Go Where Others Won’t – My Direct Mail Journey
It is a terrible time to buy off of the MLS!!
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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.
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:
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 +
Property Type: SFH
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.
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.