Go Where Others Won’t – My Direct Mail Journey

It is a terrible time to buy off of the MLS!!

I’ve put numerous offers on multiple listings with the same outcome – multiple offers.  I’m asked to submit my highest and best offer

and, in the end, the property gets bid up 10-30% over asking price.  My local market is on fire.  There is hardly any inventory and listing agents don’t even bother returning phone calls, even when I ask them to represent me so they can double-end the deal.

In my last transaction, the listing agent was representing three additional buyers – so much for that little trick, it looks like everyone else has caught on to that as well.

Next Steps:

As you may have heard on my recent interview on the BP Podcast, I believe I have another 1-3 years left before I plan to exit half of my existing portfolio.  After looking over all the data, the lack of inventory and the increased competition, I felt like I need to acquire property differently to take full advantage of the current market.  Over the past 3 years, I’ve purchased primarily from banks and the MLS.  However, now that the “deals” on the MLS are over-priced (for my business model anyway), I need to go directly to the source – the homeowner.

Starting next week, I plan to attack a set demographic of homeowners in an effort to create my own leads.  I’ve laid out my marketing campaign below:

Target:

Zip Codes:  In the sub-markets where I would like to purchase property

Equity: 30% – 100%

Owner: Absentee Owner

Sq Ft:  500-1700

Bedrooms:  2 +

Bath:  1+

Property Type:  SFH

Message:

In the first phase of the campaign, I plan to send 1,400 postcards.  I chose to go with yellow postcards primarily to keep expenses down on the front end.  I did extensive research on direct mail marketing.  This involved speaking to seasoned Realtors, talking to non-real estate related direct mailers (insurance agents, brick-and-mortar businesses, etc.) and reading several books on the topic.  I’m by no means an expert, but I believe a few of the “tweaks” I plan to implement below should result in a better response rate.

Note:  I’ve written, “Looking forward to your call” on each postcard in red ink.

Address/Name:  I’ve also incorporated mail merge into the card so that it will include the homeowner’s name as well as the address of the property I’m targeting.

Photo:  I’ve also chosen to include an “approachable” photo of yours truly.  I’m not sure if this will hurt or help my cause.  I plan to test this by sending out the same postcard without the photo and monitoring the response rate.

Informal:  The look and feel of the postcard is low quality.  I deliberately decided to send something that would stand out from the rest of the potential seller’s mail – i.e. glossy, professional, high-resolution, etc.

Saturation Strategy:

I had my printer print 1,400 postcards and adhere a stamp to each of them.  I will be writing my personalized message on each of these cards over the weekend.  Down the road, I plan to outsource this to another party, but I’ll be doing it myself for the first phase.

In the second phase, I plan to send out a letter on lined yellow paper that will reference the postcard.

The third phase will be another yellow letter referencing the previous one – in a very clever manner (details to come on this).

The fourth phase will be another postcard referencing the previous three mailers.

The fifth phase will be another postcard letting them know I will available should they decide to sell their home down the road.  They will be put on a separate mailing campaign and will be mailed twice a year.

Holes in the Plan and Areas for Improvement:

The first problem I see with my list is that it is more of a “shotgun” approach, meaning I have no real qualifying information that any of these homeowners are under distress.  I’m hoping to catch a burned out landlord, a homeowner who can’t afford to “fix-up” their home, or an owner looking to exit the property quickly.  Over the next few months, I will be working toward funneling future lists against additional criteria – code citations, fire damage, divorce and abandoned properties (while driving for dollars).  Though at this time, I feel that this campaign will be enough to get my feet wet.  I’m a big believer in the idea of “adjusting while in flight.”

I look forward to posting updates to the community – feel free to share your insights or thoughts below.