Disclaimer: This post is about (gulp!) the Internet. If even the idea of putting up a real estate website for lease options leads makes you sleepless then wait for the next post on Hotlines etc that don’t require you to even have a computer. :-)
How to use the Internet to attract buyers for your Lease Options:
There is a pretty big section in most newspapers, week after week, called Rent To Own in the Real Estate Section. Some newspapers call the section Lease Option also.
You will also see ads targeting to prospects with bad credit saying something to the effect that if you have been turned down by the mortgage companies – call us to get the home of your dream.
As a side note I am not a big fan of Land Contracts in Michigan. The foreclosure process that is required to kick out a non-paying Land Contract buyer who bought your home and then defaulted is long and governed by the same laws in Michigan that govern a bank foreclosures.
Although in certain circumstances (property being vacant) you can accelerate the eviction and some astute investors who play in the Land Contract world have told me that they add a eviction clause in their custom made Land Contracts – I have yet to see one contract in reality.
So some of the companies in Michigan who advertise and focus especially on bad credit / home ownership themes might be selling a 12 / 18 month Land Contract deal which gets the seller cashed out at a later date via a refinance. So keep that in mind when you are reading these ads.
Rent To Own Ads are pretty much 100% Lease Option ads and it is a good idea to check them out in your local newspaper before you do anything so to get a feel of the marketing.
Very very few real estate investors use the Internet to market their lease options which if you choose to do so does gives you a pretty good advantage over your competition in your local city. This is how it works:
1. Run advertisements consistently (more on classified ads later) in your local newspaper. I said “local” and “consistently” – two very important and precious words to keep in mind. Also you want to run these ads EVEN when you have NO house at the moment to Lease Option (more on that strategy later also).
2. Direct your prospects to your website.
3. Your website has pictures (lots of them), virtual tour if you want to really blow them away, description of the house with the list of all the upgrades you have done, any promotion you are running (free appliances, gift gas card etc), lease details such as monthly payments, Option number and finally the most important thing of all….
4. An invitation to join your Lease Option Buyer List. So lets say 10 people come to your website as a result of an ad that you ran in your local newspaper.
Well technically you can only sell your 1 home to one out of 10 but the other 9 are still in the market to buy something. May be they don’t like “that” house but who is to say that will not like the second house that you put up next month.
Entice them and ask them to join your Hot Lease Option Upcoming Houses Notification List so they get priority notification even before the house hits the classified section.
Sort of a Pocket Listing Invitation if you want to use the REO slang.
Understand that this strategy is advanced and mostly not used by anybody. Everybody wants to wait till they have a house or worse when the house is done.
The term you need to remember in real estate is Build To Suit – if you doing this, week in, week out your market will tell you what kind of houses you should be looking for.
This is the beauty of having a website and use it for more to tell you what the market wants in your local Michigan city instead of thinking about your website as something to sell that ONE house that you have right now.
I know it might sound hard to believe at first try but really most investors get so tied up in “doing” that deal that they have burning a hole in their head that they forget to build a business.
Nothing personal – just a fact of life. All entrepreneurs go through it. I did too in the beginning.
5. These are some of the things that you should be asking at your site from your site visitors – name, email, number of bedrooms in the house they want to get, basement preference, brick or frame, garage preference, city preference, if you are operating in a city which is comparatively big – it would help to ask a more specific question for example if you see Detroit ads they will mention something like East Side or West Side preference.
Where can you advertise on the Internet to get leads?
1. Detroit Craig’s List; at http://detroit.craigslist.org Free
2. Google Base: http://base.google.com Free
3. Google / Yahoo will be a pain the rear to do and get some leads because you are competing against everybody and their mother selling a $20 book on how to do lease options. Very hard to do Pay Per Click ads and get some leads out of there – not to mention expensive.
4. The thing that I am watching closely is the evolution of Google Local ads that will let you target and run really local ads on Google, which will be really effective for our kind of business.
5. For Sale By Owner sites: cheap prices for the most basic packages. Owners.com is a good example. The whole idea is to get people come to your Lease Option website.
6. EBay – will cost money to run - $150 at least. Plus my feelings about EBay are that it is more suited toward building an Investor List than attracting local homebuyers.
Where can you advertise offline to get Lease Option leads?
I am very old fashioned when it comes to real estate leads. May be the reasons that the damm $26 ads have made me so much money. Real estate is a Local game.
Seriously doubt that a guy in L.A. is thinking about buying a 3 bedroom in Redford. But there are renters in Redford with kids in Redford schools and mom & dad working in Dearborn and Sterling Heights.
They are reading the Sunday’s Free Press and Redford Observer – may be a small percentage looks on the net – may be it is a big percentage; there is a no hard data available anywhere that can pinpoint where most of the people are looking for Lease Option deals.
But I would suggest to you that do both – with 1-2 Knockout punch:
Punch #1: Use the free resources – Google Base; Detroit Craig’s List initially till you close on some deals, put some new money in your business checking account and then think about spending some money on the Internet. Since both of the above are free (at least for the time of writing this)
Punch #2: Spend you money where it will get you the biggest Return on your Advertising Dollars – your local newspapers. In the above example – run small ads driving people to your website in BOTH newspapers – Detroit News and Redford Observer – I repeat run ads in not one but both newspapers.
Sometime I get emailed about the cost of running these ads – well I worry about what comes back to my bank account and not too much on what I have to spend.
As long as coming in number is bigger than going out number – all is good. You can charge the advertising on your business credit card and pay it once the house is Lease Optioned off.
Or you can close one deal and take $500 off right from the top to spend it on advertising on your next deal. The real big mind shift that most entrepreneurs never make is not to think of advertising / marketing as an expense but as investment to build their business.
There are 2 big things in my business I spend money like it is going out of style – my education and my advertising. As long as I feed these two dragons, all is good in Planet Ijlal.
Website Domain Name Tips:
Spend some time thinking of a good and short domain name for your website. Rule of thumb is that keep it within 21 characters with the dot COM thing so it fit in one line.
Newspapers classified sections have a notorious tendency to break down the name in 2 lines if it is long and put a hyphen in the middle. I don’t have to tell you that that becomes a different name.
I had this experience personally one time when my ForeclosureTour.com ad became Foreclosure-Tour.com in two lines. Suffice to say that I did not get any leads that week.
So keep it within 20-21 characters and you will be in the limit. Also you don’t have to use www moniker anymore. I don’t use it anymore. www.MarkIjlal.com or MarkIjlal.com work the same way.
Also I hate long winded domain names – abcpropertyinvestmentsgroup.com is a great tribute to your LLC’s name but come on…. One of my coaching group member Lou Provanzano got a cool name recently for his Detroit deal – www.DetroitOnTheMove.com which gets full marks for originality and sounding good when you say it, print it and leave it on your voice mail.
And yes I am guilty of having long names in the past too – some of them are so crappy that I am actually embarrassed to share them here.
But the point is you want to have a good name; should spend some time on it, make a list of 10-20 names; ask your significant other, if you are in my coaching group, email me the names before you blow the insignificant amount of money needed to reserve them via Godaddy.com. Get a second opinion. This is how the world will see and your business. It is worth spending some time on.
How to get your Lease Option Website Designed:
This is the part where most will hesitate because they are still thinking big dollars when it comes to websites. In 2006, websites are so cheap that there is no excuse left for not to have one.
Where can you get a decent site made?
1. Do you have kids? Do you have neighbors who have kids? Do you have nieces, nephews, and little cousins? Know anybody who goes to a high school??? Every High School in America has a clique of geeks who can design a better-looking site than most web design firms out there.
I have personally hired 16 year olds – one time even flew one from Denver, CO to Michigan to work for two weeks on a business that I used to have. I had one 18 year old actually move to metro Detroit from U.P. to work on a project.
These kids were smarter, harder working and had a better work ethic than most grown ups I have worked with in the last 10 years. They get it. And they love doing this stuff and putting it for the world to see it.
I met an 18-year-old two years ago who was designing websites for Detroit Hip Hop acts – his sites could go heads up with a $50,000 site – he was doing this for $10 per hour.
Ask anybody who is going to high school and is between 14-18 in your life. They know a geek who can whip up a world class website for you in 7 days for probably pennies.
2. You can always go the outsourcing route and use a website a www.elance.com or www.rentacoder.com which will let you post up for free what you are looking for; bunch of companies (most of them in India / China and Eastern Europe) will put up competitive bids. They all have reviews on the previous work they have done; read them and give one the site to do.
If you are totally lazy and don’t want to do anything at all – then spend couple of hours trolling Google and Yahoo and find a website on lease options that you like and then tell whomever is doing your site to make your site look like them.
And for crying out aloud don’t copy blatantly but use it for inspiration and ideas. Most people like me use a copyright protection service that trolls the web looking for lift offs.
When we find somebody cutting and pasting our stuff – we get him or her shut down. I did that to bunch of bogs already that were just copying and pasting my content on their sites.
Next Part 5: How to figure out your Cashflow Payments, Exit Strategies that nobody wants to hear about but they sure do work, the absentee owner thing.