There’s definitely an upfront cost to effective real estate farming, but the returns on your farm will pay for the investment many times over if you can stick with it.
Here’s the typical annual cost for a real estate farming operation with 250 homes in it.
Annual Real Estate Farm Cost – 250 Homes
| CHEM.agency Website | $2,388 |
| Facebook Group | FREE |
| Eight Months of Regularly Scheduled Postcards (250 x 8 = 2,000) | $1,260 |
| Property Update Postcards (200 / month x 12 months = 2,400) | $1,584 |
| Four Months of Regularly Scheduled Letters (250 x 4 = 1,000) | $550 |
| Three Events Sponsored | $2,500 |
| Total | $8,282 |
While this is a sizable investment, remember the potential turnaround on this spend.
Let’s say that for your farm of 250 homes, the turnover rate was right around 5%. This would mean you could expect about 12 or 13 homes to be sold from that neighborhood every year.
Let’s figure that the absorption rate is about three months, meaning that it is a seller’s market and the demand for property in your neighborhood is outstripping the supply.
Finally, let’s assume that the median sale price of homes in your neighborhood is $250,000. If your farm is functioning moderately and you’re capturing just 25% of the sales in the neighborhood, you’re closing four properties a year, or $30,000 in GCI (assuming a 3% commission rate).
Also remember that your success will have a snowball effect. Every closed deal will mean another evangelist singing your praises and connecting you with referral clients. If you do this right, you may end up getting most or even all of your business from referrals in a few years.
Invest $8,282 to make $30,000? Yes please.
