“20 Minutes of Successful Niche Secrets – EPISODE 49,”
Where Alexander Umanets discovers his Niche
Glenn: Hi! It’s Glenn McQueenie, and thanks for joining me on my 25-Minute Success Series Podcast. Today we are joined by Alexander Umanets from Sutton Group Old Mill, a brokerage in Toronto, Ontario. Alex, welcome, and thanks for joining me on the call.
Alexander: Thank you very much for inviting me.
Glenn: Great! So can you just tell me a little bit about your background (how long you’ve been in the business), and maybe a little bit of what you did before that, and where you’d like to take your business for 2018? And then we’ll go have some fun discovering what to do.
Alexander: I got my license in November 2017, and I’m now in the process of defining my niche and finding out how to generate leads and so on. My background is, in 2004, when I bought my house, the next year I bought another house and rented it and renovated it and sold it in two years for profit. And right now, I have an investment property condo in Richmond Hill and it’s rented also. I have extensive experience with renting and renovating.
Glenn: Okay, so who do you like working with the most? There are 52,000 agents on the Toronto Real Estate Board. It’s not like there’s a shortage right now. The public’s not up in arms screaming, “Hey! We need more agents!” So the big challenge now is, how do you stand out in a very crowded field of agents (especially if you’re new in the business) and build a really great book of business? So if you had to pick just one type of person who you’d really like to work with, who would be a dream-come-true client for you?
Alexander: Ideally, I would like to have a mentor who would help me with the basics of this business, especially in how to talk to people, what to say, how to handle objections, and how to find leads – people who sell or buy properties. Those are the main things, I believe, to start.
Glenn: Right. Those are all very true and valid. I think that’s the foundational stuff that you need to learn in real estate. But a lot of real estate is trying to get off to a quick start, and I really recommend that you work with people who are most like yourself, or are people who are planning to do what you’ve just done, because you’ll have a lot of confidence meeting with a buyer who’s thinking about buying a house, doing a renovation, and then selling it for a profit. Would you feel comfortable if I sent someone who wanted to do that to you? You could probably add a lot of value to him, couldn’t you?
Alexander: Yes, because I have experience in this area.
Alexander: And I can recommend which property is suitable for investment, what kind of tenant you need to look for, and what to renovate and what not to do in renovations.
Glenn: Right. And because that’s where you’re most confident right now, you can honestly talk authoritatively about this, because you’ve made the mistakes. You’ve already failed forward. You’ve already done a lot of the hard work and the heavy lifting. I’d probably suggest that that might be a market that you might want to go after, because learning the broader real estate market takes a long time, like learning a lot of the different areas. What does a renter need? What does an investor need? What does a senior moving down need? What does a divorced couple need? All of these are very, I would say, unique skills that you need. Part of the reason I wrote this book, too, was really for my argument to agents that said, “Listen. Just bring you and your natural abilities and your experiences to a target market that you’d love to serve, because you already feel pretty comfortable with the knowledge of serving those people.” And then the rest of it is just the technical stuff of real estate – drafting up an offer, presenting offers. You’ve already read offers, you’ve already bought and sold homes before, so it’s not going to be that hard for you to learn that side of it. But there is a big gap, I would say, with most realtors right now who don’t know what the true renovation costs are of turning one property into a higher value property (what the costs are, what the permit process is). There’s a lot of that background, Alex, that you already have that you could bring into your marketplace.
Alexander: I can correct you with more. I know how to do the renovation myself. I am a handyman!
Alexander: From the framing to the plumbing to electricity, so I can talk about it professionally.
Glenn: Exactly. And that’s what people really want, because most agents don’t know much about that stuff at all. They know the concept. They can go to some of the home inspection reports they’ve been on and maybe give rough ideas of what it’s going to be to put in a kitchen or a bathroom or change windows, but none of them have that hands-on skill. I think the biggest way you can add value to the transaction, and this is your unique selling proposition, is by meeting somebody and saying, “Listen. I’ve already done these flips. I know how to build a house from the bottom up. I know how to frame. I know how to plumb. I know what good contractors are. I know what bad contractors are. I know how to make sure you don’t get ripped off. That is the value that I actually bring to this transaction. It’s not just simply finding and buying and selling a home. Any agent can do that. But what I can do is not only find you the right property to renovate, because I know what the pre-cost is and the post sell-out cost, but I also know what the budget is for renovations, and I can build a pretty good business model for you to flip houses and make a lot of money in real estate.”
Alexander: Yeah, probably this is the way to go. Another way I was thinking about is empty nesters and downsizing. I also like this direction to explore. Maybe you can recommend something in this way.
Glenn: Well, I’m happy to, but my first thought would be: figure out one niche first. It’s almost like, “Build one restaurant first. Get that restaurant profitable before you move on and open up your next restaurant.” I’m not saying you can’t do the downsizers; it’s just a bigger learning curve. With downsizers, a lot of them have already bought and sold homes a bunch of times, so sometimes they will tend to go with more experienced agents or local experts or people who have been buying and selling those homes. I’m not saying you can’t do that right now. I’m just saying the “easy” button – the easiest way for you to probably make the most money in the quickest time – would be to stay in the reno, because you’re going to feel very confident there. In the downsize world, here’s what it is typically. They’re between 55 and 65. Their kids have left the house. They left a little while ago. Now their kids are starting to get married, and they’re thinking about either moving downtown (into downtown condos), or depending on what areas, they’re moving into local condos. But a lot of them have a large search criteria. They’re like, “Oh, I could go to Windsor. I could go to London. Hey, we could even go to Peterborough. We could go to Cobourg.” There are lots of options, so it’s a very long process for them because they have to gather a lot of information before they actually make a decision, and they don’t even have to make a decision. Do you know what I mean?
Alexander: I see.
Glenn: Whereas, someone who wants to buy, flip, and reno properties is there because they want to get a return on the money. Or it’s, “Hey, I’m selling my condo. I want to buy a semi, but to buy the pretty ones in Bloor West or some of the really prized neighbourhoods, I’m going to be competing against all of the other buyers, and I just can’t afford to lose in multiple offers, or end up winning, but paying hundreds of thousands of dollars over just to get that property, so why don’t I go look for the ugly duckling right now? That ugly duckling, I can turn into a really beautiful home, and maybe stay and raise my kids, or flip it and move to something I really like.”
Alexander: Yeah. Or maybe the solution is to supplement your mortgage with a basement rent.
Glenn: Exactly. And that’s what a lot of people don’t even understand, is that basement rents have really skyrocketed from $600 to $1000 a month to up to $2000 a month. And with today’s mortgage rates, that would carry $400,000 or $500,000 worth of mortgage.
Alexander: Yeah. I just wanted to tell that I have experience with renting a basement. I’ve had tons and tons of tenants, and I never had a kid or anybody who failed to pay, so I know how to screen tenants. So it’s also experience I can use in the real estate profession.
Glenn: Yeah, absolutely. So I’m going to give you a bit of the marketing solution right now on how you can actually generate leads in order to get a steady flow of people to help you grow your business. There are probably three things I’m going to tell you. Number one is, the easiest button is to probably create a Facebook business page called “My Fix, Flip and Rental Service” or “Fix, Flip and Rent Toronto” or “Fix, Flip, and Rent Etobicoke” – something along those lines that clearly defines what you’re offering on your business page, right?
Alexander: I already have a business page, but it’s not defined exactly, so far.
Glenn: Exactly. And that’s the problem. Every agent already has their business page, but most of them are trying to be everything to everybody, and they end up being nothing to nobody. They’re just trying to be like, “Hey, I sell in Pickering. I sell in Aurora. I sell in these areas. I’ll go anywhere to sell a house.” They’re putting general stuff there because they don’t want to limit their market. It’s almost like those contractor vans. One contractor van will have the “One-day painting company,” and I think it’s pretty clear what they do to your house – they’ll paint it in one day. Or the “Five-day kitchen company” – they’ll do that. But then you’ll have the rest of the white vans, and it’ll say, “We do eaves troughs, kitchens, bathrooms, electrical, windows, landscaping, snow removal.” Everything that you could possibly want, they put it on the side of their van, and everyone looks at it and goes, “Yeah, they’re just trying to be everything to everyone.” So the more specific you can get, the better. And you can have multiple Facebook business pages in each niche. You can have your own business page where you’re still doing the rest of your stuff, but this one is where you start posting content about how to fix and flip properties, “Before” and “After.” “Hey, listen, just wanted to let you know I bought this one a couple years ago and paid this. We put this much in the reno, and this was the profit we made on it.” And you don’t have to put the address. You can just put the area, right? What you’re trying to do is start posting and positioning yourself in the marketplace as the expert. If I’m looking on Facebook, or if you want to do Facebook targeted ads to reach me, you can look for anyone in this postal code who likes “renovation,” “HGTV,” any of those design shows. You can actually target customers just by the interest that they have, and then they come to your page or they see your ad, and they’re like, “Oh my God! Here’s someone who’s already done it and here’s what he does.” Does that make sense?
Alexander: Yes, exactly, very targeted.
Glenn: Yeah, very targeted. And then the second thing is, you’re going to find that your business will grow into the conversations that you have with everyone else. What I mean by that is, when someone says to you, “Hey Alexander, how’s real estate?” most agents say, “Oh, it’s really busy. There’s some multiple offers” or “It’s a good time to buy.” There’s this typical, canned response that people have. You could change the game of it, and when someone says, “How’s real estate?” you say, “Hey, it’s great! I just helped this couple who bought this house here, and they were able to do reno’s that I helped them with, and they flipped it for this, and they were able to make this much profit. Who do you know who’s thinking about doing a flip?” Or, if you don’t have any customers yet, if someone says, “How’s real estate?” you can say, “Great. I specialize in helping people build wealth through real estate. We do that by buying homes, and flipping them for a profit. I’ve done tons of renovations myself. I know exactly how not to get ripped off. I know how to rent. I’ve dealt with tenants.” This is the conversation that as you start having more of with everyone you meet, you’ll start building a tribe of people around it. Does that make sense?
Alexander: Yeah. I like it. Good idea!
Glenn: Yeah. And then the third thing I would do is go on MLS, and I would start with a very small area that you’re most familiar with, whether it be the Kingsway or Etobicoke. And I know there’s going to be lots of people listening to this call who don’t really live around Toronto, but I’m really just trying to say stay in your local neighbourhood that you know the most (or even in an area, maybe a radius of 10km from where you live or 6 miles). Could you find the 10 next best fix and flip properties on the market, and could you start posting those on your Facebook page? “Here’s my pick of the week. This property, I went and saw. I think we could put this much money into it, and I think we’d be able to flip it for this.” Could you do that?
Alexander: Yes, of course. It’s a great idea, by the way.
Glenn: Yeah! Well that’s how it works, right? That’s the game. The game is, “Okay, I’m going to go and work in an area of my business that I already know. But what’s the carrot that I can give? It’s like fishing – what’s the lure that I can use to catch this type of fish? The carrot, or the lead generation vehicle, is not “Just Listed, Just Sold” cards, which everyone else does; it’s very targeted, “Here’s my pick of the week of the best reno property.” Or you could even profile properties over the last year that you’ve seen that have been bought and have been sold, and here’s what the profit was, and estimate what the renovation costs are. You just have to be careful of all the rules. You can’t identify them by address, but you could say, “401 and Yonge.” You could do areas, and you could start doing that kind of information to the consumer.
Alexander: I see. The reno information and the common pictures of the property and the location (I mean the area – not the address).
Glenn: Yeah. If it’s another broker’s listing, you’re probably going to have to get permission to do this, but you could actually just do summaries also. Ideally, pictures are worth a thousand words, but you could also summarize it. And then I think this is the fourth thing that I would do if I were you. What if you started doing either a daily tour or a weekend tour of homes to be renovated and flipped? What if every Saturday, just between 11 and 1, you said, “I’m going to be at this house starting at 11am, and we’re going to see these five properties. Each house I go to is going to take about half an hour, because I’m going to show you what you can do, how much it’s going to cost, and how much money you’ll make on this.” Who would want to go on that tour, Alex?
Alexander: I don’t understand right now how to do it exactly, but the idea is pretty good.
Glenn: Yeah. So the way you do it exactly is you start doing targeted Facebook ads calling your Saturday tour “Homes to flip” (we have to think of probably the right marketing lingo), but what if all week long, you were building up that these were the five houses that were going to be on, and “Just meet me here.” You could have four or five couples show up, and take all five of those couples at the same time to the next five homes. That’s the beautiful thing about positioning yourself as, “Hey, it’s just a tour. It’s no cost, no obligation, but I’m going.” It’s your way of demonstrating your knowledge with people in a very laid back, informal way. After that tour, people are like, “Oh my God, Alex. I can’t do this without you.”
Alexander: Is it in order to get into the property – to look at the property inside as well?
Glenn: Not a problem. All you have to do is book, just like you would to show any other buyer. You just book an appointment through that office and say, “I’d like to show this property between 1 and 1:30.” And then you call the next one and say, “I’d like to show this property between 1:30 and 2,” and you can bring as many people as you want through the property.
Alexander: Oh, I see. I see. I understand it now. It’s the property on the market.
Glenn: Yeah. Oh yeah, it’s properties on the market. And then this would be the next level, but I think this would be really cool. What if you could start targeting either “for sale by owners” who have rundown properties, or on your business page or Google AdWords, start saying, “If you have a house that needs to be reno’d, give me a call. I have five, 10 (after doing these tours for awhile, you might even have 20 or 30) people who are looking to buy a renovated property.” So then couldn’t you go back to a farm area and drive by all the houses (look from the outside, because you can usually tell who needs to be renovated or not), and just simply put a postcard in their mailbox that’s very direct to them, and says, “Listen. I’m working with 12 couples who are looking to buy a home in this area. If you don’t want the muss and fuss of going onto MLS, give me a call. It’s very confidential, and I’m happy to bring some of those buyers by.” So now you use Facebook to get your buyers, and then use the buyers to farm back to get your sellers directly. If you did this well, you could almost create your own MLS system. It’s Alex – buyer – seller. How fun would that be?
Alexander: Brilliant idea!
Glenn: Yeah! And that’s the game with niche markets. That’s why I did the book, because all you have to do is figure out the code of how do I go and get these people? But it all begins with you just bringing what you know, because you’re going to be very confident in front of a buyer talking about renovations, but you won’t be that confident standing in a house in an area you’ve never been to and people start asking you questions about the area. You’ll just be like, “Yeah, I have no idea.”
Alexander: I see.
Alexander: Great! Great.
Glenn: Does that make sense?
Alexander: Yes, it’s great. It’s like a lead machine.
Glenn: That’s exactly what it is. But it’s targeted. And what you have to realize is your value is so superior compared to most other agents who don’t have your background, and that will give you the confidence. So although you might be brand new in the business, the technical stuff is pretty easy to learn. How do I do an offer? How do I do a waiver? All that other stuff. The lead generation machine and the conversion machine is where you really take off, and that’s where your real estate career goes.
Alexander: Thank you very much!
Glenn: No problem. I’ll give you the last idea, and then I’ll just open it up if you have any questions, and then we’ll wrap it up. The best thing you could do with your time right now is get really, really amazing at your product knowledge. You already know how to do the flips, but start looking at the areas that you believe have the best potential to do the best flips. Then as soon as you see the properties going on MLS, get in there quickly, and you go and see them yourself, because just like the other houses you bought, you had to look at a lot, right, before you finally decided the one that you were going to buy?
Glenn: You’ll be able to go, “This is the one where I think I can make lots of money.” And here’s the last thing I would tell you – and I think this is going to be the most fun idea ever. What if you joint ventured with all these buyers? What if you said, “Listen. Here’s what I’m going to do. I’m going to find the property for you. I’m going to negotiate the agreement. I’m going to oversee the renovations, and I’m going to fill it with renters. Buyer, your job is to put down the down payment and the closing costs, and when we flip this property, you get your down payment back first, and then we share the profit.”
Alexander: It looks like a business.
Glenn: It is a business! And this is why your niche market can be a massive business.
Alexander: I mean, not just selling and buying properties, but it’s like doing business with your clients.
Glenn: Yeah! And you know what? A lot of your clients, or a lot of people you know have a lot of money right now and don’t have any time. They would love to invest in real estate, but they keep hearing, “Oh, it’s a hassle to be a landlord.” And it’s a myth, because we know that most wealth is created by buying property. Very few people actually sell income properties. They hold them for a long time. But here’s your opportunity to talk to people and say, “Listen. It’s your money. I’m going to do the flip. I’m going to do the reno for you. We’re going to fill it with tenants, and we’re going to build wealth together. I’m a partner in this every single step of the way.” And then you just nail this one part, and then you can duplicate this model in any city in Ontario or North America.
Alexander: Yeah. Also a great idea.
Glenn: Isn’t that fun?
Alexander: Partnerships with your clients to do flipping.
Glenn: Yeah. And it solves their selfish problem and your selfish problem. They come up with the capital. You bring your skills and find the property. You do the flip. You do a joint venture agreement so you don’t have to register all these companies – it’s just a joint venture that you’re doing with one-off. And you might find one person who might want to do 10 of these with you. You might find 10 people who want to do one of these. You might eventually sit there and go, “You know what? I’m going to raise $2 million in capital from 10 investors, and I’m going to go and that’s what I’m going to do for the next couple years. I’m just going to be buying and flipping properties, and we’re going to be sharing the profits.”
Alexander: Yeah. This is a viable idea I was thinking about a few years ago.
Glenn: Yeah. Well a lot of people are looking for a return on their money, so by default, they’ll put it into the stock market, which can go up and down, or they’ll buy a single condo. And I’m sure over time, the condo will be fine, but there are not a lot of condos you can buy right now as a first-time investor that will actually break even and give you any type of return. You’re usually looking at the return further down the road, whereas there are still lots of flips available where you can do it.
Glenn: There you go! So do you have any questions, or are you good?
Alexander: Basically, no.
Glenn: Do you think these ideas will work?
Alexander: I’ve got the food to think about.
Glenn: Yeah. And it all just starts with one step, and that’s learning the market (which you already know part areas, but getting a bit more), getting your Facebook business page, putting profile properties up there that are lures to other people who want to do this, offering them no cost, no obligation daily tours of the property, and then eventually building an investor’s syndicate, where you can be in business with these people buying and flipping property all the time.
Glenn: How fun is that?
Alexander: Very, very good idea.
Glenn: Yeah! Good! Well thank you, Alex. Thanks for joining me on the call today.
Alexander: Thank you very much for your help, and thank you for inviting me to your podcast.
Glenn: Yeah, my pleasure!