The Secret to High Return on Investment in the Real Estate Business

Too often those in real estate look at all costs associated with their business as just that – costs. If you were to change your thinking just a little and look at some of the money you spend as an investment instead, you might just have a different perspective. Let’s take a closer look at this.

Do you have an RRSP?

Investment property?

Stocks?

Own another business?

OK – let’s say you own one or more of these. Now, what kind of returns are you getting on them?

5%? 8 or 9%....maybe even 15%? Nice!

What if I had an investment for you that would return you over 700%? Would that be of interest?

I hope so!

Now, what if I told you that you probably already have what you need to do this in your pocket, right now? Don’t believe me? No? Do me a favour – reach into your pocket – right now – and get out your phone. Seriously, do it right now! Now, take a look at your contacts – how many people are in your contact list? 50? 150? 500? More?

Are you leveraging that list to its fullest extent?

Here’s what I mean by leveraging your list: How many times per year do you touch your list? What is a touch? A touch is a contact point, a phone call, a card, a calendar, an email, a newsletter, etc.

What do you think would happen if you touched your list 33 times a year?

Do you think some magic might happen? I’m willing to bet it would!

So back to that 700% return – here’s an example of how it might work.

I know of an agent who does this:

  1. Monthly hardcopy, high quality, newsletter - 12 touches
  2. Monthly email report on statistics, articles about R.E., etc. - 12 touches
  3. Client appreciation event: movie night, bbq, etc. - 1 touch
  4. Pick up the phone and call 4 times a year - 4 touches
  5. Send a hand written thank you note after each call - 4 touches
  6. Bonus - Send an annual CMA update on their home - 1 touch

Total 34 TOUCHES

While you’re thinking about this, work out a plan to make each of these touches systematic. This shouldn’t be a haphazard process, rather, you should put some thought into when each of these activities will happen. Set your annual schedule now so that you can simply check your calendar weekly and know what you need to accomplish for the following week. For example, you might say that your hardcopy newsletters will go out on the 1st of each month and your email reports might go out on the 15th of each month, etc. The point is to get to the stage where you are managing the system instead of the system managing you. Work on your business instead of just in your business!

What does a 33 Touch program cost? After all, 180 hardcopy newsletters are expensive to produce and mail and a client appreciation event can cost as anywhere from a few hundred to a few thousand dollars or more!

Total cost to the agent in my example: $150 per contact per year

This particular agent has 180 clients on his list, so this costs him $27,000 per year. Sounds like a crazy amount of money, but keep in mind, he does 40 deals a year from his list.

Like clockwork. Every. Year.

So, if you do this in our market (Peterborough, Ontario in late 2014), where the average price is about $275,000 and the average commission per side is about 2.33% your $27,000 investment will gross you somewhere around $220,000 per year! That’s over 700% return on investment!

I can hear you now, “That’s impossible!” Well, before you call me crazy, let’s say you’re only HALF as good as this other agent (but I know you’re just as good!), and you only do 20 ends from this program. That’s still $110,000 return on your $27,000 investment. Name me another legal investment (selling drugs doesn’t count!) that you can count on that will give you that kind of return! Still over 350% ROI.

The secret? Each person on your list probably knows 200-250 people - and who will your database recommend if you implement meaningful and consistent communication? Go deep in your communications, keep yourself top of mind and perform well when you get the opportunity and the dividends will surely come your way in short order.

2 Comments

  1. Brandon Timmins 06/21/2016 at 3:19 PM Very true, great info Doug!!
  2. Doug 06/21/2016 at 3:36 PM Thanks Brandon :)

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Doug Lytle

Doug Lytle

Branch Manager
CENTURY 21 United Realty Inc., Brokerage*
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