There are many ways to find real estate deals, and the best method depends on your goals and resources. The Multiple Listing Service (MLS) is a good place to start, as it gives you access to listings from real estate agents. You can also ask around or search online classifieds websites like Craigslist or LoopNet.

If you're willing to do some legwork, bird dogs and direct mail can also be effective. Bird dogs are people who find properties and then sell them to investors, while direct mail involves sending letters or postcards to homeowners in a specific area.

Of course, you can also find deals by networking with other investors or attending real estate investment seminars. Whichever method you choose, make sure to do your research and always be on the lookout for good deals.

The 25/25/2 Formula For Finding Deals

Here’s how it works. We want every single one of you here committed to sending out 25 pieces of mail a week, making 25 phone calls a week, and writing 2 offers per week on real estate deals. This is the mathematical formula for success. If you do 25 letters a week, by the end of the year, you would have sent out 1300 pieces of mail. If you make 25 phone calls a week, by the end of the year, you would have made 1300 phone calls, and if you make 2 offers a week, you have made 104 offers by the end of the year.

Look at how this breaks down. If you’ve identified a mailing list, but you don’t have a preexisting relationship with them and your letter is relatively generic, a 1% response rate is considered good.

1300 pieces at 1% means you’re going to get 13 contacts. Now my question for you is, do you know what the value of these 13 leads are?

This is how you would figure that out. If we invest $100 to produce a quality lead that we know will generate $300 in revenue, what’s our rate of return on investment for that single lead? That’s a 300% return. Do you know what your return on investment is on the leads that you are generating for your business? If you don’t, you better because this is how you can make your projections moving forward.

If we know we can drop 1300 pieces of mail at $1.00 a piece and generate $10,000 in revenue, am were making a profit? Can we invest more? The answer is, of course, yes. But, what if it costs us $15 to produce leads to drop 1300 pieces? $15 times 1300 is $19,500. If we spend $19,500 to get $10,000, we’ve now lost $9,500. We see this a lot in beginning business owners and would- be entrepreneurs, they never stop to calculate the cost of their lead generation. This is why we like Craigslist. It’s free. This is why we like the Private Money Ex- change Craigslist ads. This is relatively free marketing except for the investment of your time.

As you become more seasoned as an entrepreneur and as a business person, your time becomes exponentially more valuable. At this point you have to make sure your return on investment of your time is substantially higher.

What is the value of your time? If you’re doing menial functions that you could be paying an assistant to do, you are probably wasting your time.

Please understand we are sensitive to the beginning, budding entrepreneur. There was a time that we did everything. Now we have a customer service team to make my outbound calls, send direct mail, and schedule appointments, because the highest and best use of our time is to be here talking with you or closing deals. Anything that you can do to maximize your core competency is going to increase your income.

For you our question would be this: What is your core competency? What are you really good at? We’ve yet to meet anybody that’s really good at everything. Are you that sensitive in your own business regarding the value and investment of your time? If you’re not, you need to get there through specialization and choosing and identifying what it is you’re going to be good at, or your niche. Identifying your core competencies in relation to that niche will allow your income to explode.

When you are doing a very targeted message to market match where you’re sending 1300 mailers to out of state owners with a message that says, “Dear homeowner, I’m writing you because you live out of state. You own your property at free and clear. I would like to pay you cash fast.”

This is a very specific message to market match and our response rate on the piece is going to be exponentially higher. A good rate of return on a shotgun piece is 1%, in a strong message to market match, a good rate of return is 10%. If I got 13 leads from 1300 pieces on my last mailing, and on this mailing I get 130 leads with a very strong message to market match, my dollar per lead is going to be dramatically higher because the message to market match is more specific. This is what I’m talking about when I say “rifling your leads.”

In marketing, again, if you use the shotgun approach, you use 150 bullets and you might get one. In the message to market match you’ve got to be very specific and very strategic to the game that you’re hunting and the bullet that you’re going to use. 

In this scenario, I used a very specific message to market match with out of state owners. I get a lot more leads, which is going to give me a higher, what we call “DPL,” or dollar per lead. Ultimately, that’s what I want to maximize. For those of you who are out actively looking for real estate to invest in, one of the things I see broken more often than not is that you have a bunch of worthless leads.

If you’re not sure if your leads are worthless here’s the litmus test for you. Of the leads that you have coming in from the multiple websites that you are paying monthly to have access to, how many properties have you bought and how much money have you made?

Think about this. Of all the money that you’ve invested, of all the worthless websites that you’ve got that look really pretty and they’re fun to play with, how many of the leads coming in have you actually made money with? I will tell you that the bulk of clients that I see that I work with privately or one of my mentors works with, we see so much wasted time on leads that are worthless.

I will go even further to say, of the leads that you have coming in, how many of those are you actually calling? How many are you sequentially following up with? You make the call. You write the letter. You send them some chocolates. You send them an offer. You follow up with that. Are you going through a sequential process? Are you closing the deal? If you are, that’s great. You represent a very small minority. The large majority is wasting time playing on the Internet and looking at leads that you will never get paid from.

Please don’t confuse time with success. If you are investing three hours a day looking at emails, writing letters and offers, and you still haven’t gotten paid, are you following up as strategically and as specifically as you should be? If you’ve got leads from people who’ve responded to your message and you are a welcome guest in their world because they received your mail piece and they reached out to you, why aren’t you closing more deals? Why aren’t you buying more property? Why aren’t you lending more money? Why aren’t you borrowing more money? Think about that.

When you sit down to work on your business and in your business, what is the outcome of each day? Are you producing revenue as a result of that work? If you’re not, don’t think that you’re a real estate investor. You are a real estate investor wanna-be. The only difference between wanna-be and success is taking strategic targeted leads and converting them into dollars. How do you do it? By doing the very things that scare you the most: picking up the phone, talking to people, and asking tough questions like, “How much do you want?” or “How did you come up with that asking price?” Or writing low offers and letting any negative reaction roll off your back. If you are not getting bombarded daily with no’s, you’re not asking enough questions or writing enough offers.

Look at the math. If I get paid for every 10 offers I write and out of this 1300 mail piece I get 130 leads, how many offers do you think I should write on 130 leads? Let’s do the math. Let’s say that conservatively, 25% of these leads are worth writing offers on. We’re going to write offers on 32 pieces of property. Out of the 32 pieces of property, I’m going to get paid on every 10, which means we will buy 3 deals. Here’s my math. If I’m going to wholesale and assign a deal, I want $5,000. If I’m going to partner on a deal, I want $15,000. If I’m going to do the deal all by myself, I want $25,000.

What this means is that I’m going to make $45,000. It’s important that you guys get the numbers in your business down to this format. Only once you know the metrics of the cost of your marketing, the number of leads that you get, and the dollar return on the investment in marketing, can you then ramp up to do more.

My goal here today is to help you guys understand that investing in real estate is an incredibly lucrative business if it’s treated like one and runs like one.

Once you understand the formulas of marketing it’s actually a lot more fun because the metrics are based more on income and on strategy. If you know the strategy and the formula and you follow the path, then you can pretty much dictate your outcome as to when you get paid.

So, we made $45,000 on our 1300 piece mailing. We’ve invested 100 hours into making calls, writing offers, and strategic follow up. Let’s say we spent $3,500 on the mail. We’ve got $3,500 on 1300 pieces and we invested 100 hours. If we invested $3,500 in mail, we netted $41,500. If we take the $41,500 divided by 100 hours, we get $415 per hour. Are you currently making $415 an hour?

If you’re not, you’re probably not following the formula on your screen which is 25 letters mailed each week, 25 calls made each week, and 2 offers written each week. If you follow that formula, stick to the formula, and do it consistently, you should be making no less than $415 per hour. Now you choose how many hours a week do I want to work?

If you work 10 hours per week, you make an extra $4,150 per week. If you work 20 hours in a month, you make $8,300 per month. If you want to work full time in this business, you’ll take that multiplied by 2 which makes $16,600. If you do that for 12 months, you make $199,200.

Here’s what I know: There’s not a single person here that doesn’t like that number. Perhaps, there are a select few of you who look at that number and say, “Lee, that’s too small.” 

Ok. Then with $199,200, can you hire 3 employees and pay them $40,000 each per year. That’s $120,000 which means you’re netting out $89,000 annually. But, can your 3 employees do the work of you? You now take your $199,200 times 4, because it’s you and 3 employees, and guess what now you’re grossing $796,800! 

There are really two things you need to get really good at. Marketing and sales, not real estate. Real estate is the byproduct of the business. If there are no new leads, if the phone is not ringing, and you don’t have customers, it doesn’t matter what your product is. It could be real estate, it could be widgets, it could be swimming pools, it could be candy, but if you don’t have customers, you don’t have a leg to stand on.

You must focus first on the marketing. It is truly the lifeblood of your business.