HELP Discouraged flipper with dismal direct mail campaign results
I recently started a house flipping business (although I'm not sure how good of a business it is since I have yet to flip my first house). After researching for I can't tell you how many years and after what seemed like a decade of analysis paralysis, I am finally taking action.
On 2/15/2017 I sent out the first batch of white, typed letters. I sent 370 letters. Turns out I misspelled my website and screwed up the return label, but did end up getting a few calls. Each week thereafter I sent another batch until the fifth week when I sent the first list again. I eliminated anyone who bought 2016/2017.
List 1 was simply my neighborhood. I figured if a deal was going to happen in my own immediate neighborhood it should be me that knows about it before anyone else. Like all my lists, I pulled the list of names and addresses from the title office.
List 2 was a list of Tax Delinquent homes in areas I wanted to buy. 361 names in all.
List 3 was a combined list of probate and homes that had a Notice of Default filed (I live in CA). 93 combine here.
List 4 was a specific neighborhood I wanted to target. It has no HOA, was built in the 1970's, is in the $600-700k starter range (I live in OC), and is a place I feel has long-term value. 272 homes here.
Since I didn't get list one mailer one back, I have no data, but I do know I had a 4.71% return rate (insufficient address and the like) on list 2, 9.68% rate on list 3 and 1.84% rate on list 4 during the first mailing. The next mailing to the same addresses provided 1.36% return rate on list 1, 2.10% on list 2, 4.3% on list 3 and 0% on list 4 (I corrected each mailer as it came back and before I sent out the next batch). This is returned mail rate, not response rate.
As far as response rates, I received most calls during the first mailer (contrary to what I have read). List 1 generated 12 total calls among all the mailers for 3.3% response rate. List 2 got me a 3.4% response rate. List 3 I received zero calls, and list 4 got me one call at 0.4% response rate.
List 2 was the only one that got me an actual lead. I submitted a verbal offer and was rejected immediately for being too low. Most calls I got back were, "Who are you? Is this a scam? Why would I want to sell? Don't send me anything else? etc." Each letter costs $0.59 each including postage since I printed everything at home ($0.01 for paper, $0.05 for ink, $0.06 for envelopes, $0.01 for labels, $0.47 for postage from Costco).
I wanted to find a way to do more so I bought 5,000 postcards on VistaPrint and sent my first batch out 4/3 (to list 1), 4/7 (to list 2) and will send list 3 & 4 tomorrow (4/12). So far I've not gotten one singe call from the postcard which surprises me. The letter phone calls came mostly 1-2 days directly after mailing. Postcards cost me $0.37 each with postage ($0.03 for the postcard, $0.00 for ink, $0.01 for labels, $0.34 for postage from Costco).
This brings me to today. I am finding a declining response rate with each supplemental letter I send. I'm told after 5-6 letters is when you get most responses, and I'm resolved to complete 5 letters/postcards before I call it quits, but I'm currently feeling very discouraged. The first two mailings were letters, the next two were/are going to be postcards, then I'm going to finish with a letter.
I have already found my next list of people I want to target. I think I've been doing it wrong in the sense of hitting entire neighborhoods. This next list is a list of 2,300 absentee owners in the 4-5 cities I want to buy in with houses below the $8-900k price I want to stay below.
My problem is two fold. ONE: I am discouraged from the dismal results from the few thousand I already spent. I'm questioning the success of direct mail altogether. Perhaps my Orange County, CA market is too saturated and there are no deals left to be had? TWO: I don't know if I have it in me to commit to the thousands a proper 2,300 absentee owner list will require of me. I'm already kind of all in and although I could cough up the money for this second list, it would pretty much drain my funds that I've earmarked towards this venture rendering my real estate flipping dreams dead.
Thoughts/Words of Encouragement/Ideas?
#WhatTheHeckHaveIGottenMyselfInto