No matter the real estate investing strategy, at some point in time all investors are going to need marketing. Whether advertising a rental to potential tenants, attracting cash buyers with a wholesale deal or reaching targeted buyers on a fix and flip, effective marketing could impact the bottom line. When marketing real estate, there are many marketing landmines that investors could avoid with a little knowledge.
Where to Start When Marketing Real Estate
Having a solid real estate marketing plan is integral to the successful sale or rental of a property. So first things first, I would be remiss (and the OTA Real Estate marketing instructors would be disappointed) if I did not mention the seven P’s of marketing:
- Real Estate Price: For a rental this includes rent, deposits and, fees; for wholesale or fix and flip this is the sale price.
- Type of Real Estate Product: The house, condo, commercial building, land, etc. that is being sold. This is where creating curb appeal, using the in color and picking the right fixtures to get the high end look come into play.
- Place – Real Estate Location: This is an easy one, except perhaps in the case of mobile homes or floating homes, and simply refers to where the property is located.
- Real Estate Process: This is a lot about the real estate investor themselves. If wholesaling a property, the investor needs to be a good salesperson; personable and knowledgeable to help ensure the transaction goes smoothly. If renting a property, the investor should focus on how they or their Property Manager will serve the tenant after move in.
- Physical Environment: The actual interaction your potential tenants or buyers have with your marketing. For example, where and how is the advertising being done and is that an effective strategy for the type of real estate being sold and the targeted audience?
- People – Real Estate Team: As is always emphasized in OTA Real Estate classes, having the right team in place is essential and this applies to the marketing of real estate as well.
- Property Promotion: Now we are getting somewhere: signs in the yard, internet listings on craigslist, social media, MLS and feeder sites, referrals, word of mouth, and direct marketing.
Real Estate Marketing Plan
Now let’s take the real estate marketing concept into a workable plan that can be quantified, performed and adjusted. Just like a real estate business plan, a marketing plan should be adaptable to changing markets and trends. I always like to start off with what my potential exit is going to be, specifically looking at the demographics and understanding who is moving in (and out) of the neighborhood. If my demographics show the average age of the area is over 60, then I need to base my rehab decisions on what my customer wants. Likewise, if the 6 unit apartment complex is in an area popular with recent College graduates, I need to understand their needs and make sure I fulfill those, both in design and amenities of the units, but also in how I’m reaching them to let them know that I have the apartment they want.
Once I understand who my target is, I then need a strategy to reach them. Does my mass marketing via social media platform reach who I want? Is the For Rent sign in the yard attracting quality tenants? Do I need to hire a real estate professional? The answer to all these is Yes and No (and sometimes maybe). Once I identify how I want to reach customers, I need to track every contact and ask, how did you hear about this vacancy, listing, deal? Then I go back to my plan and see if I am spending my marketing time and money in the right places.
Pros and Cons of Real Estate Marketing Strategies
Sign in the Yard: Real estate signs are inexpensive, immediate, guarantees the prospect has a certain level of interest in the area and is accessible by anyone who drives by. However, a sign can be an indication that a house is vacant, reach is limited to those who see the sign, it provides very little information and can create laborious phone calls from under-qualified prospects. Overall, a sign is an important tool but should not be the only one in a real estate marketing toolbox. For a desirable rental on a busy street, a sign may be all that is needed, but in any other situation, other types of marketing will be required.
MLS and Syndicated sites: A Realtor will be needed to get real estate listings in the MLS (Multiple Listing Service). The data that is in the MLS then gets sent, or syndicated, to a large number of other sites that consumers can access directly. This gets very detailed and verified property information out to an incredibly large audience. The services of a Realtor come at a high price but often the exposure received in return is worth it.
Free Real Estate Marketing sites: Many of the feeder sites that the MLS data feeds into can be accessed by investors to get their properties advertised for free. The list of free real estate marketing sites gets larger every day: Zillow, Trulia, Redfin, Rent.com, rental.com, cozi, hotpads, apartment finder, apartments.com, etc. In addition, there are sites that do not have any MLS agreements, such as Craigslist and FSBO, that have similar functionality. The advantages here are low cost, wide reach, and a lot of information, pictures etc. can be included in the listing. The disadvantage is that there is no way to tell who (or what) is replying to the advertisement. For example, I stopped using Craigslist for my rentals a few years ago because for every one human I got in contact with, there were 10 computers sending me SPAM. However, there are many markets where people still use Craigslist to find housing so investors should do the research based on their audience and decide if marketing on these sites would be beneficial given the risk.
Social Media: Similar to the MLS feeder sites, new social media platforms pop up all the time trying to attract the new generation of housing buyers, investors and renters. I have found that real estate investors who already use a specific social media platform, find success using that same platform to enhance their real estate business. However, I have seen very little success in establishing a social media presence on a platform a new investor has never used before just for the purpose of marketing their real estate. The exception to this rule is real estate wholesaling, because investor networking is critical to success. In other words, investors who like to use Facebook, Instagram, YouTube, Snapchat, etc. could be successful in using them to enhance their other real estate marketing strategies. An investor who wants to begin using social media should start off with a personal page and build up followers, then move into real estate once they are confident in their ability to manage their account and have ensured that the targeted demographic uses said platform.
Real Estate Marketing Landmines
Marketing real estate can be dangerous, plain and simple. Real estate professionals, are held to a very high standard so, anyone marketing real estate should know a few basic rules:
- Fair Housing: Although private investors are not held to as high a standard as Real estate Professionals, no one wants to spend the time and resources defending real estate advertising decisions. Investors are advised to try and avoid all pictures of people, references to any religion (including close to a church), or any other indication that would be perceived as stating that the investment would not be right for any particular class of person.
- Regulation Z: The Truth In Lending Act requires specific disclosures for any entity that regularly offers credit. This regulation is triggered for investors who offered consumer credit for dwellings more than 5 times in the preceding calendar year. Any investor whose exit strategies includes owner financing should research the requirements first and weigh the pros and cons of advertising specifics of the financing they are offering.
- Real Estate Lease Options: Investors interested in this strategy should consult a real estate attorney who practices in their area to understand the contracts, advertising (specifically Regulation Z above), and disclosures associated with leasing real estate.
- Local Real Estate Rules: City, county, state, and HOAs all can have unique rules on what type of real estate advertising is allowed and what is not. Most will focus on signs, specifically size, distance from unit, directional signs on public right of ways and the information on the sign. Most of the rules can be determined by seeing what other Realtors in the area are doing. For example, if all vacant units in a condo complex have signs within 5 feet of the condo door, it’s a good bet that’s a rule.
Advertising is an integral part of real estate investing. Having a real estate marketing plan, putting the plan in action, tracking effectiveness, and adjusting the plan are the keys; but it must all start out with understanding the rules and who the customer will be.