How Many Leads Do You Need to Succeed?

Posted on November 6, 2013 by

Lead FunnelRecently I wrote an article on “Determining Your Marketing Plan in 7 Easy Steps. You can apply these 7 Steps to market your home buying and selling business or pretty much any other business, product or service you wish to promote.

In this article, I want to expand on Step #1: Determine How Many Leads You Need to Succeed at _____________. For the purposes of this article, let’s fill in the blank with Wholesaling. In order to determine how many leads you need to succeed at Wholesaling, you need to begin with the end in mind and ask yourself a few more questions…

1. How many deals do you want to do per month and per year?

You need to set a target number of deals you want to quick turn (put under contract to buy and immediately resell or assign) each month to know if you’re achieving your goals. Let’s say you want to find and flip 1 to 2 deals per month or 12 to 24 deals per year. This is a very, very realistic and achievable goal for any part-time real investor.

2. How much cash do you want to make per month and per year?

You need to set the monthly and annual financial goal you wish to achieve so you know if you’ve succeeded or not. Let’s say your goal is to make $10,000 per month or $120,000 per year wholesaling houses on a part-time basis. Again, this is a very realistic and achievable goal for an investor who is willing to put in the time and effort to get the job done. Yes, wholesaling is like a job. It pays you well if you work it and pays you nothing if you don’t.

3. What do you predict your average profit will be per deal?

If you deal in properties with a low after repair value (the “ARV”), your average profit may only be $5,000 to $10,000 per deal. If you deal in properties with a higher ARV, your average profit may be $20,000 to $40,000 or more. But let’s say you only predict your average profit will be somewhere between $5,000 to $10,000 cash per deal. That’s not bad for a part-time job doing 1 to 2 deals per month.

4. How may leads do you need to get one deal?

The number of leads you’ll need to go through to get a single deal under contract will vary greatly on your ability to create win-win solutions for you and your seller, your negotiating skills, the quality of the leads you generate and your individual financial goals among other things. Let’s say you predict that it will take you 10 to 12 leads to get each new deal under contract. This is a very realistic number that you can adjust upwards if you are new and inexperienced and down as you get more seasoned and experienced.

5. How many leads do you need to generate monthly and annually to reach your short term and long term financial goals?

So now, let’s pull the answers to all these questions together using a Lead Planning Worksheet and determine how many leads you need to succeed at Wholesaling based on your realistic and achievable goals. Below are 4 different examples…

Lead Planning Worksheet
Click here to download the Lead Planning Worksheet

Example 1: If you do 1 deal per month at an average profit of $5,000 each, you’ll make $5,000 per month and $60,000 per year which is only half of your $120,000 goal. In order to do one of these deals, you need 12 leads per month or 3 leads per week which is not many at all.

Example 2: If you do 2 deals per month at an average profit of $5,000 each, you’ll make $10,000 per month and $120,000 per year which will allow you to reach $120,000 annual goal. In order to do two of these deals, you need 24 leads per month or 6 leads per week which is not very many.

Example 3: If you do 1 deal per month at an average profit of $10,000 each, you’ll make $10,000 per month and $120,000 per year which will allow you to reach $120,000 annual goal. In order to do one of these deals, you only need 10 leads per month or 2.5 leads per week, which is 2 less than the number you needed in Example 1, because you improved your closing ratio slightly. The only other difference is the fact that you increased your average profit to $10,000 per deal.

Example 4: If you do 2 deals per month at an average profit of $10,000 each, you’ll make $20,000 per month and $240,000 per year which will allow you to double your $120,000 annual goal. In order to do one of these deals, you only need 20 leads per month or 5 leads per week, which is 4 less than the number you needed in Example 2, because you improved your closing ratio slightly. The only other difference is the fact that you increased your average profit to $10,000 per deal.

As you can see, Wholesaling is a numbers game and you get to make up the numbers you want to achieve. Now it’s your turn to download and complete your own Lead Planning Worksheet and come up with your own numbers. As you do, ponder these thoughts…

Thoughts to Ponder

  1. What are your answers to the 5 questions above?
  2. How much more can you make per month and per year if you increase your average profit per deal even higher?
  3. How many more deals can you close each month if you generate 30, 40, 50 or more qualified leads each month?
  4. How will your life be positively affected if you generate the number of leads you need to succeed in achieving your monthly and annual financial goals?
  5. When will you start working towards these goals?

Dustin GriffinDustin Griffin is the Executive Director of the Tampa Real Estate Investors Alliance (Tampa REIA) and the Atlanta Real Estate Investors Alliance (Atlanta REIA) and is also an entrepreneur, real estate investor, website developer, internet marketing enthusiast and a husband and proud father of two.

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Comments

  1. Christina Hendershot says:

    Dustin, Good article. I do have a question. I recall in your Five Marketing Musts, you mentioned choosing at least 5 ways for marketing consistently to generate leads. We have sent out about 1000 direct mails and got about 1-2% calls. I heard this is about average. I wonder if your example of 12 leads for 1 deal is just an example. Otherwise, we need to ramp up other marketing methods. What frustrates me the most is that some people made it sound so simple when they mentioned about the deals they made. But it would be more interesting to learn how many are actually from marketing along out of those deals. Another thing related to the leads/prospects, in Locating Prospects, Ron talked about his FSBO leads and that his organization spend zero time generate leads. He made is sound so simple. It’s almost unrealistic. If he is truly that successful with FSBO, then we should ask him to do a workhop.

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