Direct Mail - Why Length of Residence?

Question

First off, I am new to BP and I have to say, I haven't come across a better source of education. It's like plugging into that machine from the Matrix to learn Jiu Jitsu (only you learn about real estate investing).

I'm beginning to compile a mailing list from listsource.com using many of the filters recommended by some of the experts on BP. I have seen posts by experts (e.g. @Michael Q.) suggesting people add 7+ years length of residence as a filter.

I want to understand the rational. If the purpose is to ensure that there is enough equity in the house, doesn't the equity % filter already account for that? On the other hand, you could presume that motivation to sell increases with time. But then, why not use 3+ years or 5+ years. It seems that using 7+ years would exclude some absentee homeowners who both used cash to finance their purchase and have experienced distress sooner than 7 years in.

This is not just a theoretical question. My list shrinks significantly when I go from 3+ years to 7+ years.

Any feedback is greatly appreciated.

Erick Corte · Answer

@Michael Quarles

Guys thanks for the tips! its great advice! I will have to play myself with some of that criteria and see the good results.. Have a wonderful day!

Erick Corte · Answer

@Solomon Solomonov

@Michael Quarles

Hi Michael and Solomon,

I thought it depends on what you are trying to accomplish. Michael, I believe you said that you are not renovating the houses before selling them. Instead I believe you are just reselling them as-is the way you bought them. For someone looking to renovate, would it make more sense to use a filter of 10+ years ownership to find those sellers that have owned the house for a long time, maybe even 15+ years and have not done any renovations on them? or wouldnt you also be able to find more owners that are already tired of dealing with the property/tenants and are ready to move on? Most other opinions I have heard indicate that anything less than 10 years might be too soon for an owner to be tired of their property. Let me know what you think, I am a total begginer so I am definitely still learning a lot every day and in need of lots of help and information. :) Thanks in advance!

Erick Corte

BP Nation!

Michael Quarles · Answer

Currently your median house sales is 680,000 and your Average List Price is 1,454,733.

I like marketing to the low end properties. So I would include a filer for the accessed value to to exceed 455,000. I have found that this formula decreases the number of mail pieces thus reduces my marketing budget and it increases my call quality. More motivated sellers.

And I am not only marketing to absentees. I market the Owner Occupiers as well

Michael Quarles · Answer

Personally I see a correlation between length of ownership and a property which needs to be renovated. One could have bought a home that was totally in need of repair and thought they would orchestrate that repair however did not. Which is causing them sell now.  Deferred Maintenance and functional obsolescence do not tie to length of ownership.

If I were searching for properties in need of renovation I would stick to the 2/3rds median value filter. However in some areas I would also use a year built filter was well.

Michael Quarles · Answer

I am currently only using 4 years.  The answer is that we are looking for likely motivated sellers and yes someone what just purchased or transferred within 4 years could be motivated however they wont in general be as likely as someone with more than 4 years.

In your city there were 465 addresses which were absentee with 40% plus equity and less then 4 year ownership. I would not market to them.

Solomon Solomonov · Answer

@Michael Q. Got it! Coincidentally, my value filter did not exceed $450k, but that was based on my budget, not the median property values. Your input makes sense though. Thanks for the feedback.

Solomon Solomonov · Answer

@Michael Q.

Can you elaborate on the value filter? What is the source of the values in first place? Assessment appraisals?

Solomon Solomonov · Answer

I'm sure there  is an ideal range of length of residency in every market, but I rather not spend the time trying to figure it out.  If I had the budget I would probably just blanket all absentee owners with 40+% equity. If I really wanted to find out if there was a pattern, I can look at all the deals generated from DM over the course of a year or two. If the responses and conversions all had a length of residency of 7+ years, I'd consider only marketing to that category moving forward.  From what I gathered from all the posts on The topic, the results of test campaigns should drive the makeup of your mailing lists. Then again, I'm only just embarking on my first direct mail campaign.

Solomon Solomonov · Answer

@ Michael Q.

4+ years gets me to 1,230 contacts, which is a good number to start with. Thanks for the feedback.