Direct mail 1 year later
Hi all, this is my first post on BP. I've been a long time lurker and my new year's resolution was to start posting on BP and actively participating in the discussion.
By way of an introduction, while new here on BP I've been an investor since 2009, and since then I've had the change my real estate strategies three times including: short sale buy/sell to short sale rehab to buying directly from sellers and rehabbing and finally wholesaling from sellers. I guess I've completed about 45 total deals in the past 4 plus years.
Since I wanted to make a contribution to BP community, I thought rather than have my first post be a fast intro I'd jump right into it, starting with one of the most favorite topics - Direct mail.
It was just over a year ago when I began to realize that the short sale business was beginning to dry up (meaning it was less investor friendly and there were now many bidders for properties where before I had been the sole bidder). So I decided to shift my strategy to dealing with sellers directly instead of with realtors (where I had been finding most of my deals). I started sending out DM and added websites to capture leads.
Now I'm in a very hot market here in South Florida, so my results are going differ greatly from other markets (except for maybe San Antonio and So Cal).
I'd also like to post my DM results for the past year here, but being new (and not 12 years only) I can't figure it out. Maybe someone has some suggestion on how I can post it and I'll be happy to show you the evolution.
So without the benefit of showing you the evolution of my mailing over time with number of letters mailed, response rates and closed deals, suffice it to say since Jan 2013, our response rates have been dropping consistently and our piece sent have increase substantially. I went from a response rate of almost 10% in Jan 2013 with 634 letter sent and two closed deals to where we are today, which is increasing our budget to 2500 letters monthly and a response rate of about 3% and only two closed deal in the past 6 months (though our increase in mailing mainly took place recently in Nov 2013). Since November, we've employed the DM campaign method with repeat letters (variable content of course) to the same list over a six month period. Up till then, we had been mailing once to an absentee owner. We'll see how this campaign method pans out.
As for that one year performance, it'd be much easier to show everyone the spreadsheet, so if someone can let me know how to post an excel file, I'd be happy to. I guess the upshot of this post is to affirm the advice of Jerry Puckett and Michael Quarles. If you don't have a funds to do this consistently over time and expect results from your first mailing, you're wasting you money. I've spent about $18,000 in DM this year with 6 closed deals (the lightest of all my years) resulting in about $80k in net. Not what I was expecting.
In my opinion, while DM to absentee owns is the right strategy, it's also one for those with deep enough pockets to out-mail the next guy or those able to strategically target a list of motivated sellers, at least in my market.
DM will always be part of my marketing, but it needs to evolve like other parts of my business. You need to be capable of changing gears from time to time. Maybe that time is now.