Episode 290: Top 3 Mistakes When Dealing With Seller Leads with Danny Johnson
Nothing happens without a great deal from a seller. Knowing how to generate those kinds of deals is a good place to start. Danny Johnson of FlippingJunkie guides us in succeeding at our real estate venture by exposing the top three mistakes people do when dealing with seller leads. He talks about house flipping paired with the good use of technology to help with your business, particularly on having an online presence. Giving us a look into his book, Flipping Houses Exposed, Danny also shares the things we must do to establish ourselves online and generate those leads.
Watch the episode here:
I’ve got Danny Johnson here with me. He’s a local San Antonian. We’ve known each other for a long time. My mentor and his mentor are probably the same guy from way back, a guy named Rick. He’s very private. He owns a lot of houses. We’re going to be talking about house flipping and technology and some mistakes we make on seller leads or buyer leads, which one?
On seller leads, generating those leads for the great deals for house flips, wholesale and all that stuff.
I love that because that’s where the rubber meets the road. Nothing happens without a great deal from a seller. That’s a good place to start. What have you got? Three major mistakes that people make when they get on to some seller leads?
Using online to generate the leads and if I can, I’ll tell the story of how I got into that from house flipping.
Give us a little bit about your background and then we’ll pick up from there.
I was selling magazines door-to-door. I ran into Rick trying to sell magazines and he taught me how to flip houses. I flip houses for two days and then I decided to teach other people how to flip houses.
That’s happening a lot right now. Everybody flips one house and they got a course next week.
My wife and I have been flipping for many years in San Antonio and we have known Mitch for a long time. Before that, I was a software developer and I work in this office that was a skiff, which is like a bank vault almost. We can’t have a cell phone and no natural light or anything because it was a defense work for the Air Force doing software development. I felt like the life was being drained out of me. At that time, my dad who was also friends with Mitch and Rick started flipping houses. He was having a blast, telling me his life completely changed.
He was so excited about everyday driving around town and making these deals, talking about the deals he was doing. I got bit by that bug and I said, “I want to do that. I’m sick of being stuck here at this desk.” We started flipping houses and got really excited about it. I spent three years part-time and that helped us figure out, “What do we need to do on our limited time to make this thing work,” which was great. We did well. We’ve been to a pace where we’re doing about 35 deals a year. I took this trip on the West Coast. During the trip, we went to an air museum. The summer before, I had taken an airplane ride with Rick in a small plane and I was like, “I want to get my pilot’s license. That would be awesome.”The days of saying you don't need an online presence is not here anymore. Click To Tweet
You wanted to get a plane and you wanted to fly?
Yeah, I took a bunch of flying lessons but my business dropped off because I was so into flying. The thing with the marketing we were doing, what you’re getting right now and results on marketing and those leads are from what you did three months ago most of the time. Those leads were still coming in as I wasn’t doing anymore. I was focused on my flying lessons and everything but we’re still getting deals. Then when I was done after three months and I got my license, I realized that things were drying up. The leads were not coming in anymore and all that was happening. I had lost motivation because I was so interested in wanting to go flying and having fun all the time, which wasn’t good for the business.
At the time, I was doing these goal-setting meetings with one of my buddies and I decided to start a blog to hold me accountable. I was like, “I want to show other people what I’m doing to build this thing back up.” Basically, it was 34 weeks in our business. Everything that we were doing, all the marketing we did, every single call that came in, why they were selling, how much they were asking, whether they want to sell the house or not, just breaking down every single piece of that because I noticed there were no blogs that showed all that. Everybody just showed the rehab process or how to do this or how to do that but nothing about the day-to-day, what are these calls coming in? What are the people telling us? What am I telling them for every one of these calls? That became a pretty big thing and that became that book. I took those blog posts, turned them and made it into a book with a little bit more readability. The thing that people like so much about that book was the realization of how much this is a numbers game. Because they could see how many times I was saying, “Next, next, next,” instead of trying to turn these deals or these non-deals into deals.
Don’t spend too much time on the non-deals. Quit trying to make chicken soup out of chicken shit. I like that, “Next,” because people don’t understand. I was talking to people on my weekly call. It’s a group coaching. There are about 40 people on the line. People are going, “I’m having trouble find the houses.” I said, “How many contracts did you write? How many people did you contact in the last five days?” He says, “I had twelve or fifteen.” I said, “Take the crap out of there, please.” I said, “You’ve got to get your numbers up. My VAs are calling 200 people a day and I have four of them, that’s 800 a day.” Get four or five appointments a week to hopefully buy a couple of houses. Maybe buy one, maybe not. You drop those five lukewarm ones into a different follow-up CRM and you’re still pursuing them but you didn’t get one this week.
Then there will be weeks you buy four because some of those old ones will resurrect themselves. Do you remember the good old days when we could get into the Classifieds to go and buy a house, and if we’re screwed up, we’d buy two and then we wouldn’t know where we’re going to get the money for all of them? Those days are over. You’ve got to work hard to find the houses now. People, whether they like it or not, you impressed on them. It’s a numbers game. You’ve got to get your numbers up.
That gets into what Jim Rohn always said was, “When you have somebody that’s supposed to be doing something and generating results and you want to get a reporting from them, he would have a small box on the report and they were supposed to fill in how many calls or how many whatever they were supposed to do.” He said he made it a small box because whenever the people came to him and they said, “I wasn’t able to do this or that or get this and that and this happened.” He said, “Do you know why I made that box so small?”
“I just want the number. It’s all that matters.”
“A story won’t fit. I don’t give a crap about whatever else happened. I want to know how many did you do?” That’s all there is to it.
That’s like when I’m talking to people, they want to tell me, “Can I talk to you about my deal?” I say, “Yeah.” “There’s this lady and she has this,” “I don’t give a crap. How much can you buy the house for?” “She has a daughter and then they have a dog and then they had a car.” I said, “I don’t give a damn. How much can you sell the house for now? I need that number.” Then they go off and be like, “She was wearing a pair of boots and a hat.” I go, “I don’t give a crap. How much is the repair going to cost? I need three or four numbers from you. I don’t give a crap what they were wearing or where they were going or what they were driving.”
I don’t care about any other details until I know that there’s a deal and then I’ll tell you what other details I need.
If it looks like a deal, then I want to learn all about them so I can talk to them and make friends but before that, I don’t care.
You’ve got to do that. When you get into the storytelling and all that kind of stuff with the details it’s because you’re not getting enough leads and you’re trying too much to make something which is not good enough.
You’re trying to make excuses on why you didn’t call 200 people.
The book and the blog are describing all that stuff and showing what marketing we’re doing and where those leads are coming from. The majority of them were coming from our website. That’s how we were generating most of those leads. People are contacting me and reaching out to me saying, “How do I get a website too?” I had nowhere to send them because I had built my own and didn’t feel building websites for people. I’ve got no place to send them. We created websites as a part later but the fact is getting and having a bunch of customers that have websites, over the years we’ve helped thousands of real estate investors with websites. We’ve seen that there are some common things that people struggle with. A lot of people have tried to generate leads online and didn’t have success with it and might not have known why. That’s where those three mistakes come in, the things that keep people from being able to do it.
We probably have a mutual friend, Eric, who I was wholesaling a lot of deals to. He and his partner were trying to figure out how he was getting all these great deals. He didn’t tell me, I think I found it. They were setting up a website because they found out I was getting a lot of stuff online. They had this website built, they had it going and I was looking, I said, “I don’t know who they talked to about building this thing but it’s all wrong.” At the time, it was built in Flash or something. Google and their algorithms and their spiders wouldn’t be able to crawl the website and find out even what was on it. It wasn’t going to show up in the results for them to be able to get deals. At the time, I wasn’t focused on an abundant mindset and trying to help them do better. I wanted to keep getting the deals and selling them to them. Over the years, when we started helping other investors with the websites and getting this stuff going knowing that there’s enough for everybody, we’ve come to share a lot of these things that we’ve learned over all those years of messing around trying to keep that website ranking and all that stuff.
Not Having A Complete Online Presence
I want to let people know, we talked about your book, Flipping Houses Exposed. We’re going to go through the three mistakes people make. What’s number one?
Number one is not having a complete online presence. A lot of people think online presence, “A website is an online presence.” It’s not necessarily the whole story. I was outside my dentist office awhile back leaving and there was a couple talking. As I pass by them, the woman said to the man, “I was looking for them on Facebook and I couldn’t find them. I checked online I couldn’t find them. I checked Google, I couldn’t find them there either.” She goes, “I guess we’ll need to find somebody else.” It’s this thing where they’re trying to find a service and they weren’t looking for a website. They were looking for information about who these people were and all this stuff. It’s not a matter of opening the phone book and calling somebody anymore.
They want to see what’s going on with the person, whether there are reviews. This house flipping business and generating these leads, it’s a service. This is a service-based business. We provide the service of helping people to sell their house quickly. It’s the same thing. If you’re doing direct mail even if you have a website on it or don’t have a website on it, a lot of times likely they’re searching for your phone number or your business name. Whatever’s on that postcard or letter online to find out more about you before calling this complete stranger. A lot of people don’t realize that’s happened more and more. The days of saying, “I don’t need an online presence,” is not there anymore. Even if you’re focused on direct mail, you’re probably driving traffic to your competitors without even knowing it.It's good that it's hard because if it wasn't hard, everybody else would be constantly beating you. Click To Tweet
I’ve got to number three in the SEO thing at one time and I hope I’m not going down a black hole here. Anyways, my problem with the SEO calls from the website was it seemed to me that whoever was shopping to sell their house online was calling everybody on the first two pages. When I’m going into the house, there are three people coming out. When I’m coming out of the house, there are three people coming in. It’s like, “I’m getting a lot of calls but there’s a lot of competition for these houses.” How do you combat that?
That’s interesting because we didn’t and don’t still have that problem for the most part. How we combat that is making sure that we’re live answering those calls. If the web submission comes in, we call them immediately. What we did with the website is if that form submission is done, there’s a text immediately to us and to the person that submitted the form. Once I do the first form, we get the text and then it goes to the second form on the page. They’re still on our website filling up that second form when we’re calling them because that first form gave their number, the house that they’re selling and their name. I can click on my phone on that text, dial that number and call them while they’re still on my website. That’s huge because then if you set that appointment, they’re much less likely to be going to a bunch of other ones. It’s when you’re calling around, once you finally talked to somebody and get stuff you need, you stop. You don’t feel you need to do a whole lot more.
It’s the same though. No matter what medium you’re using, consistency and speed, you’ve got to get there fast these days.
Set that appointment whether you think it’s a deal or not. You can always cancel the appointment, but have them feel that they’ve got the next step done. They’re not waiting for something.
Try to take them off the market the most you can.
That’s how you do that. The online presence, in my story outside the dentist office is they went to Facebook. You can get a Facebook business page for free. Even if you don’t have a website, get your Facebook business page. With the amount of competition, we’ve got to be branding our businesses as much as we can and get a Facebook business page. Fill it out as much as possible. Include pictures of ugly houses and all that crap. Their Google My Business page, it’s the same thing. Even if you don’t have a website you can create a Google My Business page. You’ve got to have that. You can set up a Yelp account to have your business on there. A tip for all this is you need to have the same phone number and address exactly as you have on your website and on all these things. You’ve got to have that because Google in the rankings, they look at that because then it’s a legitimate business because you’ve got the same info everywhere. It ties it all to the one thing, to the one business. All these spiders are crawling all stuff, they’re going to know that and say, “This business is more legit especially if you have a Better Business Bureau accreditation because you paid for it.” Most of the spammy people trying to game Google aren’t getting Better Business Bureau accreditations. That’s another one.
The next step beyond that is making sure that you’re getting reviews. It amazes me how few investors spend time on this and it’s huge. Because if you’re not doing this, you’re going to be up against competition that has 20 or 30 reviews that took him a couple of years to get. You know how it is, if you see two businesses, one’s got one review and the other one’s got 40 or 50, which one are you calling? There’s a reason why they got so many reviews. This is big and the time to do this is now. It’s not to wait for it and it’s not easy to get those reviews. Every one of those should be a huge win that you’re celebrating because you’ve got to talk to them using their Google account or whatever to go to your business and leave that review. If they’re happy about you buying the house, that’s the time once you got that closing table and got that check in their hand to ask them to do it.
You might even get it done while they’re sitting at your office, “Let me pull up your account.” Also, I take pictures with people with the key or the contract or the real keys. I’m owner financing houses and I actually am instituting a letter into my closing documents to be sent to the state representative of that district. It’s saying how great it was that they could finally get out of winter and they could only do it by having owner financing from a private individual like this guy so we could have state representatives getting some good news instead of hearing about the people they got screwed.
I also have another idea that I learned. Tell me what you think about it. I don’t know if it’s a good idea or not I thought it was a good idea. You noticed when you have the reviews, it’s always the two bad reviews. You go ahead and you make some bad reviews on purpose that say, “I can hardly think of anything bad to say but they wanted to move so fast. Once I talked to them it, they decided not to. I didn’t have a complaint.” Make a bad review that really has a positive outcome. “I was upset for a minute because they were willing to move so damn fast that I wasn’t comfortable but when I finally talked to them about it, they did a 180 and said, ‘No problem, we’ll wait until you’re ready.’”
My thing is advising on not putting out fake reviews. However, you feel about it, that’s your thing. Google has ways of determining some things sometimes automatically. We’ve had trouble before because we did have an IP address of something where we were taking a tablet at closing and having them sign in. Something about that same IP address or something there was some trigger and they removed a bunch of our reviews.
Even if you did at your office and let them use your computer, that’s not good?
I don’t know. You’ve got to be careful about how that works. They might think, “If their business is doing that, then they’re probably giving something to get the review.” That’s why they’re so hard to get so many but once you do, your competition has the same problem. They’re likely not going to keep up with it. That’s the first mistake and not having that full presence online. When they search you, your business name, your phone number or whatever, that’s going to come up with all this different stuff. It will make you a lot more legit and then also make it less likely to have your competitors show up alongside all your stuff.
Not Knowing What To Expect
You might need to have a complete online presence that’s not just a website but a whole bunch of different places, Facebook or business page or Yelp or whatever. The second one is to make sure you’re getting reviews because what good is it to be on all these places if you’re not getting any reviews. You’d have to get some positive reviews. What’s number three?
The review was part of the first one, so maybe it’s four, I guess. The next one I have is not knowing what to expect. This is huge because so many people think, “If I get a website, it should show up in Google on the first page or somebody will find it.” The thing with websites is that it takes time to show up and it takes work. It takes a Search Engine Optimization work outside of the website to be able to get it to rank. It’s knowing that’s what it takes because so many people get into it not knowing and they get a website and then four months later they’re like, “I don’t have anything, so I’m canceling.” You’ve got to go into it with the plan. If you’re going to do it by ranking organically with SEO, Search Engine Optimization that you would pay for and our company does offer that service to do that, you’ve got to know it’s an investment. It could take in a tougher market ten, twelve or even four months. You look at that investment expense up front and say, “I’m not going to commit to this unless I’m going to do that monthly for that many months to get to the top to actually get the results.”
It’s like radio advertising. If you think you’re going to go in for a week or two at radio or a month or two, you’re crazy. You’ve got to go into radio no less than six months to a year. It’s hard.
The next thing is how many people stop inches from gold? If you’re reading this and you’ve tried it before and you were like, “I got to the first page and I wasn’t getting any leads.” There are several reasons for that. The first one is that’s for whatever keyword you typed in and there are thousands of keywords. The bigger reason is the fact that 70% of the clicks happen with the first three results. If you’re not in the top three, you’re not there yet. You’ve got to keep going. Once you get there, you will get a lot more leads. A lot of people will say, “I’m on the first page or I’m number five or six but I’m not getting anything. It’s not really worth it for me to keep going because I’m not getting anything. I might get one or two later.”
Then you stopped.
It takes me longer to move up on that first page up but knowing that once you get there, the benefit there too is hard but it’s good that it’s hard because if it wasn’t hard, everybody else would be constantly beating you. It’s whoever is willing to last longer to get this done.If you don't have a big enough budget to make a dent and get enough calls, you're throwing money away. Click To Tweet
Number two is to be committed?
Yeah, knowing that there’s a commitment needed and you’ve got to work to get to that top three spots and don’t give up until you do. The next thing is with AdWords. If you want me to talk about the budgets for Google Ads because it’s the same thing, it’s direct mail. If you don’t have a big enough budget to make a dent and get enough calls, you’re throwing money away.
I want to talk about that.
The way that we determine or a way to look at this is by looking at what we typically make on a deal. If you’re rehabbing, you might average $25,000 or something on a rehab. You say, “What’s it going to cost me to get that deal that’s going to make me $25,000?” You’ve got to reverse engineer from there and saying, “How many leads do I typically get to get that deal?” Even if you don’t have an awesome acquisitions team or person or yourself that’s doing very well and you take ten leads and you make one of those deal. From there it’s like, “How do we get the ten leads?” In line with Google Ads, a typical range of conversion rate, meaning that someone came to your site and contacted you saying that they want to sell their house. You throw an easy number out there like 10%. In order to get the ten leads to get the one deal to make the $25,000, we’ve got to have 100 people going to the website, 100 people become ten leads, one deal profit.
How much does it cost to get 100 people to the website? At that, we’re talking about how much it’s costing per click because that’s what we’re doing is pay-per-click. Your ad will show up, you don’t pay for it unless somebody clicked on it and went to your website. This depends on keyword and competitiveness and all that stuff but to keep it simple, $25 per click is a pretty good number. You could be paying $40 for good keywords. You could be paying $10. They’re all over the place. It depends on the market and keywords. A good one maybe is about $25 per click. We’re looking at 100 clicks at $25 that’s $2,500 to get us ten leads, one deal, $25,000. That’s how you look at it. If you go in and say, “I’m going to try out this PPC thing, Google Ads but I’m going to start with just $500 a month.” You’re likely not going to see much because Google actually takes that budget and you have a daily bidding budget. If you broke down $500 by 30 days in a month, that’s $25.
You can’t even get one good click. You’ll end up with a lesser keyword getting clicked or something and you’re paying that money and then your ads won’t show the rest of the day because you’ve already spent your budget. If you’re going to go into it, you’ve got to look at it like spending about $2,500 or more a month on ad spend to be able to generate those deals. Anything less is likely to get you to where you’re paying money but you’re not seeing the results because you’re not getting enough leads unless you get lucky and the first two were awesome or something.
You better be committed to start following every one of them right now. Make yourself available because you’re paying for the leads. If you’re not gung-ho about following up on them ASAP, then your odds are going down fast.
What I like about the PPC leads though is a lot of people think it’s a lot of money to pay-per-click and stuff. What you’ve got is you’ve got somebody that already knows that they’ve got an issue that they want to resolve and they’re searching for somebody like us. They’re looking for us. Whereas Facebook, you’re getting in front of a bunch of people. In direct mail, a lot of times you’re getting in front of a bunch of people. With PPC and SEO also, they’re searching for you, which is a completely different scenario when they call. You have more of the people saying, “When can you get out of here? I want this thing sold. I’m sick and tired of this,” versus “I don’t know how much you give me.” They’re not even interested in selling the house. There’s a big difference there. That’s number two, knowing what to expect budget-wise for PPC stuff, paid traffic versus the SEO stuff.
Focusing On The Wrong Keywords
The last mistake that we’re seeing is people focusing on the wrong keywords. All this is based on keywords. When you do PPC and Google Ads or SEO, you’re trying to either get your site ranked for certain keywords or you’re trying to be targeting those click ads per certain keywords. It’s important to make sure that you’re focusing on keywords that include something that shows motivation like warm traffic and not cold traffic. As an example, if you are targeting to sell a house, you’re going to burn your budget through really quick with people looking for a realtor. You’ve got to make sure that you’ve got something in there that’s like, “Sell my house yesterday or sell my house with the tenants in it or how to kick out tenants.” Something that’s going to show that motivation, how to evict tenants in Bear County or whatever it is. Have those things that represent that somebody is going to have a situation where they’re going to be looking to get out quickly and have that property.
I’m not very good at this. Could you sell the house immediately? You’re going to get a lot less people that use the word immediately but the ones that do should be a high-quality lead.
The way that Google does it too is they’ll take similar words and swap them out. If somebody says “Fast,” they might show yours even though you targeted “Immediately.” It depends. You don’t have to list out every single possibility. Google will do that for you. If it’s close enough, it will show that result for that and do that thing. Immediately represents, “I’m not looking for a realtor to have this thing sit on the market for a long time and get as much as possible. I want to sell it immediately.” That would be something to try out. That’s the last one. With this along those lines is a lot of people are scared about online stuff because it’s unknown, how much it takes and how hard it is. With what we talked about, it’s a matter of saying, “I want to become one of the top people generating leads online in my market.” I’m sure, a lot of the successful investors that you know focus on how many at most marketing channels to generate all their deals.
Not many, probably three or four at the most, maybe.
They become experts at each one instead of trying a bunch of crap.
They usually start with one at a time and then once you get one that works, you leave it alone. It’s on autopilot. “I’m going to try to make SEO pay or I’m going to try and make a phone room pay.” Then once it’s running, you can leave it alone because it’s running. You go to the next one and you’re building blocks. I call them lanes. We keep opening up acquisition lanes that don’t compete with each other that you have to spend some time to figure out. To me, doing what you’re talking about here, I will have to hire a company like you or hire a person to come in-house and do it full-time. I tried to find someone to come in-house and do it full-time for me just paying attention to me and wouldn’t be able to fabricate or whatever. They’d have a job as long as my SEO was working to produce these houses. When they quit work and they lose a job, I thought that would be a poignant point. The problem is you can’t pay these guys enough because they can get paid working on five, six, eight, nine, or ten accounts way more than you pay them for one account.
There’s a way to do it. We had talked about the warm traffic and the keywords and sometimes it’s difficult to figure out which ones. We actually took $2 million of ad spend across the accounts that we managed and looked at which keywords were searched and actually became leads. You can have a high traffic volume, people clicking sell house but they don’t become leads because they weren’t looking for an investor, they’re looking for a realtor. We looked at which ones were producing the actual ones and we put together a list of those top 50 and actually became so that you know which keywords to target.
First of all, you can get a copy of those 50 Top keywords that result in leads. You can get a copy of the book, Flipping Houses Exposed and learn more about Flipping Junkie and Danny Johnson at REInvestorSummit.com/Junkie. This is a real results-based test over $2 million worth of ad spend. These are the ones that hit and produced real leads. Get the book, Flipping Houses Exposed. I’ve known Danny for a long time. He’s been active for a long time. He had a great coach and mentor because we shared that guy over the years. Your dad was also quite a consummate house remodeler and house flipper in the end. Talk about changing a life, the guy started a little remodel business and ends up owning a whole bunch of houses and cashflow and everything else. It’s a tremendous success story both you and your father. Anything else you want to say to the audience, maybe the new investors?
If you enjoy listening to podcasts, I have one also called Flipping Junkie.
Thanks for taking the time to stop by. I appreciate you talking to us about that foggy area of SEO. I want to thank all the audience for stopping by to get you some Danny Johnson. If you haven’t checked out TaxFreeFuture.com, please go there. It’s over 37 videos on how to grow your financials or your retirement fund tax-deferred or tax-free. It’s amazing because there’s so much unknown about it and there are so many myths about it that these 37 little videos will teach you a lot about what you can do and how fast you can grow. It’s incredible. Go to TaxFreeFuture.com because you will not believe what your financial advisors are not telling you.
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About Danny Johnson
Danny Johnson is the CEO of FreedomDriven, LLC, where he utilizes his expertise in the house-flipping industry alongside his vast technical knowledge to effectively lead the San Antonio based small business. Danny always knew he wanted to be his own boss, but understood firsthand the struggles that come with entrepreneurship.
Danny’s father was an entrepreneurial spirit, never scared to take the risk of running a business. The freedom house flipping has created for Danny and his family continues to inspire Danny professionally, as he seeks to assist others in the industry to achieve the same freedom. Upon graduating from Trinity University with a degree in Computer Science, Danny worked for a local defense contractor as a software developer.
It was here that he met Melissa Johnson, future business and life partner. Together they founded Danny Buys Houses in 2003 and began flipping houses full time. While coding is still a passion of Danny’s, the challenge of leading the team as CEO is more fulfilling than any of his previous roles. In this role, Danny brings his passion for personal development and challenging oneself to help continually grow the team.
Currently, Danny and his team are developing house-flipping software to serve as a connection between the work and the customer, in turn providing freedom to fellow entrepreneurs. Simply put, he’s an expert helping other industry experts work as efficiently as possible. Danny is also a licensed pilot and enjoys coaching his son’s soccer team.