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:
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.
sorry I know this is off topic and I really have been enjoying everything that has been said. I even reached out to a few of you on bp. I just had to ask.
Thought I would give everyone an update on our marketing efforts thus far. After taking the advice given here, we decided to go big on our marketing efforts. Instead of mailing 395 people like we were, we went out and bought an absentee owner Listsource list of just over 5,000 people.
So far we have sent out 8,395 pieces of mail (one more round of 1,679 to go on our second mailing) and our response rate is at .24% (OUCH!). That works out to 20 phone calls from those 8k+ pieces of mail or $263 a phone call.
For those who want to know, we are using the Zip Letters from Yellowletters.com as our mailer. We've also purchased postcards for our 3rd round of mailer based upon Michael Quarles' advice.
My question is, why are our response rates so awful? They've actually increased from .18% to .36% from round 1 to round 2 (apparently all that advice about repeat mailings is true, although those numbers should be higher). Is it the area we invest in (East Bay, California). Does our messaging suck? Is the market completely over-saturated with RE investors? If you were in my shoes, what would you do differently? We are committed to sending out a postcard towards the end of next month, but we don't know how much longer we can sustain this with such pitiful results - the time to pull the cord on this experiment is getting close.
Any advice, counseling, strategies, words of wisdom or ideas would be a great help to us.
Brandon - I would guess the list is the problem. A big list doesn't necessarily mean you will get a good response.
What parameters did you use for your list?
-I only mail to specific counties
-Houses with equity of 50% or more
-Houses costing between 50k and 250 -300k (I don't want junk)
I omit war zones and bad areas
And I only mail to out of state absentee owners.
Ky is not a huge state so that might change depending on your area. I have found that they need to be about 3 hours away (at least) before the "pain in the butt" factor is big enough for them to get rid of the property.
The parameters for my list were: owned over 12 years, at least 40% equity in their house with at least $60k in equity, specific zip codes I wanted to target, absentee owned and no trusts. For us in the Bay, we also include a minimum house value of $200k, anything less and you are more than likely in a war zone. I basically crowd-sourced a bunch of criteria for my list from BP.
I do mail to in-state owners, but that is because I don't want to omit people in LA, San Diego or Sacramento. Interestingly enough, I had a caller say he was tired of dealing with his property and driving out there when he had issues and it was only 45 miles away because in the Bay that can take 2 hours to get to on a bad day.
Would you change anything about our critiera/parameters?
I don't personally use a time owned factor, because you lose out on anyone that has paid cash for the property. I look for 50% equity. I'm a wholesaler (and I would want the option to wholesale the property even if that wasn't my primary strategy) so 40% equity isn't enough in almost all cases. By the time you figure a rehabber isn't going to pay more than 70%, the repairs could easily be more than 10% allowed (in your 40% equity). That doesn't allow for a wholesale fee either. I think those numbers are too tight for me.
I used to include in state AO's but I never bought a single house from them. You just have to figure out what is best for you, but those percentages are terrible. I would send PC's and save the more expensive marketing pieces to follow up with folks that have contacted you but you weren't able to strike a deal with.
@Brandon Foken It seems like direct mail campaigns are extremely regional in a market like yours the bay area I would imagine one deal would more than cover thousands of mailers. From the calls that you did receive were any converted into face to face meetings?
@Brandon Foken Hey Brandon I feel for ya bud. I too am in a hot California market here in Los Angeles. We own a lot of houses and duplex/quads here in LA County and get tons of these letters (that I used to throw out, but am now keeping as examples)
Has your rate gone up with any subsequent mailings or have you given up? I hope you haven't given up as a lot of people have stated that you need to contact 5-7 times to receive a response.
I've sent out over 800 letters to non-owner occupied SFH and duplexes, here in Long Beach, Torrance etc hot LA County markets and have only received one call back. I've looked them up on PropertyRadar.com and hand selected who i would contact. Also I've found a couple by drive-bys and looked up info on PropertyRadar and then mailed the owners directly.
Still only 1/800 responses....
I figure like someone else from LA mentioned above...that the markets here are saturated and that sellers feel they can get a lot more the old fashion method- through the MLS
I hope I don't waste a ton of time and money...Brandon, perhaps we are both in the wrong markets for this. I feel like California is on it's own ship heading up a bubble...
Either way this is a great discussion and I hope to learn more and possibly get a deal if I get lucky from one of these letters.
At this point I suppose I should start looking into "war zone" areas of LA, as they more likely have some under $350k properties
@Will F. There are times I wish I didn't live in the Bay Area because it seems like real estate investing would be easier in just about any other market than here; however, I've lived in 7 states and this is, by far, the best place I've ever lived. With that being said, I didn't give up at all. Instead, I actually went bigger and made my mail campaigns even more granular. My business partner and I are sending between 4,000 - 5,000 pieces per month now and are trying a bunch of different letters, verbiage, envelopes, messages, etc. For the most part, we've brought it all in-house. One thing I'll tell you is that everyone who calls us has received other letters, but it was something about our message, our touch that made them call us back.
@Jacob Forbis Our response rates have risen slightly, but they're still not at the level we'd like them to be. We're trying a few different techniques/ideas for the next round of mailers in hopes of getting them higher. Even though our response rates aren't were we would like them, we've still gotten deals done from them and I attribute that solely to our net being cast very wide. Instead of going after 400 people like we were in November, we are now mailing between 4,000 - 5,000 people monthly. Even if our response rates continue to suck, which I hope they don't, we are getting enough responses because of the sheer numbers we are mailing. From our mailings in Dec/Jan we've closed two deals (one wholesale and one rehab). Best of luck to you!
to shorten the list you could do what I do and attach a seperate sheet with FAQ's. This keeps the letter short and simple but also provides anwers to any objections they may have to pick up the phone and call you.
I take more of a professional approach when completing my campaign. My mailing consist of a 1 type letter on a letterhead 1 business card and the FAQ's. I came with the idea while thinking about adding a bio my company. After I realized that the I do not have enough history for that yet. I started to notice a trend in the objections and questions I was getting and decided to just provide them with something that answered everything thing they are thinking about.
Below is what I came up with. If anyone has anything they feel I could/should change or add, your criticism welcome
1. What will this cost me? We do not charge you anything to buy your property.
2. Do I have to pay a commission? No, you are not required to pay a commission for the sale of your property
3. Do I have to repair anything before I can sell? No, we buy houses in as-is condition, no repairs will be needed on your end. We will be purchasing and completing a full remodel of the property
4. How long would it take to close the sale and get my money? We can close as quickly as 7 days, up to 30 days. This is also subject to change depending on the negotiation time we may need to catch up on any mortgage defaults, liens, code violations, back taxes you may be facing.
5. What if I decide to cancel the sale? You may cancel the sale as long as this is discussed in advance and as long as it is not in violation with any of the legal agreements that will be signed.
6. Are you buying or listing the property? We are buying, we do not list properties. We only market to find our own buyers and this is not until the property is legally under contract.
7. Are you a Real Estate Agent or Broker? No, we are not affiliated with any Realtors association; we are a private Real Estate Investment company only.
8. What is your business Model? We invest in old, vacant, abandoned, over leveraged and distressed properties. These properties are then fully renovated and held as either rental properties, sold on the retail market or sold off in bulk to other investment firms.
9. How long has your establishment been in business? We have been purchasing and selling properties since 2010
10. How do I know this sale will be completed in a legal manner? All sales will be completed by an attorney or title company. And all of the contracts used are approved by the Florida Association of Realtors and Florida Bar.
11. What if you decide to cancel the sale? Again, cancellation of a purchase agreement may be allowed if it adheres to allow legal documents agreed upon and signed by both parties.
12. What if the title/deed of the property is not under my name can I still sell? No, even if you are partial owner on records. All owners that are listed as owners must be present and agree to the sale before we can move forward.
13. What if I currently live out of state? Will I have to travel to complete the negotiations? No, if you live out of state you will not have to travel to complete the sale. All documents’ can be sent via fax, certified mail or email. We may request that some documents be notarized or that a copy of your driver’s license is submit just to confirm you are the legal owner
14. Should I be represented by a Real Estate Agent to complete this transaction? This is optional. But understand that by hiring an Agent your potential profit will be affected by the commission you will have to pay them.
15. How did you obtain my information? In the state of Florida all property records, tax history, foreclosures, evictions, code violations, liens, criminal records and civil suites. Are considered to be public knowledge and can easily be access online by anyone at no charge.
Wow, what a great thread with a ton of valuable information.
@Brandon Foken your efforts are really inspiring. You said you've closed two deals with this mailing, what's your close rate then if you don't mind sharing; I'm trying to do some math to figure out how worth it this route is with the not-so-great response rate.
@Joseph Konrad thanks for the nice words. To answer your question, we have sent out over 21,000 pieces of mail to close those two deals. So I guess that's an average of 10,500 pieces of mail per deal. It definitely takes a lot of time and upfront commitment for a solid direct mail campaign. Best of luck if you end up going this route!
Thanks. Well it looks like it's working out for you, but maybe just barely right now. I guess all markets are different and property values are sky high out there.
Keep us posted! I want to see that response rate climb after subsequent mailings.
Is anyone coaching you through this campaign? I'm considering a direct mail campaign in my market and if your results are typical then I'm getting a little worried. Maybe they're typical for a big, relatively sophisticated market like SF and the East Bay, but I'm hoping that DM is more effective down here in the Southeast. Can anyone speak to the relative effectiveness of various direct mail tactics in different regions of the country?
@Luis Toledo sorry I missed your question a few weeks back. No, no one is "coaching" us through our mail campaign. We've taken a lot of the advice given here on BP, podcasts and elsewhere to assemble a encyclopedia of direct mail knowledge. We still are ironing our the kinks everyday, but feel like we are getting close to the point where we feel like we know what we are doing. While I have no first hand information about the rest of the country's market, I would imagine you won't find one any more competitive than here in the Bay
I've shied away from coaches in the past, @Sharon Vornholt for a few different reasons. The main reasons are:
I've been approached in the past by people in my area to "coach" me. All they wanted in return was a piece of every single deal I generated from now until the end of time.
The community at BP seems to abhor the idea of paying someone for knowledge that could be freely gained from this group, networking sessions or getting out there and taking action.
This is no slight to Michael, you or anyone else, but I have yet to find someone on BP that understands the intricacies and nuances of my target market (the SF Bay Area) and does a large volume of outbound marketing. Tactics & strategies that seem to work well in the rest of the US fall flat here.
I routinely hop on the phone and talk with a few people in my local area that have sent out a considerable amount of marketing and have picked their brains on what works versus what doesn't here in the Bay. I would never consider or call any of these people a "coach", but that doesn't mean they haven't been there to help or critique what I've been doing. As I mentioned above, I love talking real estate and marketing in particular with anyone and everyone, but I just have never felt compelled to hire a coach.
Finally, and I hope this doesn't come across as egotistical or full of hubris, but with the perspectives, knowledges and advice given within this thread, I have closed two deals (one flip and one wholesale) and have another two under contract since January 2014. So, as of now, I'm pretty darn happy with the coaching I've been receiving from the BP community. Not a bad success story, eh @Brandon Turner ??
I think this is a problem that many people face. We have done direct mail for and my company generates nearly 1600 leads in a year both in Chicago and Atlanta.
As I look at your letter I would not change much. I think the biggest issue is your data.
We constantly shift our target. You might try going after something more specific like - Divorce leads (you can get these on listsource.com), Also most people tell you to mail monthly. I find if I am consistently mailing once per week over a month period to "distressed mortgage situations" it yields higher responses than monthly mailings.
Also a technique we use is when we have a certain area hitting we will do an EDDM (every door direct mail) post card through the postal service to that mail carriers route. This also has had a very high yield.