Posted over 5 years ago

Building Your Direct Mail Marketing Machine

 Building a Marketing Machine... essential to developing a wholesaling business. Pretty common knowledge right? But I'm starting to see a new dynamic. Lately it would seem that the MLS has dried up for deals in certain areas. That means that your average Investor, Rehabber type is having to look elsewhere for deals.

This last year I have partnered with several investors who were foresighted enough to see the wisdom in marketing for their own deals. For a fraction of what it may cost them in terms of Agent commissions or wholesalers fees for just one deal, they can hire me to run a marketing campaign that could net them multiple deals. That means that in the end, a successful campaign will pay for itself and then some.

Great news for the investor, and even better news for me as it allows me to reach out and touch territories all over the map.

The other day as I was writing an email getting ready to initialize another out of state campaign, it occurred to me that what I was writing was pretty good stuff, and may benefit others who would like to build their own machine. So I will post that letter here. Maybe run a series "How to Market Like a Wholesaler"

Lists, Niches, and Casting Your Net...

I'm going to dive right in to my topic of criteria. All of us who do direct mail wish that our letters hit only highly motivated sellers. Then we could save a ton of money and do more deals. Unfortunately, we can only make some educated guesses about folks that might be highly motivated. There are "niche" markets like divorce, job loss, bankruptcy. You could add to that probate, inherited properties, job transfers, mortgage lates, code violators, and tax liens. People in all of these situations are likely to have more motivation than your average joe to sell their homes at a discount.

The reason these are known as niches is because obtaining lists of such people is not easy. All of it is public information, but who is going to aggregate that info in a usable form? I build my probate list manually from the county website. Takes me hours every week. I used to pay a VA to do it for me. When I take her pay and divide by the number of leads she was getting, I was paying something like 4 dollars a lead. That's not too bad in the scheme of things....if you KNOW you're going to get a deal. But shelling out $400 plus postage for 100 letters each week can eat up your working capital quick, and no guarantee of a deal.

It's the same with the other niches, with the possible exception of mortgage lates (also known as 30, 60, 90 day or NOD, notice of default). Some of the standard list brokers sell those. In Texas, the laws are such that the only warning given of foreclosure happens exactly 28 days before auction, which allows no time to effectively work pre-foreclosure lists. It may be different where you're at, you'll have to check.

So what do we do? We either set up systems to mine the data for the niches, or we fall back to more common ground. There are 2 other types of lists that are much easier to get and far less expensive. Equity Owners and Absentee Owners (Out of Area Owners or OOA).

Equity Owners are very simply Owner Occupants who have a lot (50% or more) of equity in their homes. Most have lived in their homes for many years and have paid down their notes. This group of people are a viable list because they have the ability to give a large enough discount that you can wholesale the property. They would be trading you their equity in return for an easy sale, a quick sale, or to avoid deferred maintenance. The majority of the people on this list are best served by, and will go on to list their homes. But if you cast your net out wide enough, you will come across the ones in distress who need a different solution.

Out of Area Owners own a property, but don't live there. For the money, this is far and away the best list to work. A wide enough net here catches frustrated or burnt out land lords, heirs with no use for the (headache) property, and people in trouble paying 2 mortgages. This is the list that gets my phone ringing off the hook, and it's quite easy and inexpensive to obtain through the major list brokers. Usually about .25 cents per name.

If you decide to take this route, don't be half assed about it, or you'll just end up pissing your money away. You have to be persistent and consistent to get the results you want. Start with a quality list. You need to have a decent sized net, but not so big you lose control. Start with 1000 or so. Break the list into either 3 groups of 333, or 2 groups of 500 if you're pretty confident in your phone skills. Mail one group out per week. If 3 groups, mail a group per week for 3 weeks, skip a week, and start over. (obviously if 2 groups wait 2 weeks between cycles). While you will get calls right off the bat, you'll find that you get your best results after multiple mailings. I would stick to a format that goes letter letter postcard postcard, repeat.

One fellow I do marketing for went through 3 cycles over the course of Spring and summer. He spent nearly 3k on the campaign. While he got lots of calls initially, none of them really matured into deals (just a side note here: he learned valuable lessons from all the time he spent on the phone with these people. Really honed his negotiating skills). After the second and third round with no deal, he was getting a little discouraged. But I convinced him to do one more round, and I believe he did it more out of a sense of loyalty to me than belief it would yield fruit.

But guess what? On the verge of quitting, the machine we had built suddenly spit out 3 deals all at once. I've seen that happen many times before, and it seems to always work the same: build the machine, fine tune the machine, build momentum, and eventually the machine does what it's supposed to do. In fact, we finished the campaign in late summer, and he just got 2 more deals: one was a residual (new call from older campaign) and one was a follow up on a call that came in months ago. Their circumstances changed and they became more motivated.

His 3k investment generated nearly 500k (yup, that's right, nearly one half MILLION dollars) gross spread. Had he picked up these same deals through a wholesaler, he'd probably have spent closer to 50k. No chance an Agent could have got them, the properties never hit the MLS. Conversely, had he chosen to wholesale these deals rather than rehab them, he certainly could have earned 50k handily.

If you want to succeed in wholesaling, you'll have to market like a maniac. And that's where I come in. I can help you build and fine tune that machine. From the list, to the letters, to lead capture; from the call to the contract.

Comments (17)

  1. Tiny 1457243107 avatar adamp25

    Hey @Jerry Puckett

    Thanks for the insight. You've got to love the residual value you're getting out of this post. Could you tell me, how/where can I get a list for high-equity owners and inheritors? My list provider doesn't offer either of those. I've also asked title reps from 3 major companies for high-equity, but they can only see the mortgage amount, beneficiary, and inception date. Thanks again! 

    1. Tiny 1399436120 avatar ejpuck

      Hi Adam,

      Thanks for your comments. Yes, I do still get quite a bit of residual traffic from my blog and forum posts. But the idea was to build resources my clients could use as well as attracting new ones. BP just happens to be the perfect vehicle, and I drank the kool aid here a long time ago :-)

      You can get high equity lists from listsource. Or for about the same price you can get them from me without having to scale that learning curve and learning which filters, how to use the interface, etc. 

      Inheritance lists, there's really no better source than U.S. Leads List. When you talk to Lance, tell him I sent you. I've done mail for more than a dozen of his clients with good success.

  2. Tiny 1427819960 avatar jamesgr

    I'm going back through my previous campaigns of no calls to resend out marketing to.

    Thanks for the kick in the pants.

  3. Tiny 1411004506 avatar llopez023

    Thank you Jerry. I'm glad I came across this post today. It was perfect timing since I sent out my first 300 letters (of 1000) a week and a half ago and no calls. This really helps both my strategy and expectations. Look forward to seeing more from you.

  4. Tiny 1399700075 avatar jodirivers

    Jerry, your post has been so helpful and informative.  Just the direction I needed!   

  5. Tiny 1404361848 avatar drewebb

    Excellent read Jerry!!

  6. Tiny 1399654244 avatar padreag

    Thanks Jerry. As I read your post on wholesaling I become more educated and empowered. This is great intelligence.

  7. Tiny 1504722765 avatar randonbowerman

    Great article Jerry!

  8. Tiny 1520736114 avatar relljones

    Really good and helpful Blog Jerry, very informative.

    1. Tiny 1399436120 avatar ejpuck

      Thanks Darrell. BP has given me so much it's a pleasure to give back.

  9. Tiny 1450042724 avatar bobewoldt

    Jerry, I'm going back and reading your posts, and you have some really good ones on direct marketing. I'm clipping them into Evernote for future reference when I get my own marketing going...

  10. Tiny 1399649906 avatar rejdave

    Thanks Jerry. I've been reading some of your stuff throughout the day. This article is very helpful. The biggest thing for me that I keep hearing is that I need to be persistent in my campaigns. I'm starting today on my second letter for non owner occupied properties. Letter, letter. postcard, postcard! Time to get to work. Funniest thing happened today. I received a yellow letter from someone wanting to buy my rental. Just another reminder of what I need to be doing. Thanks.

  11. No avatar

    I loved this article! Very directive, and detailed. I will definitely study it, and put is in to practice.

  12. No avatar

    I have another area I'd like to explore, I have the list what I need is a program and letter content. Your welcome to contact me via email

  13. Tiny 1496431002 avatar gparker

    Nice article Jerry. I find it so interesting with my marketing how I can go 3 months with nothing then 3 deals. Part of issue in my area is that investors are bidding up the prices and deals are getting skinnier. It is not uncommon for me to show up at the property with 4 other investors at the same time. This is not for all categories I market to but some yes. I like deals with decent spread so I am patient.

    1. Tiny 1399436120 avatar ejpuck

      And patience is at least half the battle. It's down right hard to stay persistent and consistent with your marketing when nothing is coming in. That's the mark of someone who is seasoned. From reading your posts, I have no doubt about your skills and experience.

    2. Tiny 1442371879 avatar ggk1

      If you don't mind sharing, what categories would you say you are most consistently "beating the crowd" to?