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As a real estate investor, one of the most important things you need to get right is your marketing budget. Many investors struggle to set a realistic budget that will generate leads and deals without breaking the bank.

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So how much should you actually spend on marketing? The quick answer is “it depends”. It depends on factors like your market, lead sources, profit margins, and business goals. But there are some guiding principles that can help you arrive at a sustainable marketing budget.

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Take the Yearly View

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Don’t get caught up budgeting month-to-month. Marketing results fluctuate, so you need to level it out and look at targets for the full year. Map out your overall business goals, then work backwards to determine the marketing spend needed to get there.

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For example, if you want to do 20 flips that average $30k profit this year, you’ll need enough marketing budget to generate 40+ quality leads per month. Price out your lead sources, factor in close rates, and you can calculate the marketing investment required.

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Set Minimum Budget Thresholds

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As a general rule of thumb, wholesaling companies should budget at least 25-30% of revenue for marketing, while flippers can get by with 15-20% minimums. If you’re well below those thresholds, you’re likely leaving deals on the table.

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Don’t make the rookie mistake of cutting marketing just because you had a slow month or quarter. That shotgun blast to the foot will just make future months even worse.

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Find Your Magic Marketing ROI

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Not all marketing channels are created equal. Find the ones that consistently deliver the highest ROI for your business, then pour more budget into what already works.

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For example, if you spend $2,000 on Google Ads and make $10,000 in profit, reinvest those winnings into more AdWords, not untested Facebook ads. Ride your winners until you’ve maxed out their potential.

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Save For Rainy Days

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One of the keys to a sustainable marketing budget is having a rainy day fund. When you have an unusually good month, don’t spend all that excess on your yacht fund. Sock some away so you have a 6 month cushion.

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By saving during peak periods, you can maintain marketing efforts even when times are slower. This helps smooth out the natural ups and downs of the real estate market for more consistent results.

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As with your personal finances, the key is avoiding wild swings and extremes. With some savvy budgeting, you can invest enough in marketing to profitably grow your business without needlessly burning through cash. Try these tips, track the results, and you’ll be flipping houses instead of flipping out over your marketing variance.

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