Direct Mail to source multifamily deals

18 Replies

Have any of you used DM to source deals? I'm planning to target a list of ~700 multifamily owners once a month for six months and I have a few questions.

1. I'm not sure on postcards vs. direct mail - do you know which has better response rates? I feel like postcards are great because you see the message immediately. I personally throw away envelopes when I know it's marketing that isn't relevant to me and I don't want to risk that with my campaign. 

2. Do you have tips on what kind of verbiage to use? What I'm thinking so far is very generic:

"Hello XXXXXXXXXX, We are actively seeking B and C class multifamily properties. If you or your colleagues are interested in selling a property directly to an experienced investor group, please let us know."

3. How can I incorporate skip tracing into my campaign? Should I skip trace the entire list as soon as I get it or only skip trace returned mail?

Thanks a lot! 

Hey @Chihiro Kurokawa ,

I have done some direct mailing to multifamily owners. The response rate was far lower than when I do my normal SF wholesale marketing. But for the ones that did call, I got into active negotiations on most of them. 

Last Thursday I closed on a 52 unit property that came from DM. 

I’d love to give you some insight on what I did. Granted, it’s not too scientific or tested, but it worked...

I have only done letters, so I can’t compare to postcards yet. 

My verbiage is very simple and simila to what you said. These are typically sophisticated investors, if they’re in a place to sell, they’ll call. If they’re not, any verbiage used can get calls, but probably wasting everyone’s time. My opinion only!

Personally I do skip tracing after, but I suppose it depends on your list size. 

I've been mailing to long time (over 15 years) MF owners for 2 years. 

Got 4 responses in total. All negative. 

Last two were in response to my latest round of letters that contained actual LOIs instead of a vague "I will buy your property".

It seems an LOI is taken a lot more seriously to the point of an angry owner lecturing me on how much more his property is worth :-).

I've done it with some success for the smaller deals.  You've got to be consistent with it and need to commit to repetitiion.  Prospect now is good in terms of data.  As deal sizes increased success rates with direct mail decreased.  If/ when the market changes, it should be more effective.  

Try to be as specific as possible to trigger a response.  Generic is easily discarded.  Hand writing a portion or noting something about the neighborhood and your familiarity with it is good.

I'm in the process of start DM targeting small (5 to 50) apartment buildings with equity and long time (>10 years) ownership. I looked at some sample data from listsource and data quality seems not very reliable. I used "number of unit" to find apartment building. 

I'd echo previous comment that response from owners of larger apartment building owners are very low. For larger deals, you need to have strong relations with brokers specialized in apartment buildings. 

I did a yellow postcard direct mail campaign over the last six months of 2017 - 600+ pieces of mail every three weeks, 8 mailings total. I was targeting properties of 60+ units.... I got ONE call (from an owner of a 2016 build... great).

After absolutely no success in the larger space I began targeting a new market this year with a direct mail campaign focused on 8-60 unit properties, 30-100% equity (or unknown). My first mailing was 1,000 letters and I got ~8 phone calls. Same thing with the second mailing. The smaller space seems to have wayyy more success with direct mail. My third mailing went out last Friday.

As far as verbiage, my letters read very similar to yours with a mention of having "the experience and the funds to close".

A few things to note...

1. I like to include a return address on the first mailing so I can get rid of bad addresses and not waste money continuing to mail them.

2. Watch out for condo owners. I pulled my list from listsource.com and got a handful of calls from condo owners totally clueless about why they received a postcard from me (luckily, only one called me crazy!). Make sure to delete any addresses with a matching Owner and Property address. Sounds obvious, but it was something I missed.

Hi @Nick B. , I think I recognize you from some meetup events in DFW. I'll have to introduce myself next time I see you!  That's good to know that you were taken seriously, although the response is not ideal. Perhaps it's just a matter of time. 

@Josh E. Are you able to provide specifics with regard to deal size? I.e. you had success with assets up to X units. Do you think that 6 mailings over 6 months is long enough? Also, I'm not sure how much more specific I can get than "I want to buy your property." Do you reference the property name? If so, I'm wondering if ListSource or Prospect Now provide that data. I'm definitely not going to look up property names given the number of owners I'm planning to contact. 

Thank you @Chase Keller , I DM'd you. Congratulations on your recent close! 

I would echo prior comments. We originally included duplexes and triplexes, plus 4-19 units. We then moved on to only 4 and up and the response rate dropped significantly. That being said we have purchased 49 units via direct mail (one 4 unit and a multi building 45 unit). The 45 unit deal was the third time they had received something from us. Recently did a very targeted mailing of around 100 and have had 3 responses from people who had no interest in selling. It takes patience and persistence.

This may be a silly question, but I am new to the DM process and excited to jump in. Does it make sense to contact owners in a hot market? Aren't they bombarded with these letters/postcards all the time? Or is it that in a hot market this is the only way since each half decent MLS deal have 5 offers within the first hour of posting?

Richelle

@Richelle Bryan , yes, all owners are receiving calls and letters almost daily. That's what those few I could speak with told me anyway. 

The "trick" is two fold: 1) your letter has to stand out and attract attention somehow; and 2) your message has to reach them at the live-changing moment (e.g., divorce, death, bankruptcy, etc.). At that point they may be more motivated to sell and care less about the highest price they can get. 

Originally posted by @Nick B. :

@Richelle Bryan, yes, all owners are receiving calls and letters almost daily. That's what those few I could speak with told me anyway. 

The "trick" is two fold: 1) your letter has to stand out and attract attention somehow; and 2) your message has to reach them at the live-changing moment (e.g., divorce, death, bankruptcy, etc.). At that point they may be more motivated to sell and care less about the highest price they can get. 

 I see thanks Nik! This helps a lot.

Originally posted by @Adam Kessler :

I did a yellow postcard direct mail campaign over the last six months of 2017 - 600+ pieces of mail every three weeks, 8 mailings total. I was targeting properties of 60+ units.... I got ONE call (from an owner of a 2016 build... great).

After absolutely no success in the larger space I began targeting a new market this year with a direct mail campaign focused on 8-60 unit properties, 30-100% equity (or unknown). My first mailing was 1,000 letters and I got ~8 phone calls. Same thing with the second mailing. The smaller space seems to have wayyy more success with direct mail. My third mailing went out last Friday.

As far as verbiage, my letters read very similar to yours with a mention of having "the experience and the funds to close".

A few things to note...

1. I like to include a return address on the first mailing so I can get rid of bad addresses and not waste money continuing to mail them.

2. Watch out for condo owners. I pulled my list from listsource.com and got a handful of calls from condo owners totally clueless about why they received a postcard from me (luckily, only one called me crazy!). Make sure to delete any addresses with a matching Owner and Property address. Sounds obvious, but it was something I missed.

I am nowhere near that level  (yet!) but my question is how do people get the 60+ properties then? I know it's still competitive at that level but there has to be way less buyers than those buying sfhs, duplexes etc?

Originally posted by @Richelle Bryan :
I am nowhere near that level  (yet!) but my question is how do people get the 60+ properties then? I know it's still competitive at that level but there has to be way less buyers than those buying sfhs, duplexes etc?

Owners of 60+ unit MFH are generally more sophisticated. A lot of them are syndicators/funds/corporations, etc, so they know their best bet for getting the most in their sale is through a selling broker. That's not always the case but generally it is, so your best bet for getting larger MFH is through a commercial broker that specializes in MFH. And yes, obviously way less buyers than SFH but also way less inventory so the competition is still very fierce.

@Richelle Bryan

@Michael Le said it perfectly. I do not own any large multifamily (yet), but I was working with an established syndicator on finding these deals. From being on BP for a while, it feels like there was a time when direct mail could have worked on some of these larger deals. Based on my own experience and the experience of others shared here, in today's market it's a far less successful sourcing channel than commercial brokers.

Originally posted by @Adam Kessler :

@Richelle Bryan

@Michael Le said it perfectly. I do not own any large multifamily (yet), but I was working with an established syndicator on finding these deals. From being on BP for a while, it feels like there was a time when direct mail could have worked on some of these larger deals. Based on my own experience and the experience of others shared here, in today's market it's a far less successful sourcing channel than commercial brokers.

 Got it, thanks Adam!

Originally posted by @Michael Le :
Originally posted by @Richelle Bryan:
I am nowhere near that level  (yet!) but my question is how do people get the 60+ properties then? I know it's still competitive at that level but there has to be way less buyers than those buying sfhs, duplexes etc?

Owners of 60+ unit MFH are generally more sophisticated. A lot of them are syndicators/funds/corporations, etc, so they know their best bet for getting the most in their sale is through a selling broker. That's not always the case but generally it is, so your best bet for getting larger MFH is through a commercial broker that specializes in MFH. And yes, obviously way less buyers than SFH but also way less inventory so the competition is still very fierce.

 Great to know thanks so much Michael!!

@Chihiro Kurokawa sub 50 units I had the most traction.  I think spreading them out over a longer period of time may be more effective than 6 in 6 months - others may disagree.  

I would reference address.  Name will be time consuming to track down - agreed.

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