I live in Denver and want to invest in my first property within a 30 minute drive. One problem I’m having is my ability to find motivated sellers in this metro area. I’ve heard that every market has deals because all owners are human and humans have problems. All I have to do is uncover the folks with problems and I’ll find motivated sellers. Match the right solution with the right motivated seller and I’ll have my first rental property for long term cash flow (assuming I buy at the right price/terms, properly screen tenants, and maintenance concerns are well planned). I mailed out 7348 pieces in 2013 and I got 50 calls, but zero deals. I hired a mentor who suggested mailing to newer houses so maintenance is less of an issue. I mailed out 2091 postcards January 11, 2014 without a call. Some folks say that Denver is a rare market where direct mail doesn’t work. Others have said that postcards do not work and I should use Yellow Letters (I’ve used both). My mentor claims that direct mail works in all markets and we need to tweak the list or the message. Last week I sent out a second postcard to the 310 absentee owners from the list of 2091 with a new message. Instead of continuing along my path mailing more pieces I want to get some input. I would like to ask this community: What can I do to uncover a few seriously motivated sellers?? I only need to do 2 deals in 2014 to buy and hold. I could go the traditional route and put down 20+%, but my mentor suggests otherwise.

Agreed Yellow Letters Are overrated. I was about 10%-12% response rate on yellow letters but spinning my wheels because of all the tire kickers. I recently moved to yellow mail-merged postcard with a similar message and received almost 3% response but much more motivated. People call yellow letters out of curiosity, it is not often you get hand written mail these days. They call postcards more out of motivation.

Will direct mail find motivated sellers

Bill S.Pro Member

Moderator

Rental Property Investor · Denver, CO · Member since 2013 · 4k+ posts · 2k+ votes

12y

I would say that your response rate is based on the quality of your mailing list. Where are you getting that? What is the target of that list and does it match up with your goals? It seems like your response rate of 50 in 7,000 is a bit low (0.7%). I've been told direct mail should be more like 2-3%. Based on what I've read you need to verify the quality of your mailing list and repeat your mailings to that list.

Seems like the problem is not the market or method but the details.

0 Reply

Dev HornPro Member

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

12y

I don't have enough info to pass judgment on the mentor, but the suggestion to concentrate on newer houses with less maintenance is counter to most of the logic around REI - newer houses may have less equity, and without a distressed condition, there is less justification for offering a heavily discounted price for the property. People with newer homes in great condition have a pretty cool way to sell their house - the MLS! =)

Look at your:
1) Market (who)
2) Message (what)
3) Method (how)

Focus more on homeowners with EQUITY, not the age of the home so much (sure you can limit age but that's not your #1 factor), and go after those who might be more motivated (such as absentees) and finally, hit them every 4-6 weeks, repeatedly.

3 Reply

Stephen Weber

OP

Investor · Denver, CO · Member since 2013 · 18 posts · 2 votes

12y

Thank you for your input Bill and Dev.

My list is from listsource and the target is homes built since 2000 and 3/2 plus other minor details with the focus not on equity, but on #s so I uncover owners ready to hit the panic button. My mentor suggests buying Sub2 so equity isn't required, motivation is, because that is where the opportunity will come. He claims I am seeking distressed seller more than distressed property.

1 Reply

Brian Gibbons

Investor · Sherman Oaks, CA · Member since 2008 · 6k+ posts · 3k+ votes

12y

Ok here is another way to look at making money.

Low Equity Deals.

Inventory is low, WSJ says there are 20 million houses in the USA that have less than 10% equity.

Listsource - properties bought at top of market 2006 - 2009.

Solution: Send a postcard to those no equity homes.

AND get a V.A. to scrape Craigslist and other FSBO etc. sites.

The message:

I want to Buy Your House EVEN IF YOU HAVE NO EQUITY!

(Now talk to them in your copy, plusses include

no agents commissions,
protecting credit rating,
flexible on closing date,
make all repairs,
pay you all cash,
sell fast, etc)

Set the appointment, go see them, present a cash offer (likely moving money) and a sub2 and lease option assignment.

This is not wholesaling, it is seller financing.

Hope that helps.

2 Reply

Bill S.Pro Member

Moderator

Rental Property Investor · Denver, CO · Member since 2013 · 4k+ posts · 2k+ votes

12y

I would say the response (to your mailings) is more about your approach (sub2) then the method. With the appreciation we've had in Denver the past two years (supported by significantly fewer foreclosures) I think that the pickings are very slim for your approach (Sub2). Owners don't need to consider Sub2 because they can sell outright and at least break even. S&P Case-Shiller has Denver up over 5% from market peak in 2006. Sure there maybe a few that are too wrapped up in their situation to move via convention means but they are few and far between as you have found.

So I would say that perhaps your original conclusion is true that Denver may not be a good market for your approach (sub2) but it's not the fault of direct mail IMO.

0 Reply

Account Closed

Investor · Central Valley, CA · Member since 2012 · 6k+ posts · 3k+ votes

12y

Originally posted by @Stephen Weber:

Thank you for your input Bill and Dev.

My list is from listsource and the target is homes built since 2000 and 3/2 plus other minor details with the focus not on equity, but on #s so I uncover owners ready to hit the panic button. My mentor suggests buying Sub2 so equity isn't required, motivation is, because that is where the opportunity will come. He claims I am seeking distressed seller more than distressed property.

One issue I see here is that your list has no-equity leads for possible sub2s deals, but it sounds like your mail piece is general. IMO, getting a motivated, upside down seller to call takes a different message than the general yellow letter piece.

I think the yellow letter is way over-rated if you want to be taken seriously in certain markets. Especially if more than few investors are sending them to the same owners.

I'm concerned about a "mentor" that would let you mail that many pieces without results and/or tweaking of the message. Has anyone on the list been hit more than once?

2 Reply

Account Closed

Investor · Central Valley, CA · Member since 2012 · 6k+ posts · 3k+ votes

12y

Originally posted by @Bill S.:

I would say the response (to your mailings) is more about your approach (sub2) then the method. With the appreciation we've had in Denver the past two years (supported by significantly fewer foreclosures) I think that the pickings are very slim for your approach (Sub2). Owners don't need to consider Sub2 because they can sell outright and at least break even. S&P Case-Shiller has Denver up over 5% from market peak in 2006. Sure there maybe a few that are too wrapped up in their situation to move via convention means but they are few and far between as you have found.

So I would say that perhaps your original conclusion is true that Denver may not be a good market for your approach (sub2) but it's not the fault of direct mail IMO.

"Up over 5% from market peak in 2006" is no equity for a lot of borrowers. Additionally, that 5% is an average number, which means plenty of borrowers are still underwater. Even with 100% equity, many borrowers are way short on commissions and closing costs.

0 Reply

Roc P.

Philly Area, PA · Member since 2008 · 297 posts · 27 votes

12y

Great stuff everyone, can't believe the tip about Craigslist, that's worth a 1K right there. Rocco

0 Reply

Bill S.Pro Member

Moderator

Rental Property Investor · Denver, CO · Member since 2013 · 4k+ posts · 2k+ votes

12y

@Account Closed - I guess I see the local market a bit different. 1st off, 2006 was the very peak. People who bough on either side of that would be better off.

2nd - S&P Case-Shiller is an index not an average. The areas of the MLS that I watch (I don't watch the whole City) on the average are up way more than 5% since 2006. I realize averages can be skewed but my point is that when people are experiencing equity growth I believe it diminishes the opportunity for SUB2 deals (what's the point if you can sell out right?).

At any rate I do get your point that some price growth does not automatically mean you can sell without being in the hole. Also if people get behind, then the late fees etc can rack up costs. These costs mean they can't sell outright without bringing funds to closing which they obviously don't have because they are behind. My point being is that there would be opportunity but the market may diminish that opportunity from a strictly numbers perspective.

0 Reply

Account Closed

Investor · Central Valley, CA · Member since 2012 · 6k+ posts · 3k+ votes

12y

Originally posted by @Bill S.:

@Account Closed - I guess I see the local market a bit different. 1st off, 2006 was the very peak. People who bough on either side of that would be better off.
2nd - S&P Case-Shiller is an index not an average. The areas of the MLS that I watch (I don't watch the whole City) on the average are up way more than 5% since 2006. I realize averages can be skewed but my point is that when people are experiencing equity growth I believe it diminishes the opportunity for SUB2 deals (what's the point if you can sell out right?).

At any rate I do get your point that some price growth does not automatically mean you can sell without being in the hole. Also if people get behind, then the late fees etc can rack up costs. These costs mean they can't sell outright without bringing funds to closing which they obviously don't have because they are behind. My point being is that there would be opportunity but the market may diminish that opportunity from a strictly numbers perspective.

I've only been involved in RE since 1999, but I can say I have yet to see a market or area where there are no sub2 opportunities. The other thing that contributes to lack of equity is liens in addition to the mortgage(s). A lot of Bubble loans don't make good sub2s because of really bad ARMs.

BTW: Bringing cash to closing just isn't the norm, even with people who have the money. They have to be in serious pain, rational enough to see the benefit. That being said, in 2000 I remember a seller that offered me $5K cash and a secured promissory note of $15K against a different investment property that was for sale if I would take over his overencumbering loan on a vacant hood property that was wracking up abatement liens.

Sub2 is just another tool in the shed, or should be, if you are marketing to sellers.

1 Reply

Bill S.Pro Member

Moderator

Rental Property Investor · Denver, CO · Member since 2013 · 4k+ posts · 2k+ votes

12y

@Account Closed I did not mean to say there weren't opportunities. I just feel the market maybe limiting them in Denver right now.

0 Reply

Account Closed

Investor · Central Valley, CA · Member since 2012 · 6k+ posts · 3k+ votes

12y

Originally posted by @Bill S.:

@Account Closed I did not mean to say there weren't opportunities. I just feel the market maybe limiting them in Denver right now.

I can't think of any market that has unlimited opportunities for buy and hold acquisitions these days. So I work with possibility. As long as it's possible, it's an opportunity. Denver's no more limited in possibility than Berkeley or Santa Monica or Orange County CA or Austin. Just more challenging and costly to get to the leads.

1 Reply

Dev HornPro Member

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

12y

I am not (yet) advertising in Denver, but I am in LA, and I completely agree with K. Marie Poe. Think Denver is more challenging than LA, San Diego, or any other major metro in CA? I seriously doubt it. Inventories are tight everywhere.

Don't convince yourself that "RE investing just doesn't work here in <fill in the blank>!" Look around, I bet there are plenty of people succeeding at it. Stop trying to convince yourself that there is no opportunity. Instead, tell yourself that those guys that are beating you are no smarter than you are, so YOU CAN succeed in YOUR market. Change your inner voice...

Get determined, get educated, arm yourself with a winning strategy and go fight for your piece of the pie!!

4 Reply

Stephen Weber

OP

Investor · Denver, CO · Member since 2013 · 18 posts · 2 votes

12y

Thanks all for your considered replies.

And thank you Dev, for a bit of clarity and a kick in my pants!

1 Reply

Anson YoungBusiness Member

Flipper/Rehabber · Denver, CO · Member since 2009 · 1k+ posts · 726 votes

12y

Originally posted by @Dev Horn:

I am not (yet) advertising in Denver, but I am in LA, and I completely agree with K. Marie Poe. Think Denver is more challenging than LA, San Diego, or any other major metro in CA? I seriously doubt it. Inventories are tight everywhere.

Don't convince yourself that "RE investing just doesn't work here in <fill in the blank>!" Look around, I bet there are plenty of people succeeding at it. Stop trying to convince yourself that there is no opportunity. Instead, tell yourself that those guys that are beating you are no smarter than you are, so YOU CAN succeed in YOUR market. Change your inner voice...

Get determined, get educated, arm yourself with a winning strategy and go fight for your piece of the pie!!

I'm an extremely optimistic guy, I hate saying 'never' or 'can't'. However, I have talked to pretty much every single investor I know here, some guys doing 4 flips a year and some are doing 40-50 flips a year. Easily talked to 25 successful investors who I personally know. None of them can rely on direct marketing the way you can in other markets. Each has tried a long term campaign, and most have tried for years, tweaking message, lists, etc, and do not get the same response rate as other markets can nearly rely on.

What I'm saying is, nobody I know has built a business around direct mail in Denver. Are they out there? Most likely, yes. Have my own campaigns largely failed, even with the expert advice here and from private marketing experts I've consulted? Yes. Have I closed a few deals off of my marketing? Yes. Enough to comfortably build a business out of it? Nope. Am I still mailing to my niche? Yes, I'm not a quitter! :-)

The last 2-3 people I talked to moved their marketing to a different market, same exact material they were sending out here, with 10x the results. It was shocking to me.

I've tried to wrap my head around this in general, and this is what I've come up with:

1. denver is a very unique market, we hit our foreclosure stride earlier than most of the country, 2005 is when it started for us. We never hit 'rock bottom', we took a dip and recovered quick.

2. we have no war zones, nowhere in denver I wouldnt feel comfortable walking around after 10pm or midnight. No huge high crime pockets.

3. one of the lowest vacancy rates in the country, hovering around 1-3% - tired landlords are getting waiting lists for properties that need to be filled, with rents going up yearly.

There is probably a ton more, and again, I'm not a negative nancy, but the overall numbers can speak for themselves. If someone is killing it doing direct marketing in Denver, I'd love to talk to you of course.

Podcast Guest on Show #235

2 Reply

Dev HornPro Member

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

12y

I hear ya, Anson. It can be frustrating.

You make some excellent points and of course you and Stephen know Denver way better than I do (lived in the city for 6 months once =). But every day people are getting divorced, crappy renters are moving out after trashing houses, people pass away, people have financial problems, etc. etc. - the drivers of motivation are pretty consistent and occur every day whether we're in an up market, down market or low inventory market.

I suppose the challenge there is not can you find deals, but can you find enough to make this a repeatable and "growable" business model? Sounds like a very real challenge for you guys in that market.

I wish you and Stephen the BEST up there. Go Broncos! =)

0 Reply

Anson YoungBusiness Member

Flipper/Rehabber · Denver, CO · Member since 2009 · 1k+ posts · 726 votes

12y

Originally posted by @Dev Horn:

I hear ya, Anson. It can be frustrating.

You make some excellent points and of course you and Stephen know Denver way better than I do (lived in the city for 6 months once =). But every day people are getting divorced, crappy renters are moving out after trashing houses, people pass away, people have financial problems, etc. etc. - the drivers of motivation are pretty consistent and occur every day whether we're in an up market, down market or low inventory market.

I suppose the challenge there is not can you find deals, but can you find enough to make this a repeatable and "growable" business model? Sounds like a very real challenge for you guys in that market.

I wish you and Stephen the BEST up there. Go Broncos! =)

Absolutely... I hear you. It made me sick to post something that 'negative' about the subject, but its really just my findings.

Part of me wants to as an experiment, hire an expert, throw money at it and see if we cant get it to work after all. It works, just not that great right now.

Thanks for your insight Dev, always very much appreciated!

Podcast Guest on Show #235

0 Reply

Account Closed

Investor · Central Valley, CA · Member since 2012 · 6k+ posts · 3k+ votes

12y

Originally posted by @Dev Horn:

Instead, tell yourself that those guys that are beating you are no smarter than you are, so YOU CAN succeed in YOUR market. Change your inner voice...

Get determined, get educated, arm yourself with a winning strategy and go fight for your piece of the pie!!

It's SO not about smarts. If it were, I'd be retired. I have no shortage of smarts, like so many others in REI. It's about mindset and skills set. But perhaps mindset first.

I've never been one to believe in the limitations of the market. Every market had deals and deal makers. I've never once wavered on the belief that the market does not control my destiny. But some of the challenges these past few years are making me wonder if my mindset is limited and needs some adjusting.

0 Reply

Account Closed

Investor · Central Valley, CA · Member since 2012 · 6k+ posts · 3k+ votes

12y

Originally posted by @Anson Young:

Part of me wants to as an experiment, hire an expert, throw money at it and see if we cant get it to work after all. It works, just not that great right now.

Thanks for your insight Dev, always very much appreciated!

I've been considering the same thing. I might need to move away from the marketing and let someone else focus on generating the calls. I know there is great marketing help out there. The challenge for me is that most of my deals come from very targeted research and getting letters to people who no else is reaching. A list from listsource doesn't do that. I have no clue how to train anyone how to do what I do either. OMG, I have become the e-myth.

1 Reply

Anson YoungBusiness Member

Flipper/Rehabber · Denver, CO · Member since 2009 · 1k+ posts · 726 votes

12y

Originally posted by @Account Closed:

Originally posted by @Anson Young:

Part of me wants to as an experiment, hire an expert, throw money at it and see if we cant get it to work after all. It works, just not that great right now.

Thanks for your insight Dev, always very much appreciated!

I've been considering the same thing. I might need to move away from the marketing and let someone else focus on generating the calls. I know there is great marketing help out there. The challenge for me is that most of my deals come from very targeted research and getting letters to people who no else is reaching. A list from listsource doesn't do that. I have no clue how to train anyone how to do what I do either. OMG, I have become the e-myth.

You can train me... :-) I'll even split some deals with you to pay ya back. I love niches.

Podcast Guest on Show #235

0 Reply

Dev HornPro Member

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

12y

Dang, being in Denver (or CA) is TOUGH!!!

(Hey I was rooting for Denver! Jeez!)

0 Reply

Stephen Weber

OP

Investor · Denver, CO · Member since 2013 · 18 posts · 2 votes

12y

Thanks Dev, we were trying to let the wound of humiliation heal. But the Broncos performance was so exceptional, or lack thereof, we need the reminder so we don't forget next season.

Anson - your response is appreciated as I know you are sincere and successful doing deals. You've made me reconsider my activities. I've got to skin this cat! Thanks.

0 Reply

Stephen Weber

OP

Investor · Denver, CO · Member since 2013 · 18 posts · 2 votes

12y

@K. Marie Poe One issue I see here is that your list has no-equity leads for possible sub2s deals, but it sounds like your mail piece is general. IMO, getting a motivated, upside down seller to call takes a different message than the general yellow letter piece.

I think the yellow letter is way over-rated if you want to be taken seriously in certain markets. Especially if more than few investors are sending them to the same owners.

I'm concerned about a "mentor" that would let you mail that many pieces without results and/or tweaking of the message. Has anyone on the list been hit more than once?

Thanks for offering your thoughts above. I mailed the initial list and got no calls. My mentor suggested targeting just the absentee owners a second time. I Just mailed out 300 to those as a second mailing.

We are targeting folks with any amount of equity, but not negative. I agree with you that “there has to be sub2 properties in every market.”

You go on to say in another post that skill set and mind set are key! What steps can I take to get my first rental property under my experience without going the traditional route? Continue mailing to absentee owners, call/email ads in Craigslist to For Rent and For Sale By Owners, newspaper ad?

Any mindset adjusting advice is welcome…

Thanks for your contributions to the community!

0 Reply

Account Closed

Investor · Central Valley, CA · Member since 2012 · 6k+ posts · 3k+ votes

12y

Originally posted by @Stephen Weber:

@K. Marie Poe One issue I see here is that your list has no-equity leads for possible sub2s deals, but it sounds like your mail piece is general. IMO, getting a motivated, upside down seller to call takes a different message than the general yellow letter piece.

I think the yellow letter is way over-rated if you want to be taken seriously in certain markets. Especially if more than few investors are sending them to the same owners.

I'm concerned about a "mentor" that would let you mail that many pieces without results and/or tweaking of the message. Has anyone on the list been hit more than once?

Thanks for offering your thoughts above. I mailed the initial list and got no calls. My mentor suggested targeting just the absentee owners a second time. I Just mailed out 300 to those as a second mailing.

We are targeting folks with any amount of equity, but not negative. I agree with you that “there has to be sub2 properties in every market.”

You go on to say in another post that skill set and mind set are key! What steps can I take to get my first rental property under my experience without going the traditional route? Continue mailing to absentee owners, call/email ads in Craigslist to For Rent and For Sale By Owners, newspaper ad?

Any mindset adjusting advice is welcome…

Thanks for your contributions to the community!

I'm not a big believer in the numbers game. I'd focus on a neighborhood/area that has the rental housing you want. Then I'd do it all. Letters to owners of vacant/abandoneds, code violations, tax defaults and every other distress I could think of. Learn how or have someone help you identify distresses in public records (recorded docs, tax collector, courts, etc).

Knock on some doors and talk to neighbors. Pass out your post card and tell people you are buying. Post flyers where it's allowed. I've had some success recently with print advertising.....advertising in the newspaper. It supports my letter. People get my letter, they remember the ad (which has my picture) and they vet me on my website.

0 Reply

Andy Collins

SFR Investor · Dallas, TX · Member since 2011 · 604 posts · 243 votes

12y

I'm not an expert on direct mail, but am a real estate investor with several properties, in my personal name.

In the past I got maybe one mailer a month,,,lately its to the point I get 2-3 every week,,today I got 2!

Direct mail to absentee homeowners is over saturated based on what I'm experiencing

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Will direct mail find motivated sellers

Will direct mail find motivated sellers

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