2 How to Market Real Estate in a Flat UK Market
Transcript
00:00Because the difference between people being in the game and not being in the game is the movement of money.
00:04Remember, the only person that's responsible for it is the originator of the debt.
00:08Everybody else just becomes the servicing agent.
00:10Man, it's evolving like a girlfriend and or a wife.
00:16Hey Nathan, the guy that turns ideas into business empires.
00:21How are you going, business legend?
00:23G'day Rick, you innovative disruptive property guru.
00:31How are you, Rick?
00:32Mate, on a roll. Fit fine, wonderful and well.
00:35Really excited to speak to you this week because I've got an exciting subject to talk about.
00:40Tell me what's going on.
00:42Marketing. Marketing in today's property market is different from what we were probably doing 10 or 15 years ago.
00:50Absolutely. It's changing. It's evolving so quickly. What's the latest?
00:55Mate, it's evolving like a girlfriend and or a wife.
00:58Fifteen years ago in the UK, we did like those ugly signs, right?
01:04And I'm not going to say ugly signs don't work.
01:06But there are some other things we can start to employ in this market, which is a flat market.
01:12It's not the same market it was a couple of years ago that can have incredible results.
01:17So one of the industries that's become very big that wasn't around 10 or 15 years ago is deal sourcing.
01:25Deal sources. It's like a whole bunch of people.
01:29It's like it's a massive whole there.
01:31They run training courses on it.
01:33People become deal sources.
01:35So therefore, let's say a house is £100,000.
01:40If you're, say, a deal sourcer, at what price do you think the deal sourcer needs to buy that property at in order for him in his mind to feel it's a deal?
01:51I guess that everyone has their different ranges of comfort, would you say?
01:56Yeah, and I'd say that if we spoke to most deal sources, they're going to say to you it has to be at about 70 cents on the dollar, maybe 75.
02:06So it might be he's got to get that thing at about 75, right?
02:10Could we agree that there might be some properties where the debt load on the property is at 80%?
02:18So he's got a £100,000 property, but he owes the bank 80,000.
02:22I think there's going to be a lot of those properties out there right now, isn't there, with even less equity than that?
02:27Yeah, there are, and it's increasing quite rapidly.
02:31So here's my point.
02:32When the deal sourcer comes across properties with high debt loads on them, do you think they fall into the not-a-good-deal bag, or do you think they go into the good-deal bag?
02:44Well, most investors will put those into the not-a-good-deal bag.
02:49Correct.
02:50So if it's not-a-good-deal bag, they will therefore have no value to the deal sourcer.
02:55Correct.
02:58With limited skill sets, yes.
03:01Well, it's what you know, isn't it?
03:03Correct.
03:04And if I said to the deal sourcer, let me ask you something, sir.
03:07Out of 10 houses, are you making money out of the deals you're doing, or are you making money out of the deals you're not doing?
03:15You'll probably say he's making money out of the deals he is doing.
03:18And you'd say, well, what's happening with all the deals you're not doing?
03:22He says, well, I just don't do them.
03:23They're just scraps.
03:24I just walk away from it.
03:26And then you have a conversation that goes along the lines of, sir, let me ask you something.
03:29Just suppose you could make money out of all those scraps.
03:32So you made money out of properties, whether you did the deal or didn't do the deal.
03:36Natural fact, every property you made money out of, how would that make you feel?
03:40Because everybody only has a certain set of skills.
03:45So when something comes along that doesn't match their set of skills, what they decide is, I can't do it.
03:52I don't know how to do it.
03:53There is no deal.
03:54There is no deal based on what you know.
03:57It doesn't mean there's no deal.
03:59There's just no deal based on what you know.
04:01So, for instance, I might see a house and I decide I don't think that's a deal for whatever reason.
04:08A building developer might say, no, that's an awesome deal because it's on a massive block of land.
04:14I can get rid of that house, put in 15 different home units, flats, and make $7 million.
04:21But if my skill set is not in developing blocks of land and not being a building developer, I'm just a guy that buys houses, I would say that's not a deal.
04:32That makes sense.
04:33Because of what I know and what I don't know.
04:34Okay.
04:35So let's go back to our original situation.
04:38The guy's got a loan of 80% debt on a house and there's not much equity.
04:43And what we're saying is we're going, the equity positions in properties is reducing.
04:48What I can do is I can pick up that property.
04:52I've now got an 80% loan on that property.
04:56Well, I can put a paperwork procedure in place to pick up the loan and make payments on anybody's loan.
05:03I can babysit it.
05:04Remember, the only person that's responsible for it is the originator of the debt.
05:08Everybody else just becomes the servicing agent of the debt.
05:11Let's say the deal sourcer had a property and he could get that for 75 cents on the dollar.
05:17He's got to pass it on to somebody and the next person's got to come along and probably get some financing and a bank loan and all this sort of stuff.
05:24Well, if I can pick up bank loans, it really is only a paperwork system.
05:28It can be done very, very quickly and suddenly non-deals become deals.
05:32Because here's the thing.
05:33If I have a property and I've simply got the paperwork that I can look after and babysit the existing loan, what I could do is make that opportunity available to somebody else.
05:46Do you think there'd be anybody in the United Kingdom who would want a house tomorrow where they don't have to put in a really big deposit and they don't have to qualify for a bank loan?
05:57Do you think there might be anybody who wants that?
05:59I think there'll be a lot of people very hungry for that right now.
06:02Yeah.
06:03And do you reckon some of those people, in order to get to the front end of the hungry herd, would probably give me some money?
06:10Now, what I could also do is I could joint venture with deal sources.
06:15So now I'm joint venturing with deal sources because they're saying, look, we don't know what you just did, but you just made a bucket load of cash out of a property that we couldn't figure out how to do.
06:25This is a great area where people have different skill sets.
06:29And so I'm going to suggest that if you're a deal sourcer out there and you're sourcing properties, where you think there is no profit, somebody else sees it because they have a different set of skills.
06:40Yep.
06:41So joint venturing with people like yourself, Rick, is an opportunity where a dealer can pass on something that they couldn't monetize potentially and then work with you to find ways to actually monetize it.
06:56What a lot of people do is they go to learn.
06:58They'll do a course and a program.
07:00They go to learn.
07:01Later on, then they try to earn.
07:03But they've invested a lot of money in trying to learn.
07:07I always think it's a much more efficient model if you learn and earn at the same time.
07:12So you're actually earning whilst you're learning.
07:15The other thing was, and I mentioned this right very early in marketing, and people have asked me this all the time, they said, well, how did you grow We Buy Houses so large, right?
07:25And I understood the most powerful kind of marketing you'll ever get is word of mouth.
07:32You can spend millions of dollars on advertising, but word of mouth is the most powerful because here's the deal.
07:38You can have all the brochures on the wall about electricians, but I'll always call my best mate and say, there's a good electrician.
07:45And if my best mate says, Tom, down the road, regardless of how much money everybody else is spending on advertising the electrician business, I will go to Tom down the road because it was a recommendation from you.
07:58So if we understand word of mouth is so powerful and it cuts through as the most powerful thing, what I used to do was, and no one else does this, everybody buys houses, right?
08:09I'd sell houses.
08:10Now, is it a fair assumption that most people buy and sell houses and then they make a profit on every house or they attempt to make a profit on every house?
08:19Absolutely.
08:20Yeah.
08:21Okay.
08:22They've got to find more buyers and more sellers for their houses, right?
08:26And they're going to give a marketing machine and spend advertising and marketing for that.
08:31But a lot of it doesn't come from word of mouth.
08:33But what if you did this?
08:34What if every hundred houses you brought, you probably gave four of them away?
08:40Now, I don't mean give them away for free.
08:42Let's say you buy a house for 300 and you'd normally sell a house for 350.
08:49So instead of selling for 350, you get a house for 300 and you say to somebody, oh, look, here you go, you can have it for 280.
08:55Now, all of a sudden, you've given a guy a house for less money than what you paid for it.
09:00What do you think the guy thinks about you that you just gave a house to for less money than what you paid for it?
09:07They'll either think you're a little bit crazy or you think you're an absolute God.
09:12Right.
09:13Now, if he thinks you're an absolute God, who do you think he'll tell?
09:15Everyone.
09:16Correct.
09:17Now, when he tells everybody, where does everybody now come to get one?
09:21To you.
09:22You'll have them lining up.
09:23Here's the interesting thing.
09:24When people want to buy one of my houses, they'll pay me a few hundred dollars as a fee to be on my list rather than somebody else.
09:33And how do you get to the top of that list?
09:36Well, because people sometimes say, they say, how do I get to the top of the list?
09:41I say, well, the standard fee is 200 pounds to get on the list.
09:46And I guess some people give me more in order to get to a higher position.
09:50Someone says, well, what if I give you 500 pounds?
09:52You go, well, that gets you to position nine.
09:56Well, what if I give you 1,000 pounds?
09:58I tell you what, I'll give you 1,000 pounds.
10:00We'll take the 1,000 pounds off the price of the house, but that gets you in position one.
10:04So people will want to give you more money.
10:05But here's the deal.
10:07You've gone from trying to advertise to people you're a great guy to giving a few houses away.
10:12And all you've really done is reject your profit center or taken a small loss.
10:16And if you take a small loss, the word of mouth you get is massive.
10:22And then everybody comes and they call you up and they go, hello, you don't know me.
10:26My name is John and I'm a friend of Alistair McGurkinshaw.
10:30And I wanted to buy a house and he said that you did this for him.
10:34And can I get one?
10:35I said, John, I haven't got one.
10:36I'll get you on a waiting list.
10:37Oh, is that possible?
10:38Yeah, but look, what I need to do is I've got so many people on the waiting list.
10:40You might have to throw me a couple of hundred bucks just to get on that list.
10:44And it was kind of like, well, you take my S-card, Visa card, but all of a sudden I've got a waiting list with people paying me money.
10:50Do you understand?
10:51Yeah.
10:52And how much more invested are those buyers going to be when they've actually put some cash on the line?
10:58Yeah, well, I've recently got someone who's called me from Cardiff and they said, Rick, can you give me some houses?
11:02And I said, what do you got?
11:03He said, I got 300 buyers.
11:05And I said, you got 300 buyers?
11:07He said, I got 300 potential buyers that want to do a lease option.
11:10So you've got 300 buyers that want to do a lease option.
11:12I'm like, okay, that's fine.
11:13How much money are they giving you?
11:14Because the difference between people being in the game and not being in the game is the movement of money.
11:19Because it's not how much money moves.
11:21It's the physical movement of money moves people psychologically and emotionally from not being in the deal to being in the deal.
11:27And that's why casinos never use cash.
11:30They always use pieces of wood because it keeps your emotions out of it and you'll always throw bits of wood around at each other.
11:36You don't get emotional about wood, so you'll spend all your money.
11:39If you had to spend cash, people will stop spending it because there's too much emotion around money.
11:43So they get the emotion out of the casino by using bits of wood, right?
11:47So that's why it's a little bit like if you've seen this.
11:50You go to a dinner party and you say, who wants to go to blah, blah, blah on Saturday?
11:56And everybody goes, yeah, let's go Saturday.
11:57And you go, well, I've already booked it.
11:59So 71 pounds each.
12:01And you watch everybody pull out and go, oh, well, hang on.
12:04I better check my diary.
12:05Well, everybody will pull out when you start asking for the money.
12:08Money is the tool that moves people from not being in the deal to being in the deal.
12:12It's not the documents, not the form.
12:14It's money.
12:15It doesn't matter how much it has to be.
12:17It has to be money.
12:18That's why I say to people, if you want to be in the list, it's 200 bucks.
12:21Yeah, and that works.
12:22That is very, very powerful.
12:23I remember doing the exact that strategy and we had a couple of buyers lined up.
12:31We converted them from just interested to putting some physical money on the line and they were super engaged.
12:40They would connect with me every couple of weeks or more.
12:45Got anything for me today?
12:47You got anything?
12:48Any properties come up?
12:49And it was quite powerful compared to everyone else on the list.
12:53If there was no money involved, there was no connection.
12:56There was no follow up.
12:58It was a good idea at the time and then that was it.
13:01That was the last I heard of them.
13:03Yeah, well, and quite often people get this and understand it that the only thing you have to sell is time.
13:11The only thing you cannot buy is time.
13:14Once time is gone, it's gone.
13:16Lawyers don't meet for free.
13:17Doctors don't meet for free.
13:19No one meets for free.
13:20It's going to cost you a couple of hundred pounds or a hundred pounds.
13:23And people go, yeah, yeah, yeah, I'll get my secretary to organize it on Monday.
13:26I say, great.
13:27I should give them a phone.
13:28So take a photo of that.
13:29Yeah, I was just going to say, just a quick one, Rick, for those that aren't watching the video but are on our podcast.
13:35Ah, yeah.
13:36What you've just flashed up there is a QR code.
13:39Thanks.
13:40Yeah, ladies and gentlemen.
13:41Sorry, what I just showed everybody was that I have a QR code as the faceplate on my phone.
13:45You can enter your MasterCard and Visa card into your phone and it's in my bank account and the appointment's locked in.
13:52Now, can I just tell you?
13:54That really sorts people out real fast because once people move money, it tells you about whether that meeting was really going to happen or not going to happen.
14:04Yeah, yeah.
14:05Very powerful.
14:06Yeah.
14:07So the thing I want to get, so you can lose money on houses.
14:11I remember once I had to go, I wrote this book.
14:14It's a long story, but I wrote this book once, which I thought was an absolutely fun, great book.
14:18It was a huge bestseller.
14:20I ended up going to court and I came in second place.
14:23And I remember the judge said to me, she said, Mr.
14:25Rotten, you taught your people how to make money out of houses.
14:27I said, yes, ma'am.
14:28She goes, I've looked at these books here.
14:30You lose money on houses.
14:31I said, ma'am, I lose money on houses in order to build a multi-million dollar business.
14:36And she couldn't get her head around it.
14:38And I also didn't have enough time to explain to the science behind it.
14:41Right.
14:42So you can lose money on property as long as you understand why you're doing it.
14:47But it's an incredible bargaining position.
14:49So what I wouldn't do, I wouldn't lose money on a property to sell it to a business.
14:56Because that business doesn't necessarily get you 15 more businesses in the front door.
15:00But let's say I don't want to have to sell.
15:03We buy houses.
15:04Let's say I'm saying, okay, I'm going to every now and then I'm going to give a house away, a massive discount.
15:10Or I forgive loans.
15:11I'll say to people, look, you owe me 300 grand.
15:14Every blue moon, I say, you know what?
15:15Pay me 200.
15:17Keep the last 100.
15:18And people are like, excuse me?
15:20Yeah, look, you probably need it more than I do.
15:22And you've just got a new kid.
15:24You've got a new dog.
15:25And you want to upgrade, blah, blah, blah.
15:27People get so pumped.
15:29For the next few months, your phone just rings off the wall, as I've told everybody.
15:34And you've got to remember, you don't have to sell any of those new people about who you are, what you are, and how you do it.
15:42It's already pre-sold by somebody else.
15:44Probably not a bad place to wrap it up for today.
15:47Well, I guess what?
15:48I guess we have to wait until the next one.
15:49Until then, my friend, it's been good seeing you too.
15:52Thanks, buddy.
15:53See you, bud.