Hey, everybody, and welcome to this week’s episode of The That Real Estate Tech Guy podcast. I’m your host, Jordan Fleming, and my co pilot for this episode is Scott Corbett from Lightmark Media. He’s an old friend of mine, Scott, welcome to the podcast, and why don’t you give a little introduction to yourself and the company?
Hey, it’s so great to be here. Jordan, great to see you again. I love the idea of this podcast, it’s much, much needed. So glad you’re leading the charge on this one. The technology aspect of lead generation and the whole real estate investing business is critical.
What we do is we help real estate investors around the country in their local markets generate leads, mostly off-market deals, what people call motivated seller leads. We’ve been doing this a long time, over 10 years. We use Google ads, Facebook ads, Instagram, YouTube, even getting into Tiktok ads a little bit. We help people do that. We also help with marketing automation and systems on the back end so that they actually get the most value out of their leads. Generally, people know us for lead gen.
Getting proper leads is where you’re going to spend the most amount of your money as an investor, particularly when you’re starting out, and it’s a bit of a minefield. Can you walk us through how you approach it as a company?
We have investors who come to us all the time and they’re at various stages of their development as a company. Or sometimes it’s just a solo guy. Not so long ago, the place people tended to start out was direct mail. People still do direct mail, don’t get me wrong, it just tends to be on the expensive side. Where people typically start today is by doing outbound text messaging and cold calling. And, of course, they use tools like smrtPhone very effectively for parts of that. That is what I would call a relatively high impact, although there are of course, technical challenges with those two methods. But it’s high impact, relatively low cost, and people love it for that reason.
Where people go next is where we get involved. The places people go next are generally one of two places: they go to Facebook ads, which is a little like direct mail, in the sense that it’s just interruption marketing. We’re trying to interrupt people as they go about their business. Maybe they’re looking at pictures of their grandkids or something, and we’re just trying to say, hey, by the way, if you’ve got a house problem, we can solve it.
So I’ll try the other way people go, which is Google ads. Google ads are inbound in my perspective, because people go to Google and they have a problem and they’re trying to solve it.
They’re actively looking, you’re not placing it in front of them and hoping they’re looking for something.
They are, they’re looking. My campaign managers tell me there’s something like 200 to 250 keywords that we’ve identified after spending many, many millions of dollars in Google ads, that are actually indicative of somebody who’s actually got a real house problem that they’re trying to solve. It’s a true motivated seller type keyword, and of that 200 or 250, they’re probably only 20 or 30 that provide 80% of all the traffic out there.
You’ve learned that through the volume of experience, you’ve whittled that knowledge down?
Yeah. We’ve generated 10s of 1000s of motivated seller leads over the past 10 years. We have a way to aggregate all that data, look at it, and learn from it. But Facebook… now, as soon as I say this they’re going to change the rules next week, right? I probably shouldn’t say anything about Facebook’s policies, they’re a pain in the rear end, their policies constantly change. One of my Facebook campaign managers probably spends two or three hours a day sitting on chat with Facebook reps trying to get disapproved ads approved again.
I’ve noticed that! I get the email that an ad has been declined or disproven. What could we have possibly put in there? That happens.
The truly maddening thing is that there are a million reasons an ad can trigger that automated warning. So the robots turn the ad off generally, but it takes the humans to turn them back on. We have little scripts that we have to say in the in the chat because we finally learned the trigger words. The humans are often verging on incompetent or disinterested but if you say the right things, then you can get them to put the ad back in the review process. Eventually, almost in every case, the ad will be back online within a few hours.
So Facebook is annoying in that way. But there are good things about Facebook. The main good thing is that you can get somebody to click an ad, and they can tell you ‘I do have this house for sale, give me an offer.’ Those things turn into deals, which turns into a lot of money.
We hvae a client in St. Louis who, over the past three months, has cleared 100k in wholesale assignment fees just from its Facebook ad campaign. So it works. That’s why we put up with all the aggravation, because it actually works, and the leads are actually cheaper than Google leads.
So instead of buying 25,000, completely cold, unproven people who may not have anything to do with you or even have a house to sell, you can start working those Facebook leads. Is that how you guys see it?
That’s exactly right. Cost per lead is higher on Facebook than it is with text message marketing and cost per lead is higher on Google than it is on Facebook, for a reason. The quality of the lead typically is higher, and you’ve got more advertisers jockeying for space. You get what you pay for, in a way. I won’t say that the low cost methods don’t work, because they do.
As you scale your business, you’re going to want to find and assess what is working. How important is the process of narrowing down for each customer, each market, and what’s your approach to that?
It’s definitely not one size fits all. If people come to us and say ‘I’m so excited. I want to get started. I’ve got a $500 a month marketing budget, what can you do for us?’ Then we very gently put our arms around them and say, ‘you need to go find yourself a good cold calling and text marketing solution, because that’s where you are now in your business.’ For other people who are a bit further along with their business, they’ve got a little more revenue coming in, doing more deals, if they want to get into digital marketing, what should they do?
A few factors that are really important to look at are what market are they in? Is it Los Angeles? Or is it Dothan Alabama? Because the number of people in a market is going to determine what your options may be.
The second thing you look at is how competitive the market is. How are your back office systems set up? Just a little tidbit on that: you probably know John Martinez, the real estate sales trainer. He’s been hammering this point for years and years, which is that particularly with Google ads, someone is doing a search. They search for ‘sell my house fast. Athens, Georgia.’ They see a list of page of results. The ads are at the top, the organic results are the maps are down below. Whatever it is, if they click that ad at that point, let’s say it’s Atlanta. The click on that ad is probably going to cost you somewhere between $40 and $60. That’s not a cheap click.
They’re going to hit your landing page and usually landing pages want you to do two things, either fill out a form or call. Whether they call or whether they fill out a form you either need to answer the call live, or you need to call them back within about three minutes. It’s speed to lead. So we have to ask questions, like are you set up to do that?
Because if you’re gonna spend $60 on getting this click, then don’t waste it by calling them back a week later.
Exactly. And it’s even worse than that. Because typically what we see is that it takes about five clicks to get a lead. So if it’s a $30 click, then that’s $150 cost per lead, if it’s $40, you that’s a $200 cost per lead. $200 that you really just spent to get that person to call you or fill out a form. That adds up, and if you don’t jump on that, you can imagine what they do next, they just hit the back button. They’re back at that search results page and they go on to the next one.
Speed to contact is critical. If you’re going to spend $200 to $300 on a lead, and you want to generate 10 Leads? You’re still spending three grand. Do not let that sit on the table and go oh, yeah, I forgot to call this guy back for two days.
You would be surprised at how often that happens.
I wouldn’t. I used to build CRMs for people! Anytime someone is actively making a choice to reach out to me via a form or a phone, that is what I care about most. It’s interesting that you guys make that a really important part of the conversation.
Do things like demographics matter for markets? Types of housing, whether they’re middle ground, lower ground, upper ground; how much do you get into the weeds of those specifics?
So every investor has a buy box, right? The buy box is partly determined by geography but it’s also partly determined by demographics. If you’re in Birmingham, Alabama, for example, your buy box may be a three bedroom, two bath house built in the 1950s that needs a lot of work. You can buy that house even today, for 70, 80, 90, 120 and maybe put a renter into it or flip it as a wholesale deal, or fix it up and sell it. That’s your Buy Box.
Someone on the West Coast has a very different Buy Box. A client in the Bay Area knows that house selling for $650,000 is a great deal. Because if they put 200 in it, then it’s worth a million five. You buy these houses that are decades old, they typically need repairs, or something’s wrong with them, there’s some reason why people can’t just sell them on the open market. The demographics that go along with that are typically often an older person that lives in a house and they’ve been there a while, or sometimes the demographics that you’ve got in every city where you’ve got little pockets. Whether these are working class pockets, maybe out in the suburbs, you’ve got the more high income professional areas. You have to focus on those geographical areas that are associated with the demographics. That’s the key point. It’s not so much geography, – places above 500 feet in elevation, that doesn’t matter – it’s where do the working class people live? Those are quite often the best opportunities for investors.
You can target geography pretty carefully, particularly with Google ads. Our friend Chris Richter from Audantic is really good at pulling lists of people who are likely to sell and he operates within what he knows his clients buy boxes are. He can pull that list and it may be all across a city, but it’s specific properties. You can actually just put ads in front of those particular people associated with those properties.
The point is, you’ve got to try to make your ad spend be as efficient as possible. You’re not showing ads to people who own million dollar homes in Birmingham, right? You probably don’t want to buy that and you don’t want to advertise to those kinds of people. Put your ads in front of the right people, whether it’s driven by geography or a custom data set that you can import, and then use a filtering tool for your ads to make it more efficient.
If someone is looking to up their game, and start doing the type of inbound lead gen that you guys can do, what is the entryway to that step up?
I would say that Google is pretty, pretty expensive. It’s that way for a reason. To get into a Google campaign, if you have a market of any significant size, you’re going to be spending a minimum of about $2500 in ads, that’s about where it starts. Your Google and Facebook, to a large extent, is all about having this month be better than last month, optimizing the campaign based on a bunch of different factors.
There are people I know around the country who are having success in their small market. They’re spending maybe $500 or $1,000 a month doing PPC, and they don’t get many leads, but they get a few leads. They’re probably answering live and they’re following up quickly. But to hire a company like ours, it doesn’t make sense, unless you’re spending enough money to generate enough data to make us earn what you’re paying us. My guys have been doing this collectively for decades, but we need data coming in to be able to know how to optimize the campaign and make it better over time. If you can’t spend at least that much, you’re probably not bringing in enough data to warrant having us around.
The ROI on the type of activity inbound leads that you guys can generate is really, really high. If you’re just doing wholesale selling, chances are the four grand you spend on marketing is turning into 40 to $60,000 of assignment fees. At some level, if you’re serious about scaling, or building a proper business, you’ve got to look at your marketing spend as as investment into profit.
It’s not a cost. It’s an investment. It really is an ROI framework that makes the most sense, particularly with Google ads, which are more expensive. But Jordan, I will tell you, Facebook ads can be a way to put your toes in the water a little bit with paid ads, because you can actually generate lead. It does depend on the market, it depends on how strong your organic social presence is, too. The stronger your brand presence is in a market, the less hard the paid ads have to work. You can actually get in the game with Facebook ads, for closer to around $1,000 a month in spend. That can be encouraging for people as a way to start. Your quality is generally going to be lower than Google ads, and you’re gonna have to filter through a lot more junk. But in the midst of all that junk, you’ll definitely find some gems.
Get some deals, get some money and then start investing in better marketing.
1. What is one type of lead gen that has the biggest impact? Or is it too specific to the kind of customer?
I’m gonna twist your question a little bit. I’d say the biggest technique or system you can have is between your ears. You’ve got to start looking. If you’re going to step into the world of paid ads, you have to have the mindset that first of all, I’m gonna give this a six month commitment, right? Commit to it, because there is a sales cycle to everything. You won’t really know your ROI numbers till after six months or so. It’s a mindset, a brain system. And you’ve got to use that ROI framework. It’s not just spending money, you are investing money generating marketing that’s gonna pay off.
2. What’s the biggest mistake people make when they start approaching paid advertising?
They’re too impatient. They don’t give it long enough or they’re just nervous about committing. Sometimes if you can take a Google campaign from spending 3 or $4,000 a month to 5 or $6,000 a month, then all of a sudden, you get two and a half times more leads. People who are willing to invest in Google really reap the benefits of it.
But I would also go back to what we talked about earlier: if you’re going to invest in paid ads, in particular, you have to have a rock solid back office system. That’s where people drop the ball often. And if I could throw in one bonus answer: you don’t have enough disposition options. If you’re only a wholesaler, that’s all you can do. Then what happens if you get this perfect flip opportunity? Or what happens if you get a house that’s actually ready to be listed on the MLS today, get it under contract, get a relationship with an agent and work out a deal? Maybe it’s a house that you could pick up and use as a rental. Just have multiple disposition options and that can do wonders to your returns on the marketing investment because now you’ve got more ways to make money.
3. Question number three you’ve answered with questions one and two, which is about the best advice you would have for someone new into paid advertising. If you’re only concentrating on lead gen, but you’ve got nowhere to flog your leads, you’re spending lots of money but unable to make any cash. Buyers are critical.
That is such a good point, Jordan. That’s what I would call a campaign, and there are lots of ways to build your buyers list. I’m so glad you brought it up, because you’ve got to give that as much attention as you give the leads.
Otherwise, where are you puttin’ them? You’ve got 50 leads that you put under contract, can you close any of them? And if you can’t close any of them, you’re not making any money.
I’ll drop this just as a reference point. We work with a guy named Jimmy Vreeland in St. Louis, Missouri on his social media and we do paid ads, too. I’m talking now about organic social media, which people really like because it takes time as opposed to money. For some people, that’s a good situation. Go check out what we’re doing for Jimmy, his brand is called U Buy STL. We’re using a lot of video, we’re using a lot of rich content, basically a full press effort to attract all the other investors in the St. Louis area. It’s working out really well. Because the more buyers you have, probably the higher the assignment fees you’re gonna get.
The higher you can offer, as well. If you’ve got better buyers, than you can win more deals because you’ve got the confidence to offer more money.
4. Question number four. What is one thing you wish everyone knew about paid advertising?
One thing? I would say probably that paid ads are a marketing strategy, or they’re marketing channels that you should not be afraid of. You shouldn’t be intimidated by them. Companies like mine are not crazy expensive to begin with. But there are also lots of great resources out there. If you go to BiggerPockets, even if you want to do it yourself, do not be afraid, do not be intimidated by these consoles that looks so crazy. Facebook used to be simpler, it’s not that simple anymore. But don’t be intimidated. If you want to just play around, give yourself $500 to play around and just see how it works. If you can get comfortable with it as an ad channel, it allows you to reach more people.
5. Last question. What is your best advice if you’re just starting out with lead gen and you had to pick three things to help you?
What I would tell people just starting out is to start with the free or the cheap stuff. And really use it. For example, I mentioned U Buy STL that my friend Jimmy Vreeland does in St. Louis. He’s also got his organic socials for seller facing, called I Buy STL. He’s really focusing on organic social media for those two markets, right? He creates video. He’s posting every single day. He’s clear about how he helps each of those groups. And he’s putting the message out.
In other words, he’s getting himself out there and uses the free platforms to get comfortable with video. Point number two, get comfortable with video. We haven’t talked about TikTok yet. TikTok may seem like something that teenagers use, but I guarantee if we circle back around, at the end of 2023, the people who got into TikTok earlier are going to be really glad they did. YouTube shorts, Instagram reels, TikTok: the world is going video video video all the way, and you’ve got to get comfortable with it.
You’ve got to start with the place of who am I? And how do I help people? And who do I help? What can I say to those people, and then get comfortable being that person, showing up and getting the message out there. The other thing is embracing a philosophy of failing forward. It’s really true with paid ads. It’s a great success if we run an ad on Facebook and it just bombs. That’s so great because now we know what not to do. Now we can pivot and try something else. Embrace that philosophy that failure is just part of the learning process. Everybody who’s successful has a long history of failures behind them, right? It’s just how you respond to the failures. You’re gonna fail, guaranteed. Embrace it, say now I know that and I won’t do that again. What’s the next experiment I can make?
And then and then of course, you know, answer your phones when somebody calls you.
Find out more about Scott and Lightmark Media at lightmarkmedia.com