Marketing for phantom house; yay or nay?

Question

So after having been highly intrigued by yesterdays debates about the ethical use of advertising for a phantom house using bandit signs, I was curious as to what people may think regarding other forms of 'fake' advertising. For instance, the guru class I signed on for were implying that we should make fake advertisements to build our buyers list. Like many of us have found it that produced many tire kickers. We were also encouraged to use craigslist to learn about our market. For instance, to find if mobile homes are selling in the area you put up an ad for a mobile home for sale. Or you do the similar to start building your tenant/buyer lists.

What are the differing opinions out there on these strategies (I'm guessing some do it and some don't) but more importantly what are alternatives marketing means for getting the responses and lists one needs?

J Scott · Answer

I'll just say that if I were to find out that a wholesaler were using fake ads to attract my business, I would absolutely never work with that wholesaler.  Time is my most valuable resource, and if you're going to waste it, I won't work with you...

Dev Horn · Answer

I am personally 100% against fake ads.  As an investor myself it is frustrating to follow up on something and find it's a ghost.  And if the address you use is REAL (which we will know because we look the property up before we respond) and you DON'T have a listing agreement or a contract to purchase, it is illegal to advertise that property.  So, you're left with listing bogus addresses.  If I discovered someone pitching a bogus property to me - they would go on my BLACK LIST (never do business with them) for life.  So, BAD idea.  BAD GURU!  BAD!

Instead, pull an absentee owner mailing list and sort on owner name.  The guys that own multiple houses are the players that you want on your buyers list.  You can do a similar thing with county records in many locations - pull a list and sort by owner.

Aaron Mazzrillo · Answer

I have only used this strategy in very few situations;

1. I am thinking of buying a mobile home park in the area and want to make sure there is demand for affordable housing. I'll advertise a home for sale with rent-to-own terms to see how much interest there is. I don't give out a site location and I don't take calls. I do it on CL and just collect the emails.

2. I am thinking of moving up or down in asset size in a farm (if I typically buy 3-4 beds, but want to see if there is demand for 2 beds, or if I am looking at an apartment bldg with 1 or 2 bedroom units) and there is very limited data on rents for that product. I would place an ad on CL with a picture of a similar house in the area, no address, and a rental amount that I would hope to get. If I get some response then I know there is demand for that product at that price.

In either case, if someone contacts me more than once I let them know the property is no longer available and remove the ad after a short period of time. I think it is a great way to test a market without spending any money and taking unnecessary risk.

Ned Carey · Answer

@Steven Johnson I will be glad to buy a house you don't have with the money I don't have.  LOL

Jimmy T · Answer

These annoy the crap out of me. I've noticed that tons of new wholesalers are posting a ton of these things on CL.

I would then contact them only to be told that the property has been "sold" and they then attempt to take down my info.

Personally, I would rather go with an upfront and honest approach with your ads such as posting an example of a previous property that you have wholesaled to a cash buyer etc.

I personally feel like I've been "duped" when I respond to one of these ads.

Steven J. · Answer

This is all great info! I'll take it very seriously. I admit I did do the fake posts when I first started, its what the guru said to do, and I felt pretty sketchy about it. I did get a couple people interested but not real tire kickers. I do know now when I see them on CL whether they are real or not. As for testing the market as @Aaron Mazzrillo  does I'm not sure how I feel on that. I don't like getting hopes up for possible tenant/buyers when I don't have anything ready for them, but I'm not really sure how to test the market. Do you just do your research and hope you're correct?

Account Closed · Answer

Check out the my house deals cash buyers list.  There are literally hundreds of investors that have registered online and freely given their information(email and phone number).

www.myhousedeals.com

This website is another great resource for meeting investors.

You don't want your first contact with a potential investor to be negative.

I think there are plenty of legitimate resources for finding investors.  Your already using one of them!

Aaron Mazzrillo · Answer

I think the important difference is that I am not adding them to some list and then trying to sell them something else; the old bait and switch.

I don't know if you have ever marketed an actual property for rent on CL, but almost 100% of the time when I contact an inquirer about one of my vacant properties, they ask "which property is this?" Don't think for a minute they find your ad and only respond to you then sit home praying it works out for them. Anyone shopping on CL for a place to live is responding to everything they see that interests them and very rarely do I ever get someone emailing me twice asking about the status. I also don't leave the ads up very long. I am taking the temperature. In other words, if I put a mobile home ad up, and I get 1 or 2 responses over a 24 hour period, I know there isn't very much interest at all. I delete the ad and pass on the deal. If I get 5 or more within that same time period, I know there are lots of prospects and I'll have no problem putting people in homes. Regardless, on how you feel, you're not the one writing the very large check and signing for the 6-7 figure loan. If you were, I'm sure you'd 'feel' much differently.

Samantha M. · Answer

I can see why people advertise fake houses on craigslist, you put up a few honest craigslist posts that you get about 1-2 properties a month (no fake house) in a certain county and no one calls or emails you.

You put up a fake house with 70% - repair numbers and you get a ton of calls. Buyers dont make it easy to try and do this honestly.

Marketing for phantom house; yay or nay?

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