How BiggerPockets created 100k in net worth in 4 months

How BiggerPockets created 100k in net worth in 4 months

Investor · Houston, TX · Member since 2009 · 210 posts · 261 votes

This is a long overdue thanks to the BP community as a whole and the mentors and friends I have met through BP.

By way of background, my core investing strategy is buy and hold. I have a full-time job and consider real estate investing to be a solid hobby of mine. Some guys like sports, cars, legos... etc. While I like those things, I choose real estate. I have been trolling BP for almost 7 years now and for many years I have read and listened to conversations about whatever was discussed in the forums and podcasts.

I bought my first rental in 2007 and was hooked.

Enter BiggerPockets.

After slowly growing my portfolio to what I thought was a critical mass, I felt I would benefit from obtaining a RE license. Once I got the license finding deals became easier, but I was still limited by what was listed on the MLS, however, I was getting better deals and saving commissions. Happy investing.

I have been trolling BP for almost 7 years now and for many years I have read and listened to conversations about direct mail. I always thought it would be too time intensive for me with a full-time job. After hearing @Jerry Puckett and @Sam Craven podcasts (as well as all the others), I thought I might give it a try. I was quite skeptical at first as I have a full time job and thought engaging in a direct mail campaign would be time and capital intensive.

After a quick email to Jerry we set up a call. One call with Jerry and we were ready to go (skeptical, but ready to go). We engaged Jerry to help us with a very small direct mail campaign (500 letters a month at a total cost of $3,000 for a 6 month campaign).

Since it was our first campaign we opted to do as much as we could to keep the cost down so we chose to stuff and stamp the letters ourselves and knew we were taking a considerable risk with a small campaign.

We committed to a $3k campaign for a 6 month period and never thought we would see the $3k again (but we were excited for our expensive experiment). Since my partner and I have full time jobs (and manage our growing rental portfolio) time was our biggest constraint (and money). We set up a google voice number and started mailing letters. As the calls came in we let every one go to voicemail. Never answered a single call. We called back each individual and fumbled though the many scripts that can be found on BP. Low and behold, our 500 letters to the same 500 individuals a month got the phone ringing.

Let's talk results.......................

Remember I am a buy and hold investor with a RE license and a full time job. I was just hoping to get better deals than I could find on the MLS.

After 4 months of letters (500 a month to the same 500 people) My partner and I have COMPLETED the following deals solely from our direct mail compain (these results do not include current leads we are working or deals purchased on the MLS).

House 1 - Purchase price 48k, 12k rehab, rents for $1,100 a month. ARV = 90k (Net 30k equity and cash flowing rental)

House 2 - Purchase price 31k. Wholesaled (closed and relisted on MLS) for 59k two weeks after purchase. Netted 24k after holding/closing costs. House required 25k rehab and had an ARV of 110k.

House 3 - Purchase price 61k. Partnered with a local wholesaler (met on BP) who found a buyer at 73k and double closed it. We split the spread with the wholesaler and netted 5k.

House 4 - Purchase price 70k, $0 rehab, rents for $1,100 a month. ARV = 90k (Net 20k equity and cash flowing rental).

House 5 - Purchase price 70k, $0 rehab, rents for $1,100 a month. ARV = 95k (Net 25k equity and cash flowing rental).

Net Net Net.........

The value I place on the education and training that can be found on BPockets can not be calculated by a simple cost benefit analysis, but if you want one here you go.

My partner and I have increased our net worth by the following amounts solely from the 5 completed deals in the first 4 months of our direct mail compaign. These does not include the 7 other rental properties purchase directly from the MLS in 2013 that we used knowledge learned on BPockets to acquire.

Cash - 29k (properties sold)
Equity - 75k (properties held)
Total - 104k
Plus the net present value of the 3 cash flowing properties we held.

Subtract the 3k for our small direct mail campaign and we are still over 100k in net worth increase. Not a bad result from our 3k experiment with direct mail through contacts made on BPockets.

In the last 6 months, I have used the knowledge gained from BPockets to find, analyze, acquire, finance, rehab, advertise, lease and manage 10 additional properties. My modest portfolio continues to grow and my simple hobby has turned into a passion.

Thanks for the community @Joshua D. and @Brandon Turner and all the moderators and contributors.

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Real Estate Broker · Cleveland Dayton Cincinnati Toledo Columbus & Akron, OH · Member since 2013 · 30k+ posts · 20k+ votes
12y

Great post. Very motivating. I have not used direct mail before but after reading this i think I'm going to have to start.

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  • Investor · Raleigh, NC · Member since 2013 · 348 posts · 128 votes
    12y

    @David J.

    Great story and congrats on the success! Who knows in another year maybe you'll double or triple that number! Best of luck to you.

  • Real Estate Investor · Sioux Falls, SD · Member since 2013 · 415 posts · 84 votes
    12y

    @David J.

    Thats awesome!! Congrats and best of luck in 2014!

  • Flipper · Irvine, CA · Member since 2013 · 349 posts · 45 votes
    12y

    Awesome, awesome story. Thanks for sharing and hope you do even better in 2014.

  • Real Estate Broker · Cleveland Dayton Cincinnati Toledo Columbus & Akron, OH · Member since 2013 · 30k+ posts · 20k+ votes
    12y

    Great post. Very motivating. I have not used direct mail before but after reading this i think I'm going to have to start.

  • Investor · San Jose, CA · Member since 2012 · 2k+ posts · 3k+ votes
    12y

    David,

    Did Brandon and Josh pay you to write this post?

    Kidding aside, that's amazing result. $100k return on $3k investment and still counting. Now you have to become a "Pro" member. You're no longer qualify for a basic member. At this pace, you might end up retiring much sooner than you think.

    CONGRATS!

  • Mark UpdegraffBusiness Member
    Real Estate Broker · Rochester, NY · Member since 2010 · 1k+ posts · 697 votes
    12y

    Wow! Simply incredible!!! It get's all of us on that are "too busy for direct mail" to seriously think about what we're doing!!

    How long did it take you to get comfortable with "scripts"?

    Did you find your self improvising right from the start or were your first contacts with perspectives pretty canned?

    Would love to hear more about lessons learned as you implemented this new technique.

    Not sure how you're doing all this while holding a full time job either!! I got my salesperson license a year ago now, and dealing with people can eat up precious time. Do you take all clients or do you cherry pick? How much volume did you do outside your own deals as an agent in 2013?

    When you're at your full time job are you able to work own your investing / sales. I can't imagine being a good agent or investor and not being available for 8 hours everyday...

    Thanks so much for sharing!

    Mark

  • Investor · Houston, TX · Member since 2009 · 210 posts · 261 votes
    12y

    @Account Closed

    No payment from @Joshua D. or @Brandon Turner. LOL

    Thanks for the kind words all.

    @Mark Updegraff

    1. How long did it take you to get comfortable with "scripts"? Did you find your self improvising right from the start or were your first contacts with perspectives pretty canned?

    Never got comfotable with the scripts. I memorized them and quickly found out that sellers say whatevert hey want and you just have to build rapport and roll with the conversation. I simply tell them who I am, what I do, and how I add value to the situation (close quickly, clean neighborhood, cash in pocket, rehab family home, etc.). While I agree there may be some solid sales tactics that may be employed I just try to get to know them and try to help them.

    2. Not sure how you're doing all this while holding a full time job either!!

    Systems and procedures. I can't be distracted all the time so I set times I am willing to do certain things.

    Example 1 - I make all my calls in the car on the way home from work each day. That way calls get returned the same day and I am stuck in the car anyways so why not use the time for something productive.

    Example 2 - I won't even go look at the house until we have an agreed upon "highest I would pay" and then I tell them I will subtract anything that needs to be done on the house to rehab it.

    Example 3 - All the rentals I manange and the direct mail is all in a smallish prededined area I identified as my farm area, so when I make a trip down the the "farm" (only 4-5 each month) I can take care of everything I need to in one trip.

    3. When you're at your full time job are you able to work own your investing / sales. I can't imagine being a good agent or investor and not being available for 8 hours everyday

    I work at work and play the rest of the day. When I am at the office I am owned by my employer (but I like my job). If I need more time I come in early so I can leave early.

  • Mark UpdegraffBusiness Member
    Real Estate Broker · Rochester, NY · Member since 2010 · 1k+ posts · 697 votes
    12y

    @David J. But what if that killer deal hits the MLS in the middle of your work day? In my farm (which is a hot area) you won't get the deal unless you're first in line, and even then it ins't certain. Maybe it is a function of my market, but I would be out some good deals if I had hours that I was not available to be an investor.

  • Brandon TurnerPro Member
    Investor · Maui, HI · Member since 2009 · 13k+ posts · 3k+ votes
    12y

    AWESOME @David J. ! Thanks so much for sharing!

  • Investor · Houston, TX · Member since 2009 · 210 posts · 261 votes
    12y

    @Mark Updegraff

    I may lose out on a few deals, but with a full-time job I only have time for a couple deals going at one time anyway. I check my farm on the MLS once in the morning and once in the evening. If something goes in between thise times I just miss it.

    However, in my market if a deal comes up on the MLS and is that exciting (Houston has gotten pretty hot lately too), they will get multiple offers and generally hold offers fora day oy 2 until they have a critical mass of offers. If this is the case, I will still have time to make an offer.

    But the truth is, the deals flow from the direct mail (1.2 a month) has more than kept me busy and have way better spreads than anything I have ever purchased on the MLS. I feel like I have to "settle" when I buy something on the MLS because the direct mail is so good.

  • Investor · Parsippany, NJ · Member since 2010 · 66 posts · 10 votes
    12y

    @David J. hint hint lol

  • Houston, TX · Member since 2013 · 30 posts · 7 votes
    12y
    Thank you so much for sharing! I will be starting a direct mail campaign very soon as well, and I think the key is to send out marketing on a consistent basis to the same people so they begin to know who you are. A "one and done" campaign just won't work.
  • Rental Property Investor · Northern, CA · Member since 2012 · 5k+ posts · 5k+ votes
    12y

    Way to go @David J. @David J.

    There are always lots of posts here on BP about direct mailing, and yours is certainly an example of a success story.

    How did you go about selecting the 500 people that you kept mailing to? And how many times on average did the people have to receive one of your mailings before they actually called?

  • Dawn AnastasiPro Member
    Rental Property Investor · Milwaukee, WI · Member since 2013 · 6k+ posts · 4k+ votes
    12y

    Congrats!

  • Joshua D.Pro Member
    BiggerPockets Founder · HI · Member since 2008 · 16k+ posts · 5k+ votes
    12y

    @David J. - This is fantastic! I've been sharing it around the web all day. Thanks for taking the time to let us know about your successes. This post will surely lead to even more business/connections for you.

  • Rental Property Investor · Queen Creek, AZ · Member since 2013 · 368 posts · 191 votes
    12y

    This is great to hear congrats. I must admit that I have committed the cardinal sin of direct mail marketing; I started a champaign and went 3-4 months and stop. I am getting ready to start another champaign with the help of @jerry Puckett, I know with committing to a marketing budget will help. Thanks for the inspiration.

  • Karen MargraveBusiness Member
    Moderator
    Realtor, General Contractor, and Developer · Redding, CA · Member since 2009 · 7k+ posts · 4k+ votes
    12y
  • Wholesaler And Coach · Springfield, VA · Member since 2011 · 169 posts · 75 votes
    12y
    Congrats on your success! What was list criteria?
  • Investor · Houston, TX · Member since 2009 · 210 posts · 261 votes
    12y
    Brad Chandler Criteria was absentee owner with more than 6 or so years on title. 3+ bedrooms. 2+ baths. In addition, in the area we mailed the houses were built in the late 70s early 80s with a few exceptions.
  • Investor · Houston, TX · Member since 2009 · 210 posts · 261 votes
    12y
    Kyle J. The selection criteria is listed in the post above. Regarding the number of letters prior to calling, we received calls from every month that led to purchase so I am not convinced any number of letters does the trick. I am convinced that when they are ready to call someone they call the letters they have on hand. It could be yours and it could be someone else's. I think once they make the call they are looking to relieve some stress. Find and relieve their stress and everyone wins.
  • Rental Property Investor · Buffalo, MN · Member since 2010 · 511 posts · 92 votes
    12y

    Hi @David J. wow what a great story, congrats on your success. Keep us posted on how things are going.

  • Investor · Glastonbury, CT · Member since 2013 · 53 posts · 10 votes
    12y

    Congrats @David J. - Great success story!

  • Investor · Parsippany, NJ · Member since 2010 · 66 posts · 10 votes
    12y

    @David Jackson Hi David, a few more questions if you don’t mind.

    I had to log back on, your story really distracted me yesterday after reading it, in a good way of course!

    Here are my questions:

    What was your vm greeting if you don’t mind sharing?

    What was your monthly call back %?

    Did you also call back numbers captured on Google voice that did not leave you a voice mail?

    How did you finance the deals you decided not to wholesale? It appears you’re beyond the conventional financing limits from your previous acquisitions if you used traditional financing.

    @Jerry Puckett is a great partner and also helped get us started back in Aug, we discontinued the campaign for Dec as we felt it was not wise to invest in mailings for that month. Our call back % was also declining month over month and we got more dirt then gold.

    We are planning to test this same list we have with postcards and add about 500 more to our list from a different market. We believe that could have been part of our problem and should have done more due diligence in the markets we chose to market to. We did use the same list criteria as well as the same resources, google voice, scripts, Jerry’s system etc.

    Our goal is to have at least the campaign pay for itself through our first least one wholesale deal and provide working capital to increase our mail drop. That is still our objective and even though we have not made a penny, we are motivated and committed to seeing it through. The hardest part is writing the check every month without seeing the first deal come in. It can get very discouraging and hard sale to the spouses. lol

  • Bellmore, NY · Member since 2013 · 1 post · 0 votes
    12y
    That was a very inspiring post. Also what area are you in? I am planning to try direct mail in Long Island NY. Thank you for sharing your story of success.
  • Dev HornPro Member
    Flipper/Rehabber · Arlington, TX · Member since 2013 · 1k+ posts · 2k+ votes
    12y

    Awesome story! Love to hear about the success of BP members!

    "Great things happen when mountains and motivation meet." ~ William Blake

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