money left over to put in her pocket every month, but it also has every red cent that she pays to the seller going toward paying down the principal.
She will make more money on the back end of this deal AND she solved this seller’s pressing problem.
In about 6 months from now you will see a lot more gurus talking about situational marketing and charging boatloads to learn it from them. But if you want to start learning it now, while they (and everyone else) are still scratching their heads about it, then come learn how to use Situational Marketing to make money in this new economy while everyone else stays stupid about it for at least the next 6-18 months.
Remember to leave a comment below. I LOVE hearing your “AHA” moments, thoughts and opinions!