Investor · Howey in the Hills, FL · Member since 2013 · 376 posts · 114 votes
Today I was thinking about my direct mail results for the past 9 months:
14,000 pieces mailed = 1 deal
I've been mailing to absentee owners. They seem to fall into one of several categories.
(1) Snowbirds (because I'm in Florida) - they have no interest in selling, although they always respond and ask how much I would give them.
(2) Other investors - they do not want to sell unless they can get twice what they paid and would rather hold the house and collect rent.
(3) Lunatics.
I rarely ever come across a house that is run down. They all seem to be in very good shape. Everyone also tells me they routinely receive direct mail from dozens of other investors.
So I'm thinking, why not mail to owner occupied properties? It seems like it would be worth a try. I know every area is different, and in my area the absentee owner pool seems to be suboptimal.
I was actually just listening to you on the podcast, which made me think of this. Would your list criteria be the same for absentee owners and owner occupied properties?
just listened to your latest podcast @Michael Quarles and was very intrigued by your assertion that owner occupied properties with high equity are basically an untapped market. It would seem that ups the potential leads pretty significantly.
Matthew Buttner I've gotten similar results with absentee owners. Which areas are you targeting in Florida?
Would you mind sharing details on the one deal you got?
I purchased my one deal last October and I'm just about to list on the MLS. It was occupied by a tenant who had a lease, so we had to wait him out and eventually evict him. The seller lived several hours away in Florida and sold just because she didn't want to deal with the tenant any longer. They were once friends and things went bad.
I bought it for $70,000. It's a 3/2, 2,000 sq. ft. with 2 car garage in Sorrento. We rehabbed pretty much everything. I think we've spent about $40,000 on it. I comped it out at $150,000 - $160,000, but we're in the process of having it appraised to be sure. Should be on the MLS sometime next week.
Today I was thinking about my direct mail results for the past 9 months:
14,000 pieces mailed = 1 deal
At 14000 mailings to a deal was there an issue with the list or just unlucky with unmotivated sellers? What was the response rate like though?
The list was fine. It was just that no one was motivated. I would get a huge response (around 10%) from each mailing, but no one who was interested in selling for less than retail.
I've come to realize that direct mail doesn't work as well in my market as it does in the markets of the people I hear on the podcast and on this site. It turned into a waste of time for me, as I was spending as much money on the direct mail as I was making on the deals I got. I was basically breaking even.
Mailing to probates was a little more successful, but still not worth the time and money I had to put into it.
I'm not the only one in my area who feels this way. I've mentioned this to several "big-time" successful investors in my area and the consensus is that direct mail is not as effective in this area as it is in other markets.
I should also say that this applies to absentee owners and probates. I have not mailed to other types of sellers, so I can't speak to the effectiveness of those mailings.
I've come to realize that direct mail doesn't work as well in my market as it does in the markets of the people I hear on the podcast and on this site. It turned into a waste of time for me, as I was spending as much money on the direct mail as I was making on the deals I got. I was basically breaking even...
Many share the frustration and it is just about in any market. Some of the sellers just will not have a reason to sell a house below what it is worth, but their circumstances do evolve, so sometimes you just have to keep at it. It is a numbers game. Chance, probability and just luck will affect your results. The quality of the list is also a factor. The more contact you make with motivated sellers (who are experiencing some sort of pain), the better your chance.
Florida is a unique challenge. You have absentee owners who live there part of the year, have vacation homes there, etc. That really dilutes the absentee pool for us in our FL markets.
Owner Occ's are fine, but you can lose you shirt mailing to them as it's harder to find the motivated sellers in that pool.
So we go after particular owner occ groups -such as senior citizens who are more likely to be moving and have a home that has not been updated in a couple of decades. And like @Michael Quarles said, we market to those at or below median value for the market.
So, yes, FL has some challenges regarding absentees, but if you use the right criteria I still think it's the most productive list.
Perhaps MQ will share his criteria for Sr. Citizens. He's a genius on mail list criteria.
... but you can lose you shirt mailing to them as it's harder to find the motivated sellers in that pool...So we go after particular owner occ groups -such as senior citizens who are more likely to be moving and have a home that has not been updated in a couple of decades...
Based on the particular city that you were looking at, if the total absentee pool of SFR is in the 10% range in the city, targeting the non absentee pool would certainly be costly. There are challenges with just about any niche or strategy. A challenge with seniors is that they may want to go the reverse mortgage route instead of selling the house at a material discount to the investor but some may want to sell.
Michael Quarles I just read your feedback on finding motivated sellers and you had mention finding 2/3 of the medium or just under the medium to find the yucky ones. What did you mean by the medium? I'm just a bit confused and I'm looking to be very specific so I won't throw money away. Please help, thanks
Kerry Baird Question, when narrowing down to who I'm trying to send letters or postcards to I would first search where are most ZIP Codes that include cash purchases, and then out of those ZIP Codes I will choose the ones that are below the median range for home prices? I'm looking for fix and flips