Scarce Deal Flow Chicagoland
Rental Property Investor · Chicago, IL · Member since 2017 · 268 posts · 189 votes
Out curiosity, where are my fellow Chicagoland investors sourcing deals? Inventory is well below 2019 levels and there's not a lot for sale on the MLS. My direct mail campaign has also so far been a bust(I probably need to ramp spending up).
I'm sure I'll land something eventually, but it seems few people are selling right now......
Sean, I've seen the same thing in other tight inventory markets. Chicago's got structural inventory issues right now -- people aren't selling because rates are still elevated and sellers are anchored to 2021 pricing. Direct mail is basically dead in low-inventory markets. The cost per lead is brutal when nobody's motivated to sell.
What's actually working? Off-market deal flow through bird dogs, networking, and pocket listings from agents who have investor relationships. You need to build relationships with 5-10 wholesalers or light commercial brokers in your area and give them clear criteria on what you'd buy. Second play: look for properties that have been on the market 90+ days that just got relisted. Agents drop price, and suddenly there's a deal. Also consider expanding your search radius 30-45 minutes out. Inventory gets better fast once you leave the core Cook County market.
How many off-market sources do you have actively looking for deals for you right now?
Out curiosity, where are my fellow Chicagoland investors sourcing deals? Inventory is well below 2019 levels and there's not a lot for sale on the MLS. My direct mail campaign has also so far been a bust(I probably need to ramp spending up).
I'm sure I'll land something eventually, but it seems few people are selling right now......
Sean, I've seen the same thing in other tight inventory markets. Chicago's got structural inventory issues right now -- people aren't selling because rates are still elevated and sellers are anchored to 2021 pricing. Direct mail is basically dead in low-inventory markets. The cost per lead is brutal when nobody's motivated to sell.
What's actually working? Off-market deal flow through bird dogs, networking, and pocket listings from agents who have investor relationships. You need to build relationships with 5-10 wholesalers or light commercial brokers in your area and give them clear criteria on what you'd buy. Second play: look for properties that have been on the market 90+ days that just got relisted. Agents drop price, and suddenly there's a deal. Also consider expanding your search radius 30-45 minutes out. Inventory gets better fast once you leave the core Cook County market.
How many off-market sources do you have actively looking for deals for you right now?
Sean, Chicago's been brutal for inventory. We've been operating in and around the market for years and I'll be straight -- direct mail has been dead for about 18 months here. The response rates just aren't there anymore.
What we've actually had luck with is building relationships with wholesalers and other investors who get early access to deals before they hit the MLS. That takes time to build, but once you're in a few people's networks, they think of you first when something comes across their desk. We've also had some success with off-market cold outreach -- networking at local REI clubs, courthouse steps, driving neighborhoods, and just talking to people. Not glamorous but it works.
One thing we've started doing is running ads on Facebook specifically targeting distressed homeowners in high-equity neighborhoods. Those have actually outperformed direct mail. The cost per lead is comparable but the conversion is better because you're reaching people who are actually in pain, not just fishing with mail.
Direct mail probably still works if you're willing to spend k-10k plus per month consistently, but that's a long game. How much are you spending on that campaign right now?
Sean, Chicago's been brutal for inventory. We've been operating in and around the market for years and I'll be straight -- direct mail has been dead for about 18 months here. The response rates just aren't there anymore.
What we've actually had luck with is building relationships with wholesalers and other investors who get early access to deals before they hit the MLS. That takes time to build, but once you're in a few people's networks, they think of you first when something comes across their desk. We've also had some success with off-market cold outreach -- networking at local REI clubs, courthouse steps, driving neighborhoods, and just talking to people. Not glamorous but it works.
One thing we've started doing is running ads on Facebook specifically targeting distressed homeowners in high-equity neighborhoods. Those have actually outperformed direct mail. The cost per lead is comparable but the conversion is better because you're reaching people who are actually in pain, not just fishing with mail.
Direct mail probably still works if you're willing to spend k-10k plus per month consistently, but that's a long game. How much are you spending on that campaign right now?
Bo, thank you for your responses. I use a combination of MLS and direct mail. I usually spend between $400 to $1000 a month on direct mail. Historically, until the last 6 months, I have decent luck with that in terms of responses.
Now the issue is getting enough leads to go to bat. I've started to tip-toe into the Facebook advertising to get an idea of how it works. How much do you recommend spending for Facebook advertising.
I also target 90 days or longer list on MLS.
@Sean McKee, Our company does many forms of marketing to source fix and flip deals. One major marketing source of ours is direct mail. If I could offer some advice, I would say your direct mail volume is quite low. For example, we send out at least 20,000-30,000 postcards a month. Once you get to that point, you will learn the numbers in your market. For me, depending on the mailing lists being used (I use several different lists) it takes anywhere from 3,500-7,000 postcards to capture a deal. When you run the mailing and list costs you will find that it costs you a few thousand dollars of direct mail to acquire a signed contract. Once you have those conversions calculated you can scale accordingly. I'm not familiar with your market but you will likely find that it will cost you $2,500-$5,000 in mail to convert a deal. As long as you are making at least 30-45k per deal its a no brainer.
Check out ListLab.us if you want a source of mail lists that covert!
Cheers!
@Sean McKee, Our company does many forms of marketing to source fix and flip deals. One major marketing source of ours is direct mail. If I could offer some advice, I would say your direct mail volume is quite low. For example, we send out at least 20,000-30,000 postcards a month. Once you get to that point, you will learn the numbers in your market. For me, depending on the mailing lists being used (I use several different lists) it takes anywhere from 3,500-7,000 postcards to capture a deal. When you run the mailing and list costs you will find that it costs you a few thousand dollars of direct mail to acquire a signed contract. Once you have those conversions calculated you can scale accordingly. I'm not familiar with your market but you will likely find that it will cost you $2,500-$5,000 in mail to convert a deal. As long as you are making at least 30-45k per deal its a no brainer.
Check out ListLab.us if you want a source of mail lists that covert!
Cheers!
Sound advice! Thank you. I mailed about what you said for my last deal. It’s good to have a hard figure to go off of.