Find a rental property through direct mail

6 Replies

I would like to hear your thoughts, experiences, and stories!

So here is what I want: buy 1 rental property in 2015.

And here is the strategy: direct mail to single-family homes near my own home. I want to come across as "the guy next door" that you can trust will give you a fair deal. The actual dollar-amount I offer will never be retail price, but I want to put out an image of a trustworthy guy. I'll send out the mail in late January through early March (winter), when prices are generally lower for the year.

Here is my target market: any 3+ bed/2+ bath SFH within 5 miles of my home with 50% or more equity. Basically, this means family residences with owners that have been there awhile. To me, this proves the house is worth enough that a family would stay awhile - ultimately, that's what I want my renter's to do. According to listsource, there are about 5000 of these homes.

Here is the letter content:

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Hi Mr. and Mrs. Johnson,

I would like to buy your house. You might be having troubles with repairs, the bank, taxes, attorneys, or anything else. I’m here to listen and help work out a deal for you. And, if we work together, you can avoid the 3% buyer’s agent and 3% seller’s agent fees.

My current home is actually right around the corner in [condo community] on [street name] Street. You can tell I like the area, and I’m looking for a rental property nearby. I have two options. I could either stay in my condo and rent out your house, or do the opposite and move into your house and rent out the condo. I’m still deciding, and your house looks great either way.

If you’re interested, please give me a call on my cell at [cell number] or an email at [email address]. I hope to talk to you soon!

Sincerely,
Matthew Trotter

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What do you think?

@Matthew Trotter  I'm no expert copywriter so take this for what its worth...you can ditch the whole second paragraph. There's no need to give out so much personal information, and they don't care whether you plan on moving or not, it doesn't effect them at all.

You seem to be clear about the type of property you want. But I think you need to do some more thinking about the type of deal you want, and why you want to buy direct.

For example, I buy direct because the type of deals I go for leave no room to pay an agent (and the commission is definitely not coming out of my pocket!)

What are the deals I go for? Well I buy for the loan balance. So the seller needs to be in a position (financial or emotional) that all they care about is getting rid of their payment. Their loan also has to have good enough terms for it to be worth it for me to take over.

So you might want to think about those things. Do you want to buy direct so that you can buy for less than the house is worth? How much less? Do you want to do work on the house? How much? Things like that.

5,000 is a lot of mailings. Did you do any equity or length of ownership slicing? Mailing one and done is probably not the best way to get a great deal. You should focus your list to people who can "afford" to sell at 50%. 

what discount are you looking to get? I wrote some handwritten letters and a lot of people called thinking I really wanted there house because it was special.  A few wanted above market thinking I'm some sucker...I probably could have gotten one or two 10% below market but I want to do better than that. To get a %30 discount you really need to find someone motivated to sell and I'm starting to think it doesn't really matter what the letter says exactly. You will definitely get a lot of phone calls telling you anything is for sale for the right price. Good practice but also a waste of time after a few conversations. I've sent out about 450 letters and have had about 20 calls and only one motivated seller. Good luck. 

@Doug Pretorius  that is helpful. I am going direct to get a better deal by bypassing agent fees and possibly finding someone in need. I never thought about targeting a specific need (mortgage too much vs. repairs too costly vs. late on taxes, etc.). Now that I think about it, I only have the time and tools to do minor repairs ($10k max, just to put a number on it). I recently bought my home and did $3k worth of work, and I felt I could do a little more without getting frustrated. I'll have to think about the specific need to target, but I'm leaning towards paying off their financial debts (mortgage, taxes) rather than taking over a fixer-upper. How would you update your list criteria to focus on that? 

@Bill S.  I haven't drilled down the list yet. I'm working on that. Yeah 5000 is way too much at once.

@Mike Landry  that's a great return rate at about 4.4%, but I want to come across as someone who can help but is also not a fool.

@Matthew Trotter  

Time for some constructive criticism.

Instead of putting out the "image" of being trustworthy, why not just "be" trustworthy?

Your letter needs work.  People are not going to sell your their home below market value because you are the nice guy next door.  As mentioned by @Doug Pretorius  these same people do not care about where you plan on residing.  You need to find the cause of their pain and then build trust with them so that you can offer them a reasonable solution.  This means that you are almost certainly NOT going to get a deal on one mailing.  IMO, this is a lot of time, energy and money just to buy a single off-market rental property.  

I think you would be better served running numbers and making offers on listed properties.  The commission you will pay will likely end up being less than the money you are shelling out to buy a list with 5k names and produce mail for that list (even once).  

Originally posted by @Jeremy T.:

I think you would be better served running numbers and making offers on listed properties.  The commission you will pay will likely end up being less than the money you are shelling out to buy a list with 5k names and produce mail for that list (even once).  

 That was my thought as well. There's nothing wrong with using an agent to buy a rental that you plan on holding for the long term. The commission is not really an issue in that scenario. It's not hard to find someone with a listed property to take 10% or so below market value.

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