If you are in the real estate investment business or thinking of starting in it, you have probably heard of the advertising method of bandit signs.
Many real estate gurus are recommending them, but unfortunately, there are not many results available to make a sound decision whether to use them or not.
Questions that many ask in this context is how many bandit signs to put out and what they really cost.
According to the available data based on results, to get at least one phone call you will need to put out at least 10 bandit signs.
To get at least one transaction or deal, at least 36 signs will be needed.
Depending on the quantity you buy, the cost per sign starts at $10 and can go down to $3 per piece.
But there are also hidden costs, which are fines from municipalities that you have to take into consideration, because they are illegal for the most part.
This article will discuss the numbers of bandit signs, how many you should put out and also the real or hidden costs of using this guerilla marketing method.
What Are Bandit Signs and What Do the Numbers Say about Them
I am sure each one of you has seen them at some point on side of the road somewhere – not for long, but you have probably seen them.
It’s a kind of guerilla advertising method usually used by real estate investors who often use the ad copy of “we buy houses” or another more creative and not that overused variation of it.
If you are an active real estate investor, you might have used them already.
From what I could observe, there is a lot of love and hate about them in the real estate investor community.
They are similar to billboards, but in contrast to these, are of a more temporal nature (put out over a weekend, before taken down), because using them is often a bit of a grey legal area, at least in the U.S.
The dimension of a bandit sign is usually 12×18 or 18×24 inches and the material used is plastic because of its durability and resistance to weather.
Since they are mostly used at street corners, the copywriting has to be very effective and simple.
They should display even less text than a google ad and one of the most important information besides the marketing message is the phone number.
It is said that they can be very effective when it comes to generating motivated seller leads, but let’s not only be led by hearing and saying and check some actual stats about them.
Getting reliable statistics is a bit hard to come by, because, similar to cold calling (covered in one of my past articles), for some this strategy works while for others, it doesn’t.
It depends a lot on the location where you put them, and, of course, the ad copy you put on them.
And then, it’s more difficult to test them, compared to online marketing methods, where you can rely on more constant variables.
Apart from the ad provider who may do this as a result of you violating some policies, no one can take down an online ad.
That’s not the case with bandit signs.
Interest or keyword targeting isn’t possible either, because many different people of all walks of life will drive by those signs.
I think the closest bandit signs come to a form of digital advertising which is called push advertising, where the targeting is also very limited and your ad is shown to a rather broad audience.
That being said, here are some statistics I found, that I wouldn’t consider as too reliable.
Tracy, an active real estate investor in Florida from propertymob, did some testing and shared her statistics in the below video.
She put out 400 signs, from which she got 52 seller calls (one call for every 7 to 8 signs put out) and from these leads she could convert 11 into transactions.
So, in terms of online marketing, this is a 13% sign to lead conversion rate or response rate and a 2.75% sign to sales conversion rate.
Since she is already quite experienced and has done a lot of testing with different ad copies, we can’t assume that this is an average conversion rate.
But using 400 signs in this test comes close to a reliable statistic that we can use.
Her total profit from the transactions was $81, 323.68.
According to this forum thread of real estate investors where one investor tells about his experience with bandit signs, his results varied from area to area, and he would get 1 call for every 3 to 10 signs put out.
This would mean a sign to lead conversion rate or response rate between 10% and 30%.
Taking both experienced results into consideration using conservative numbers, you can expect a response rate of 10% to 13% per bandit sign, and a 2.75% sign to sales conversion rate.
According to this provider, the cost of a simple bandit sign is $4.13 per piece (quantity of 50), and $3.07 (quantity between 100-500).
Taking the first example, putting out 400 signs probably cost her $1,228.
Since she got 52 calls and 11 transactions out of it the cost per lead would have been $23.6 and the cost to generate one transaction $111.6.
Since I don’t know her exact marketing costs and further related costs (e.g. someone putting the signs up, monitoring the signs, time investment, taking the calls, etc.), I assume her total return on investment likely was 6622% (profit of $81, 323.68 divided by the costs of the signs $1228).
This is an amazing return on investment but it was probably lower because of the further costs I don’t know about.
One cost that for sure would need to be included are the fines you are likely to get from the respective city to put up bandit signs because they are illegal in most municipalities.
These fines can be between $50 to $300 per sign (source). Therefore, the term ‘bandit’ in ‘bandit sign’.
If you get caught, for example, in Philadelphia you could end up paying a fine of $75 per sign.
So this could mean a significant risk of doing business, if you are not sure that they are converting well.
With the results of our above example it would have still meant a positive return on investment, even if the total fine in Philadelphia would have been a hefty $30,000 (400 sign x $75 fee).
The profit would have gone down from $81, 323.68 to $51, 323.68 and the ROI would have been 164% (profit of $51,323.68 divided by the cost of $31, 228).
How Many Bandit Signs to Put Out
In large part, we can answer this question already from the above numbers and the information about the facts and risks.
But the number also depends a lot on your goals and how many bandit signs you can bother your local area with until they are taken down and/or you get a fine.
I would first check how high the fines are that you could get and determine from this information how much money you can risk losing in your first intent.
If the fines are $300 per sign, I wouldn’t bother doing this marketing experiment in the first place.
You don’t want to end up with a $30,000 fine without having received any calls and transactions.
The response rate and sign to sales conversion rate can help us make this decision.
Let’s say you want to test first if bandit signs give you some results in your area of choice.
You will need fewer signs if you just want to test if you get calls and more if you want to get at least one transaction.
If you want to test first if you get at least one call (lower potential fine amount) and to see if bandit signs are something suitable for your marketing mix, you would need a minimum of at least 10 bandit signs (one call divided by 10% response rate per bandit sign).
So, the money you would have to bet for your marketing test would be the cost of 10 bandit signs (approximately $50) and in the worst case a total fine of $750 (in Philadelphia), which makes it a total cost of $800.
But if you want to risk a bit more and even aim for at least one transaction from the get-go, you would need at least 36 signs to get one deal (1 divided by 2.75% sign to sales conversion rate).
The total cost for the signs would be around $180 (about $5 per piece) and the potential total fine $2700 (36 x $75), making it a total investment of $2880.
Remember though that not all fines are that low per sign (we are basically talking best case scenario).
Where to Put the Bandit Signs
Similar to digital marketing, you want to use as much traffic as possible to increase your chances of converting it into deals.
For bandit signs in the offline world, this means you would need to put them in areas where there is heavy traffic and at busy intersections.
The more area you cover with them in strategic spots, the higher your chances of converting this ‘offline traffic’, but also the higher your chances of getting fined.
If you want to use private properties, always ask the respective owner for permission.
There are also some more or less reliable tactics you can use to avoid fines, which is putting the bandit signs up only during weekends as city workers usually don’t work on those days.
An additional tactic is using only a phone number dedicated to this bandit sign campaign.
This can be done with an online phone number such as for example Google Voice, so it would be difficult for authorities to track you.
Let’s Leave You with a Balanced Opinion So You Can Make a Decision
|In terms of only the sign costs, they are not expensive.||It could potentially damage your reputation and other marketing efforts, because it’s not considered very professional.
|You can attract sellers that are motivated and want to sell fast.||It is illegal for the most part. The majority of cities prohibit putting out bandit signs and can fine you between $50 and $300 per sign.|
|You will attract sellers that prefer not to work with realtors.||They can easily be taken down by your competitors.|
|Many residents don’t like or even hate bandit signs. The ugliness for marketing purposes is a good thing (draws attention), but for the rest of the people it’s often just annoying.|
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