Orange, CA · Member since 2012 · 66 posts · 17 votes
Hi everyone,
In my first year of Real Estate Investment, my goal was to get three rehab deals in 2013. My best lead source has been direct mail, so I'm really focusing on getting my marketing to be at a manageable, yet profitable level.
I've been thinking of upping my mailing activity from 1000 to 2000 mail pieces sent per month. I got lucky with 1000 mailers per month and managed to get one good deal after 3 months. But lately its been a little dry. I think I'm not mailing enough, but asking for your opinion. I've decided to bump up to 2000 per month. This 2000 includes mailing previous people I have mailed before. (I want to hit the same group every 6 months until I have more $$ to do more.)
I was happy with getting my one good deal after 3000 mail pieces sent out, but its been another 5000 and I haven't gotten much. (I also blame it on my lists... I was experimenting with different lists and they were duds. Probably wasted 1000-1500 on a bad list... I'm going back to what worked for me before in my first 3000.)
I was hoping for every 5000 mail pieces I send out, I should get 1 deal. Does that sound realistic? How much do you mail and how many deals are you getting out of it?
Real Estate Broker · Canton, GA · Member since 2010 · 15k+ posts · 11k+ votes
13y
You need to calculate your return on investment. Make sure your message is effective and the list is right.
Without those 2 things you could mail 10,000 per month and by dumb luck land a deal but that is not how to run and effective business and maximum returns and profits.
Direct mail 1 to 2% response is standard, 3 is good, and 4 to 5% or higher is doing very well. I said response and not getting a deal from it.
If you are doing 2,000 a month one percent would be 20 calls a month. 10 percent of the calls turning into deals would be 2 purchases a month.
You need to figure out the length of time per rehab to get back your investment plus the profit plus the amount of profit average per deal. If your goal is too make an extra 100k in profit a year then you take that divided by the average profit say it's 20,000 and you would need 5 deals a year.
Remember that mailers have a building effect. Someone you mailed to might not sell today but might decide 5 months down the road to call you. That person also might not be interested in selling at all but by asking in your mailers if they know someone else you get a call.
Real Estate Professional · Salt Lake City, UT · Member since 2010 · 608 posts · 163 votes
13y
I notice with my direct mail that the calls and deals are not consistent at all. After reading a lot on BP, I try and make my mail create calls from motivated sellers and not a lot of tire kickers. About 3 weeks ago I was getting real antsy because I was not getting any calls in the last 6 weeks except for a few tire kickers. A week later I got about 11 calls of which 1 is a signed contract and 2 other strong possibilities. I am not including the "never call me again" calls, and I am mailing about 1500 letters/postcards per month. The one I have a contract on was the 11th letter they had received from me. They got my letter 2 days before the tenant gave notice they were moving.
A funny side note. The one I got under contract involved 4 sisters that were renting out a condo they bought years ago. The last sister I got a signature from had all my letters when I got there. A lot of them had notes on them. She said the first 3 letters really creeped her out and proceeded to tell my why. She then pointed out what she liked about my later letters. She finally told me what a nice, professional kind person I was and to convey that in my letters. I have learned it is a game of appealing to the most people, but she did have some great points I am reviewing in my letters to that particular list.
Investor · Portland, OR · Member since 2009 · 42 posts · 18 votes
13y
If you are sending out 2000 mailers per month you should able to EASILY land 1 solid deal per month. If you are not then I would change the list and marketing piece before changing the amount you send out. That or you need to examine your follow up / lead filtering system to see if deals are falling through the cracks.
What lists are you mailing and what kind of marketing piece are you sending them?
Orange, CA · Member since 2012 · 66 posts · 17 votes
13y
Tucker Merrihew Maybe we should be more specific about what kind of deals? I've also noticed that the area you invest in will have a different response rate. I live in a really hot market (Orange County, Ca). You don't find as many motivated or distressed sellers, but when you do, the profits are in the $40-50K range from one deal alone. My brother has been using DM for some time and feels like he has gotten a deal every 3500-5000 letters. I think some lists just suck, and you end up wasting a month on a bad list or a bad area for investment. There is also a TON of competition in the Inland Empire area, so I have to send out way more letters to get responses.
Anyway, I feel like I am on the right track with 1000-2000 per month but its my list and my letter that needs work. I just tried a new letter that's on letterhead, and tells people a little about myself. I'm hoping those tweaks increase my response rate to 2%.
Gary Parker I have had the same experiences as you lately, which is why I posted. Sometimes you just get a bad batch and your phone doesn't ring at all, and if it does its just a tire kicker. Its really discouraging. By the time I close my first deal, I'll probably have to use the money on all my marketing fees for the year. Its my second deal that will be my income... Hope that one comes!
Investor · Portland, OR · Member since 2009 · 42 posts · 18 votes
13y
I agree So Cal has more competition, but it still boils down to what list you are mailing? And what marketing piece you are sending. If sellers are getting the same marketing piece from you as they do from every other jo shmo then yes it will be hard to land a deal (also I am talking about equity deals not LO's).
Orange, CA · Member since 2012 · 66 posts · 17 votes
13y
Michael Quarles I absolutely love that. I'm printing it out and posting it on my board. Right now I cant afford more the 2000, but with every deal I do, I promised myself I would go up 1000 in mailers per month. That way my previous deal helps me pay for the increase in expenses.
Real Estate Investor · Weehawken, NJ · Member since 2012 · 79 posts · 19 votes
13y
When you are looking for deals, are you just looking for rehab deals? Or are you wholesaling the remaining potential deals that don't fit your rehab criteria?
Rental Property Investor · memphis, TN · Member since 2009 · 2k+ posts · 3k+ votes
13y
Originally posted by Michael Quarles:
Good to meet you Lauren,
Here is what I see from a yellow letters only perspective.
People who send less than 500 a month lose drive and focus then stop.
People who mail between 500 and 1500 start learning what they don't know.
People who mail between 1500 and 2500 begin to consistently create opportunity
People between 2500 and 4000 consistently buy property.
People between 4000 and 10,000 a paradigm shift occurs.
People above 10,000 can't mail enough and are frustrated at the lack of list size.
Great perspective from someone who KNOWS what he is talking about. I have never met Michael, but have read and followed him for a couple of years on BP and he knows his direct mail stuff. And his knowledge of Yellow Letter mailing is second to none.
Lauren Hardy - the best thing about your post is tracking and adjusting and then readjusting to what works best. Your list is extremely important, but so so is the tenacity with which you attack it. Staying consistent and sticking to great mail pieces without trying to reinvent a new formula will be the best action you can take. I look forward to hearing how your next mailer performs for you.
Real Estate Professional · Salt Lake City, UT · Member since 2010 · 608 posts · 163 votes
13y
Originally posted by Michael Quarles:
Good to meet you Lauren,
Here is what I see from a yellow letters only perspective.
People who send less than 500 a month lose drive and focus then stop.
People who mail between 500 and 1500 start learning what they don't know.
People who mail between 1500 and 2500 begin to consistently create opportunity
People between 2500 and 4000 consistently buy property.
People between 4000 and 10,000 a paradigm shift occurs.
People above 10,000 can't mail enough and are frustrated at the lack of list size.
Very interesting Michael Quarles. When someone is mailing 10,000 mailers a month, would I be correct in assuming those mailers go to multiple states? To different lists? I would love to know a little more detail to what you have posted.
Flipper/Rehabber · Bakersfield, CA · Member since 2008 · 3k+ posts · 3k+ votes
13y
Hello Gary,
The guys and gals we send more than 10,000 pieces a month for, and this includes postcards, only one markets out of state however Philly New Jersey and New York are so close Im not certain that its what you meant with your question.
The main players stay to their geographic.
I think the main reason is a legal understanding of state laws and licensing from a broker perspective.
Real Estate Professional · Salt Lake City, UT · Member since 2010 · 608 posts · 163 votes
13y
Thank You Michael Quarles. I guess I can see 10,000 in the cities you mentioned. The metro population is about 1.5 M in my area and that is about a 100 mile area North to South. I certainly have not researched all the possibilities one could mail to but I dont think I could come close to 10K a month in my area unless I mailed to a farm area. Would you agree with that statement? In the back of my mind I have always thought 5000 a month might be my max.
Investor · Central Valley, CA · Member since 2012 · 6k+ posts · 3k+ votes
13y
Originally posted by Gary Parker:
A funny side note. The one I got under contract involved 4 sisters that were renting out a condo they bought years ago. The last sister I got a signature from had all my letters when I got there. A lot of them had notes on them. She said the first 3 letters really creeped her out and proceeded to tell my why. She then pointed out what she liked about my later letters. She finally told me what a nice, professional kind person I was and to convey that in my letters. I have learned it is a game of appealing to the most people, but she did have some great points I am reviewing in my letters to that particular list.
This is interesting to me. Most of my sellers have been out of area. But for the ones that I have met, sure enough they have my letter(s) when I get there. I'm curious which letters creeped her out and why? Was it the yellow letter style? Was it too many exclamation points and/or dollar signs? :)
Flipper/Rehabber · Bakersfield, CA · Member since 2008 · 3k+ posts · 3k+ votes
13y
4000 buys about 5000 yellows, about 11,500 postcards or about 7000 zip letters.
When people start to build a duplicatable business through consistent marketing their confidence changes. It's a great thing to see in someone. When you have confidence that what you want is in fact accomplisable fear goes away.
Real Estate Broker · Canton, GA · Member since 2010 · 15k+ posts · 11k+ votes
13y
Right now I am just ramping up my mailers.
About a thousand this month but increasing at a fast clip next month.
I am different in that I own a commercial real estate company and as the head broker I am searching for listings to obtain and also off market properties for my buyers and myself. So I am targeting specifically triple net properties and larger apartment buildings because they are what I focus on day in and day out for my clients.
I have a full time research analyst doing nothing but building my mailing list and research from scratch that is local to me. It is a ton of work sourcing the information as each county in my state has different zoning codes, different assessor search functions they use by county, etc.
I am using a white envelope mailed every month and we were using labels but switched to printing out from the printer on the envelopes because it's cheaper and I am not limited on a label size with what I can print. The larger label size the less labels you get for the money.
I bought an HP 8100 only printer that was 150 on sale at Staples for 96 bucks to give to my assistant to use. The XL black cartridge costs 36 bucks and does about 2,500 full size pages. Since we are only printing return mailing address and mailing address on each envelope the copy count should be around 7,000 to 8,000 envelopes or more because of the limited text. The auto tray holds 250 envelopes at a time and we mail merge the lists to auto print. I like print on the envelopes because we can choose a handwritten font for the outside for the addresses.
I have a local UPS store that will print black and white copies for 4 cents a piece which is cheap that I go to. They wanted 8 cents to print out the envelopes outside addresses so I decided to do those ourselves. I can print the outside addresses for less than 1 cent per envelope. Best price on envelopes I have found is Staples at about 8 dollars for 500. Occasionally they run a sale with coupon to where you can land for 5 bucks and I stock up.
I checked into bulk mail and first class would go from 46 cents to 36 cents but I would have to pay an annual fee. With the volume I will be doing the fee will be worth it.
So far I have :
Letter 4 cents
Envelope at 500 for 8 bucks at 2 cents
Mail at 46 cents currently but I am working on 36 cents and annual cost factor
Print outside of envelope 1 cent (ink cost)
Roll sticks so you do not have to lick the envelopes
1 stick at 2.00 does about 2,000 envelopes marginal cost at a fractional of a cent
So I am at 49 cents per piece mailed and I haven't even factored in savings from getting envelopes for 5 bucks instead of 8 or saving with bulk mail.
I like the fact I have a full time assistant who only focuses on my business and nothing else. I know many cannot afford such a person but for me and what I am doing it works. Yes the assistant is a cost of mailing but I have other things they do for me as well. I plan to get up to about 4,000 to 5,000 a month.
Real Estate Professional · Falls Church, VA · Member since 2012 · 238 posts · 83 votes
13y
Hi Lauren,
I am in the District of Columbia and Northern Virginia, which is a very active and competitive market. If it's any help, here are my numbers for 2013 so far:
8747 pieces mailed
7 contracts
1 closed
I am trying to mail 2000 a month consistently for now and keep nudging that number up until I'm maxed out!
