Newbie investor in California getting zero leads - should I market elsewhere?

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Newbie investor in California getting zero leads - should I market elsewhere?

David Tankersley
Wholesaler · Anaheim, CA · Member since 2014 · 64 posts · 16 votes

Hello all, 

I have partnered with another BP person in marketing for absentee owners throughout southern California. We have presumably used the successful techniques as suggested by the various gurus here in BP and elsewhere in a 3 month postcard campaign via Yellow Letters that started in November.

Perhaps I am not patient enough, but as of yet we have had absolutely NO response from this campaign.

You folks are welcome to shoot back with any questions you may have for us, but my questions are:

1. As new investors/entrepreneurs,  are we wasting our time in trying to find wholesale deals in Southern California?

2. If so, I am willing to look into other states even though I have reservations about contracting out of state. What is a good market to target? (I'd prefer the western states, but am not averse to others)

3. If you are successfully wholesaling in California, please share any advice you may have.  

4. I have read in many places that it can take a while (3-6 months) before a marketing campaign can bring in results, but is Zero calls or responses normal in this market?

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Karen MargraveBusiness Member
Moderator
Realtor, General Contractor, and Developer · Redding, CA · Member since 2009 · 7k+ posts · 4k+ votes
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The market here in southern California is very strong, and sellers are not motivated to sell, whether they are local or absentee owners. As long as the owner is breaking even, more than likely their properties will appreciate, so no motivation. 

You might need to broaden your scope, and begin making calls to the owners, etc. I'll tell you, I don't work that niche, but if I did I wouldn't be putting a stamp on an envelope and hoping someone opens it and calls me. I would be calling them or knocking on their door! Most people are very receptive if you approach them right. 

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  • Matthew Nixon
    Real Estate Agent · LONG BEACH, CA · Member since 2014 · 209 posts · 43 votes
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    @David Tankersley 

    Can you give us a few more details like how many mailers you sent out and how many campaigns you've done?

    Ultimate guide to direct mail

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  • David Tankersley
    OP
    Wholesaler · Anaheim, CA · Member since 2014 · 64 posts · 16 votes
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    Matthew, 

    It's roughly 9000 leads on a drip campaign running every 6 weeks and the 4th cycle starts soon if I am not mistaken.

    Andrew,

    I'd certainly like to ramp things up to a budget than can afford to send 50,000 mailers, but if the market is this rough, I'd think my money and time are better spent elsewhere.....but I would love to be wrong is this presumption!!!   

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  • Matt R.
    Sherman Oaks, CA · Member since 2013 · 3k+ posts · 2k+ votes
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    One guy I know of on BP who has success in SoCal spends north of 150k annually marketing. This is not for the prime LA stuff but rather IE mostly. I think it takes a bit of creative marketing effort to crack the LA prime areas and perhaps a little luck but they are out there. I see opportunity almost daily just on the mls. That stuff goes in hours but still someone is cleaning house on those ones.

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  • Antonio Coleman
    Specialist · Sibley, LA · Member since 2014 · 1k+ posts · 190 votes
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    @David Tankersley It doesn't matter how many mailers you send out if you'er not doing it in the right fashion. The main issues i see when doing direct mailing is that investors come off too strong.

    Come in with another angle of educating people instead of just pushing to buy their property. Doing this will increase your response rate, and you will acquire more properties. 

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  • Karen MargraveBusiness Member
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    Realtor, General Contractor, and Developer · Redding, CA · Member since 2009 · 7k+ posts · 4k+ votes
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    The market here in southern California is very strong, and sellers are not motivated to sell, whether they are local or absentee owners. As long as the owner is breaking even, more than likely their properties will appreciate, so no motivation. 

    You might need to broaden your scope, and begin making calls to the owners, etc. I'll tell you, I don't work that niche, but if I did I wouldn't be putting a stamp on an envelope and hoping someone opens it and calls me. I would be calling them or knocking on their door! Most people are very receptive if you approach them right. 

    4Reply
  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
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    @Karen Margrave 

    door knocking is the way to go... when I worked the PDX market I had 3 teams one women one man ( women were better at this by far by the way) we knocked every NOD in our 3 county area.

    When I was in Timber we wrote very specific letters to timberland owners and did quite well with out of state owners. I find the same yellow letter type speil tends to get tossed if you have a bunch of the same kind of investors hitting the exact same properties. I know I get 2 to 10 a month all saying the same thing and most never even bother to follow up.

    when I go into a market and want to buy something I go the exact opposite if I am sending a letter its totally professional in look and manner.. but I really really narrow my target and focus.. so its not unusual for us to lock down a deal every 50 letters.

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  • Matt R.
    Sherman Oaks, CA · Member since 2013 · 3k+ posts · 2k+ votes
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    I can give an example of door knocking/calling in SoCal just two days ago. I found a good deal in a complex. With a one phone call turns out there was a FSBO for 10% less in the same complex with the identical floor plan and condition etc. No one knew about it but me.

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  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
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    @Matt R. 

      now we all know and how come I did not get a call  :)

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  • Matt R.
    Sherman Oaks, CA · Member since 2013 · 3k+ posts · 2k+ votes
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    Originally posted by @Jay Hinrichs:

    @Matt R. 

      now we all know and how come I did not get a call  :)

    Yes, I need to call you on some of these! 

    0Reply
  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
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    @Matt R. 

     Yes you do !!  I can't operate without my teams !!

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  • Sean Hurwitz
    Investor · Van Nuys, CA · Member since 2014 · 151 posts · 38 votes
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    Hey @David Tankersley , I don't remember which Podcast I heard it on, but it was FROM a Wholesaler...he said it takes a good 2-4 campaigns to REALLY get going and get the responses. 
    I'm not a Wholesaler, but I believe that even more patience might be needed on your part.

    Good luck with it all.

    I'm a rehabber, feel free to hit me up if yo have some good deals!

    1Reply
  • Jeremy T.
    Investor · Pittsburgh, PA · Member since 2014 · 266 posts · 240 votes
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    Let's say you are an absentee owner who wanted to unload a property.  You probably have a very specific set of circumstances that have led you to the point of wanting to liquidate your investment.  Additionally, you receive several yellow letter style/postcard piece(s) of mail every day/week in which some guy/gal has 'handwritten' the same message (I'm sure it's merely a coincidence that their handwriting and message is exactly the same...) about how he/she would like to '$$$BUY$$$ your house for cash dollars' (I'm paraphrasing here). 

    Look, there is no doubt that these campaigns are successful in certain markets or with a 5 figure/month marketing budget and a fully functioning call center to handle the inbound call volume.  When a market becomes saturated with the same message, the effectiveness of the hokey, 'aww shucks, all I have is this measly legal pad and red pen (hell, I even use this pad as a coaster for my coffee!); therefore allow me to scribe you this simple message about how I want to buy your property' is diminished, IMO. 

    You need to determine how you can stand out.  I don't think lowering the bar is the answer.  These are likely successful/sophisticated individuals in other areas of life.  Be personal, be professional, be prepared and figure out what keeps your prospect up at night. 

    If you want to compete in the most competitive market, you need to find a way to separate yourself.  Doing what everyone else is doing is not an effective means to accomplish that goal.  Read the forums, learn about what things drive the landlords of BP up a wall.  Tailor your marketing message to allow the "you" at the start of this post to say "Oooh, this is an interesting piece of mail, I wonder what it says?  Aha! Yes! This person gets it and I believe they can help me solve this problem!".

    1Reply
  • David Tankersley
    OP
    Wholesaler · Anaheim, CA · Member since 2014 · 64 posts · 16 votes
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    Thank you all for your valuable input.

    I particularly like your ideas about a more unique marketing approach and that is definitely on tap.

    The good news is that suddenly, like magic we had 10 leads call-in today. We are in the process of filtering them out, but there is light at the end of the tunnel.

    I guess we weren't patient enough after all?

    In any case, all of your input was worthy and I am very grateful for this community.

    0Reply
  • Dev HornPro Member
    Flipper/Rehabber · Arlington, TX · Member since 2013 · 1k+ posts · 2k+ votes
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    We once did a 25,000 sticky note campaign out there (in the IE - Riverside) and got ZERO calls from it.  Zero.  I seriously thought that was statistically impossible.  We verified that the delivery crew really did put them out (they gave us several thousand pics of our notes on doors to prove it).  And we got ZERO calls.  30 years in marketing and it was the first campaign I ever did that got ZERO CALLS.  You gotta love So Cal!  (arrgghhh!)

    Our direct mail strategies (for WeBuyHouses.com) work well out there, but we are doing thousands of pieces per month and have been hitting that market for about 15 months now.  The cost per lead is still pretty high.

    We also have a pay-per-lead business where people bid on the leads we generate.  In LA, single motivated seller leads are selling for over $500 EACH (for exclusive leads).  First time I've seen that in my years in this business.  The competition is driving the cost of business way up out there.  So, it is what it is.

    To invest remotely, you'd want to consider a place where you at least know someone who can check out properties, send you pics & videos, and represent you locally.  Maybe a family member or close friend.  Point is, you'd need a partner unless it's a market that you can travel to frequently.

    Hot markets I see that are not too competitive are often secondary markets - like Birmingham, AL, Columbus, OH, Fort Worth, TX, or Tucson, AZ.  Yes, there's still competition in markets like those, but no one is paying $500 a lead in those markets!

    Wish you the best, David!

    1Reply
  • Bruce May
    Lender · San Diego, CA · Member since 2011 · 664 posts · 231 votes
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    @David Tankersley, I've been investing in the San Diego and Inland Empire for the past 7+ years doing flips and a few wholesales. I've almost exclusively gotten my leads from my own mail campaigns. That changed last year. I only did two campaigns and did not get any deals from either one and they were big campaigns. We did get calls, but nothing evolved into a viable deal. That was the first time that had happened to me.

    To combat that I'm returning to my own letters. I've used the yellow letter and the postcards, but as I said that didn't get me anywhere last year. I'm going to re-reading the marketing books written by Dan Kennedy and fine tune a letter I used a few years back. As was mentioned by @Jeremy T., we need to stand out from the crowd. Best of luck to you.

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  • David Tankersley
    OP
    Wholesaler · Anaheim, CA · Member since 2014 · 64 posts · 16 votes
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    gee, Dev & Bruce......you make all all seem so much harder out here than when the seminar gurus come to town. ????

    The "leads" are coming in, up to 25 now. But most are looking worthless as I thimk that the "3rd notice" card is only scaring folks into calling to see what it's about. 

    I'm not discouraged though and hope to at least break even on the venture. Moving forward I am getting more serious about working out of state. As I said the western states interest me the most. Towns that interest me now are Denver, Seattle, Boise, and Tuscon. I have a contact in each of them and would liken or pair-up a BP member to keep things professional and honest.

    Even if we make a few bucks in Cali, I still believe that it's smarter for me to look out of town.

    Thoughts?

    0Reply
  • Account Closed
    Investor · Meridian, ID · Member since 2013 · 133 posts · 50 votes
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    @David Tankersley if you get any wholsale deals in the Boise area please put me on your buyers list - if you are looking for buyers. Thanks !

    0Reply
  • Jonathan Mednick
    Birmingham, AL · Member since 2013 · 149 posts · 44 votes
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    Originally posted by @Dev Horn:

    Hot markets I see that are not too competitive are often secondary markets - like Birmingham, AL, Columbus, OH, Fort Worth, TX, or Tucson, AZ.  Yes, there's still competition in markets like those, but no one is paying $500 a lead in those markets!

    Wish you the best, David!

     I worked the Fort Lauderdale/Miami market for years. Market tanked, got saturated with the competition and started buying in  Birmingham about four years ago and moved here three years ago.  Not much competition like in the major markets and Birmingham is more of a buy and hold market. Most net caps will be in the 10% range. I've done about 300 turnkey properties for myself as well as other investors and we have now moved in to Huntsville, Montgomery and Mobile. If you are in need of local infrastructure and expertise or would like to see our current inventory of over 70 turnkey properties available for sale so you can get a better read on this market, let me know.

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  • Bill S.Pro Member
    Moderator
    Rental Property Investor · Denver, CO · Member since 2013 · 4k+ posts · 2k+ votes
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    @David Tankersley If you try Denver I would be interested to hear what kind of results you get here. I've been doing it here for about 6 months and it's tough sledding and I got more leads and a deal by mailing to an out of state area where there was significantly less competition. 

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  • David Tankersley
    OP
    Wholesaler · Anaheim, CA · Member since 2014 · 64 posts · 16 votes
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    good to know, Bill. 

    The stats I have seen look good for Denver, but knowing how things are in the trenches such as yourself is always good to know.

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  • Ronnie Wilson
    Edgewood, MD · Member since 2014 · 79 posts · 17 votes
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    Dave,

    So Cal is a very competitive market. I'm not a big fan of the yellow letters. I have an investment company and we use our letter head on our letters. Keep testing different letters in your direct mail campaign until you find something that works. Change the content in the letter. While your running your mail campaign start working on other investment skills. Wholesaling is a great skill to have but don't limit yourself to just that part of investing. I like investing in HUD homes and tax liens and tax deeds. Tax liens and tax deeds create a nice passive income.

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  • Andrew Johnson
    Project Engineer · Littleton, CO · Member since 2014 · 80 posts · 17 votes
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    @David Tankersley I would suggest you really do your research to determine your best strategy if you try and wholesale here.  Like Bill said, the competition and market here suggests that Denver probably isn't the best alternative to wholesaling in SoCal.

    @Bill S. I have heard (and seen) how tough Denver is to wholesale for a while. I was getting ready to start mailing here but then decided to take a step back to determine if my marketing money is really best spent mailing locally. I have been considering Kansas City as an alternative since I used to live there and know the area. I've talked with people with very encouraging results there.  I've heard good things about parts of Arizona as well.  I'd be curious to know where you've decided to start marketing out of state.

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  • Bill S.Pro Member
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    Rental Property Investor · Denver, CO · Member since 2013 · 4k+ posts · 2k+ votes
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    @Andrew Johnson I'm mailing SE Wyoming but much of the area is not available via listsource.

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  • Andrew Johnson
    Project Engineer · Littleton, CO · Member since 2014 · 80 posts · 17 votes
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    @Bill S. Very cool.  I talked with another investor last week who is researching investing in that area as well.  They mentioned that the rental market is strong in Cheyenne with the military base and university etc. with lower property prices.  I wish you luck!

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