Follow Us on Social Media

email icon rss icon linked.in icon google plus icon twitter icon facebook icon

A Case Study: From Direct Mail to Closing (And Everything Else In-Between!)

by Chris Feltus on July 11, 2014 · 21 comments

  
A Case Study: From Direct Mail to Closing (And Everything Else In-Between!)

Case studies are on my favorite ways to learn in real estate because this is actual work in the trenches, not just some  theories you hear being discussed.

For this reason I would like to share one of my past closings, from lead generation to closing, with the BP community. I feel it would be a great way to give back and help others along on their journey.

The Dallas-Fort Worth market is notoriously competitive right now, but with the right strategies you can still find deals out there believe it or not. This particular case study will revolve around a lead that I generated through direct mail .

Lead Generation:

Every lead originates from somewhere.

In this case one of the criteria I used was out of state absentee owners with high equity within my farm area. I approximate equity by deed date 15+ years back in this case. You can find this information from your local appraisal district or various listing providers.

People often ask me what my marketing piece of choice is, and I always prefer postcards which may surprise some of you.  Some investors like to use yellow letters; however, in my own personal split tests I have found yellow letters tend to generate more calls, but the overall lead quality (seller motivation etc)  tends to be much lower than the calls I receive off post cards.

However, if you are looking to market for listings as well as a licensed realtor, it may serve you well to use yellow letters as you may be able to convert some of these prospects into listings. But that’s a discussion for another blog post. I first began mailing this lead in late October of 2013. For this particular lead I did not receive the first call until March 2014.

Many would be real estate investors give up on mailing after having a poor result on the 1 month, so keep mailing! Consistency is the key to a successful direct mail marketing campaign. You will find the longer you continue to mail without giving up the more prospects you will have to fill up your deal pipeline to keep the deals consistent. Not all leads take this long to convert, but it does happen.

The Sellers Situation:

I don’t want to get too specific here, but this case involves a mother and her son.

The mother had been living in an assisted living center and was suffering with a form of dementia. As a result the mother was capable of making sound decisions, thus her son had been granted power of attorney. When the son initially contacted me he was not all that motivated, and didn’t even want to set the appointment.

However, as time passed on, some expensive medical bills came due that they simply did not have the means to pay, thats when the son called me back the second time. The  seller was now under the gun and needed to liquidate the house fast, and had less than a month to do so.

Related: The Top 5 “Red Flags,” to Look For in Determining Motivated Sellers

Appointment:

When I go on appointments the last thing on my mind typically is the house.

At the forefront of my mind is building an excellent rapport with the sellers and trying to connect with them anyway I can. I genuinely care about their problems and will suggest the best course of action based on their situation. If a seller is better suited by a realtor and listing the house traditionally, I let them know.

Of course all this is  not to say I don’t do the normal appointment prep items like hopping on the MLS and research what’s going on in that area, or drive the comps and all the other stuff we must do as real estate investors. No, I work on building an excellent rapport first with the seller so I can earn their trust. This allows me to get properties under contract even when my offer may not be the best.

This appointment was a little more challenging. The property had been turned into a rental unit to help cover the mothers medical bills. The property also used to be the mothers  primary residence. There was a full family renting out the property now. Not only did I have to bond with the seller, but the renters as well.

I knew when I would later have to show the property to investor colleagues later as my intent was to wholesale it. And this  would be a challenge if the tenants gave me trouble. The tenants seemed to like me, but also a bit resilient since the property could be sold. Let me make it clear, they did not want to move. To make it easy as possible I took very good pictures and a walk through movie of the property while I was there on the premises.

This would make it MUCH easier to move the property later when I had it under contract.  Other investors were scheduled to take a look at the house that day as well, however the seller felt so comfortable with me he canceled the remaining appointments (see I told you that rapport building thing would come in handy).

The seller also began to reveal to me truly how dire the situation was touching on some of the details I had discussed earlier regarding her mothers living situation and the medical bills that were now due. Because the property was in an area that I was not comfortable with, I let the seller know that I did not intend to close on the house myself, but could likely find one of my colleagues to do so. The seller agreed that giving this a shot would be fine.

Making The Offer & Contract:

In this particular instance I wasn’t confident enough to make an offer at the property, although I usually do make an offer in person.

Sometimes you need some additional time to crunch the numbers. Instead I called back later that evening and made him a fair offer based on the market value of the property and the amount of repairs it needed. Since this property was tenant occupied, and I wanted as few people looking through it, I was a bit more aggressive in my pricing to make sure it would sell.

The seller took my offer well but was hoping to receive a little more for it. I continued to educate the seller on the nature of the repairs (quite extensive) and the fair market value of the house. The seller needed a day or two to think about the offer. In the mean time I submitted a PDF offer for his records via email (a nice professional touch).  A few days later the seller decided to write it up, so we met and filled out the contract.

Related: 6 Extremely Important Questions To Answer Before Making an Offer on Real Estate

Showing the Property With the Tenant in Place:

Immediately after signing the contract I began putting together my property  packet.

Although I had a 10 day option, I didn’t sit around and do nothing for a few days. From the moment the contract was executed I put myself under the gun, I became the motivated seller and started calling up a few of my colleagues as soon as the contract was executed .

Unfortunately for me, this particular property was in an area where I had fewer established buyers, but I KNEW from experience at the price I had it, it should have no problems selling.  The first night I had this one under contract was probably one of the most stressful nights I have ever experienced.  I really wanted to help the seller, I didn’t know what to do showing the property with a tenant in place and ultimately wanted to perform on the timeline they needed.

Fortunately I started getting some calls and one of them was a big investor in the area that I knew I could trust, although this was the first time I had met with him. I gave the tenant a call and scheduled another appointment to look at the property.

We both arrived at the property and I could see the tenant from the drive way, he looked very annoyed and displeased. I don’t blame him, but this process wasn’t exactly easy on me either.

We got out of our cars and started to look around.  After finishing our walk through I pulled him aside and asked what he thought.  To my surprise he wanted to buy it now on the spot and whipped out his check book giving me his nonrefundable deposit.  I only had to show the property once, thankfully.

Because I made sure the numbers worked and had great pictures and video, it really helped me package the deal together and market it efficiently and ultimately close earlier than what the seller needed on their timeline.

In Conclusion:

Always aim to create a win-win situation where the seller benefits and gets the amount of money they need and the end investor gets a great deal.  Don’t be afraid to get your hands dirty and try some new things you have not yet experienced.

What’s something new that you’ve tried that got you awesome results?

Be sure to leave your comments below!

 

Email *
  



{ 21 comments… read them below or add one }

Tom Moreau July 11, 2014 at 8:10 am

Hi Chris,
Terrific advice ! I will be using these suggestions this week.
Tom Moreau

Reply

Chris Feltus July 11, 2014 at 8:34 am

Thanks for stopping by Tom! I hope you found some good actionable items in this case study to implement in your own business.
All the best

Reply

Ignacio July 11, 2014 at 9:29 am

Hi Chris

Thanks for posting. Getting started and these cases help ALOT. Im hoping once I get going I can do the same for others.

Thanks again

Reply

Roy Schauer July 11, 2014 at 9:48 am

I agree on building the bond with the home owner. Some people are going to think its salesman tactics, which it is, but most distressed property owners are hyper sensitive and pick up on those who aren’t sincere about helping them. When you truly put their situation at the forefront of the deal, it shows and builds your credibility with them. I just recently got an offer for a property I was working with where the owner was in preforeclosure and we stopped it from being sold at the courthouse the day of the auction. Now the house will be sold, she won’t have a foreclosure on her history, she’s already in a better living arrangement (which we helped her with) and has already been working with her daughter to move forward and plans to buy a 4-Plex next year utilizing a lot of what she learned from this property to be in a better position when it comes to financing.

Reply

Chris Feltus July 11, 2014 at 10:17 am

Hey Roy, you are absolutely right. You need to have the clients best interest in mind, and truly put their needs above your own. Especially as you say with distressed properties, sellers can detect vulture investors very easily. If you genuine care about helping them, it will show and really help separate you from the crowd.

Glad you had success and helped prevent a foreclosure, and you were able to create a win-win situation for the seller. Good stuff.

Reply

David Torres July 11, 2014 at 11:24 am

Thanks for sharing Chris. I do have a question about how you meet your buyers. I did a search for investors that buy in my farm. Do you mail them letters, call them directly, visit them or use a website to contact them? Appreciate any suggestions.

Reply

Chris Feltus July 11, 2014 at 2:54 pm

I wouldn’t waste marketing dollars to find buyers personally. You only need a few buyers, get the deals and buyers will follow.

Reply

Pei Pei Siau-Cronin July 11, 2014 at 1:49 pm

Hi Chris, thank you for your post.
There are a few points that I don’t quite understand and would appreciate if you could elaborate further :
1) is this a wholesale deal?
2) “… I became the motivated seller and started calling up a few of my colleagues as soon as
the contract was executed…”
Who are your COLLEAGUES?
3) “…Fortunately I started getting some calls and one of them was a big investor in the area
that I knew I could trust…”
Is the BIG INVESTOR a flipper or buy-and-hold investor?

Thank you for your time to read through my questions.

Pei Pei Siau-Cronin

Reply

Chris Feltus July 11, 2014 at 2:54 pm

No problem, glad you found it insightful. Yes this was a wholesale deal. Colleagues are through the years from friends to people I met at REI groups and bigger pockets members. Big Investor in question is a big local player in this market, its not a hedge fund or anything like that but he owns quite a few buy and holds in the area.

Reply

Pei Pei Siau-Cronin July 11, 2014 at 2:58 pm

Chris, thank you so much for your speedy reply. Learned so much from you!

Reply

Byron July 13, 2014 at 9:19 am

Chris, do you mind me asking how many postcards you normally mail per week/month to get your deals?

Reply

William Vaquerano July 13, 2014 at 9:23 am

Great article! Thanks for sharing Chris!

Reply

Chris Feltus July 15, 2014 at 7:33 am

Hey William, thanks for the nice comments, and thanks for reading!

Reply

Bill July 14, 2014 at 4:13 am

Chris,
Thanks for putting your experience in words!
Bill

Reply

Chris Feltus July 15, 2014 at 7:34 am

You’re welcome Bill. I hope you found some actionable tips within this post. Thanks for stopping by!

Reply

Pyrrha Rivers July 14, 2014 at 7:23 am

Hi Chris,
! It comes right on time for me as I nervously prepare to contact two absentee owners in my farm area. I found the first vacant house when visiting a friend and because of what I have learned in Bp did not look at the house three doors down as an unpleasant site because of the overgrown grass and overflowing mailbox but I saw it as a possible opportunity. I asked my friend about it and she told me the owner LOST the house and moved about a year ago.
I immediately got on the county web site and found that the person who bought the house in 2008 is still the owner on record. There is not new mailing address but I’m hoping her mail is being forwarded since the taxes are current. I decided to send her a letter but having never done this…didn’t know what to say or how often to mail her. My friend told me of another vacant home around the corner, I researched it and found the owner’s name and address so I will mail both owners.
As far as my strategy. Your case study helped me decide to send them a letter and follow with monthly post cards. My county just instituted a vacant property owners registry which I believe will motivate absentee owners to sell as fines will be imposed more readily for code violations.
I wrote my letters highlighting this fact in case the absentee owners are not aware or as a reminder if they are. That’s why I will send a letter first in an effort to protect their privacy.
Can you tell me about your post cards? What to say? Where to get them?
Thanks again for your post which gave me encouragement and actionable steps.
Any additional advise you can offer for my plan is greatly appreciated.
Thanks!

Pyrrha

Reply

Chris Feltus July 15, 2014 at 7:51 am

A vacant properties registry sounds like an excellent tool, I wish we would adopt something like that here in North Texas! I get my postcards from postcardmania, but I order in large bulk quantities so I get a fairly large discount. The postcard doesn’t have to be fancy just talk briefly about you or your company, and how you might be able to help them. For example you buy houses as is for a discounted cash sale, no need to make repairs, problem tenants, delinquent taxes etc.

Reply

Tom Moreau July 14, 2014 at 1:33 pm

Chris,
This aspect of R.E. farming is very new to me and I have a few questions.
While looking at probate lists, statistically it is heavy with the listings of male surviving spouses. At first I was just looking at the surviving female spouses because the odds are that they are the surviving owner of the home. Wouldn’t it make sense to contact either of the survivors, if any, because the survivor may want to downsize?
What is the lower price point at which you would not bid on a home?
Tom Moreau

Reply

Chris Feltus July 15, 2014 at 7:36 am

Tom, you’re making it too complicated. I either send mail directly to the vacant house itself and or the executor. The price point depends on your needs entirely. What works for me here in Dallas Texas may not work for you wherever you are located. You can make money in any area at the right price no matter your exit strategy (flip, wholesale etc.)

Reply

Tom Moreau July 15, 2014 at 7:46 am

Chris,
Good suggestion.
I can see that my previous approach would be limiting…
Tom Moreau

Reply

Ronnie Sparrow August 2, 2014 at 12:17 pm

Chris, thanks for sharing your experience. Every time i visit with a seller I learn something new. I really do make a conscious effort to try and listen to what they are telling me. My goal is to always build a rapport and find a connection some where, only then will I start to walk the property with the seller. I have been a registered nurse for the last 25 years and I use that to my advantage. Most if the time I have no problem finding a connection by using my experience in the the health care field. Most of the seller I talk to are over 50yrs. old and I am able to find some kind of connection between my health care experience and their current health situation. If that does not work then I look for some other kind of connection.

Reply

Leave a Comment

Comment Policy:

• Use your real name and only your name in the field designated for your name.
• No keywords allowed as anchor text in the name or comment fields.
• No signature links allowed under your comments
• You may use links in the body of your comment, but it must be relevant to the discussion at hand, and not merely be some promotional link.
• We will have NO reservations about deleting your content if we feel you are posting merely to get a link without adding value to our discussion.
If you add value, but still post keywords, we'll use your comment, but remove your link and keywords.
• For more information about acceptable practice, see our site rules.

Want your photo to appear next to your comments? Set up your Gravatar today.

Previous post:

Next post: