The Titanium Vault hosted by RJ Bates III

Why Marketing Budgets Are Dumb | Wholesaling Real Estate

• RJ Bates III • Episode 664

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If you’re new to my channel my name is RJ Bates III. Myself and my partner Cassi DeHaas are the founders of Titanium Investments.

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SPEAKER_00:

Today, we are going to be talking about why marketing budgets are dumb for wholesalers. Now, this is going to be very controversial because there are many of you that are probably thinking like my whole life, I was taught I have to have a budget. And if I don't have a marketing budget, what am I supposed to do? Just blindly spend money. So kind of stick with me through my thought process here. Um, as I break down my opinion on this, it's not like I want you blindly spending money, but I also don't want you shortchanging yourself inside of your business because you have this set number that you're willing to spend. Now, inside of Titanium University, there are posts that happen inside the group. And I I looked this up the other day. We had up until yesterday, we onboarded our 24th class, we had 777 members. Now we're over 800. Out of the 777 members, 684, I believe, were active inside of the group. Meaning in the past 28 days, they had made their own posts or commented on somebody else's post. So the vast majority of them are active. The posts themselves, though, are kind of up to the members to decide what they want to share. And every now and then we get posts where the members will share their KPIs, how much they spent, what they closed and funded. It's super awesome to see that, but it's not something that we ever like mandate or promote because people are private, right? You know, you're sharing already a lot of information. And so three members posted their KPIs in regards to how much they spent in comparison to how much they made. Okay. Now I'm gonna break these down for you and explain why I'm sharing this here in just a second. The first member shared that they spent$8,500 in marketing for the month, and they had$52,000 in closed and funded assignments that month with another$50,000 in pending closings for the next month. Okay. Now that's fantastic. That is above average, really going above and beyond. The next member posted that they spent$4,500 in marketing. They had$25,000 in closed and funded assignments with an additional$25,000 to$30,000 in pending closed deals for the next month. And then we had a third member that said they spent$4,000 in ad spend with$14,000 closed and funded and more pending for the next month. Now I don't know what that more was, but it just said more pending for the next month. Okay. Now some of that could have been because they didn't have them assigned yet, they didn't know the exact numbers. Makes sense, right? If you just locked up a deal on the 27th, 28th, 30th of the month, you don't have recon done, you don't have it assigned, you don't know how much you're gonna make. Now, going back, the three amounts in marketing budget was$8,500,$4,500, and$4,000. Now, I don't know how they chose those marketing budgets. Could have just been how much money they had, it could have been the choice, right? Not everybody wants to get as much money as possible and close the funded deals. It could have also just been a set decision. That's what I really want to talk about. Is if you make a decision that you are only going to spend X amount of dollars in a month. That is what I believe is dumb when you set a precedence. The reason why is because if you talk to any of the PPL providers that have a marketplace or a bidding system, they will tell you that at the beginning of the month or the beginning of the week, the bids are higher than they are at the end of the month. And then you ask them, well, why would that be the case? Well, by the end of the week, or the end of the month, the majority of people have spent their marketing budget, and so there's less people competing for those leads. So the price per lead goes down incrementally because there's less competition. Now, when we look at these three examples of how much money that they spent, you had the first TU member spent$8,500 for$50,000 in close and funding, the second one spent$4,500 for$25,000. Now, the question that you're probably thinking to yourself, or at least I was when I looked at that, was why didn't the second one spend$8,500 or$9,000 to double the revenue and essentially double their profit? Why did they make the choice to only spend$4,500 when the first person spent$8,500? Now, again, it could have been budget, how much money could have been time, bandwidth, too many leads, something along those lines. But common sense tells you if you had told them before in the beginning of the month, if you just spend nine thousand dollars this month, you could go from$25,000 to$50,000, which actually that$50,000 was just that month. The next month, the person that spent$8,500 had already had$50,000 assigned ready to close, and it was pending. The person who spent$4,500 had$25,000 pending, so it was literally half across the board. Now, the goal in marketing is not necessarily to set this hard and fast number for what your budget could be, it should be based off of the return on investment. You should be looking at this and trying to jam the slot machine over and over and over again, unless you just have a specific amount of money that you want to make and you want to do less work. For example, Tyler Osborne inside of TU, his goals, the reality that he wants to create for himself, is all based around time. He doesn't necessarily need to make all the money in the world, he wants to spend more time doing other things. Now that would make sense as to why he would spend less to make less money, but I don't think that's the case for everybody. So when we look at I want to respond to this comment real quick, Matthew, there are people here. I made a mistake today. I am doing this both on vertical and horizontal, and I believe a lot of people are on the horizontal portion of this. So if you're on the vertical, stay where you are, brother, make sure you like that video, okay? All right. So getting back to the topic of why marketing budgets are dumb. Listen, if you set a hard, fast number for yourself going in the month, let's just say using a small round number that makes sense for the math, three thousand dollars for the month. And you're going to do something like Speed of Leads Coupon Club or Property Leads Nationwide Exclusive$30. That's going to get you 100 leads for the month. Now, as you start buying those leads, they're going to start dripping in. And what's going to happen is if you're doing things the right way, you're going to come to some sort of resolution to each lead. It should be, it's either they're not a good fit, we are not their solution, so it's a dead lead, or you get a signed contract. Those are your options. Now, every now and then you're going to end up where a lead, for whatever reason, cannot sign with you. This is a hot topic in today's implementation call where you have to follow up with that seller, and that happens. But when that happens, it should be the smallest queue of leads that you have inside of your CRM. And it should be based off a very specific time frame in which you are going to follow up with them to either come to the resolution of sign contract or a dead lead. Now, as you're going through these leads, you only have 100 for the month because that's the mythical number that you set for yourself. Now, at what point in time do you make a decision to exceed that budget if you don't have any new leads to call, or your queue of leads now has run dry? Are you going to just continue staring at your CRM for whatever you have? Are you not going to buy leads? I believe this is actually a decision that some of you are making right now, where you're saying I'm only going to buy two leads a day, three leads a day. I'm not going to exceed that maximum. Now, let's throw out a scenario where inside of a week you were to buy 25 leads using the$3,000 budget. I the mythical number that we're picking. Okay. Now you bought 25 leads. If you were to go on a heater and get four signed contracts, you now have four signed contracts, 21 leads remaining. Let's just say 15 of those are now dead. Are you only going to work those six leads? Even though you have four signed contracts, you have four opportunities where you're going to make money where you could, if you hit the nationwide average, be making$60,000. Are you going to make a decision to not buy more leads? Even though it's proven to you right now that it's working, you're performing, the leads are performing, you're going to stop because of the budget that you put on yourself. This is where you should absolutely be going all in and getting even more deals under contract. My personal opinion is it shouldn't be based around a budget, should be around whatever your closer could perform on a daily basis. What I mean by that is there's a certain bandwidth that each closer has, in which they can only call so or they can only place so many dials in a day, they can only have so many conversations. What does that number look like? For some people, it's 20 leads, 50, 100, 200, whatever that number is, get your queue up to that number, and then every single day you're gonna have leads that are gonna flow out of the new leads, call no answers, and follow-up statuses. Now, however many leads that is, that's how many new leads you need the next day. So some days it'll be two, maybe the next it's 15. But it changes based off of your abilities to perform as a closer, and so the more leads that you're pushing out of your CRM, that's more leads that you need to buy, and you need to be tracking your KPIs based around your lead-to-contract ratio, your contract to close ratio, and if you're maintaining those KPIs, what ends up happening is you don't have a specific amount that you spent in a month. You just look to say, how much did I spend this month? And then based off of the KPIs that I was hitting, what was the return that I got on that? That is how a real closer actually runs their business. They can actually look at it and say, I'm not worried about how much I'm going to spend, I'm more worried about my abilities to perform and hit the metrics that I should have every single day. Now, this would change by day by day. Going all the way back to the 2023 50-50-50, there's a day that you could go watch if you really want to painfully do so. It's eight hours of me leaving voicemails. It was the day in New York, so I don't know what day that was. Um, somewhere in 25th, 26th, no Oh, the camera's not broke. I'm running it two different ways, both vertical and horizontal. I get it. You guys don't like the vertical, it's also running horizontal right now, just so you know. So, man, never gonna try this again. This is a one time off thing, but, anyways, so the day in New York, eight hours of me leaving a voicemail. Now, what ends up happening when you just run a streak of voicemails is that no leads moved out of my CRM. So, as a closer, I didn't do my job, which was to get in contact with those homeowners and get to a resolution. So, going into the next day, I don't receive any new leads. Zero dollars are spent because I didn't move the needle one way or another in my business, I didn't earn the opportunity to receive new leads. Now, the next day, when I move 10 leads out of there, I get to receive 10 leads the following day. That is how I would like to see this run, and this is really what where I believe marketing budgets actually come from, or one of two different reasons. First, you don't have money, you're on uh a real tight budget across the board, and so it's like, well, based off of how much money I do have in order for my life to to move on and the rent and the mortgage and the electric and the car and the kids and the food and all this, I can spend a thousand dollars. Okay, that makes sense. Inevitably, you need to get to a point inside of your business, though, where that's no longer a concern. Like if you're constantly pinching pennies across the board, we have issues. We've got to get to a point where revenue is coming in and we have money to be able to invest inside of ourselves and inside of our business. The second thing is people are naturally conservative and they really don't trust on themselves, they don't believe that they could replicate what is happening inside their business over and over and over again. What I mean by that is is maybe you do go have a month where you make 50, 60, 70,000 and you feel good about yourself. That's also more money than you've ever had inside of your bank account. So you really don't want to just go hogwall crazy buying a bunch of leads when you don't know if you could do that again. Because really, you could boil that down to what was just four deals. It wasn't really like I proved the concept, it was just I talked to the four right sellers and I got them under contract at the right price, and so because I was able to move four deals, I was able to make money, and so the fear keeps you from really going all in, all in on, hey, I'm just going to consistently be buying leads based off of the deal flow, so you set that budget, and when I hear about people setting those budgets, that's where you come across the people where it's like it's the 22nd of the month, but I've already spent my budget, so I'm just gonna work the leads that I have. So for the next week, I'm not going to buy any leads. Now, what happens over that next week? I go buy those leads. The people that are not afraid buy those low-hanging fruit leads, the competition goes on a week vacation, and then we go and we close deals with less competition for less money because the actual cost of those leads go down. This is actually a proven thing. You can actually ask property leads, lead Zolo, and speed the lead, and they'll tell you at the end of the month we charge less for the leads because people don't have the budget anymore. It's actually sad that businesses end up in that position. Now, Hyro asked in the comments, so 10 leads a day? Depends. What did you do the next day or the day before? Did you move 10 leads to dead? Did you get two signed and eight dead? Then that would be 10 leads. If you got 12 dead and three signed, then you need 15. If you did nothing, you get zero. That's how it should work. So your cue of leads always stays and maintains the same over the course of time. That is my personal opinion. That's how we run our business right now. That's how we've always wanted to run it. And it has what it maintains is consistent deal flow. It's not like we come across it, it's like we just don't have deals right now, we don't have leads. We also don't run across the problem where it's like we don't have money, which is ultimately where everybody should want to be. Now, how you handle your leads, that is uh that was a hot conversation today during the implementation call. I personally believe that you should be aggressive. I think you should be aggressive on killing your leads and moving on to the next one. So Carlos says, What's your approach approach if you literally have zero dollars to spend on leads or marketing? Go watch my zero dollars to get a deal, get you a deal, get money, don't use it on anything else, and start your business. FISBOS, MLS, whatever you gotta do to go find a deal. Go find one. And then move on. The other thing, Carlos, is you can find someone that's got too many damn leads and work their old leads. There's plenty of people out there. That's what just started this conversation this morning. When someone said, I'm thinking about just going and calling all my old dead leads, the one that had the wrong price, and start working those and seeing if I can resurrect those from the dead. And I said, Absolutely not. Go get somebody like you, Carlos, who ain't got nothing but time and desire, and put them to work, let them grind that shit out, and you focus on closing your deals. So when we go back to the budget, this also the reason why I want to talk about this today is because I feel like this is one of the most important topics that we could talk about today. Because we're coming into that time of the year where I feel like everybody's about to take off. And so I gave my opinion to TU this morning, but to you guys here on YouTube, make that decision. What are you going to do going into Thanksgiving and Christmas? Okay, are you going to focus on taking time off? Are you going to focus on buying all the Christmas gifts? Or are you going to focus on, hey, I'm going to grow my business. I'm going to invest in the leads when I know that the rest of the industry is taking the time off. Because what we have seen over the past decade is that November, December, going into January and February are massive opportunities. The competition is going to take time off. They're going to punt on fourth down inside the fourth quarter. That's what they do over and over and over again. Just like every single month, at the end of the week, at the end of the month, the budget's gone. What do you think that looks like right now coming into the end of the year? Let's take time off. I don't want to buy leads. They're still motivated sellers. People are going to need our solutions. So just remember, you can either decide that you want to be the guy that spends$8,500 and made$100,000, or you can be the guy that spent$4,500 to make$50,000. Now, some of you might be the person that spent$4,000 that made$25,000. That's still a solid return. It's nothing to laugh at. Part of the reason why that person made less is probably because he JV'd on that. He's just looking at his take on. And that's okay. We all start somewhere. But if we are always limiting ourselves, your results will be limited. So don't go into the month saying, here's how much I will allow myself to spend. Actually, work the system the way that it's meant to. And if you're not there, if you're not there financially, that should be the next goal for your business. Get yourself in a position where you can actually run it like a business needs to, not off of some Dave Ramsey type budget.