In our continuing quest to become “a wealthy couch potato”, we offer Part 5 of our ongoing conversation with Cris Chico.
In the first 4 segments of this series, we saw how Cris is able to find properties to wholesale anywhere in the country, and make it happen from his living room. Considering he made almost $1.5 Million in profits last year, we think it’s worth hearing what Cris has to say:
Now, in the real estate biz, there’s an expression:
“You make your money when you buy, but you collect the money when you sell.”
While it’s important to buy at a low-enough price, you don’t cash the proverbial check until you sell the property to someone else.
“Hey, Buyers! Come Out, Come Out Wherever You Are!”
Today Cris explains exactly how he finds buyers in any market. Of course, he has a large list of buyers in his more established markets… But remember that Cris wholesales virtually in new markets across the country all the time.
That means Cris has to create a buyer’s list from scratch every time he moves into a new market. Unlike the big real estate “guru’s” who brag about how many names they already have on their lists, Cris has a ton of experience with starting new lists. (Starting and growing a list is one of the biggest stumbling blocks for new wholesalers.)
Not only will Cris explain what has been most effective in building his buyer’s lists, but he will also talk about what doesn’t work so well. And he will help you avoid spending thousands of dollars on marketing that seems great at first but simply doesn’t work well anymore.
The “Godfather of Virtual Wholesaling” also has some sneaky little ways to really help you build your list. So put down the remote, grab a cup of coffee, and enjoy learning from Cris as he opens up his bag of tricks.
Virtual Wholesaling: How to Engage Buyers Awesomer
Cris: The predominant way we use to build our buyer’s list is through direct mail. We send direct mail to absentee owners who recently purchased a property. We know those are the real players. We’re not looking at having a buyer’s list of thousands of people. We just need the right people.
We get the list of buyers. Then we create a postcard in Click2Mail that we send to these buyers. We used to put a buyer website on that postcard. It would say:
“Hey I got properties for sale. Just go to this website, opt in, and you’ll be able to see all my properties.”
I first started back in 2005. Back then squeeze pages were a novelty. You know…
“OMG look! A website with a squeeze page! Let me put my email in there, right?”
But now more people are jaded to that. We find that squeeze pages don’t work as well as they used to by a big margin.
JP: Probably because now they’re going “the NSA is watching”.
Cris: Yeah. Well when I was doing it, there were not a whole lot of investors using that approach. Now, everybody is doing it. It’s just more commonplace. I was one of the first guys, really.
So what we do, and this is a bit of a trick which works really well, is that we send them a postcard. The postcard is very blind, and by blind meaning it doesn’t say I have a property for sale. It just says something like:
“Urgent Notice: I desperately need to talk to you about your property located at 123 Main St. It’s imperative that I speak with you right away. I didn’t want to miss your phone call so I recorded this message here. Call and listen to this message. If you could do that over the next couple of days that would be great.”
On that postcard you notice it doesn’t say anything about my properties. Every postcard has a different extension on it specifically for buyers. I want them to pick up the phone and dial that extension.
They’ll call the hotline and hear my voice saying:
“Hey this is the reason why I sent you the postcard. I have other properties for sale. If you could leave me your name and number and your information, I’ll send them over to you.”
Then some will leave a message. However, not everybody leaves a message. Some of them will hang up. However, the 24-hour recorded message captured that contact information when they called into the system.
JP: Sneaky.
Cris: We know they’re an investor buyer, somebody from the tax records. So we know they’re legitimate. My acquisitions person will pick up the phone and redial the hang ups.
We’ll get even more buyers from people that just hung up, and they’re perfectly ok with it. We never had any issues with someone yelling and screaming and saying “Why did you call me back”, and that approach. I’ve split tested this. Recently we did a small buyer campaign of 300 postcards and we got an almost 40% response rate.
JP: When you add the people that you called back, who didn’t leave a message.
Cris: Yeah, 40% of the people that we sent the mail to, called in to the 24-hour recorded message.
JP: Ah.
Cris: And out of those, half will leave a message, the other half we’ll pick up on the back end.
JP: So what, in a nutshell, is the opening of the conversation when they call back? “Hey you called me up – let’s talk”?
Cris: You say:
“Hey, JP. It’s Cris. I was the guy who sent you the tiny little postcard the other day about your property.”
And they’ll say “Oh yeah, that’s right”.
Then I will say:
“Hey I was just calling back, and noticed you didn’t leave a message. I was just following up. Sometimes the voicemail system will cut off the message. I wanted to make sure that you were able to listen and I wanted to see if you’re interested in buying more deals. Maybe we could start developing a relationship.”
JP: Ok - well that’s, easy enough. Makes sense.
I had one more question too before we move on…
The postcard you send out. That’s a blind postcard. I’m a little confused about what exactly it says. You don’t have to read it word for word per se, but you mentioned that it says something like, “I need to speak with you urgently about such-and-such a property.”
Are you referencing a property that they previously purchased, according to the tax records?
Cris: Exactly, yes.
JP: So this is a list coming from the tax records of people who paid cash. Individuals who paid cash for property. You’re referencing one of the properties that they bought according to those records.
Cris: Right.
JP: In the postcard. Brilliant, man. I love it. This is like sneaky tricks, Chico style. I love it.
Cris: (laughing) Sneaky wholesaling tricks, 101.
JP: That’s right.
Cris: But it works pretty well.
The other thing is this: For those of you who are on the line and are just starting out, putting together a buyer website adds another layer of complexity to your whole process. Because you need the buyer’s website.
Are you going to use Wordpress?
Are you going to use Freedom$oft?
You need a squeeze page…
You need an autoresponder…
You need all these different things, right?
No!
This strategy eliminates all of that. Because it keeps it very simple. With this strategy, you’re just using a recorded message.
And on top of that, it’s actually more effective. When I split tested this, asking “How many buyers did we get with this method?” and “How many buyers did we get by sending them to a website?” The website took a beatdown. A tremendous beatdown. This method works far and above anything we’ve tried before.
The next step, after we’ve got these buyers, is simplifying. I’m a big believer in simplifying.
People ask: “Where do you keep your buyer’s list?” and “How do you mail these people?”
Really, we keep the buyers on a spreadsheet. Nothing fancy. And then we use this really sophisticated approach in order to mail them. It’s called “Copy-and-paste into the ‘BCC’ field.”
JP: (laughs)
Cris: And, lo and behold, it all gets delivered!
If you are working with a list of 200-300 hundred people, you can use Gmail. Gmail has a max of 500 people. But for most people out there, going out and getting an autoresponder, and doing all this other stuff, it’s just unnecessary work that you really don’t need.
You only need a list of buyers and email.
Just “copy-and-paste”, and send it.
Send them the property and then talk to them. That’s it. I always like to try to keep things as simple as possible.
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We did our seller mailing.
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We got our property under contract.
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And then we do our buyer mailing.
Typically we do the seller mailing first and get a property under contract. The minute a property’s under contract, the buyer mailing gets out.
We don’t do the buyer mailing first. We do the seller first.
My theory is this: If you find a good deal, you’ll find the buyers. The hard part is finding the deal.
JP: So you sign up that first deal then, with no buyers in queue.
Cris: Right.
JP: It’s very interesting.
What window are you giving yourself, typically, to find that buyer? Because you need to have enough time. You can’t pick just pick up the phone and start calling. You need to have enough time for the mail to do its thing and for conversations to be had.
Cris: Yeah typically our inspection period is 10 days on the property. Excuse me, it’s 14 days. Our inspection period is 14 days.
However, though, our contract that we use says that all days are considered “business days”, so it is actually three weeks that we have to work the deal. We have more than enough time.
JP: Very interesting. Ok.
Cris: Plus, we don’t really have a deposit on the deal. The way the contract is structured is that the deposit is due after the inspection period, which is then put up by the buyer.
JP: Nice!
Cris: So, even if we fall a couple of days after the inspection period, it doesn’t matter because there’s no money put up anyway.
JP: I gotcha.
Set Up – Set up a spreadsheet to keep track of your buyers. You don’t have to have any names yet. Just have it in place for when you do have a list. Have a way to track the buyer’s names, contact information, what kind of properties they would be interested in, when you contacted them last and any comments you might want to include.
Create – Create a postcard design using the example Cris gave above. That way you have it all set when you are ready to find buyers for your deals.
Review – Review any contracts you have to see if they incorporate some of Cris’ techniques. Do they have a long enough inspection period for you to find a buyer? Do they give you the option of locking up a deal with no money down until the inspection period is over?