“20 Minutes of Successful Niche Secrets – EPISODE 30”,
Where I talk to Owen Lennox about targeting Investors and turning invisible clients into visible clients
“20 Minutes of Successful Niche Secrets – EPISODE 30,”
Where I talk to Owen Lennox about targeting Investors and turning invisible clients into visible clients
Glenn: Hi! It’s Glenn McQueenie, and welcome to my 25-Minute Success Series Podcast. Today, we have a pretty special guest. We have Owen Lennox from Keller Williams Golden Triangle Realty in Kitchener. How are you doing today, Owen?
Owen: Great, yourself?
Glenn: I’m doing great! Well thank you so much for joining us, and I want you to just tell the listeners a little bit about you – where you are right now in your business, how long you’ve been in the business, and where you’d really like to go with your business. And then we’re just going to work through it. It’s going to be a lot of fun.
Owen: Alright, sounds good. So I’ve been in the industry for about 20 months now – so fairly fresh. I had an interesting start, I guess. I had an automotive background, and decided that I wanted to take my career into my own hands and control my income, and that’s where I decided to take the leap into real estate. I had an investing background, so that’s where I got the majority of my firsthand knowledge. I had a very good start. Within the first two months, I had five listings. It was a bit of a sink or swim when I got into the industry. My wife was going to be on maternity leave within the first month or two, so we had no other income coming in other than our investment properties. So it was a really good start, and had a successful first year. We did about 21 transactions in our first year, so to me, that was over what I expected. So, yeah – can’t complain.
Glenn: That’s amazing. You know, 21 transactions in your first year would put you at the top of the class for most agents, so congratulations on that, because that’s a lot of work to go from 0 to 21 transactions in your first 12 months. It’s probably going to put you in the top 1% or 2% of all the realtors out there, so that’s pretty good.
Owen: Yeah, and two of those transactions were people I knew before. The rest were all brand new business.
Owen: So that was really exciting for me as well, getting a lot of people.
Glenn: Yeah. So where did you get all your new business from then? What were you doing?
Owen: When I was going through my schooling – because I heard the schooling helps you to not get sued, and not a whole lot about the actual real estate business as a whole, for running your own business – I tried to learn from as many different mentors as I could, and I took a very large liking to the For Sale By Owner market. For a lot of people I talked to, the For Sale By Owner market was the best way to get immediate business. You didn’t have to have a downstream of 90 days of lead generation and getting things filled up, because you’ve got people with their hand up basically asking to work with you. I just have to figure out a way to make it work as a win-win for them, as well as for myself. So that was where my business took off faster than most, I guess.
Glenn: I think it’s so great what you just said there: “They’ve already got their hand up.” They’re what we call the “visible prospects,” right? It’s so interesting in our industry, where a lot of people are like, “Oh no, you’ve got to go door-knock two hours a day. You’ve got to go cold call two hours a day.” And I’m not saying it doesn’t work. If that’s what you really love to do, then I think it works really, really well. But for probably 80-90% of the agents, they’re going after basically invisible prospects and hoping that if they talk to 100 people, that three people might say, “Yeah, I might be interested.” So you cut that whole thing out, and just said, “Hey, you’ve got a problem. You want to sell your house. You made a choice to sell it yourself, which I think is great. I’m going to come and meet up with you. We’re going to see if we can help each other, and if there’s a win-win solution, then we can work together.” Is that your mindset?
Owen: Yeah, that was exactly it. It was just finding out where they were coming from and what they were looking to achieve. And again, I didn’t take every listing that I came across, because I was picking and choosing what ones I thought I could work well with, and we had a nice relationship, and it worked out very well. I had a 100% success rate – every listing I took went to sale and completion, so I had a nice track record, as well. I think that helped build my confidence, as well as the clients’ that I was dealing with.
Glenn: Sure. So where do you want to go with your business now? Just imagine it’s a year from now. You’ve had the best 12 months ever, and we’re on this call again, just chatting about your best 12 months. What would have to happen for you to sit there and go, “Wow, Glenn, that was amazing. Had my best 12 months!”
Owen: Well, in February, I hired an admin, so I’m currently looking for another agent to help me out. And I’m trying to – as you’ve taught before – find my niche. So far, my niche has been working with the For Sale By Owner market, but I’m fairly heavily involved in investing. That’s where I’m looking to take my business to the next stage, and get into the almost exclusively investor crowd, and be able to have a lot of referral and repeat business from those investor clients.
Glenn: Right. So let’s take a look at who your perfect client avatar is right now. My book, “The McQueenie Method,” on the front page it says, “Just bring you to your target market.” So what you’ll find is we’re really in the mindset-attracting business. Your niche could be investment properties, but there are a lot of investors you’d never want to work with, and there are other investors who you’d be like, “If I could just find more of those identical people, I could build a really massive business,” right?
Glenn: So who does your perfect client look like? How old are they? Where are they now? Where do they want to go? And what’s the unique problem that you want to solve for them?
Owen: Age – (just because of financials), I’m probably looking into mid-forties and above. Ideally, I do really like working with young investors, as I’m fairly young myself, so being able to help grow basically their net worth, by showing them proven methods to invest in in the real estate industry, and getting some solid returns that are very hard to find in any other market.
Glenn: Well I think the irony, when you talk to people who aren’t investing in properties now about investing, their first hesitation is, “Oh, I don’t want to be a landlord.” It’s just this default, closed mind: “I don’t want to be a landlord.” And I always find it so ironic, Owen, that all the people who are landlords never sell their properties, and meanwhile, all the people who don’t want to go into it think it’s such a hassle. I always wonder, maybe those people who own all the properties are just telling everyone else it’s such a hassle so they don’t compete with them anymore? It’s so weird to me.
Glenn: So if you had to choose right now: young or mid-forties? Who do you feel most comfortable working with?
Owen: Probably the mid-forties. I’ve done more of it. I do find a bit of a strange relationship there, where I have to break down those barrier walls. There is a bit of a stigma with me being a younger realtor/investor, that I just have to prove myself a little bit more than maybe an older agent would have to do. But once we get past that, I feel like the relationship and bond is a little bit stronger because they see what obstacles I’ve overcome in a short period of time, and can build that rapport a little bit stronger, I feel, with clients.
Glenn: Right. Okay. Well, you’re going to find that, too. I got into real estate when I was 23 years old, and all of my sales were with people a lot older than me. Luckily I got some friends who referred their parents, which was awkward, too, because they used to take you to Wonderland when you were 10, and now, all of a sudden, you’re selling their whole biggest asset of their life. But I think what people are looking for is – at first, they’re going to judge you on your age – but they’re really looking for: will this person bring the right amount of value that I need? Do they know what they’re talking about? Do they walk their talk? And I find it’s just that blip, almost. There’s a blip, and people go, “Boy, you’re young!” And then once you start talking, all of a sudden they just forget about it, because you’re there to solve their selfish problem, right?
Glenn: Okay, so let’s picture this mid-forties person. What’s keeping them awake at night? What’s their biggest fear and aspiration, that we can devise a lead generation
strategy that will tap directly into that fear or aspiration?
Owen: I think for a lot of the investors I’ve spoken with, it’s just uncertainty for the market. There’s been a lot of talk about market fluctuation. And I think it’s a long-term strategy – we’re not looking to do what’s happening in the next six months to a year. We’ve seen steady growth in any 10-year cycle, and that’s what I’m looking to tap into is long-term wealth accumulation, not short-term flips.
Glenn: Isn’t it ironic that when everyone else is lining up to buy investment properties, and probably over-paying for them, a lot of people buy investment properties, and then when the market turns, the smart investors go and buy them, and the dumb investors sit there and go, “Oh no. The market’s going to crash. No, I’m going to wait. I’m going to wait.”
Glenn: I really think there are great deals in any market. We’ve recently done this thing with our agents where I sent them an email. It was more of a conversation about overcoming buyer reluctance in the kind of shifting market that we’re in right now, and what I was saying in the email is, “It’s not the price. It’s really the interest rate that matters the most.” When they’re buying their own resale home, a $400,000 home at 2.7% would maybe carry for $1,830 a month, but at 4.7%, it’s $2,300, but you pay maybe $150,000 more in interest on that loan over the time. And even if prices drop to $325,000, but you’re at 4.7%, your monthly payment is $1,835 and you’re still paying way too much interest on it. I think for investors, we have to get really clear on what investing is; and it isn’t speculating. Investing is really minimizing your risks in order to maximize your long-term wealth creation, right? If you’re buying investment properties, you’re really looking at, number one: what are the market rents? And you can figure that out pretty well just by doing a market rent study, or just seeing what everyone else is renting for. You can see, “Okay, what is my interest rate?” You can do the numbers, and then you can lock that rate in for five or ten years right now, which I would totally encourage everyone to do. Number three is get a home inspection done on the property by a really good home inspector who tells us what our variable capital costs are going to be over the next period of time. Then we have a good idea of what prices are, because you can see what everything else just recently sold for. For me, if you know all those four things, and if the investor knows all those four things, there shouldn’t be any risk in going and buying an investment property.
Owen: Yeah. I tell a lot of my investors that I want my investments to be boring and my life to be exciting, not the other way around.
Glenn: That’s a great line.
Glenn: Okay. So they’re sitting at home, thinking about buying an investment property, but there’s a part of their mind that’s sitting there going, “Well, why don’t I just wait until prices drop a little bit lower?” Is that what you’re finding? What’s their biggest reluctance? Is it just the uncertainty of the market, or they don’t know what to do?
Owen: A lot of it is not knowing what to do. Uncertainty will definitely play a part in that, but usually I’ll look at any 10-year period, and even when we had issues in 2009, even if we’re looking in less than a 10-year span from there, we’ve still seen the market go back up from where we’ve had some historic lows in a short period of time. So I like to tell clients, “We’re looking at this over a long-term picture, and we’re doing the smart evaluations. We’re looking to see the whole picture, not just a very short blip on the radar.” And if we’re doing it strategically and we’re looking at the numbers, if it’s a cash-flowing unit, we’re normally going to be doing well with our principal pay-down (the active appreciation or principal appreciation on the property), and the mortgage is being paid down by those tenants. So we’re winning in a couple different categories. It’s not always just the price of the property that we’re concerned with, right?
Glenn: Right, because there are so many different returns, as you were talking about. The biggest return, I think, is that cash on cash return (the return on your down payment). If people really understood just that number alone, that when you’ve got a cash-flowing property, not only do you have the mortgage pay-down, the principal pay-down, but you’ve got the return on the cash on your down payment. Most of the people I know who have investment properties are probably getting anywhere from a 17-28% return on their down payment, right?
Glenn: Annually. Now how many people in your marketplace know that?
Owen: Very little. A lot of them don’t realize the power in the leverage that we have with real estate lending. They’re seeing, “I’ve put $100,000 into this property. I’ve only got $5,000 back.” They don’t realize the amount of leverage that’s been put on the property with $100,000. Say you can buy a $400,000 property. If it appreciates by 6%, we’re normally seeing 20-25% returns on the actual money that was invested. So the understanding behind the leverage aspect I think is the biggest myth or misconception that most people are dealing with today.
Glenn: Right. So, and even if we didn’t have that 16% appreciation, we’d still have 19%, right?
Glenn: Which is better than anything else. And it’s totally one of the safest liquid investments that you have. It’s phenomenal. Okay, so now the question becomes, what’s the bait, or what’s the lure that we should use in order to get those invisible prospects right now to put up their hand and become visible prospects? You’ll find that the deeper you go into your niche, and the more unique wisdom that you’ve collected in there, this information can’t be Googled. Instead of looking online for that answer, it forces someone to come to you, and then you actually go into what we call a lead-receiving business instead of a lead-generation business. Does that make sense?
Glenn: Okay. So have you sold many investment properties lately? And where did you get those leads from?
Owen: The majority of the leads that we’ve seen so far have been For Sale By Owner clients. They’ve been trying to sell their property privately, and a lot of them are either novice, or not really sure what they’re doing. I’ve actually had a couple of clients, that after I put a spreadsheet together, and they realize how much money the property is making them, they’ve actually been reluctant to sell. They realize, “Oh, I’m actually getting a 25% or 28% return on the property. Why would I get rid of this?” So I’ve had the other case where I’ve had a client that was ready to sell their property, they realized how much money they were making on it, we refinanced, and we ended up purchasing them another property instead of selling. So it’s worked on the other side of the scale. I approach them as a sales side, and we ended up purchasing another property.
Glenn: Well, that’s the game, isn’t it? You make so much money on your first one that you can refinance it and then buy your next one, and then just keep refinancing. If you look at how most people have built their long-term wealth, they’re usually just refinancing their properties, taking equity out, and buying something else, right?
Owen: Yeah. That’s exactly what my wife and I have done, and it’s been working very well for us.
Glenn: Right. So have you done any seminars to get these people, or you just attract them directly?
Owen: Yeah, we’ve done some seminars. We do a fair bit of networking events. Right now we’re in the process of trying to put together a whole team that’s well-rounded, because we’re finding a lot of investors today want to see those returns, but don’t want to put the effort in of dealing with tenants, finding properties, dealing with any of the day to day aspects of it. If we can put basically a completely passive system together for them, where they’re basically just putting in the down payment money, and any capital costs that could be associated within the first six months to a year, and we can cover everything else from finding the tenants, basically doing all the property management, finding the properties, doing the numbers to make sure the returns are going to be best for that property – that’s where we’ve found a lot of clients are very serious and interested in it. They’d much rather take their money out of other money markets and invest in real estate if we’re able to do it as almost a completely passive investment source for them.
Glenn: Wow. That’s the secret. The way that you’re going to win the game of becoming the top investment agent in there is by reverse engineering and planning everything from the consumer’s point of view, which it sounds like you’re doing anyway. You’re creating a wall of value that’s so high that it’s, “Not only will I find you the property, but I’m going to property manage it.” And that’ll be another stream of income for you. Then you’ve got your repair division, which is another company for you, and another stream of income for you. But more importantly, you talked about getting another agent. I wonder if you were to bring on one, two, or three rental agents right now that were brand new agents, who all they did was 50 or 60 rentals a year. In Kitchener, do a lot of the rentals go on MLS? Or are they non-MLS?
Owen: A lot of them are on the private markets, but we are seeing a little bit more of an increase, I believe, in rentals being put on, but it’s usually the higher-end properties. There are a lot of new builds that are now being put onto the MLS system and being broadcast that way.
Glenn: Right. Okay. The big solution you’re really trying to solve is, not only do you have the property management and the repair (because other people can do that), but if you had the rentals and all the renters, and you had a list of 200 renters and you know when their leases were coming up, you could go to these people who had investment properties and say, “Listen, I’ve already got 200 people. I know when their leases are coming up, and I can be moving people in and out our your properties whenever you want them to.”
Glenn: And here’s the next thing I would tell you to do. I think you should, if you can figure that model out, which I think you can, what I would suggest you do is approach people and say, “Okay, listen. Here’s my solution. I’m going to find you the investment property. You’re putting the down payment down. I’m going to manage it. I’m going to repair it. I’m going to rent it out for you. And we are going to share the growth. And what that means is, when it comes time for you to sell your investment property, you’re going to get your initial down payment back, and then we’re 50/50 on the capital gain of that property.”
Owen: Correct. Yeah, we’ve got some joint venture agreements and stuff like that in the works currently, exactly in those terms.
Glenn: Without you putting any money down?
Owen: Yes, correct.
Glenn: Okay, because that’s the big game. And now you can set your standards, right? The best thing about doing this is, the more value you add, the higher you can raise your standards. If people don’t fit inside your box, then they just don’t fit inside your box.
Glenn: Okay, so let’s switch, because I know we’ve just got a couple minutes left here. These calls go by pretty quick. How do we get more people into your world right now? I think number one is, I would honestly think about creating a Facebook page called “The Secret MLS of Investment Properties in Kitchener.”
Glenn: “The Secret MLS of Investment Properties in Kitchener.” And what you’re going to do is offer some of those For Sale By Owners an opportunity to come in and be advertising on that and into that property, because what everyone else is doing is they’re working with another agent, and that agent is mostly relying on the MLS for residential investment properties. I know the commercial investment properties are rarely on MLS (or the good ones), but the residential ones are always on MLS. Is that correct?
Glenn: What if you could create this world where you start to triangulate the sale? You position yourself in the middle, and you have a whole bunch of buyers who you’re going to get through doing seminars, through Kijiji ads, through video testimonials (a lot more digital advertising, which we’ll talk about in a second). You get 5, 10, 15, 20, 30, 40, 50 buyers built up in your pocket, basically, and then we’re going to go after the Fizbeaux market. You’re going to play market matchmaker, and you’re going to approach the For Sale By Owners and say, “I have 52 investment buyers who are thinking about buying an investment property. If you don’t want the muss or the fuss, I’m not just like your regular agent, coming here, trying to convince you to list with me, and telling you what an idiot you are. I truly have the 52 buyers that are ready, willing, and eager to find your property, and I have a platform called “The Secret MLS” on Facebook which I want to feature your property on.” Could you do that?
Owen: Yeah. I think that’d be a great source of business.
Glenn: Yeah. And then what you do is, you then get your admin person to pull up all the people who own all of the investment properties in the target areas you want who are not on MLS or Fizbeaux yet, and then you send them a letter which says, “Hi, it’s Owen. I currently am working with 52 buyers who are looking to buy an investment property. If you don’t want the muss and the fuss of putting your house on MLS and disrupting tenants and all the hassle that can cause, I have a platform where I can bring those buyers to your property directly.”
Glenn: Once we target those sellers, let’s imagine that 20 or 30 or 40 of them put up their hand and say, “Yeah, I might be interested in doing that.”
Glenn: Then we do a targeted blast or ad back to buyers, saying, “Do you know that there’s a Secret MLS for investment properties? A lot of investors don’t want to put their place on the market, or tell their tenants that they’re selling for fear that they’re going to move out and lose the value of their asset. If you’d like to be involved in the Secret MLS (and these are properties that never go on the market), let me know.” And then you get more buyers to sign up. Do you see where we’re going with this?
Glenn: Does it make any sense to you?
Owen: Yeah. Just kind of a revolving loop.
Glenn: Well, yeah. You’re marketing the buyers out to the sellers, saying, “I’ve got 50 buyers.” And then those sellers put up their hand. And then all the people who put up their hand, you market back to the buyers again. You be the kingmaker right in the triangle. And the worst-case scenario for you is, if you can’t make that matchmaker connection, that you then put it on MLS to sell.
Glenn: And now you’re the market-maker, instead of the market-taker.
Glenn: I sound more excited about it than you are right now.
Owen: I’m just letting it all soak in. Yeah. I really like that.
Glenn: Yeah. It’s more about creating the Secret MLS, because what you’re trying to do in your niche is create so much value that only you have, and people have to come to you.
Glenn: You use that niche and the naming of the niche as a way to attract the people that you want to get into your niche. We don’t have a lot more time in this call, but there are so many other pillars that you could work around this. One of them is sit there and just think of the mid-forties person. What’s their biggest fear? “Well, my fear is, I’ve got a job. I’m entering the midpoint in my career. I see all my people and bosses above me, as they get to their early fifties, get turfed out of the company for cheaper labour. Number two is, I’ve got two kids that want to go to University. I don’t have enough money with taxes and everything. I don’t have enough to actually save all that, so I’m looking for a way. Could I buy two investment properties, one for each of them, that will be paid off by the time they go to University? The stock market’s at the very top of the market right now. I don’t want to put my money in there. I don’t even really understand it. Every dollar I’ve ever put into my RSP is probably what my RSP is worth today, because of all the fees.” These are the real pain points for those people. And the way you do it is you just go and get into their head. And if you can’t get into their head, then you go talk to more mid-forties investors and say, “What’s keeping you up at night? What are your biggest fears?” And they’ll tell you. And then that becomes the bait that we actually just give right back to them again. You do a special report, and it would be, “Special report for investors in their mid-forties in Kitchener.” So narrow, right? But who’s going to want that report?
Owen: Yeah. Everyone who’s after that.
Glenn: Yeah. It’s like a friend of mine, Dean Jackson, who runs 90-Minute Books. One of the books they did was called “The Cosmetic Surgeon Spouse’s Guide to Building Wealth.” And I’m like, “Well who wants that book?” Right?
Owen: Really, really specific. Yeah.
Glenn: And that’s the thing that most agents don’t understand. The more laser your focus is, the more people go, “Oh, I want that!” (instead of “Free CMA” – which doesn’t mean anything).
Owen: Yeah, they’re seeing that on every street corner and bus and everyone that calls them. If you point it right into them, it’s like, “Oh, that person’s talking directly to me.”
Glenn: Right. And then I’m just going to give you one more tip, and then we’ll wrap up, because we’re over 30 minutes already, Owen, but what do you say when you meet them at a party or socially, and people say, “What do you do?” What’s your answer?
Owen: Normally my response is, “I run a real estate business that focuses on real estate investing.”
Glenn: Right. Awesome. Are you open to coaching on just giving you some different language that will help you get more targeted referrals from those people that you talk to?
Glenn: Okay, so ask me the question. We’ve been at a party, and just say to me, “Hey, Owen, what do you do?”
Owen: “Hey, Glenn, what do you do for a living?”
Glenn: “Oh, I’m in real estate, and I specialize in helping families (usually the parents are in their mid-forties) build wealth for their kids.” Let me just put it this way: the more specific, fact-based your answer is, the more chance you have of getting referrals.
Glenn: I would answer the question as, “Oh, I’m in real estate, and I focus on building wealth for people through investing in real estate. My focus is really people in their mid-forties who are worried about losing their job or funding their kids’ education, or worried about investing in the stock market. I recently helped someone who was so afraid about getting their first investment property, because they didn’t want to be a landlord, find their first property. We bought it for x amount of dollars. We were able to refinance that property three years later. Now he has another property. So now he’s got two properties already for his kids.” And I could go on and on and on, right? My point is this, Owen: we learn by stories and metaphors. Use fact-based, “I helped somebody do this, this is what happened, this was their result.” “I have another investment property right now, but I don’t have any clients for it. Who do you know who’s thinking about buying their first investment property?” That magic language will trigger a referral. I’d learned this through Joe Stumpf many years ago, but the point was, the more specific the ask for the referral, the better chance you have. I’ll just say a few more words and then we’ll wrap, but it’s like me saying to you, “Owen, who do you know who’s getting married this year?”
Owen: Yeah. I know someone.
Glenn: And did you see how quickly a name came?
Owen: Yeah. I’ve got someone pictured already.
Glenn: Right. Instead of me saying, “Hey Owen, who’s thinking about buying or selling?”
Owen: Yeah, very open.
Glenn: Yeah, so the more specific you are on that is the better way to lead-generate. And then when you’re doing that, what you’ll find is your referrals that you’re going to get will mostly be just right into your niche market. And then the final thing I’d tell you to do is probably build the Kitchener Wealth-Building Club, and that’s going to be a meet-up group that’s going to meet the fourth Thursday of every month to have some beer and talk about investing.
Glenn: And then start marketing towards that. Isn’t that fun?
Owen: I love it!
Glenn: Okay. Alright! Well do you have any questions right now before we wrap up?
Owen: Probably just see if we can at least meet up next year to see if I’ve doubled or tripled my wealth or income by then by using some of these tips?
Glenn: I’d love to! I have no doubt that you’re certainly going to do it, and it’s going to be fantastic. I’m going to say bye to you now, just so everyone can hear me saying bye, but Owen, stay on the line for two seconds, okay?
Owen: Sounds good.
Glenn: Thanks a million for joining me, okay?
Owen: Thanks a lot.