Andy McFarland is one of our resident experts. He has been in real estate since 2003 and last year his business netted 3,000,000 in profit. He has flipped over 1,800 properties and he flips over 150 properties a year. He owns 24 single-family rentals and 645 multifamily apartments.
Naturally, we can’t wait to hear him share some key principles that he feels have made all the difference for him. We are going to walk you through every step of how he both gets leads, and closes deals. Andy’s success may seem obvious in his net profit, but he believes that true wealth is having the time to do whatever you want. So how do you become ‘wealthy?’
There is a 3-Step Process to Wealth:
- Make Money
- Live on Less Than You Make
- Invest the Difference
If you do these three things, you will have financial freedom. Real estate is a great way to make money and to invest money. Yes, the market has changed, but you can still make money in real estate. However, you can’t make money if you don’t take action. Ask yourself ‘What is my highest value task?’ The number one action that will get you money in real estate, is to Find Deals.
Your next question is most likely, ‘How do I find people that will help me to find deals?’
First, you need to know what types of properties are deals, and that comes from studying your local market. Understand the value of properties in your area. You can do this by searching the MLS, researching general repair costs, and looking at who is successful in your market.
Now you know what a deal looks like, do you have any money?
There are paid and unpaid ways to find deals. If you don’t have money you have to be willing to do what other people are not. Low cost equals high effort. If you are someone without money to spend straight out of the gate, here is a short list of places to start finding deals.
Finding Deals Without Money:
- Check MLS Offers
- Network! ( REIA’s, offers to wholesalers)
- Look to those succeeding? Ask, ‘Who should you be staying in touch with?’
- Double down on your hustle efforts (Drive for dollars, cold calling, cold texting,knocking on doors)
Pro-tip: Hit up these lists to find leads. Probate, code enforcement, evictions, closed to occupancy, vacant house, notice of default.
If this sounds like a lot of work that’s because it is. When you have more money you can employ high cost/low effort strategies. Of these, paid marketing is the first strategy.
With paid marketing consistency is crucial. Have a six months budget at least, for the channel you decide to cultivate and consider it an investment. You need six months to know if a channel is working and you need to know how to calculate your numbers. Know your KPI’s. A KPI, or Key Performance Indicator (KPI), or metric, is a quantifiable measure that can be used to assess the performance of a business, investment, or individual operating in the real estate industry. To do this you calculate your: Cost per lead, Leads per contract, and Average contract.
Start with the most proven effective channel first. For Andy and Bill Allen, that has been Direct Mail with a highly targeted list.
A targeted list is built from specific criteria. That criteria comes from answering specific questions like:
- What area do I want to mail in?
- What is the equity?
- What is the Tax value of the home?
- Is there non-owner occupancy?
- What is the length of ownership?
- What is the age of the home?
Once you send out your mail and gather data over six months, you crunch your numbers, and get real about the KPI. It may not be what you expect. Often it looks something like spending $1 to make $4. That is a 25 - 26% investment, which is worth it, but also a calculated monetary expense.
Here Are A Few Other Channels:
SEO (Search Engine Optimization)
Essentially you set your website up so the algorithm on google ranks you higher in search results. This strategy requires upfront effort and starts off slow but grows over time.
PPC (Pay per Click)
This is online ads and requires skill to run. Your team must be able to respond quickly to leads, and you have to run a tight operation for this to work well.
This includes widening your scope of marketing through various means including:
- Broader Mailing Lists (owner occupants)
- Facebook ads
- Hiring Networkers
- Hiring cold-callers (text)
- Mass Media (billboards, radio, TV)
Now that you are getting leads from motivated sellers, what next?
The truth is motivated sellers, sell to whoever is in front of them, so you can only control what you can control. That’s why we are here to give you our proven methods for turning leads into deals.
The Top 3 Important Things to Do to Turn Leads into Deals:
- Always be either prospecting or advertising. Consistency is key.
- Answer your phone live. This keeps the speed on leads.
- Do your pre-appointment work on your lead.
(That means you look at the house on Google Earth, find comparables on the MLS, know the specs on the property, and basically know what you think it is worth before and after repairs before you are on the call).
Because when the appointment arrives….it’s game time. This is when it becomes all about how you listen to your seller. You want to find their ‘truth.’
How to Make the Most of Your Appointment:
- Show up on time (this builds trust)
- Be real (be you!)
- Build rapport (focus on them)
- Listen to them, ask open-ended questions.
- Actively listen (get to know their ‘truth.’ Perception is reality!)
- Educate them if needed, (if they are way off on their idea of property value), diplomatically and softly. You don’t want them to feel ‘talked at.’
- To Close. Once you understand and can restate their needs, ask ‘Would you trust me to help you with this?’
If you have done all of these things, you have taken control of what you can control. And you still might not get the contract. And if you don’t get the contract…
Let it be a key learning experience.
- Create notes & tasks
- Follow up like crazy!
Every experience from the beginning of your real estate journey is an opportunity to see what works and what doesn’t work, and to course correct. Our advice? Learn from the experts! If they tell you something has already worked, or how to avoid wasting thousands of dollars, listen to them!
We share our knowledge from experts like Andy McFarland, because we have been there at the beginning making the costly mistakes, and we know just how much value there is in taking a tried and true process from someone experienced. Use this process and take action, because as another friend of ours Mike Simmons says, ‘You can’t steer a parked car!’