Marketing is Expensive!

28 Replies

Holy crap! Marketing is expensive! I went to listsource.com to build my list and had 10,000 people or so on it. I filtered the duplicates and only had names where the mailing and property addresses were whole. Further I filtered out corporations and only had absentee owners with more than 50% equity. 10,000 names is a huge expense.

Then I went to yellowletters.com and saw the mailing costs were about 4x the list cost.

It's clear I need to have a better targeted list to keep my costs low as I'm just starting out. What would you suggest? Should I narrow my search area (removing zip codes) or should I narrow the amount I take from each (say a percentage of names from each)?

Other demographic filters you can think of?

Thanks for the help.

@Joshua Durrin   Wonderful real life post!  Yes, it is possible to spend any amount of money on marketing. When budget is a concern, it is a good idea to take a deep breath and think about the scale and scope of your campaigns.  It is ok to start with less than 10,000 or even less than 50 names on a list. Quality over quantity usually wins. 

Sorting through a list that you purchased is a good idea. The reason to do this is to improve the quality of the list. Have you considered building your own list?  What and where is your target market?  If 1,000 real deals resulted from your proposed massive marketing effort, would you be able to handle them all at once?  This may sound silly, but it is worth taking time to define exactly what you want and expect to get from your efforts. 

It is important to buy all you want, but equally important to use all you buy.  Real estate is a solid industry that will continue as long as people have need of houses and other buildings.  There is no need to rush implementing a marketing system that will work for you within your budget.

Yellow letter marketing is one of the best ways to connect with potential sellers. The rate of response is very high when measured against other direct mail vehicles. One of the reasons Yellow Letter marketing works so well is because it is designed to be used in the form of a personal letter, hand written to a homeowner, delivered via "snail"mail.  It is almost unusual for people to receive hand written letters in the mail and that is the main reason they get opened, read and responded to so often. 

I started my investment business with yellow letter marketing and got a deal from the first 20 letters I sent out. The list I used was one I created from driving the neighborhood and writing down addresses of property that looked less than well maintained.  In a nutshell, that is one way of creating a great list on a small budget.  There are a lot more details underlying this process, but that is best saved for another post. 

I am happy to share what I know. Feel free to get in touch.  The spirit of helping fellow investors is what BP is all about and I am all in!  Hope this helps. 

@Joshua Durrin  ,

I generally recommend people starting out to stay close to the 1000 letter a month mark if their budget can handle it. There are many reasons why, but an important part of it is that I find that is about the most one man working alone while holding down a full time job can handle.

Be sure to take @Michael Quarles  up on his offer, I'm sure he'll get you squared away. Think of it as looking before leaping. 

Medium mlaw logo v1Jerry Puckett, New Refined Images LLC | [email protected] | (214) 699‑7565 | http://www.marketlikeawholesaler.com

@Joshua Durrin  I feel your pain my friend.  I am in the same boat, listsource cost about $0.40 -$0.65 cents per address and considering your looking at an average of 1 real lead per 1000.  However on listsource and yellow letter also I believe, you can get partials of your list, so you can save your list of 10,000 and only purchase the first 50 addresses for example for $40, instead of the whole list for $4,000.  

I know it is really tough starting out with very little/no funds, but starting anywhere is always better than never starting.

My monthly marketing is usually $1,200-$2,000. My system is highly productive. I don't worry about the cost. I focus on results! 

@Joshua Durrin  You don't give a list of what your search criteria were, but I'd say narrow your area by zip code, by house value, by beds/baths, and then further by equity (say, 70% to 80% equity).  You should be able to get it down to a manageable number.

Hi all, 

Thanks for the inputs.  @Victoria Winters , great point.  That's exactly what I'm working on narrowing in on is quality... not quantity.  @Larry T. , you mentioned some great ideas.  My list was absentee owners with more than 50% equity but I hadn't narrowed it much further than that.  I'd be wise to narrow it further based on house value perhaps and increase the equity margin.  @William Baumann , I did find that option to purchase a partial list... but then wondered... what part? ;) This gets into the quality of the list... hence posting my question.  But as you mention, I WILL be starting soon.  Better to have failed a hundred times and succeeded once than to never have started.  @Jerry Puckett , I'm targeting 1000 for my first list, hoping for a 2-3% return but expecting a 1%.  One real deal out of 1000 is really all I need to get started. @Joseph Ball , point taken.  However, I definitely need to get money coming in on this first deal.  I'll be ramping up the marketing soon afterward for sure... my pockets won't get "bigger" otherwise.  This first marketing campaign also is somewhat of a test-marketing one for me, as it'll be my first.  I'm further thinking to narrow in on my most desirable zip codes a bit further and take a selection from each (partial list feature) to test which gets the better response so that the next campaign is money better spent in a proven hot area. 

Thanks again for all the insights.  See you out of this rat race soon.  :)

I purchased a pretty focused list on listsource and it ran be 74 bucks. I didn't use yellowletters.com for my first campaign just because I wanted to keep my cost down. 

Honestly I spend around 300 if not more bucks on envelops and stamps to go with the yellow paper. I have a list of 375 absentee owners in and out of state. I then went to see how much it would have been on yellowletters.com and it wasn't too much more actually. 

In the future I will probably use yellowletters.com to help me out because I'm receiving a lot of phone calls now and it takes a lot of hours to write and stuff all of those letters. 

But yes narrowing down your list will help a lot! Good luck @Joshua Durrin  

Originally posted by @William Baumann :

@Joshua Durrin  I feel your pain my friend.  I am in the same boat, listsource cost about $0.40 -$0.65 cents per address and considering your looking at an average of 1 real lead per 1000.  However on listsource and yellow letter also I believe, you can get partials of your list, so you can save your list of 10,000 and only purchase the first 50 addresses for example for $40, instead of the whole list for $4,000.  

I know it is really tough starting out with very little/no funds, but starting anywhere is always better than never starting.

 I just pulled up a local list for high equity, absentee's.  There were just over 10k names and it cost about $0.08/name.

I bought a couple lists before they emailed me and told me I could get a discount by setting up a new account.  Not sure why but I pay less then half of what I used to.

I'll buy your list for you and email it to you if you want, $0.45 - $0.60/each is insane, should not be that much.

Medium logo 5545John Horner, Core Developments LLC | [email protected] | 614‑664‑3174 | http://johnbuyshousesohio.com/

Originally posted by @Joshua Durrin :

Holy crap! Marketing is expensive! I went to listsource.com to build my list and had 10,000 people or so on it. I filtered the duplicates and only had names where the mailing and property addresses were whole. Further I filtered out corporations and only had absentee owners with more than 50% equity. 10,000 names is a huge expense.

Then I went to yellowletters.com and saw the mailing costs were about 4x the list cost.

It's clear I need to have a better targeted list to keep my costs low as I'm just starting out. What would you suggest? Should I narrow my search area (removing zip codes) or should I narrow the amount I take from each (say a percentage of names from each)?

Other demographic filters you can think of?

Thanks for the help.

 How much are they charging per lead?  I would call and tell them you are going to be buying A LOT of lists and that you need the discount that they give everyone else.

Medium logo 5545John Horner, Core Developments LLC | [email protected] | 614‑664‑3174 | http://johnbuyshousesohio.com/

Marketing is expensive....but not nearly as expensive as having no leads and no transactions.

@John Horner .  Thanks John! That's a great offer.  The list was about the same cost as you mentioned though, maybe just under what you mentioned per name.  The mailers were $.78/envelope.  These costs seem reasonable.  It's just that my list is huge for my capabilities currently.  But that's also a great suggestion to work with a rep and establish a relationship... forward thinking.  :)  Great idea!

You have to track your numbers. Mailing is just another form of marketing. Most businesses if something dollar for dollar equals zero or better they will keep doing it as it gains exposure.

You have to make sure the marketing is right for your message and targeted audience.

For example if you sent 10,000 random letters out you might get a few hits from someone you just stumbled upon but it wouldn't be the results of a focused, concentrated, and targeted mailing effort.

Most want a 2 to 1 ratio or better meaning for every dollar spent 2 are coming back in return.

I like to target specific properties I think are quality that I know my commercial real estate clients would like or that I might possibly have interest in for myself.

Once you have a winner you keep doing it to build a snowball effect and cement yourself in the marketplace.

Medium allworldrealtyJoel Owens, All World Realty | [email protected] | 678‑779‑2798 | http://www.AWcommercial.com | Podcast Guest on Show #47

Originally posted by @John Horner :
Originally posted by @William Baumann:

@Joshua Durrin  I feel your pain my friend.  I am in the same boat, listsource cost about $0.40 -$0.65 cents per address and considering your looking at an average of 1 real lead per 1000.  However on listsource and yellow letter also I believe, you can get partials of your list, so you can save your list of 10,000 and only purchase the first 50 addresses for example for $40, instead of the whole list for $4,000.  

I know it is really tough starting out with very little/no funds, but starting anywhere is always better than never starting.

 I just pulled up a local list for high equity, absentee's.  There were just over 10k names and it cost about $0.08/name.

I bought a couple lists before they emailed me and told me I could get a discount by setting up a new account.  Not sure why but I pay less then half of what I used to.

I'll buy your list for you and email it to you if you want, $0.45 - $0.60/each is insane, should not be that much.

RIGHT.  Listsource is NOT $0.40-$0.65 as previously mentioned.  Their base record is 8 cents.  Certain extra filters cost more money - in particular, they charge 10 cents per record for the "Equity%" filter.  That's the only filter you need to pay for, so you're basically looking at $0.18 per record with it included.

Medium wbh square logoDev Horn, We Buy Houses® | [email protected] | 877‑932‑8946 | http://webuyhouses.com/profile/arlington

Originally posted by @Jerry Puckett :

@Joshua Durrin  ,

I generally recommend people starting out to stay close to the 1000 letter a month mark if their budget can handle it. There are many reasons why, but an important part of it is that I find that is about the most one man working alone while holding down a full time job can handle.

Be sure to take @Michael Quarles  up on his offer, I'm sure he'll get you squared away. Think of it as looking before leaping. 

 That's a good rule of thumb for the part-timer.  For full time investors (who are doing different kinds of advertising) we advise a minimum of 2,500 per month on their direct mail.

Medium wbh square logoDev Horn, We Buy Houses® | [email protected] | 877‑932‑8946 | http://webuyhouses.com/profile/arlington

Great feedback all.  These benchmarks are really helpful.  Thanks for the help.  

@Dev Horn , are you saying that Equity % is the only filter to pay for in this particular case or for any list purchase?  Just curious.  Thanks.

It's the only "premium filter" that we pay extra for.  We'll use other filters such as Length of Residence, # of Bedrooms, etc. but those don't cost extra.

% Equity is really the most important tho because you don't want to waste the 50 cents per postcard x 6 to 12 touches per year on someone who has 10% equity in their house (for the traditional cash offer), when you could have spent 10 cents one time to make sure your list only has people that can afford to sell their house at a 25-30% discount (without bringing money to closing).

Does that make sense?

Medium wbh square logoDev Horn, We Buy Houses® | [email protected] | 877‑932‑8946 | http://webuyhouses.com/profile/arlington

Absolutely.  Thanks for clarifying.

I can't speak for @Dev Horn but what he says makes a lot of sense. Equity is not a motivation but is a requirement to sell for a discount. Probate, divorce, job transfer...are motivations

Ex. you want to mail to an absentee owner with equity (50% or more) and not just mail to all absentee owners. 

Just because someone is getting a divorce and are motivated does not mean they have equity the can discount the house. 

People die with debt (you can't take it with you) so just mailing to probate may be less effective. 

Mixing 2 lists together may be a good way for you to drill down on motivated sellers that have equity.  

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