When a real estate investor contacts me to talk about writing for them, one of the first questions I ask is, “who is your target market?”
Every single real estate investor has a target market that they’re trying to reach.
Unfortunately, there’s a problem among investors that I see quite often: many investors make the mistake of thinking that “anyone” is their target market.
They’ll tell me, “hey, I’ll happily work with any cash buyer who has money.”
It’s hard to say anything against that because it SOUNDS preferable, but it really isn’t preferable at all: you shouldn’t work with ANY cash buyer who has money. That’s a business-killing mistake.
That’s because a well-chosen target market will be fun, fast, and super-profitable, while a generic market that has not been targeted will be difficult, slow, and often unprofitable.
Let’s dig into this a bit more…
WHY THE PERFECT TARGET MARKET IS NOT “EVERYONE” OR “ANYONE”
There are more people out there with money than you realize… and they’re not all like the people you want to work with. So among the big group of “anyone”, only a few are appropriate tow work with.
I’ll give you a few examples and you can start crossing them off your list of “everyone” as your target market…
For example, in our great big world of 7 billion people (or so), not everyone has money but even those who do have cash and want to buy real estate are not all perfect to work with you. If you’re not set up to work with anyone who doesn’t speak English then you can scratch off a whole bunch of wealthy non-English speakers. If you’re not aware of the cultural differences of an international cash buyer, you might not do a deal with them that makes sense for both of you. And there might be factors related to politics or international law and finance that you’re not intimately familiar with, so that probably scratches off a few more people from your list of “anyone”.
Okay, so you’re down to English speaking people with money who live in areas that are culturally, politically, and financially compatible with where you work. Great. But even among this group (which is still very large), you’re not going to be able to work with everyone: For example, exchange rates might play a factor into where people invest: as I write this, the Canadian dollar is quite low, which means that it can be very expensive for a Canadian cash buyer to buy American real estate (unlike the way it was a few years ago when I invested in the US). I’m talking about national exchange rates but this also works on a local level, as well: the value of currency in one area of the US is very different. Houses in Los Angeles cost hundreds of thousands more than a similar house in Columbus Ohio. Depending on the kind of investing you do, it might make sense for someone from one state to invest in another – but only under certain conditions. If you’re trying to partner with a private money lender on cash flowing properties, they might prefer to buy three or four in Columbus when they can only get one in LA. So your business might not be set up to work with investors because of where you do business or how you do business.
We’ve scratched more people off the list. Let’s keep going: the kind of deals you do will also determine who invests with you. Someone who needs cash flow will more likely invest with you if you’re a cash flow investor than someone who prefers the big (but inconsistent) hits of money that come with flipping.
The list is much smaller now but even among this group, you’re still not looking for “anyone”. That’s because on this group that’s remaining, there’s going to be people who are really happy to work with you – they know you and appreciate the value you have for them, and there’s going to be people who (frankly) don’t really like you that much or don’t appreciate the value you have for them. I can tell you from experience that you should do everything in your power to work with the first group of people and everything in your power to avoid working with the second group of people. The first group of people will make your investing fun and profitable. The second group of people will call you up every time something goes wrong or every time they have a question.
See? In just a few short paragraphs we’ve narrowed the list from potentially millions or billions of cash buyers to probably a few thousand. So you DON’T want to work with ANYONE. What you should prefer to do instead is find a group of people who you absolutely love working with and narrowly define that group, then invest in marketing efforts that reach ONLY those people (while ignoring or repulsing everyone else).
If you’ve done deals before then you probably already know who this group is, ideally. Chances are, you have a pretty good idea of who would make the perfect cash buyer or private money investor on your money list… and who would be absolutely horrible to work with.
If you’ve never done deals before then you have to take a best guess at this point and expect to refine it in the future. A good place to start is to find someone who is a lot like you, in terms of age, gender, interests, etc. (That’s not a perfect method of choosing a target market – when I was a financial advisor, for example, my target market turned out to be nothing like me at all – but if you have zero experience as an investor then this is a good starting point to build from).
PICK A TARGET MARKET TO ACCELERATE YOUR INVESTING BUSINESS
When you know exactly who your target market is, you can communicate with them in a way that is authentic, enjoyable and effective. You’ll connect with them and that will build trust very rapidly. And when you’re ready to do a deal with them, they’ll want to do a deal with you.
But when you don’t know who your target market is, your communicate lacks power. You’re trying to be everything to everyone, and you end up communicating too many irrelevant messages at once. Your marketing goes from laser-focused to scattered and confusing.
… And effective marketing is profitable, while ineffective marketing is expensive.
The day I stopped trying to work with everyone is the day my investing business totally changed. And I see this time and time again with so many of my clients. I urge you to think about who your target market is and narrowly define them.