Posted on: May 19, 2021
WIP 691 | Profitable Marketing Channel

 

Marketing is a crucial part of real estate investing, and one of the most profitable marketing channels available is radio. In this episode, Chris Arnold and Grace Mills, the radio ads manager of REI Radio, will walk us through the five byproducts of the data gathered and analyzed that REI Radio learned so far and the fruits they see on the radio that they have not seen before. They also share their insights on why radio is such an effective tool for marketing, as well as some of Grace’s interesting data finds. Lean into this episode and learn about radio and its potential as a marketing channel. 

5 Reasons Why Radio Could Be The Most Profitable Marketing Channel In Your Real Estate Business With Grace Mills

Since the launching of REI Radio over a year ago, it has helped students set up radio stations in 45 out of 50 states, enabling REI Radio to get more data to assess if the strategy works nationwide. With the help of Grace Mills, the radio ads manager of REI Radio, she will share the learnings from the one year worth of data gathered in this episode.

Episode Transcription

I am excited to talk you through what this topic is going to be. We launched radio and at this point, it helps students set up a radio in roughly about 45 out of the 50 states. The first thing I want you to know that we have a lot of data. When we started radio, the only place that we utilize it was for us. It was in the state of Texas and a large market in Dallas. We believed it was going to work nationwide but the reality was we didn’t have the data. We just had the belief that it would work. We do have the data now and I am excited to bring on Grace Mills, our radio ads manager. She’s the marketing director for my company. There was a point that we should leverage and hand it off. After several years, I handed everything over to Grace and I watched her even surpass my understanding of radio because it was her full-time job. She was listening to stations and researching. She took radio to a level that I couldn’t have to vest the visionary because I had so many other things to do but this was her baby.

WIP 691 | Profitable Marketing Channel

Profitable Marketing Channel: Just because a seller thinks their house is worth X and they make up that number that you buy the house for that. You need to come in and do your due diligence.

 

With our overall coaching program, everyone has come to know Grace really well. It’s funny when people have success, it’s not, “Thank you, Chris.” We get a lot of high fives like, “Thank you, Grace.” She’s on the front lines helping the students pick the right stations in their market, looking at all the data. I’ve got Grace on and we had a conversation like, “Let’s take a look at all this data and figure out what are some of the byproducts that we have seen for our students through this data.” That’s what you’re going to get. What have we learned putting students in 45 states in all types of markets and different demographics, etc.? What have we learned? That’s what we’re going to talk about. Grace Mills, welcome to the show. Glad to have you.

Thank you so much for having me. I’m excited to be here.

Buying Strategy

Let’s break this down. There are five byproducts that we want to walk through as you went through all the data and said, “These are some interesting things that we’ve learned in this journey so far.” The first thing you wanted to talk about was some byproducts that you saw from our buying strategy. My first question is and this is a bit of our secret sauce, what is our buying strategy with radio? Do we buy retail or discounted? What are we teaching students how to do?

In the radio world, you don’t have to buy market price. Their market prices, to be honest with, you have no foundation. They make them up as they’re going along. They base it on what they deemed to be demand for right now. At any given week or any given month, they’re liable to throw you this astronomically high amount to get started on radio. With our buying strategy, we size up pricing based on the size of the station because that’s where our return is. It’s in the actual audience. If you’re going to buy radio, the best way to approach it is gauging the size of the audience roughly, who’s there that you could potentially be making any profit on. We look at the QMS, which is one of Nielsen’s many measurements of determining the size of a station. We take that size and they go, “I’m going to come in at this price based on the size of your station,” which is much lower than the market price or the guaranteed price that sells rep usually tries to sell people on, which is based on reach or an impression of a much larger audience that honestly doesn’t exist.

If you’re going to buy radio, the best way to approach it is by gauging the size of the audience.

If I put that in real estate terms, we run comps on a radio station like you would run comps on a house. It’s because a seller thinks their house is worth X and they make up that number, you don’t buy the house for that. You come in and do your due diligence to say, “I know you think it’s worth this but based on all of this data, it’s worth that.” That strategy with real estate is the exact same strategy that we employ with radio. These students are coming in and they’re buying at a discount and you have some data on this. In comparison to the retail pricing that most people pay for radio on average, what are our students paying as a discount or under, what are you seeing?

I would say it’s $0.60 on the dollar. There’s the market price. Roughly, it’s about 40% below that actual market price is what they’re getting in terms of pricing. If a sales rep is just a salesperson so they can get away with upselling and getting a higher amount out of you if they will if you don’t understand that you can buy it based on the size of their audience based on whatever number that they created that day of that week.

Out of all of these students, in all of these different states, we have fundamentally shown people how to come in and statistically, we’re landing around $0.60. If you’re a real estate person, that number sounds pretty similar to what we buy houses for. We try to buy around $0.70. I think you get this. The reason that you have a successful real estate business is that you buy at $0.60 to $0.70 on the dollar. The reason our students are successful on radio is that they’re not paying retail. They’re consistently buying at $0.60, $0.70 on the dollar. I want to get to the first byproduct of this. What byproduct have you seen when all of a sudden, a student is paying so much less for their radio ads? Our average student is spending roughly $500 to maybe $2,000 a month max. That’s the average spread. What’s the byproduct that you’ve seen because of this and their businesses?

WIP 691 | Profitable Marketing Channel

Profitable Marketing Channel: By being able to buy so cheaply, you will have a lot more wiggle room in the marketing budget.

 

A lot of our students are stunned that they can dig and get it so much cheaper than what they typically imagine radio could be purchased at in terms of their price with being able to buy it so cheaply. It leaves a lot more wiggle room in their marketing budgets. Radios are a great long-term marketing source. I’ve seen that our students have been able to focus on pairing radio with expanding their targeted direct mail or online marketing or any other marketing channels that they’ve been wanting to play with because radio was bought cheaply. They’ve got a lot more wiggle room to test out other marketing sources or expand on what they’re already doing.

That’s valuable because if I’m new and I have a limited budget that I can spend on marketing and I pick up a channel that’s so expensive that it requires me to put all of my marketing dollars in that channel, that’s a dangerous place too. Radio is so much less expensive than what everyone assumes that it’s going to be. Most people assume $10,000 a month to get started. All of a sudden, you go into the store and you have a budget to buy something and you have something in mind and you see it and it’s on sale. Your first thought is, “I budgeted X. If I buy that, I have a little money left over and I’m also going to get this that I didn’t even know I was able to do.” That’s fundamentally what you’re seeing with our students. I can do radio and something else because it’s a lot less expensive.

Lowest Maintenance Marketing Channel

That’s a great byproduct. Let’s go to number two. I hear our students say it all time. I ask so many people what is one of the qualities about radio that you love the most. I hear this all time. “Chris, you said, ‘Set it and forget it.’ I’ve heard you say that. Now that I’m in it is the lowest maintenance marketing channel I’ve ever had. I just have to pay my monthly bill and answer the phone when it rings.” We’re talking about byproducts. We’ve helped so many students. What is the byproduct that you’ve seen because radio is so low maintenance as a marketing channel?

With the lower maintenance, they have a lot more free time. They have more flexibility to focus on other things. They can either focus on other projects. I have noticed the biggest significance is it’s allowing students to step outside of roles that they don’t want to do. They did not want to do so they can focus on growing their business in general either expanding into additional projects or expanding their team so they’re able to pass off more tasks to focus on growing their business.

I had a couple of people tell me, “I feel like every time I start a marquee channel when it’s prospecting or outbound-based, I created an entirely new job for myself in the business.” What you’re saying is with radio because it’s not like, “I’m going to talk about cold calling,” it works. The reality is if you’re making those calls that require time. What happens with a student is they work to set up radio and they set back and let’s say they did cold call. They’re like, “Now I have all this time. I’m so used to being pulled into the marketing and having to work it out, direct mail, building lists, making sure the postcard is right and making sure I’ve got a good system to handle all those inbound calls, etc.”

A sales rep is just a salesperson, so they can get away with upselling you and getting a higher amount out of you.

All of a sudden, they’re freed up now and they can go, “Rather than having to work in my business because this marketing channel pulled me back in, I can now focus working on my business and some of the more important bigger projects.” That’s a huge win when you think about it. I wonder what is the trajectory of a business owner investor looks like if one has a marketing channel that’s eating up all their time versus one that’s automated and gets to spend their time working on projects. I guarantee you after a two-year period, they’re going to be in two different places when it comes to the strength of their business. Do you agree with that?

That’s what excites them the most. Once they get to that point, they’re like, “My gosh.” We have quite a few students that have a lot more free time to talk to people.

They’re calling you. They’re like, “Grace, my radio set up. I’m closing deals. What do I do?”

It may have gotten to wherever they expanded their team. They’ve got tasks off their plate. Now they’ve got a lot more free time on their hands, which is great.

Creating Credibility

It creates a lot more breathing room. Both outbound prospecting works and inbound marketing works but if you were to ask me what I personally want at the end of the day, I want as much free time as possible. I want a business in which I am not a slave to my business but my business serves me and gives me that quality of life that I’m looking for. Honestly, the type of marketing channels you pick determines how much freedom you’re going to have. It’s pretty common sense. Let’s go to number three. This is an interesting one. A lot of people ask me, “I would imagine that most of your students that do radio are seasoned.” I got a lot of that in the beginning when I talked about radio like, “You’re going after the big dogs. There’s not a lot of new people in the business. They’re going to do it.” That stat ended up coming in strong.

Pretty much 80% of our students have been in the business for less than 12 to 24 months. One of the things we know with the student is if they’re in a market where there’s a lot of competition and so forth, they’re trying to gain some credibility. Number three, radio creates a ton of credibility because it makes you a celebrity in your market and gives you instant credibility because you’re trusted on that platform. What byproduct have you seen that students have come back to you now that they have this credibility and they’ve only been in the business, let’s say, six months? What other opportunities? What byproducts is this created?

For them, definitely twofold. They get a lot of calls now from other investors in their market. Those other investors are like, “I’m hearing you on the radio. You’ve got to be a big player because you’re on the radio.” You have to be this big player in our market. They can’t wait to network in talking and potentially do deals with that student based on hearing them on the radio. The flip side of that is additional stations. Other companies start hearing them on station ABC and they go, “Would you like to expand to our station. I wanted to be able to meet with you and talk to you about what we can do for you over here as well.” Once you are on the radio and you have that credibility, a lot of people are going, “That’s got to be a big player in our market.”

WIP 691 | Profitable Marketing Channel

Profitable Marketing Channel: Radios are a great long-term marketing source.

 

When we look at people’s dollar-per-dollar returns and we know that radio returns an average of $3 to $4 so that means you triple to quadruple your investment. What is not in that measurement is the byproduct of all the other opportunities that come. You’re talking about the fact that I advertise on radio. Everyone automatically thinks that person’s a big player because only big players can afford to be on radio. This is what we now laugh about or all these assumptions about radio and you’re right. All of a sudden, you start getting JV opportunities. “Can you help me move this deal? Can I do that?” Now you’ve got this other stream of income coming in because you’re now magnetic to these opportunities.

It’s not just that. We have heard stories of people raising money because they were heard on the radio with vendors coming in and discounting services if you’re a fix and flip person, which is awesome like, “What I got to do to be your contractor?” You’ve got to be a big player. I want to help you flip your house. The other side is all of a sudden, these other stations hear you and they come knocking on your door and they want to do a deal. Grace, have you found that the longer someone’s on radio, the easier it is to pick up additional stations at a discounted price because they have credibility?

Yes. It’s a lot of leverage in their next negotiations because that person goes, “That’s right. They are on two of our competitors.” It plays into their favor very well when they are trying to expand into additional stations.

Lead Opportunities

Let’s go to number four. These are interesting. I love this data that you’ve pulled and we’ve talked through. One of the things about radio is it can bring in different types of lead opportunities. Radio covers a larger landscape so a lot of times like, “Let’s take Dallas Fort Worth,” where we’re at. We can get calls in areas that are outside of our core preferred area. What is the byproduct of, all of a sudden, I’m getting calls for opportunities that might not fit my niche little wholesale bucket that I’m looking for? What has that done to the students? What are you seeing in the sense of their growth because of that?

It challenged them but it also enabled them to start to expand their repertoire of how they typically do things. I’ve had a couple of students double back to me and say, “Grace, this station I was afraid of initially because it was outside of what I typically service. I’m at a point where I am ready to service that.” They have taken the opportunity to expand their buyer’s lists to expand other creative ways of dispelling those potential properties. I think that it challenged them in a great way to expand what they’ve already been playing with.

It’s interesting because all of a sudden, we have students that were wholesalers but now they might get in and pick up some land because they get some land opportunities or they start looking and going, “I got some great subject too or seller financing options.” What’s interesting about radio in this byproduct is it’s in a good way, challenging the investor to get mature faster because it’s like, “I might want to go learn about something but when all of a sudden, the opportunity comes before I’ve learned something, I’m like, “The opportunity is here. There’s money on the table. If I go learn this thing that I can capitalize on what I already have.” What we’ve seen is it’s come in and sped up the overall growth of the real estate investor, which I think is super important.

With utilizing that side of getting those different opportunities and so forth, what have you seen with market size as a whole? I know one of the questions I always get and I think this question is asked about everything. The number one objection, “Will this work in my market?” I know it works in Dallas-Fort Worth. We didn’t have data on a small market in the Midwest or West Coast, California, San Diego or somewhere up in the Northeast. We didn’t have the data but my question is what are you seeing on this now with all of these different markets?

I hear that a lot with the newer students. They get a little nervous in terms of a market type or the market size. All the markets are successful. Honestly, from what I’ve seen from my view, the biggest push there is back to students that are able to build out a network and build out that buyer’s list. I’ve not seen one market not be successful. They can get on the radio. There’s a radio station where they’re able to reach motivated home sellers. As long as they’re able to build out their buyers list, they have no problem moving any of the properties in any market size. Big, large, small, rural, metro or larger cities, I’m not seeing a market size that a student has had an issue with.

I want to break this down. I want to challenge this a little bit. Let me play devil’s advocate. What is the value of a small market over a large market? I understand that they’re all working but there’s got to be some pros and cons to both. What’s the best about being in a small market versus a large market. If someone’s reading and goes, “I want to know that advantage.” What advantage do you have being a small market for radio?

Radio creates a ton of credibility because it makes you a celebrity in your market.

In a small market, our students are able to dominate a little bit quicker than in some of the larger markets. That’s due to what’s available to them. In some of the smaller markets, they are able to pick up two stations for the price of one station would be in someone’s slightly larger market. Some of the smaller markets they’re able to dominate it much quicker and continue expanding into additional stations.

If I’m in a city that has a couple of hundred-thousand people or small, it’s not going to be hard for everyone to get to know me fast if I’m on a couple of stations. In comparison, I honestly get a little bit jealous of this. We look at our marketing budget for DFW and we have somebody over that has the same amount of stations and their overall ending budget is a lot less than ours. We’re like, “I can’t believe you got it for even that far under what we’re able to get it for Dallas.” Let me flip it. What is the value of being in a large market over a small market?

The larger markets, they are able to hop on a station, it reaches a mass number of people all in one versus having to be forced to pick up two to hopefully find some balance. They’re able to jump into one station and read a mass number of home sellers and grow slowly if they do decide to do so.

What you’re seeing is each market wins but each market wins for different reasons. Its pros and cons are balanced. That’s the thing I love about real estate. You can do deals in your town or we have students now that buy in areas that are not the primary area that they live in. They’re doing virtual deals and their market is sold out and they go, “I would love to have it in the town that I’m in but I don’t mind going a couple of towns over and then they’ll pick up radio and they’ll expand that way.” That’s the cool thing about technology. You can do real estate in any area that you want to. Number four, as we’re talking about it, is that the value that we’re seeing is all market work in the sense of what they’re doing. Because of that, people are expanding their strategy.

Blue Ocean

Let’s go to number five. I’m going to preface this because I know when I say, it’s going to come along like, “This was a sales pitch.” I’m like, “This isn’t the truth.” We’re not telling you this is the last thing that convinces you but we’re having an honest conversation with you. I know this because I’ve had students that have come down, I had one that flew all the way to Tulum and was here and sat across from me and I had this conversation with her. I remember that and that is, “What you’ve learned is it’s been a challenge for people that have gone outside of the way that we’re doing it and try to do it on their own.

Do it on your own and figure out how to do it for free 100% all day. There are other times where I’ve tried to do that. I was like,” If I paid for speed, I would have been paying a lot less than the money and time I wasted trying to figure it out myself.” Sometimes you want to do it for free and sometimes you should pay for it. What have you seen as the byproduct of students that have gone out tried to figure it out on their own, came back to us and ended up signing up for the program?

Not a great deal. They end up overpaying because they did not realize that there was a way to challenge a salesperson’s pricing. They’re like, “They said this was the lowest package they have possible.” They get caught up within that package that they’re overpaying. They end up with less frequency. They’re paying for more but getting less. Outside of our program, on paper, that looks amazing until you start on that station and they go, “I was on this station for three months or so previously and it didn’t produce.” When I get my hands on their previous deal, I can see why. It wasn’t structured to their benefit. The sales reps are treating them as any other advertiser and selling a package together that hopefully works. They have no expertise on what a wholesaler within investors or anyone in the real estate world needs in terms of an advertising schedule that could put them in the best position to produce on that station.

The thing I’ve realized is radio is such a blue ocean, which is funny. You don’t get easily a blue ocean with something that has been around forever. Usually, a blue ocean is an innovation. What’s innovative about radio is the fact that it simply has been sitting there but never applied for us as wholesalers and fix and flippers and to find investment properties. With that being a blue ocean, there’s not any information out there. I would tell people, “Go to YouTube. Go Google around.” You and I, Grace, had been doing this for a while and I don’t know anyone else that’s teaching radio and real estate yet. Someone came to me and said, “I want to do direct mail.” You could fundamentally get on YouTube and watch enough podcasts to figure out how to do direct mail pretty effectively. I don’t think you need to hire a coach to do that.

The challenge is you have with something like radio is because it’s a blue ocean. There’s not much education. If you want to go out there and do it on your own first time, your world, make it happen. We’re telling you that people have come back and said, “There was a specific way I need to do this and I didn’t do it right.” It’s like somebody coming to you and saying, “I want to wholesale deals.” You go, “There’s a specific way to do that.” I go, “Before you tell me how to do it, I’m going to run out here and do it on my own.” You’re like, “Good luck. I could have helped you find this a lot faster but if you want to get out there and do it.” We’re excited because we’ve been able to add a ton of value. This marketing channel, as you hear these byproducts, for Grace and me, we get a lot of fulfillment. Because not only have we shown people a great channel that they didn’t know was available, we get to see the fruit of all these additional byproducts.

WIP 691 | Profitable Marketing Channel

Profitable Marketing Channel: Students are able to dominate a little bit quicker in a small market than in some of the larger markets.

 

All of a sudden, people now can grow their marketing faster because they’re not spending as much as they were on other marketing channels. They have more time to work on their business rather than end it. If you’re a family person, you have more time to spend with your family or juggle that 9:00 to 5:00 that you’re working. We get a lot of students that go, “I’m working 9:00 to 5:00 and I don’t have time to get in here and deal with something that’s going to eat a lot of my time.” They’re getting the JV opportunities as we mentioned and are maturing faster because radio will mature you in the way that it functions. I don’t know about you but it feels pretty cool to see additional fruit outside of what we were originally seeing as fruit that’s handing people a great marketing strategy. What do you think about that? It’s pretty cool.

I usually tell students, “Happy to help you. There was a point in time where I made a lot of mistakes. We can save you the time and the energy or even the hot seat because I got put in the hot seat quite a few times with decisions and that didn’t play out very well. I would be happy to save you some of the headaches and give you a little bit of peace of mind by providing any best practices and tips that we have learned the hard way.” That’s one of the biggest ones for me.

Grace, you do an absolute, amazing job. In our REI Radio little family and tribe, everyone loves Grace. She’s very genuine, loves to help. This is what she gets to do now and pour into students along with the rest of our REI Radio team. I want to publicly thank you for what an amazing job you’ve done. I could no way do all of this radio coaching without you. I love everything you’ve accumulated in your brain over time being in the trenches of this as well. If you’re reading and you’re like, “This radio piece, I’ve been riding the fence a little bit.” We preserve markets and limit the number of people. When you hear 45 out of 50 states, that means more and more markets have been bought.

There are several markets in each state but it’s getting more and more stuff getting to be sold out. Hop in, check us out, ask the right questions, see if it’s a right fit for you. The way that you can do that is to go to WholesalingInc.com/REIRadio. Book a call, see if your market’s open and let us step in and answer questions for you and make sure it’s a good fit for you. Grace, thanks so much for coming on. I was excited about this talk. It was like, “Let’s sit down and we’ll put all this data together.” It was cool, some of the points that you were able to come up with.

Thank you so much for having me. It’s exciting to be here.

To the rest of you, as always, thanks so much for joining us. Until next time, we will catch you soon when we add more value.

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About Chris Arnold

Chris Arnold is a 15-year Real Estate veteran who has closed over 2500 single-family real estate transactions in the DFW metroplex. Chris is the founder of multiple companies that are managed by a US virtual team, which allows Chris to run his organizations while living in Tulum, Mexico full time. His passion for leaders has led to the creation of Multipliers brotherhood which serves the top 5% of real estate entrepreneurs out of the US. Most recently Chris has launched his REI Radio coaching program. This program is designed to teach real estate investors the marketing stream that everyone knows about but NO ONE is doing!

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