Making KPI's Simple To Save Big Bucks

Mike DeHaan: [0:00] After four months of our most recent cold calling campaign we did, we found that our cost per deal for the cold callers was, like, $8,000. So, like, it was so far off. But but if we looked at where the work was going with our team, it was all going towards managing those calling leads.

Dan Austin: [0:16] Yep.

Mike DeHaan: [0:17] And one of the reasons this is so important to track is because it's so easy to look at the leads that you got from cold calling versus leads you got from direct mail and be like, direct mail sucks. Like, I don't get nearly as many opportunities from that. And if you look at the front end of it, you're right. But if you look at your total ROI, the number of deals closed per deal, I'm guessing you're wrong if you've actually tried both with real consistency.

Speaker 3: [0:39] Welcome to the collecting keys real estate investing podcast with your host, Mike DeHaan and Dan Austin. From wins, losses, horror stories, and tactics for optimizing your business, Mike and Dan take a real uncensored deep dive into the ins and outs of running a full time real estate investment and wholesaling business.

Mike DeHaan: [1:04] What's going on, guys, on this episode of the collecting keys podcast? It is another episode of the Mike and Dan show. We were actually supposed to have an interview, but the guy stood us up. So now we're doing our business update show for you guys. So, you know, things are definitely starting to move again, though Mhmm. Aside from my freaking rental properties, which I just spent the entire weekend dealing with. And I think it's just a Oh,

Dan Austin: [1:27] no, man. You had to do some work on the weekend.

Mike DeHaan: [1:28] I know. I had do work, period. Yeah. But it's just, the testament of, like, how difficult it is to, like, find good people for literally anything.

Dan Austin: [1:38] Oh my goodness. Especially property management. I mean, public surface announcements, this might be event on property managers.

Mike DeHaan: [1:45] Yeah. I mean, honestly, because it's been outrageous. Like, we brought on this group that was, I would say, like, relatively highly regarded in the area, and we brought them on in August. And my goal with having them take my personal rentals was I wanted them to be able to manage these properties while I traveled. And, ideally, I wanted them to be able to get it rented out while I was gone in Africa for a freaking month. I, like, figured that was plenty of time to get these properties rented. It's your first mistake. First mistake. So I went I went on my trip, you know, after all September, I was gone. You know, came back, weren't rented yet. Touch base there, and I was like, hey. What's the deal? She's like, yeah. It's just been really hard. Market's turning. You know, they're a higher price point properties, all sorts of stuff. And I was like, okay. You know, you've been doing this for a while. I'll trust you, whatever. Now here we are at the end of October, right, when we're recording this. It's October 25. So it's been two full months these properties have been vacant, which is outrageous even in this market if it is more competitive. Like, two months does not make sense. So I went by the properties and just basically make sure that everything was still good and no one had, like, broken in or there was no squatters or anything. They've been empty for two months.

Mike DeHaan: [2:50] And I was in there, and I was like, there's no fucking way that these haven't been rented yet. It's like, best neighborhood in town. Like, I own these places forever. They've always been super easy to rent. So I was like, you know what? Screw it. I'm gonna take some quick pictures while I'm here. I'm gonna go list them online myself and just see what happens. That was Saturday afternoon at 2PM. I connected I collected my first deposit from a new tenant. Sunday night, I collected my second deposit and first month rent and everything from someone yesterday on Monday, and they are actually moving in today because they were, like, a young couple. They make good money. They wanna get out of their parents' house. It took me less than thirty six hours to get both these places rented from when I listed them. Like, what is that, dude?

Dan Austin: [3:34] Outrageous. I can assure you too that the market is not turning. No. They're not that high of price point properties, actually. When you told me what you're listing them for, it's not that crazy. We have properties that that, like, are not in great areas that list for close to that. Yeah. And so it's like, that just doesn't align with it. No. I mean, that's just crazy.

Mike DeHaan: [3:50] It's just crazy. Right? And it's just a you know, showing a poor system, poor process. And then here's the problem with property managers. I think you're find this anywhere, is they don't really give a shit about your properties at the end of the day. No. You know, like, they have 50 other properties they're managing. If yours aren't rented, it's just another, like, line item on their list that they probably don't even think about on a regular basis. You know, even though they're not getting paid for it, it's like, so what? They're getting paid for 40 out of the 50 that they manage. So they're making, you know, they're making ends meet. They're getting their paycheck, and they're just like Yeah. You know, they are people that you're employing to everyone else.

Dan Austin: [4:22] Well, and it's the it's a business of upcharges. Right? Yeah. And so, like, hey. You know, we're gonna bill out your handyman our handyman to you at 80. We charge cost us, 60. We're going to bill out these subs at X amount of dollars, 10% or 20% margin on everything that they're doing. So the rent collections are good piece of it, right? It's easy money for them, but it's not the only way that they're making money. And let's be honest, most property managers in at least in the markets we operate in are not sophisticated. They are maybe some savvy real estate brokers, most of them, because you have to be a broker in the state of Washington to be a PM. Yeah. That had a few rental properties and like, you know, what'd a great idea is if I can start a property management company and then other people could pay for me to manage my properties. Yeah. And then that's how they start. And then they go and use some, you know, software that they barely know how to use. They go and hire a property manager to work below them because they don't wanna do the work. Cause it's not the work. It's kind of like a lot of task based bullshit. And you got to have a lot of, you have to have a good system of scheduling and keeping on top of things.

Dan Austin: [5:20] And the next thing you know, it's a shitty system and their properties are well taken care of, but everybody else's they're managing are mediocre and And you can't go anywhere else because the next guy down the road is gonna charge you the same amount, and it's gonna be just as shitty service.

Mike DeHaan: [5:31] Yeah. It's such a challenging things. I don't know what the solution is. Right? Because I don't know if this is exclusively a Spokane problem. I mean, it's small market, like, could be, but there's other people. You know, you have people like David Green out there who say, like, don't ever manage your own properties. You're not an expert at that. Find an expert property manager do it for you. I can now tell you that I am more of an expert than

Dan Austin: [5:53] Than a property manager.

Mike DeHaan: [5:54] Several property management companies that we have tried to work with. Right. You know? Honestly.

Dan Austin: [5:58] I agree. And it's not that hard to to, like, know that, you know, Zillow is a good place to find people. Yeah. Facebook marketplace works too. Right? There's just different easy ways to post things. And anytime it's a little extra work, that's the thing. It's like, a, it's an employee typically doing, and it's an employee working on things that aren't theirs that they don't generally understand the financial liability you're carrying. Mhmm. What is that? $10,000 loss for you?

Mike DeHaan: [6:22] Yeah. Honestly, between the the utilities and the missed rent, it's now $10,000. I'm in the hole because of that. Right? No reason. Like, I guarantee you that if we had if I had listed these properties at the end of August, when they're ready to go, that they could have all been rented and done by now. And it's just you know? I don't know. Just it's really frustrating sort of situation. But I think it is a testament, though, in in how important it is to do, like, your checks and balances with whatever people you bring on, whatever partners you're working with on different things, whether that's like a property manager you hire, whether that's a maintenance guy that, you know, you've been using for stuff. Even if they've done an awesome job on your last 10 projects, the on eleventh one, go and check and make sure it's still good because they start to get too comfortable. They do a shitty job on one of them, and then that'll come back to bite you. Right? You know, whether that's your own employees, whether that's, I don't know, anything else in between. Even, like, your tenants. Sure. You have a tenant that's been, you know, a sweet old couple that's been living in the house for five years and you've never had to go there. It's all perfect. You should probably go do a check because it's, you know, not unlikely that there's a big leak in the bathroom that they just don't give a shit about that's gonna be causing you a lot of damage when you ultimately find it when they move out at some point in the future.

Dan Austin: [7:32] When you go to turn it. Yeah. Yeah. It's, there's a reason why on the, commercial side of things why anybody that has, you know, properties under management, they're always talking about, well, you gotta manage your property manager.

Mike DeHaan: [7:42] Mhmm.

Dan Austin: [7:42] These are people with 10,000 doors and and, like, very large property management companies that are, you know, national nationally based property management companies, and you still gotta manage them. Yeah. Just it's just what it comes down to. And I think it's what you just said actually is even more valuable is, which we have found in most venues of this industry is eventually people will take advantage Absolutely. Of I don't know what it is. They just will. Tenants, contractors, employees. At some point, if you give them enough rope, and I'm not being cynical, I'm just being, this is complete experience. We've done it time and time again, eventually they will take advantage of you. A lot of times you can steer that shit back on course and be like, gotcha. We're not doing that one. That's not gonna work. But a lot of times also, it's just like, it's a lost cause at that point. Once they've taken advantage of you, the trust is lost. And, you know, quite frankly, you don't want them to stick around anyways.

Mike DeHaan: [8:32] Yeah. Absolutely. I mean, you know, I can even say that as previously I've been an employee, I've definitely done that with people. It's like,

Dan Austin: [8:38] oh Taking advantage of people?

Mike DeHaan: [8:39] It's it's like, oh, you know, you're gonna let me leave fifteen minutes early one Friday? Well, then I'm gonna start trying that every Friday. You know?

Dan Austin: [8:46] It's like,

Mike DeHaan: [8:47] oh, like, we got free lunch on, like, this day. Like, I'm gonna kinda start to expect that every time, you know, and then it becomes an issue if it's not there all of a sudden. So I don't know. It's just it's one of those things. Ultimately, what it comes down to, you care about your stuff more than anyone else does. And no matter what you do, no one will ever care about your stuff as much as you.

Dan Austin: [9:07] And don't be afraid to make sure people know you care about it.

Mike DeHaan: [9:09] Correct. Exactly.

Dan Austin: [9:10] I mean, you immediately solved your problem. Yeah.

Mike DeHaan: [9:12] I did. You know, I know.

Dan Austin: [9:14] You went and said, sorry. Not working. Bye.

Mike DeHaan: [9:16] Yeah. And that's literally what I did. Bye. Yeah. I got them leased up. And as soon as I had it all confirmed, I sent her an email. I said, hey. Listen. I don't need know these prophecies anymore. Thanks so much. See you later. And then she sent the thing back and was really upset about it and embarrassed, whatever. Was like, sucks suck. I don't know what to tell you.

Dan Austin: [9:29] Well, that's the thing is you get a chance. Right?

Mike DeHaan: [9:31] Mhmm.

Dan Austin: [9:31] Yeah. And you gave her two months of rope. Yep. And you believed you trusted. Mhmm. Then you went to verify, and there was no trust after that.

Mike DeHaan: [9:38] Yeah. That's true. Yeah. Trust but verify.

Dan Austin: [9:40] Yeah. That stinks. I would've leased your places for 10 g's for you while you're gone. Might as well have just given me $10. Yeah. Right. Honestly, you'd be in the safe spot.

Mike DeHaan: [9:49] Yeah. No kidding.

Dan Austin: [9:50] And you wouldn't have had to do any of the work yourself.

Mike DeHaan: [9:52] Yeah. That's true. That's true. Yeah. Like, leasing fee. I was actually thinking, though, niche business model, this is something that we could probably systematize. Because this is the problem with property management, it seems like, is the placing. So it was even other people I've talked to recently that are have different product management companies and they're not finding tenants. I just proved that it's very easy to find tenants very quickly if you're doing it correctly. Why don't we start, like, a leasing company that we just charge people, like, half a month's rent and it's purely just transactional? Then they can manage it themselves.

Dan Austin: [10:19] That's honestly, like, a good idea. I don't know if, for me, if the leasing would be more valuable or the actual management piece. Mhmm. Because I I don't necessarily wanna do either of those, but the leasing, what you proved, it's not that bad. And you and me, I don't know between all the properties we've, like, leased up if we've ever picked a person we weren't happy with. I don't think so.

Mike DeHaan: [10:41] I don't

Dan Austin: [10:41] think so.

Mike DeHaan: [10:41] I mean, like, with the the different tenants?

Dan Austin: [10:43] We've never had to evict anybody that we placed. We've never had to, like, deal with just incessant problems or nuisance issues, or, you know, if we placed a person like we haven't done that, we're a pretty good judge of character. We set our units up properly the way we want it. So like that leasing piece, other than like having it to set up showings, which I think you could get over is actually the part that probably benefits us the most. But the, like, the repairs, taking the phone calls, the rent collection, the management of the P and L, all that, I'll pay somebody to do that.

Mike DeHaan: [11:14] Yeah. Well, that's us because we have a lot of units. What I'm thinking about is the people that have two to three units that are like, man, I can't believe I'm paying a property manager to just, like, collect rent. We go and lease it for them, and then they can deal with those problems themselves. But when we know, we have what, like, 48, whatever the you know, like, kind of stuff. So, like, that becomes a full time task is to manage those on a monthly basis. But a lot of people don't need that, but they're still sitting there with empty properties all pissed off because their property manager, they don't wanna pay in the first place, is not leasing two of their three units that they own. Yeah. That's true. So, anyway, side tangent there.

Dan Austin: [11:47] I'm sure there I'm sure there's

Mike DeHaan: [11:48] a play there that we could figure out.

Dan Austin: [11:49] Somebody listening start that business for us, and we'll use it.

Mike DeHaan: [11:53] Let's call it a leasing agent. Other places have it. It just doesn't exist here.

Dan Austin: [11:56] I wonder if it's, a legality thing or just where people are just too cheap Yeah. In our area. I don't know.

Mike DeHaan: [12:01] But, anyway so, yes, that was my drama for the last little bit. I know you've had some fun stuff as well. We listed a major fixer upper, which is my I mean, I I kinda felt like this should become our new MO. We bought this property a little while back, just gutted it down to the studs and said, screw it, and just threw it on the market. And we've been getting a lot of interest. In fact, like, literally right before this recording, somebody else called you again. Yeah. And I think they said that they're planning to make full price offer.

Dan Austin: [12:27] Yeah. They wanna make a cash offer full price. And, yeah, some gal from Peru is interested. Yeah. You know what? I'd I love these these immigrants. Like, you you know, let's just go back to this property manager thing. Careful. Careful. No. Let's go back to this property management thing. You you one of the people you lease to are a Ukrainian couple that fled a war torn country already have two high paying jobs and saved up what? $30,000 in their bank account being in The US for a year? Yeah.

Mike DeHaan: [12:57] And they yeah. So that was the people who wanna go and rented them too. She works for pharmacy, and he's in construction. And they're with her parents right now because they left Ukraine to come here when the conflict started. I guess it was right before the conflict started actually with Russia.

Dan Austin: [13:11] Oh, they knew. They got the insight. They got the insight. K the KGB.

Mike DeHaan: [13:14] Yeah. Either way, moved here. They have good jobs. They have good money in the bank. Everything about them is good, but then there's still no jobs for everyone else apparently.

Dan Austin: [13:21] That's a right complaint. And so I've got this gal who's obviously she told me as much on the phone that she's immigrating from Peru and that they want to buy this place and renovate it. Yeah. It's like, awesome. Get after it. Yeah. Do it. Let's let's make it happen. Absolutely. You know, at all cost, make things happen. I mean, Jesus. So, yeah, anyways, back on topic here. Yeah. We've got a lot of traffic on it. It's kinda funny. There's all also just a ton of tire kickers that think they're investors or wanna be investors, and nothing wrong with that. You gotta start somewhere. But, man, such a waste of time on my part, you know?

Mike DeHaan: [13:52] Oh, yeah.

Dan Austin: [13:52] Like, I had these, like, people that are there, like, they wanna know the history of the property. I'm like, I don't know. I've been in it one time. Yeah. What else do you wanna know? I own it, but they're like, they want there's, like, an emotional piece to it or they think that somehow the deal depends on the history of the ownership of it. But it really doesn't. Walk the property, look at what you see in front of you and use the data to make that decision. Not because we've only owned it for a year, not because the county record is incorrect on how much we paid for it, not because of all these other things. Like, that's doesn't matter. What matters is what's in front of you right now and what you can do to make it make it profitable.

Mike DeHaan: [14:30] Yeah. Well, I think that's the amateur level of, like, looking for motivation. Right? It's kinda like how we coach our guys to build relationships with the seller to try and find rapport. That's the amateur level of it because they're, like, thinking, oh, it's a distressed property. These guys bought it last year, and they're just listing it. They must have some sort of a prop. What's this Right. Oh, yeah. Really? We're just like, I don't know. I don't wanna do it. I would rather take the money out and go put it towards, like, anything else at this point just because it's like

Dan Austin: [14:54] Yeah. And and I've, you know, told that story over and over again, they wanna know what that distress is. They're like, did

Mike DeHaan: [15:00] did

Dan Austin: [15:01] go go walk walk in. I was like, there's no lockbox. Just open the door. It's empty. Like like, just walk in and walk in. Tell me what you think. I was like, I'm not an expert, but you see what I see. Yeah. So, yeah, you know, that's just a little vent on my part. But, yeah, a lot of traction there. I think we're gonna do all right on it. That that's a fun deal that we should do like a full on deep dive when this thing's all clear. Hopefully we sell both, but we bought both of them on seller financing and we don't wanna give the previous owner his money back because it's a 0% interest note that was negotiated, which is so valuable to us.

Mike DeHaan: [15:31] Yeah. And so that's kind of our rationale behind selling it as well is that we have access to the 0% debt that the guy does not want back. He wants us to keep. And so we have sort of looked at the velocity of our money in different scenarios and said that our best case would be to sell these properties, get his 0% debt money, and roll that into either our own hard money lending that we do or go and put that into like, you know, we have a couple other properties that we have, like, second positions on with other investors that have interest. So it's like, well, what if we just go and, like, take their 0% debt and go and take over some of that debt, then we give those people their money back, then our ROI on those properties will be significantly higher. Yep. And especially because these little properties, like, they need work. They need some you know, they're need, like, a decent amount of cash to go into them, we're happy to do it, but it just comes down to time spent there versus rolling that 0% debt over to something else. The ROI will be significantly higher.

Dan Austin: [16:29] Yeah. And so say we dropped $30,000 renovating a unit that we can't really get out. Mhmm. Like, we could kind of refinance it, but the guy still wouldn't want his money back. And then it would just be we'd be breaking up the loan he gave us to reposition it somewhere else. It wouldn't be the full thing. So it's like, what if we can just get that full dollar amount at zero percent interest and put it anywhere, anywhere else? And then I'll obviously shave off some pretty decent, almost 6 figure profits selling both these together.

Mike DeHaan: [16:55] Yeah. Yeah. So, you know, it's been it's been interesting. And anything creative like that that you can do right now is definitely the way to go when you're looking at acquiring assets. I mean, I was even thinking about this yesterday. A lot of the ways that we're pursuing a lot of these deals, I mean, they're really especially with the cost of marketing right now, there really is no reason that we shouldn't be heavily pursuing subject to and then, like, raising money for down payments if it gets excessive on stuff and the deal still makes sense. Because, like, even right now, it's like a rental. If we can get a partner that's willing to bring in, like, let's say, $50,000 down payment to be a part owner on the deal, but we're able to secure debt at, like, 4%, and it's gonna cash flow super strongly Yep. As opposed to having to go and, like, buy hard money and then refinance out into, like, 8% interest long term debt, something like that. Like that, the total cost associated just with the current condition of the market don't make sense.

Dan Austin: [17:47] Absolutely. And the thing too, like, if you there's some margin to be made as well. Like, if you don't want to hold the property or you can't raise the money, but you can get it at a good sub two with like little to no down, you can wholesale that either on margin of the interest rate or just for a down payment fee. So maybe you want to collect ten, fifteen, 20 or more on a down payment fee right away, or say you negotiate, which we've easily been able to negotiate recently, 2% interest rates. And you go and flip that to somebody at 5%. Now you made 3% margin on that. That's monthly cash flow coming in, trickling in that you could easily do yourself or, you know, create yourself.

Mike DeHaan: [18:19] Let's just rehash that really quick. So you said that kind of fast. So, basically, what you're saying is what you can do is you can get a seller finance agreement with someone where you're gonna buy their property with debt at 2%, and then you can sell it to somebody with the debt at 5%. And you can make work into the note that's gonna be done via note servicer that you're going to set up as the wholesaler. You can make reoccurring income on the difference between that 5% debt payment and that 2% debt payment.

Dan Austin: [18:46] Yes. Which is what banks do kind of in a way.

Mike DeHaan: [18:48] Yeah. That's ninja stuff. So I know a couple people locally that have actually done really well with that in the past. We we haven't I don't think we've had the gusto to get a deal like that done quite yet.

Dan Austin: [18:58] Well, we've had some, but we actually canceled the contracts on a couple of them, not in our home market. But just because we're like, the one we canceled was gonna be like, what, 500 a month to us.

Mike DeHaan: [19:06] Yeah. Oh yeah. You're right. I forgot about that one.

Dan Austin: [19:08] We were both like, honestly, dude, like, I'll forget about this one. And then when it's time to refi out of this, like, we'll be like scrambling. So we literally just didn't do it because it was such a one off in a different market in the Midwest that we decided not to go through with it. Even though was 500 a month on margin Yeah. Plus a down payment.

Mike DeHaan: [19:25] Yeah. But we were just like, gosh, if

Dan Austin: [19:27] we forget about it, which we, you know, you have too much going on. And I know that sounds stupid, but, like, it would be easy to forget about something like that.

Mike DeHaan: [19:33] Yeah. Was in Chicago too, and we didn't necessarily know that market. And then also two stuff is getting kinda weird with, like, our local partner over there. So we wouldn't necessarily have someone to rely on over the next five years.

Dan Austin: [19:44] Exactly. That was a big part of it.

Mike DeHaan: [19:45] So we were just outside to kill it. But yeah. So, anyways yeah. Either way, our marketing's still ticking. We're starting to have, you know, a lot more, like, seller inquiries coming, especially in some of our markets that we've dropped into recently. Stuff is going insane. One of our new markets in particular in the first couple days, we've had, like, 14 or 15 leads, like, which is really quick.

Dan Austin: [20:07] I know. I was blown away when I keep seeing those coming in. I was like, damn.

Mike DeHaan: [20:10] Yeah. Like, significantly faster than normally happens. So super stoked on that. But one of the things that I guess we wanna talk about for educational portion this week, something that came up in our instant investor program as well, some people were asking about it, is your key performance indicators in your business. So your KPIs, what are the most important ones that we track, how exactly do we track them, and why you should be tracking them if you do, you know, any sort of business in general, but like the way that we do it in our off market business is really important to make sure that you are getting the best ROI and you're not flushing a bunch of money down the toilet. So really quick, here's some notes about the instant investor program, and we're gonna talk about business KPIs and how you should be tracking them. So we'll be right back. The instant investor program is our twelve week group coaching program, which includes a self driven course and access to our private investor community. We will take you through the full process of how we find our leads, how we market, how we do our sales and follow-up, and how we determine the best strategy for every opportunity that comes our way. On top of that, you will also join a community of other like minded investors nationwide that are all marching towards the same goals, and you'll have direct access to Dan and myself so you can continue learning and growing with us as we continue to adapt and grow our business.

Mike DeHaan: [21:22] So whether you're a new investor or already established, our systems can help take you to the next level. So if you think you might be a good fit, go to the instantinvestorprogram.com and schedule a call, and we can have you talking to motivated leads in as little as two weeks. Alright. So key performance indicators or KPIs, as people will say, they are basically the report card for your business. And it is so important that you know what those metrics need to be that well, I guess, metrics that you need to monitor for your business so that you know you're actually performing, and then you'll also know where you're kinda, like, wasting money and where you can be improving. Right? So when it comes to our business, our marketing and wholesaling business, there's sort of, like, three main categories of KPIs that we track. So the first one is how the different kinds of marketing are performing. So, basically, our direct mail, our cold calling, how all those things are performing, which lists that we market to are producing the most deals. And then lastly, the last KPI that we monitor is how often leads in our system are being followed up with. And those are kind of, like, the core sort of categories that we get into. And what that does is it basically allows us to fully view our marketing picture, right, in terms of the kinds of marketing and who we're marketing to that are most effective. And it also allows us to very quickly review the efficiency of our sales team to make sure that they are actually doing what they're supposed to be doing and they're nurturing the leads that we do pay good money to get. So I can keep going if you want. Dan, do you have anything you wanna chime in on that or add that before I get into the weeds?

Dan Austin: [23:00] I'm like, I'm freaking blank faced right now. What did you say? What was the first one you said? I know. What was the first one?

Mike DeHaan: [23:05] To be fair, I do run this side of the business for the most part. This is like the back office side. Well, Dan's out there, you know, keeping our contractors in shape and make sure they're doing what they need to be doing. So the very first one yeah. So the very first one, I'll say this is the most important one that people should start with, and that is the total return on marketing for the different kinds of marketing that you're doing.

Dan Austin: [23:26] So Total return. I'm I'm gonna slow you down here. Yeah. Total return on marketing because I think there's simpler ways to say this, so we're gonna get into that. Total return on marketing. What does that mean?

Mike DeHaan: [23:35] Yep. So first off, we break it down by the kinds of marketing that we do. So what we will do is we will basically set up a different phone number for each kind of marketing. So let's say we're, like, mailing postcards versus mailing handwritten letters versus cold calling versus texting versus online. All of those will have different phone numbers in our system.

Dan Austin: [23:56] So if you had a billboard out there that would have a specific phone number. Right?

Mike DeHaan: [23:59] Exactly. Right. So the billboard has a number so that way when somebody calls that number, we can see in our system it was from the billboard. Mhmm. So what we do is we have a phone number for each of those different campaigns, and then we have a cost associated with each of those that we know we spend every single month. So let's say we'll spend, you know, $5,000 a month on postcards, $5,000 a month on letters, you know, $2,500 a month on texting, whatever. And then from that, what we do every month is we go through and we can set we can check all this in RE simply, which is the CRM that we use. And you can go ahead and see how many leads are coming in tied to each phone number. So how many people are calling off the postcards, how people are calling off the letters. And then from there, you basically just take the cost over the number of leads that have come in, and you can determine your cost per lead, right, which is a super important metric. And then from there, as deals come together, you can track the lead back to the different marketing campaigns, and you can see what your cost per deal is.

Dan Austin: [25:00] Okay. So if you sent $5,000 in postcards and you got one lead per month, it'll be $5,000 cost per lead.

Mike DeHaan: [25:07] Exactly. Which would be horrible.

Dan Austin: [25:08] It should be a really bad one. Yeah. Right? We're probably hovering on male, like, 100 ish per lead.

Mike DeHaan: [25:13] No. Our cost per male is typically per lead for males typically about $2.50 to 300.

Dan Austin: [25:18] Mhmm.

Mike DeHaan: [25:18] I feel

Dan Austin: [25:19] like it used to be lower.

Mike DeHaan: [25:20] It did used to be lower for sure. So kinda last year, I think our peak, we're getting it on, like, $1.40, $1.50. Right. It has definitely creeped up a little bit. I will also say that the cost of mail has increased a lot. So, basically, our our cost per piece has increased a lot. So you got $2.50, 300. Our cost per lead for texting is down closer to, like, 140, 150. So we get more leads for cheaper on that.

Dan Austin: [25:46] Mhmm.

Mike DeHaan: [25:47] K? But that doesn't necessarily mean that texting is better than direct mail. Right? Because that's why it's very important to follow your leads down and actually know how many of your closed deals are tied to each campaign. Because what we've come to find is although our cost per lead is higher for direct mail compared to say texting, our cost per deal is significantly lower. Right. Right? And this is one of the reasons that we stopped doing cold calling a while back because so, like, for example, our our average cost per lead over cost per deal overall right now sitting sitting at about $3,700. K. $3,700. On when it comes to mail, that amount is closer to 3,100. So it's about $600 cheaper. And when it comes to texting, it's closer to about 4,100 right now. Right? So it's over 4,000. Mhmm. K? And what we used to do is when we would first start doing cold calling, we'd be like, sweet. These cold callers are crushing it. They're getting tons of leads. I think our cost per lead was, like, $60. But it feels like

Dan Austin: [26:44] it's chaotic. Right? It feels good. And when you feel chaotic in sales, it feels good because there's just calls coming in, calls going out. Yeah. People are stressed out. Like, that feels good.

Mike DeHaan: [26:52] Exactly. Right? You feel like you're productive. But after four months of that, of our most recent cold calling campaign we did, we found that our cost per deal for the cold callers was, like, $8,000. Right? So, like, it was so far off. But but if we looked at where the work was going with their team, it was all go going towards managing those cold calling leads. Yep. And one of the reasons this is so important to track is because it's so easy to look at the leads that you got from cold calling versus leads you got from direct mail and be like, direct mail sucks. Like, I don't get nearly as many opportunities from that. And if you look at the front end of it, you're right. But if you look at your total ROI, the number of deals closed per deal, I'm guessing you're wrong if you've actually tried both with real consistency. Consistency.

Dan Austin: [27:33] And to calculate that, you're also you're bringing up the term campaign. So you're saying you because, like, the way I hear it, like, when we do these things, I say, okay. So we spent $5,000 this month, and we got this many leads. It was $250 per lead on direct mail. Yep. And then we got X amount of deals this month that we locked up, which gave us $3,700 per deal. So I think about it from that flow, but you're tying it to a campaign, which is typically a monthly campaign anyways. Right? But it could be a different it could be a different campaign based on the data you're pulling for different lists.

Mike DeHaan: [28:06] Yeah. It could be a little bit. Right? So that's how we do it by marketing type. Right? And then how we do it so some people, they will go and they will try to measure, like, different different phone numbers for, like, people that are in bankruptcy versus people that are absentee owners, those sort of things. We kinda started that way, but it got messy, especially when you were mixing hand. Yeah. Especially when you started mixing in different kinds of marketing. So you would have people that were in bankruptcy that were getting letters as well as postcards as well as cold call and all sorts of stuff. And all of a sudden, you're like, which one is actually effective? I don't know. Mhmm. And I ultimately came down to as we started to scale our marketing, I care more about what marketing is effective versus where exactly the deals are coming from, like what kinds of people.

Dan Austin: [28:45] Whether it's like bankruptcy or Yeah.

Mike DeHaan: [28:47] F two. Yeah. Like, honestly, I I don't really care about that at this point because we've saturated our market. But when you're sort of starting

Dan Austin: [28:53] Well, and you're stacking data, so a lot of times it's crossover anyways. Right?

Mike DeHaan: [28:57] Exactly. Yeah. But as you're sort of starting out, you'll definitely wanna be a little bit more pointed with where you're going. But either way, I still recommend going by the marketing types for the for the different front end, I guess, for tracking. But then as you're going, you start to close deals, You wanna be able to have a general idea about where deals are coming from. Right? Like, what kinds of people. Because you could be spending an absolute fortune, let's say, marketing to seniors, and then realize that there's no actual deals that are coming from seniors. Right? So why are you spending that time? So how we do it is when we close a deal, I go back into our data, back into our database, and I see which lists those individuals were tied to. And then this is where it gets super unsexy. I literally just have a manual giant list where I go and I say, like, this was the address. This was the list that they came from. This was how much we got the contract for. This is how much we sold it for. This is how many days the negotiation took. And that way, I can keep track of all of those metrics as well so that we have a general understanding of, you know, we get x number of deals per year from absentee owners. We get x number of deals per year from vacancies and all that sort of stuff. And not that I'm gonna make any drastic decisions from that data, but it's really just looking out for patterns of like, okay.

Mike DeHaan: [30:11] I've been marketing heavily to, you know, people with, you know, high equity looking for seller finance. I've marked heavily for people that are seniors. I've been marketing heavily to people in I don't know. What's another, like, random giant list that people do? Like, corporate owners, whatever. And I'm not getting any deals from those. So why am I still wasting my time?

Dan Austin: [30:31] Or why are you not getting deals?

Mike DeHaan: [30:33] Exactly.

Dan Austin: [30:33] Are you getting leads and not deals? Is there something then that's where you gotta start digging in. Because if you're getting a lot of leads, say, off of corporate owners, then you're but you're not closing them. You might wanna go back and review your phone calls and say, maybe your sales guy or gal is not set up to to pitch to these owners. Yep. Same thing with seller financing and how you adjust to do those types of lists. And that's where you can really start digging in and improving your business. It's one thing to look at the KPIs and see you're doing poorly. It's another to figure out how you fix it.

Mike DeHaan: [31:01] Yeah. Exactly. Yeah. And if you're hearing all this and your face is just, like, melting, I have no idea what you're talking about. This is the perfect reason why you should reach out to us. Talk about the instant investor program. This is the kind of stuff that, as we cracked it and figured it out, allowed us to start scaling our system because it was no longer just throwing spaghetti at the wall and seamless stick. But it is allowing you to build a machine that has structure and intention intentionality. Is that a word? Yep. Behind it so that, you know, you know, you can appropriately predict what's gonna work and what's not. Because, you know, the thing is if you can know that your average cost per deal, say, like, $3,200, then that means that your expectation is that if you spend, say, $15,000 the next month, that you should get between four and five deals. Right? Around, you know, 15,000 divided by 3,200, which could be just under just under five. Right? So by doing that, you can project how to grow your business, what to expect in revenue, and all that sort of stuff.

Dan Austin: [31:55] Which is what I love about forecasting. Right? It's like, you know, we look at how many leads you get, how many leads does it take to get an appointment? How many appointments do you need to get a deal? And so you can see mid month, like I haven't even hit my appointments yet. There's no way I'm gonna hit the amount of deals I plan to do. But also on a long term forecasting, you can say, if I wanna close X amount of deals, maybe it's five deals a month and your average is $15,000 a deal. You can back that into how many leads and how much money you need to spend. If it's $250 a lead, just multiply that by how many leads you need to get to get to that five, five closings a month.

Mike DeHaan: [32:28] Exactly.

Dan Austin: [32:29] Yep. Yep. So I can't imagine if you weren't tracking that, like how hard this would be. So it'd be so stressful. It'd be so stressful.

Mike DeHaan: [32:35] Go back to our first year in business. And that's why I felt like it was a freaking nightmare. Right? So it was took us forever to figure this out. Yeah. But, yeah, this is super important. This is something that we work with a lot with instant investor folks, but especially recently as people are starting to get some traction, we've really started to know, help them dial in these processes. But so once you have your marketing figured out, though, this is super important when you're a small, you know, small team. Maybe it's like you and, like, your business partner like you and, like, one act manager, those sort of things. But where it gets more important on the team management side and the third sort of KPI that we watch isn't necessarily something that we keep, like, a running record of, but it is more active management and active monitoring. And for that, it is primarily how regularly leads are getting contacted once they're in our system. So the basic metric that we look for is we want every single person in our system to have a task, like a follow-up task associated with them. And if they are a lead that I would say is less than, like, a few months old, they need to be contacted at least once every two weeks, if not more frequently than that. And with the or simply the CRM that we use, you can get a link to it on our website too, and they think they have, like, a 25% discount on the first month. But it's very easy to sort of see a holistic view of, like, these are all the leads that haven't been contacted.

Mike DeHaan: [33:49] These are all the leads that, you know, don't have a follow-up task, and you can see it all on the main dashboard. And so for me as the manager, what I need to be able to do is go on there and see all of those numbers as zero. Right? So, like, there's no leads that are missing tasks. There's nothing that hasn't been contacted for x amount of time. So that way, if my sales guys are slacking or, you know, they're or they might be slacking. They can even be struggling. Right? This could be a sign they need to bring on more people to help facilitate the growth. You can easily see that, and that's how you know the health food follow-up process. Because one of the big mistakes a lot of people make is they're like, man, you know, we're spending all this money. You know, we have all these leads. We're just not getting very many deals. And more often than not, that is not due to poor marketing. It is not due to poor circumstance. It is due to the fact that your sales and follow-up process sucks. Yep. 100%. And the easiest way to improve that is just talking to more people or talking to people on a more regular basis. Yep. You know, like, we have so many people that we've met over the years that are different investors. I mean, we're even this at the start where they've spent all this money getting leads to their system, and then they're like, I haven't closed a deal in five months. It's like, how many leads do you have? They're like, 800. Like, you're honestly gonna tell me there's not a single lead in that 800.

Dan Austin: [34:59] Statistically, there is.

Mike DeHaan: [35:01] Yeah. Even if you have, like, 200. So, like, I remember when we first brought on our first sales manager a couple years ago now, like, almost exactly two years ago, she came in, and we didn't even have any money to buy marketing that month because we were so desperate. We literally had, like, 30

Dan Austin: [35:18] Or pay pay salaries.

Mike DeHaan: [35:19] We didn't have base salaries back then, dude.

Dan Austin: [35:21] Like hers. We were

Mike DeHaan: [35:23] promising it to her. We didn't have the money. Yeah. So we had $3,500 in, like, our bank account. And she came in, and we basically said, like, here's all the leads. Just try and find deals. And she found seven in, like, the first two and a half weeks. Yeah. Just outrageous. Just because she was committing the time, was she getting in front of people, she was reaching out to people that we had already paid money to have into our system. But she was adding that thing that we were missing, which was a consistent follow-up in sales process.

Dan Austin: [35:47] And it wasn't that she was just an amazing salesperson? No.

Mike DeHaan: [35:51] Not not at all.

Dan Austin: [35:52] Not dogging her at all. Wasn't that she was amazing salesperson. It wasn't that the leads were better than any other leads. It was literally just committing the time to follow-up, which is, like, so important. Yeah. Because there's only so much like, there's only so many types of mail you can send that is gonna give you a little bit of an edge. Right? There's only so many scripts you can follow on the cold call or the texting. That's minor tweaks. Right? But there's so much to be gained and just follow-up before you even start talking about tweaking or increasing or decreasing on the front end. Just do follow-up on the leads you have.

Mike DeHaan: [36:23] Yeah. Exactly. 100%. I mean, then that I think that is the biggest thing that inhibits people from really growing once they kinda have the basic principles. Mhmm. Because I will say that is the hardest thing to do in this business is the follow-up, especially after you've had a little bit of abuse or, like, you feel like you're down and, like, all sorts of stuff.

Dan Austin: [36:40] Get your ass kicked, and it's just like, damn it.

Mike DeHaan: [36:42] Yeah. Yeah. Exactly. So cool. Alright. I think that kinda covers the gambit. So I guess just to rehash everything, the three main categories that we look to cover with our KPIs are the types of marketing and what our return on spend for those different kinds of marketing are. So letters, calling, texting, whatever. The list that our deals come from. Right? And that's deals, not leads. I don't really care if a bunch of absentee owners call me, but we don't get any deals from them because they're all tire kickers. Right? And then lastly, the follow-up tasks and the follow-up timeline for all the leads. You like those to be everyone needs to be marked with the task, and they all need to have been followed up within the last two weeks, typically say. So perfect. Anything you wanna add on the that's finish out, Dan?

Dan Austin: [37:27] That's it. Just follow-up. Follow-up. Follow-up.

Mike DeHaan: [37:30] I don't

Dan Austin: [37:30] know what else to say.

Mike DeHaan: [37:30] Fortune's in the follow-up, as they all say.

Dan Austin: [37:32] Fortune's in the

Mike DeHaan: [37:33] follow-up. Perfect. Alright, guys. Well, thanks so much for listening. Again, if that melted your face, seriously go to the instantinvestorprogram.com and schedule a call with us. I promise you, we can make this make more sense, and we can make it to the point that you'll actually be able to understand this, and you will be able to monetize your business significantly better with getting spiritual style then. And if you're brand new to it, then we will help you build your business in a way that you can be good at this from the get go, and you don't have to go through the eighteen months of just, like, prayer and just hoping that things work as you're spending all this money like Dan and I had to. Yeah. So instainvestprogram.com. Check that out. Besides that, guys, you can follow us on Instagram. I'm at Mike underscore Invest. Dan is at investor man. Dan, if you enjoy this show even a little bit, please go subscribe to it and leave us a five star review and share it with anyone who has any interest in real estate or business or anything like that. And then aside from that, I think that's all we got. So take it away, Dan.

Dan Austin: [38:29] See y'all next week.

Mike DeHaan: [38:30] Man, you're you're you used to have such good outros now. Yeah. I know. You have baby brain, dude. It's just crushing you. But that's alright.

Dan Austin: [38:37] Yeah. I don't know what to say, man. I just, gosh. Alright. I feel bad for myself. I'm sorry, guys. I'll do better. I'll do better.

Mike DeHaan: [38:43] You heard it here first, Dan. We'll do better. Thanks so much, everyone. Talk to you next week.

Speaker 3: [38:48] Thanks for listening. Please leave us a review on iTunes or wherever you get your podcasts, and check us out at collectingkeyspodcast.com for tips and guides on starting your own real estate investment and wholesaling business.