Do bandit signs still work?

Question

Hey guys! I am from Arizona and want to start a wholesaling business. I am going to start putting up bandit signs this weekend since I do not have a lot of cash to work with (I am 19 and in college) but I just wanted to hear some people's advice on this. Do they still work to find motivated sellers?

Robert Nichols · Answer

When I first started flipping in 2009, this controversial strategy was one of my favorites and my #1 deal finding strategy until I got busted. I found numerous deals and made over six figures with this strategy alone, but it wasn’t and still isn’t legal.  I started getting nasty phone calls, fines and visits from ISD (Inspectional Services Department) code enforcement to our office. When I was new, this was one of my favorite strategies for many reasons. First,  the cost was relatively inexpensive, secondly the signs provide high visibility in local neighborhoods and third, the ROI (Return on Investment) is off the charts! If you close one deal it's worth it. While very effective, be warned that you can get into trouble. As an experienced flipper and real estate Broker, I rely on my network, direct mail, social media and signs on properties I own to find deals.

Brian Wheeler · Answer

@Ivan Enriquez it all depends, what size and font your signs are and where you put them are all factors that determine if your signs get noticed in the first place. If someone is really motivated, they will call on anything that has "sell your house fast." Where you are located has a huge impact as well, when I used bandit signs the leads were not that great, a couple here and there peaked my interest, but were not solid. It is tough to qualify bandit sign leads, but that's not to say they don't work. Your municipality could also be strict with bandit signs and might: take them down, give you a fine if they see you putting them up, call you to try and give you a fine or all of the above so you should check with your city first. Since you are strapped for cash, having enough signs is going to cost you a couple hundred bucks. You probably have friends in college so my suggestion would be to find the ones who have delivery jobs that are constantly going to different neighborhoods. They see all the houses on the block and can give you addresses for the individual type of property that fits your criteria granted to explained to them what to look for. Give them $500 of your profit, and everyone is happy.

Hope this helps, PM me if there is anything else I can do.

Richard Trayer · Answer

@Ivan EnriquezSigns work. But not at a ratio, that I believe, makes sense as your "first move" w/ little cash. You could very easily just pour away your money and time with only discouraging results. Or, you could find the needle setting right on top of the haystack. In my experience (having put out thousands of signs, at an average pace of 5-10/day) signs are only successful if you do it relentlessly. But when they pay, they pay really good. Signs are not that expensive (bought in bulk) but they take a lot of persistent effort to generate the lead. And then you have to know how to close, or know a closer who can do it for you, before you ever see a return.I think @Brian Wheeler gave you some excellent advice. A thought that applies at every level of Real Estate and beyond. This is what he said:"You probably have friends...so my suggestion would be to find the ones who..."You are being advised to be creative in understanding what you are looking for, and who you already know that will see what you are looking for, because they see it every day without looking. He is advising you to leverage your relationships. IMO, this is a far stronger initial approach because: 1) It costs you nothing up front. 2) It is going to prepare you, because it requires you to talk real estate with all sorts of people, and negotiate terms of a deal on how you will compensate them for helping you find what you are looking for. 3) It amplifies your presence in your area, extends your presence to other areas, and naturally helps you to further your network. 4) It generates leads for more targeted marketing, which tends to have better results than "shotgun" mass marketing.

In the Phoenix Market, there are a few different conditions. Some areas have bandit signs on every corner. Some areas have strong enforcement and the sign won't get enough eyes before being pulled. You can find some pockets that are a bit sleepier and have the right type of houses and the right amount of traffic to get eyes but not get pulled. If you are lucky, the sign will last long enough for the right set of eyes to see it. They will make the call and you will answer it. You will set the appointment and you will close on the lead. From the thousands of signs I have put out in the last 2 years, I have bought 2 houses. They were both great deals. Signs work, networking may work better and have more upfront advantages.I wish you the best of luck in your Real Estate ventures.

Do bandit signs still work?

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