Cost Per Buy

[Gary Morrison]

I'm not sure if I"m posting in the correct forum but I would like to poll the group for how much everyone typically spends on marketing per buy? Buying could equal wholesale or rehab/flip... I market through post cards and google adwords to NOO.

So far this month, I have received 8 leads/calls through the advertising mentioned above which is currently costing $106/lead. Out of the 8, we have one house under contract which we should wholesale for a quick $5K and take a low of $3k if necessary.

I'm interested in what everyone else typically averages with their cost/buy?

Thoughts?

[Paul B.]

Everyone's numbers are going to be different. I think that only you can decide what makes sense for you.

For example, my focus had previously been to buy houses right, fix them up, and sell them. My target profit per deal (on average) was $20,000. Generally speaking, I'd have been willing to spend 10% of my earnings on marketing, so that's $2,000 a deal.

Some might think that's too much, but to that I say, "I'm still netting $18,000." Plus, focusing on the cost per deal assumes that you could have an unlimited number of deals, which of course, you can't. It's only when you have so many deals that you can't handle them all that you need to start looking at the net cost for each one and trying to drive it down.

In other words, if my alternative is to sit on my hands and make no money, I'm more than happy to end up spending even $10,000 on a deal to make $20,000. I'm still making $10,000 compared to making nothing.

After all, what's better? To try to get deals that will cost you $300 each, but not get any? Or spend a grand or two on a deal, but actually get some?

That's why I suggest that these numbers are very investor-specific. What's right for me may not be right for you, and vice versa.