My Direct Mail Campaign Results Have Been Atrocious

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My Direct Mail Campaign Results Have Been Atrocious

Brandon Foken
Wholesaler · San Francisco, CA · Member since 2012 · 259 posts · 147 votes

Hey There BPers,

Myself and my business partner have been spending a significant amount of time on our direct mail campaign and so far, our results have been subpar to say the least. We have sent out a total of 395 letters and received a whopping 5 responses. 1 was a prank call. 2 were of the "please remove me from your list" variety. Our one success was getting an appointment with a seller, so in reality we have had 1 good response out of 395 total letters. I'm hoping to get some insights and ideas/critiques for increasing our response rate. The details of our campaigns are below.

We have slowly been gathering addresses so our list is split up, one campaign is 149 people and the other is 246 people. We have sent the different groups different pieces to try and test what will get the best response.

The first group received a standard yellow letter stuffed inside of a handwritten (in blue sharpie) 6x9" manilla envelope (link). I also used some muscle car stamps instead of the regular American flag ones to hopefully make it seem more "friendly". Our response rate was 4 of 149. Here is a picture of the finished letter:

The second group of 246 received a different mailer altogether. We used an A6 invitation-style envelope that was handwritten in black ink. Instead of a yellow letter, we sent our message on standard white copy paper. This letter was placed in the mail on 10/19 and we've only received one phone call and one FB like from our efforts. Here is the copy:

"

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Dev HornPro Member
Flipper/Rehabber · Arlington, TX · Member since 2013 · 1k+ posts · 2k+ votes
13y

Your list there is a good "core" list of houses for you guys to keep an eye on, but your list size is WAY to small to generate a meaningful flow of leads.

Buy a list of at least 1,000 ABSENTEE OWNERS and mail them postcards every month for AT LEAST 6 months.

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  • Sharon Vornholt
    Goshen, KY · Member since 2009 · 835 posts · 683 votes
    10y

    Direct mail and websites are the top 2 ways to get leads today.

    1Reply
  • Micah Truman
    Investor · Seattle, WA · Member since 2013 · 21 posts · 4 votes
    10y

    OK, time to jump in.  I have been a lurker on this thread for ages now, and have read through it repeatedly.  Hands down the best real estate marketing/DM thread that I know of anywhere.  My deepest thanks to everyone who has contributed.

    Now, my situation - I am not a wholesaler or flipper.  I am a buy and hold MF investor in Seattle WA.  

    I started buying MF properties in 2011, and picked up 4 between 2011 and early 2014.  It's been a great ride, and BP has been my go-to resource throughout the whole process.  I started out not knowing what multifamily investing was, and now feel capable of making offers for MF properties within 30 minutes of reviewing the rent roll.  In fact 2 of my properties were bought by submitting an offer in 90 minutes to highly motivated sellers.

    That said, I was lucky.  I began buying in the crash, and great deals were everywhere.  Them days ain't no more, and if I want to purchase more properties I am going to need to change my game plan in a major way.  

    In reading this thread, I noticed that most of the participants are focused on using DM for fix and flip, or wholesaling. All great businesses, but nonetheless different from what I do.  That said, it seems to me that direct marketing to buy mid sized (8-20 unit) apartment buildings to renovate and hold would work just as well as DM campaigns focused on quick fix and flip or wholesale transactions.

    Which brings me to my current set of questions.

    1)  Do you all think it makes sense for me to run a 6 month DM campaign focused on buying 8-20 unit apartment buildings in the Seattle area?  I only need one transaction a year to meet my current acquisition goals.

    2)  I notice that many of you often make an all cash, discounted offer to motivated sellers.  In the case of a larger apartment building, this will be impossible.  I would naturally be able to put down a substantial down payment, but will definitely not be able to pay all cash.  Will this be a problem?

    3)  Are there any BP folks who have gone after the 8-20 unit apartment market with a DM campaign, and killed it? Would love to hear your story.  

    Thanks in advance to everyone, and hope these questions aren't horribly amateur.

    1Reply
  • Curt Smith
    Rental Property Investor · Clarkston, GA · Member since 2012 · 2k+ posts · 1k+ votes
    10y

    @Micah Truman Search the marketing forum for multifamily to find other folks doing what you want to do.

    But... MF and other commercial deals are 99% held in the name of an LLC. Public records may not have the correct mailing address for the LLC's mailing address, the agent, certainly NOT the LLC members (owners).

    You are better served using the list bought somewhere, of the owners names typically LLCs or trusts, then use teh secretary of state to get the contact for the agent, then use missinng persons to look up each LLC member.

    Its alot more work to execute an effective marketing campaign for commercial deals. 

    1Reply
  • Sharon Vornholt
    Goshen, KY · Member since 2009 · 835 posts · 683 votes
    10y

    Hi Mioah -

    Direct mail works for every type of real estate, but you need to mail to the property as long as it is available if you are interested.  Curt is correct when he says to get a list.   I would also consider Loopnet.  Are you on their email list?

    I have a friend that loves multi family properties.  He uses the master lease option method with terms of 3 to 5 years, then he refinances the property.  He doesn't put any money down. I would look up Bill Walston here on BP.  

    Sharon

    0Reply
  • Dave McEvoy
    Wholesaler · Montgomery, NY · Member since 2016 · 84 posts · 10 votes
    10y

    What sorts of letters are people writing when driving for dollars? Could you theoretically use the same letter for DM and just stick it in their mailbox? Are people following up with phone calls or knocking on doors? I would really love to get one deal before spending a significant amount of $ on DM.

    0Reply
  • Micah Truman
    Investor · Seattle, WA · Member since 2013 · 21 posts · 4 votes
    10y

    Thanks very much @Curt Smith and @Sharon Vornholt for your responses.  My deepest apologies for being slow in coming back to you.  I somehow missed the notification.

    Curt I take your point about buying a list of MF owners, as most properties are owned by LLCs, and are not easily reachable.  I am currently on the hunt for reliable lists that I can use to contact them.  

    Sharon thanks a ton for the introduction to Bill Walston.  I will reach out to him now to see if I can get hold of him.  Just read a bunch of material on the lease option method, and it looks like a super interesting way to bridge the gap between a somewhat unrealistically high seller asking price, and an equally unrealistic low offer from the buyer.

    All the best, Micah

    0Reply
  • Sharon Vornholt
    Goshen, KY · Member since 2009 · 835 posts · 683 votes
    10y

    Master lease option is a great strategy.

    0Reply
  • Micah Truman
    Investor · Seattle, WA · Member since 2013 · 21 posts · 4 votes
    10y

    Thanks @Sharon Vornholt.  Does master lease well in hot markets?

    0Reply
  • Sharon Vornholt
    Goshen, KY · Member since 2009 · 835 posts · 683 votes
    10y

    It works in every  market.

    0Reply
  • Micah Truman
    Investor · Seattle, WA · Member since 2013 · 21 posts · 4 votes
    10y

    Got it.  Will really get familiar with this.  Thanks again.

    0Reply
  • Ben Roberts
    Rental Property Investor · Memphis, TN · Member since 2015 · 203 posts · 135 votes
    10y

    Wow!  I've been searching BP for WEEKS trying to figure out how to fine tune a marketing plan.  Wish I had found this post sooner. @Brandon Foken, what's the latest on your progress?  How's it going?

    0Reply
  • JR T.
    Financial services executive · Frederick, MD · Member since 2015 · 609 posts · 341 votes
    10y
    Originally posted by @Account Closed:
    Originally posted by Sharon Vornholt:
    This is a long thread but here are my thoughts.

    I would never show any seller my numbers. How in the world are you going to explain why they should give you a big discount so you or your end buyer can make a sizeable amount of money? Just say this is my offer based on what similar houses are selling for, the amount of work needed etc. Let it go at that.

    I am new to marketing, but I did ponder about this very situation earlier today and how I'd approach a seller. In my market, I think this is definitely something that would need to be discussed when negotiating with a seller. I say I think because I have not yet begun my marketing campaign, but here is my rationale: The 1200 sq.ft homes built in the 40's and 50's across the street from where I live run about 800k starting and will definitely need work. Any Joe Shmo can go online nowadays and get a ballpark of what their home is worth, so how is a seller not going to bring up a six figure difference in price between what Zillow is showing and my offer? I think each market is different and what will work in one wont necessarily work everywhere else.

     Anyone foolish enough to contact you without getting the free opinion of a REALTOR first is not as smart as you're enviaioning. In my day job we send around 20k demand letters and settlement offers each month. The snap pack aka zip letters we deploy November to March and our response rate is nearly double. Consumers focus on that sort of mail during those months. Other times of the year it's around a 15% boost and not worth the extra money.

    If you tape a quarter to each letter or postcard they will get noticed more too.

    1Reply
  • Jeff B.
    Buy & Hold Owner · Redlands, CA · Member since 2015 · 5k+ posts · 2k+ votes
    10y

    Back to some basics on Direct Mail.

    • 5 out of 395 is 0.012 or 1.2%

    The books you're reading or the guru guiding you should have made a full disclosure:  Classical returns are only 1-3%, so you're in the ballpark on your return rates.  That makes each return VERY EXPENSIVE while yet low conversion into a client.

    1Reply
  • Sharon Vornholt
    Goshen, KY · Member since 2009 · 835 posts · 683 votes
    10y

    In my market the return is just that - 1 to 3% with an average of 2%. Direct mail works. I have been doing it for 25 years and it has always been my best source of leads.  In 2008-10 the returns were much higher.

    0Reply
  • Jay Hawthorn
    Rental Property Investor · Phoenix, AZ · Member since 2016 · 19 posts · 9 votes
    10y

    You could try a co-op mailer to ease the cost of your campaign. Basically, you get the large postcard size, like a 6'x11" and you place your ad on the front side and break the back into 4 or 5 sections. Divide the campaign cost by 4 or 5 and sell the space on the back of the postcard to other businesses who might also benefit from your target market. Coupons... mortgage lenders, realtors, local restaurants are all good prospects to sell the space to. It's a little bit of a hassle... but you could get someone else to do it for you for a small commission per ad and cut your advertising cost down to zip if you do it right. Best of luck.

    0Reply
  • Brian Gibbons
    Investor · Sherman Oaks, CA · Member since 2008 · 6k+ posts · 3k+ votes
    10y

    Look into Val-Pak

    0Reply
  • Ben Ballinger
    Developer · Newport Beach, CA · Member since 2016 · 71 posts · 25 votes
    10y

    I realize OP is over 3 years old, but still wanted to respond, so here it is:

    1. You need to be patient with direct mail, it's a long-term strategy. You won't see the main benefits on your initial campaign. As they say, the fortune is in the follow up.

    2. You should increase your market budget and reach out to more. Like all statistics, small sample sizes are bad for predictability (in this case, ensuring at least a few responses).  Most people in my area who are successful with direct mail are doing at least 1000-1500 per month.

    3. I don't think you're considering ROI. Don't let negative responses get to you personally. It's how marketing is, no matter the industry. You said it's subpar because you only got one good lead. But, you should ONLY be looking at how much you spend, vs how much you make. If you end up purchasing that property for flipping/buy and holding, would the profits more than cover the cost of the campaign (I certainly hope so)? Again, a bigger sample population and more subsequent mailings would likely improve the numbers anyway.

    As an example though, if I spend $1,000 on direct mail campaign and get only one legit lead, that results in a sale for a property I flip and make $25,000 on in 160 days... I would do that ALL DAY LONG. If I asked you to give me $1,000 and I would give you back $25,000, would you not jump at it?

    That's how you have to approach marketing.

    As for whether the letter is too long or short, I can't really comment except to say that having listened to nearly every podcast here at BP, I have heard from people who use 1-2 page long letters, and those who use one sentence letters, and those who do a mix or are somewhere between, who have all been successful. So I don't really think it matters. The similarity between all of them was persistence and investing enough to get out to enough people to see predictable returns.

    Hope that helps.

    2Reply
  • Sharon Vornholt
    Goshen, KY · Member since 2009 · 835 posts · 683 votes
    10y

    @Ben Ballinger is absolutely right. Slow and steady wins the race with direct mail.  You have to be  consistent.

    People have short attention spans these days.  I would use shorter letters or postcards.  All people really care about is how you can solve their problem.  That's it.

    2Reply
  • Brian Gibbons
    Investor · Sherman Oaks, CA · Member since 2008 · 6k+ posts · 3k+ votes
    10y

    @Dev Horn

     has a video called "RULE OF 7"

    Rule of 7 with wholesaling means - 

    YOU HAVE TO MAIL TO A LIST OF SUSPECTS 7 TIMES to get a good ROI.

    Here's the video

    The Rule of 7

    0Reply
  • Sharon Vornholt
    Goshen, KY · Member since 2009 · 835 posts · 683 votes
    10y

    My rule is I mail until I buy the house, someone else buys the house or they come off my list for another reason like they ask to be removed.

    2Reply
  • Dev HornPro Member
    Flipper/Rehabber · Arlington, TX · Member since 2013 · 1k+ posts · 2k+ votes
    9y

    And @Sharon Vornholt has forgotten more about direct mail than most of us will ever know!

    ;-)

    1Reply
  • Sharon Vornholt
    Goshen, KY · Member since 2009 · 835 posts · 683 votes
    9y

    Watch out there @Dev Horn - you're aging me.  LOL

    I did buy a house after 3 years of mailing to an AO.  Persistence paid off handsomely.

    0Reply
  • Dev HornPro Member
    Flipper/Rehabber · Arlington, TX · Member since 2013 · 1k+ posts · 2k+ votes
    9y

    Oh I'm sorry.  Had nothing to do with age and more to do with experience and intelligence.  Back in 2013, I had not been doing direct mail much (we had been doing mostly TV advertising up to the housing crash in 2008).  In 2012, we relaunched it in early 2013 and we needed a direct mail strategy.  It was several of your posts @Sharon Vornholt that helped me to create a winning strategy that has developed over the last few years.  We now have pretty good expertise in this area, and we're experts at using Listsource and developing mailers.  But I have to give credit where it is due and I'd say to you newer guys reading this post, FOLLOW SHARON VORNHOLT and learn from her if you want to do direct mail and do it right.  Check out her excellent BLOG right here.  Great stuff!

    2Reply
  • Sharon Vornholt
    Goshen, KY · Member since 2009 · 835 posts · 683 votes
    9y

    Just kidding @Dev Horn.  I have been doing direct mail for what seems like a million years.  It works, but you have to be consistent.  The other thing is this; when it's a seller's market your return will be less. But... it still works.  Just keep mailing.

    When the market turns (as it always does) and it becomes a buyer's market again, that's when the magic really happens.

    Thanks a million for sharing my blog!!

    0Reply
  • Dev HornPro Member
    Flipper/Rehabber · Arlington, TX · Member since 2013 · 1k+ posts · 2k+ votes
    9y

    I can echo those comments @Sharon Vornholt - we have seen a lower response rate in most markets due to it being a seller's market as you said and also so many other "investors" in the market doing the same kind of thing.

    But the leads that do come from well targeted direct mail are some of the very best.

    0Reply
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