When I start working with a new private mentoring client, my goal for them is to do their first deal in the first 60-90 days. By the end of the year I not only want them doing 1-2 deals a month, but also have other profit streams instituted within their business. So we’re talking a solid six figure business.
Here’s the advice I give them to get started…
Focus on the first deal first.
Unless you have a significant marketing budget get started ($18,000 – $30,000), your goal can not be to generate multiple deals per month in the early stages of your business. Instead focus on getting to the first “good” deal; then leverage that revenue to increase your marketing.
As your marketing budget increases, deal volume and the speed at which they come in will increase. Continue to allocate a significant portion of the revenue to marketing to grow your business steadily.
Your marketing breaks down into two types: target list and target geographic. With geographic marketing you experience the greatest volume of deals and some of the highest margin deals because you are locating motivated – even desperate sellers – that no one else even knows about.
The issue is that this type of marketing is costly, and takes time to see significant results.
When your investing business is in its infancy and cash flow is a major concern, the more effective route is to market to targeted lists. I prefer the more obscure harder to locate lists with less competition.
Targeted lists provide a smaller population of prospects; therefore marketing costs are greatly reduced. Your business could not grow to multiple deals a month focusing just on targeted lists, but you can generate enough leads to start experiencing a steady revenue stream and increase your marketing budget.
Ideally, you should start off spending at least $500-$1,000 per month on marketing and growing the budget to upwards of $5,000 per month or more depending on the size of the business you target. Ultimately, marketing costs will represent about 10% of your revenue – or – said another way…every $1000 spent on marketing per month should yield about $10,000 of revenue.
Building a sizeable real estate investing business is not difficult or impossible – even with a limited budget. You just need to follow the roadmap.
Expect abundance,
Lou Castillo
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