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For years, wholesaling real estate has been peddled as an easy, low-cost entrance to real estate investing.
In some cases, course-sellers have even described it as a mindless and simple way for anyone to get rich quick.
And while the wholesaling business model is full of opportunity and riches, it’s not as easy as some people would like us to believe.
There are, after all, challenges.
In fact, at Carrot, we’ve built a good portion of our business around helping people understand the pros and cons of wholesaling real estate and how to overcome the challenges.
Because once you know how to overcome the challenges, it really is a remarkable business model that can support you and your family well into the future.
Here are 7 of the biggest wholesaling real estate challenges of 2020 and how to overcome them
1. Saturated Markets
Because of all the successful real estate investors creating courses and selling their knowledge about wholesaling online, many markets are becoming saturated with competition.
In fact, before 2004, there wasn’t much online talk about wholesaling real estate.
Google Trends shows how popularity has risen (and is rising) for the term, “real estate wholesaling.”
The good news is that most of that competition is made up of wanna-be entrepreneurs who will be here today and gone tomorrow.
Only some of that competition is going to stick around.
Still, in most markets, there’s no shortage of wholesalers vying for the deals that you’re trying to secure.
How can you compete in such a saturated environment?
How can you cut through the clutter?
Here are a few ideas…
- Unique Marketing — The fact is, most of your competitors are marketing in very similar ways. They’re not just sending direct mail, they’re sending very similar mailers. They’re not just running Facebook Ads, they’re running very similar Facebook Ads. Ask yourself this question: how can you market in a unique way that helps your business stand out from others? Finding a less-served niche, driving for dollars, and cold calling are three ways that you might differentiate yourself and find off-market deals that your competition has overlooked.
- Search Engine Optimization — When someone looks for your service in Google by typing in something like “Sell my house fast in [MARKET CITY]”, who do they find? If they find your website, then you’re going to collect a lot more leads than your competitors on autopilot. At Carrot, we specialize in helping you rank for high-value keyword phrases in your market. Learn more here.
2. Low-Quality Leads
If you’ve put aside the necessary budget to secure deals and you’re consistent with your advertisements, then high-quality leads will be worth the wait.
Still, stumbling through swaths of low-quality leads to get to those high-quality leads is a common problem for wholesalers.
It costs time, money, and energy.
The goal, of course, is to generate less low-quality leads and more high-quality leads.
How do you do that?
Well, you can’t avoid all the tire-kickers, but here are a few strategies for closing more deals with fewer leads…
- Search Engine Optimization — With normal outbound advertising, you interrupt potential prospects when they’re doing something else (Facebook ads, for example). SEO is different because people come looking for you and your service. That almost always results in higher quality leads and more deals. Go here to learn how you can use Carrot to get your website ranking in Google.
- Follow-Up — 90% of the time, deals get closed during the follow-up process… not during the first phone call. That’s why it’s important to follow-up with each lead at least 5-10 times. That might seem like a lot of extra work if the leads are low-quality… but you might be surprised at how many leads become high-quality after adequate follow-up. Go here to learn how Carrot can help you manage your leads.
- Build Your Own List — Rather than targeting general probate or out-of-state owner lists (i.e. the same lists that your competitors are targeting), try building your own list by driving for dollars. This will increase the quality of your leads and give you access to an untapped market.
3. Inconsistent Deal Generation
Where are all my deals?!
We just finished talking about the obstacle of low-quality leads… but what about inconsistent deal generation?
After all, your business can’t survive if this month is great and next month is terrible. You need leads coming in every single day, week, and month of the year in order to close some deals.
And it’s not just leads for leads sake.
Consistent wholesaling lead generation equals consistently closed deals and predictable monthly revenue for your business… which is critical.
So how can you generate deals consistently?
Here are some ideas…
- Understand Your Max Cost-Per-Deal — Do you know how much it costs you to close one deal? If you don’t already know that number, then go over here and use our calculator to figure it out. Once you know how much you should spend to acquire a single deal, you’ll be more confident in running ads and sending direct mail every single month. Just keep an eye on your ROI.
- Search Engine Optimization — SEO is perhaps the most effective strategy for consistent lead generation. If you stop sending direct mail or running Facebook ads, the leads stop coming in… but not with SEO. So long as your website is ranking and people are searching, you’re going to get phone calls from high-quality leads. Go here to learn how Carrot can help you rank in search engines.
- Consistent Marketing — Don’t send your direct mail all at once. Also, don’t dump all of your month’s budget into a single quick-fire ad campaign. Instead, spread your budget and your marketing campaigns out over longer periods of time to make sure that you always have fresh leads coming in.
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4. Market Brand Awareness
If people aren’t aware that your business exists, then they’re not going to come to you when they want to sell their home… plain and simple.
If you want to succeed, especially if you’re in a competitive market, people must be aware of, and like, your brand.
Okay, that makes sense.
But how do you increase brand awareness in your market?
How do you become the person that people go to when they need to sell their home fast?
Here are some ideas…
- Brand Your Clothes — It might seem silly, but putting your brand logo on a t-shirt or hat can go a little way toward increasing brand awareness in your community, especially if you wear that clothing to public events or sell it to people who also love your business. The more people who see your business’ icons, the more people who will think of your business when the time comes to sell.
- Spend Time In The Community — It’s hard to overstate the importance of spending time in your community. As the icon for your business, the more peope who know you, the more word-of-mouth and referrals that you’re going to generate. Get out there, be someone who people just expect to show up, and you might be surprised at how much that helps to grow your business’ market authority.
- Content Marketing — Social media and your blog is also a great place to improve your company’s brand awareness. And the best part is that you can do it all from the comfort of your office. If you’re a Content Pro or Advanced Marketer Carrot member, then we make it easy; you don’t even have to worry about creating your own blog content. Every month, we’ll give you blog posts that are ready to rank in Google and built to attract targeted leads. Find out more over here.
5. Fast Lead Response
How quickly do your respond to leads when they come in?
It turns out that quick follow-up extremely important. Who knew?
Research shows that the longer you wait to respond to a new lead, the less likely you are to get in contact with them at all.
In fact, responding quickly to your leads is so important that one of our most successful members, RJ Bates, has instituted what he calls the 5-second rule in his office. Someone has to answer the phone within 5 seconds or there’s a penalty.
So how are you going to respond to leads quickly?
There are two parts to this.
First, you need to know that a new lead has come in immediately. With a phone call, that’s easy — just answer the phone. But what about leads that come through your website? You need to know within seconds when a new lead opts in so you can contact them ASAP.
And second, you need to be able to contact them quickly.
Carrot makes this dead simple. With a few clicks, you can set-up text message notifications so that you receive a text whenever a new lead opts-in on your website.
This automated text even includes the leads contact information and their answers to important opt-in questions. That way, you can call them immediately and try to make them an offer.
6. Ineffective Advertisements
Not all advertisements are created equal.
Some ads will brung you lots of leads and deals at very little cost, but others will fall flat.
In order to run a sustainable business, though, you need to find a strategy for running effective ads consistently, day-in and day-out.
Here are a few ways to consistently create high-quality and high-converting ads.
- Create New Ads — A lot of people spend a lot of time trying to create the perfect ad the first time around. But the reality is that every ad you create will resonate with some people and fall flat with others. So the real trick is to become prolific at creating ads. Create new ads and you’ll quickly learn what works and what doesn’t.
- Change Your Targeting — The targeting you use is, in some ways, even more important than the ad itself. Because if you’re running amazing ads to people who aren’t interested in your service, you’re still not going to generate leads. So play around with your targeting to see what works best.
- Our 3 Lead-Per-Day Training — Our 3 Lead-Per-Day Training is one of our member’s favorite trainings that we’ve created. In it, we show you how to use Facebook, Google, Craigslist, and SEO to generate three leads every single day. Check it out over here.
- Peak At Your Competitors — You might not know this, but Facebook now allows you to look at any page’s Facebook ads… past and present. Just click on Page Transparency and go to the ad library to see what your most successful competitors are doing. Maybe you’ll learn a thing or two.
7. Market Competition
We already talked about the challenges of operating in a saturated market.
But the reality is that you’re not just competing with other real estate investors. You’re competing with real estate agents as well.
And this might be a great opportunity to apply an old saying: “If you can’t beat ’em, join ’em.”
That is, why not just create a mutually beneficial relationship with other investors and agents in your market? You can refer leads to eachother when it makes sense and both build your business.
This won’t always be possible, of course — you’ll have to compete with some businesses whether you like it or not, but why not team up with those that you can?
It will make building your own business that much easier.
Wholesaling real estate is a wonderful business model.
It might not be exactly what some popular gurus and coaches would have us believe it is, but it is an effective method for building a sustainable business over the long-run.
Remember to focus on what you can control.
Setting a goal of “2 deals a month” might be setting yourself up for failure…
Set goals based on controllable actions:
- Number of calls per month
- Number of letters sent out
- Amount of marketing dollars spent
- Number of buyers added to buyer’s list
You can’t fully control being #1 on Google, but you can control the keywords your research, and VideoPosts and SEO pages you create.
Wholesaling real estate is also relatively low-cost to get started and low-risk, but it still comes with challenges — namely, the 7 mentioned up above.
You now know how to overcome those challenges — so stop making excuses and start building your business!
Did we miss anything? What challenges are you facing? Let us know in the comments!
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