0.40% Response Rate on Yellow Letter - Looking for Suggestions

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0.40% Response Rate on Yellow Letter - Looking for Suggestions

Paul Felix
Austin, TX · Member since 2015 · 31 posts · 13 votes

I mailed 500 yellow letters to out of state property owners.  The mailer should have arrived in mailboxes around 3-4 days ago.  So far I have received 2 call from the mailer.  I used a standard yellow letter.  No modifications were made.  You can view the letter here.  https://www.yellowletters.com/product/investor-yellow-letter-1.

My list came from the central appraisal district.  I randomly selected 1000 out of state owners to mail to.  500 mailers went out a week ago and 500 will go out again today.  I sent one to myself and it arrived on Friday.

Based on other threads here on BP and elsewhere I expected to get at least 2 or 3% response rate and was hoping for something closer to 5%.  I may yet get a call or two, but it doesn't look like my response rate will come close to what others get on yellow letters.

Any ideas as to what caused the low response rate?  Here's my novice analysis of the situation.

- The letter itself has numerous people saying that it works well to generate incoming calls.  I have to believe that the letter is not the problem.  However, I do see that some suggest writing the address on the envelope by hand.  Others say this makes a marginal difference.

- Maybe more calls will come in over the next few days?  I don't know how long it should take to start receiving calls, but I was expecting that the majority of calls would come in shortly after the mail landed in mailboxes.

- My list is straight from the local county CAD.  I scrubbed the data thoroughly & ran it through google geocode api to get clean addresses.  I have not started to receive returned mail (likely will today), but if I assume that 20% of the mail is going to be returned that increases the response rate slightly but nowhere close to what others have reported.

- Maybe my target has seen too many yellow letters?  I plan to continue to mail to the same list indefinitely every month.  Perhaps the response rate will increase as the number of touches increases.  Others have reported that the response rate goes down and quality (conversion) goes up.  Not sure what to expect really.

My goal is to find opportunities to fix & flip.  The good news is that the couple calls I did get may generates some marketing fee revenue. 

What do you think I should do next?  Stay the course or make adjustments?  Thank you in advance for your feedback.

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Dannielle Spencer
Beacon, NY · Member since 2015 · 16 posts · 7 votes
10y
I'm not an expert either but I've been doing quite a bit of research on this myself because I'm doing my first marketing campaign this month. I recommend listening to Michael Quarles podcast on marketing (#81) if you haven't already. I think the biggest thing that I've learned so far is that you may need to touch people up to 5-7 times before you start to see a lot of calls come in. Being that you are in a very active area that may actually be to your benefit if you can find a way to stand out with your mailings because the people you are marketing to will already have received other marketing material and your marketing can build on that. When I went to do my mailers I made my own postcards via VistaPrint and pulled a list for my area for 1,300 homes via Listsource. In Listsource I chose absentee owners with 90-100% equity. I'm planning on running a campaign with 1/2 the list for at least 4 months and then adding on to the list as I go. I haven't sent it all out yet but I'm happy to let you know what happens when I do!
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  • Cody Alexander
    Real Estate Professional · Bakersfield, CA · Member since 2014 · 205 posts · 87 votes
    10y

    So the only criteria you were able to pick was out of state owner? Did you select equity or length of ownership? 

    0Reply
  • Paul Felix
    OP
    Austin, TX · Member since 2015 · 31 posts · 13 votes
    10y

    I limited the target list to people (non entity) owners with a deed dated at least 5 years ago.  Here's more on my list criteria.

    • Out of state
    • Single family home (no condo, townhome, commercial, etc...)
    • Deed dated at least 5 years ago
    • Assessed value > $0 (data check)
    • Land acres > 0 (data check)
    • No entity owners (LLC, Trust, Inc, LP, State, etc...)
    0Reply
  • John Chapman
    Investor · Dallas, TX · Member since 2009 · 718 posts · 913 votes
    10y

    I don't purport to be an expert on this stuff, but I've been mailing for about 3 years in DFW.  Here's my thoughts based on my experience.  First, your list is a problem.  Mailing just to out of state owners with some equity is a list that is probably getting pounded right now.   Your area is much hotter than mine, and I would not waste my time mailing to such a list.  You need a much tighter list that targets buyers with some degree of motivation.  I think larger companies with larger resources can probably mail to these lists and do okay, but sending 500 here or there is likely not going to cut.  

    Second, I'm sorry, but that is one of the most generic pieces of mailings I've ever seen.  It looks like something that everyone else is sending.  I generally try to send a mailing that looks different from others so that the owners know I put at least a modicum of thought into it.

    3Reply
  • Franklin Romine
    Visalia-Fresno, CA · Member since 2009 · 1k+ posts · 863 votes
    10y

    @Paul Felix

    Create more interesting content in the flyer to pull in the viewer.

    Frank

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  • Paul Felix
    OP
    Austin, TX · Member since 2015 · 31 posts · 13 votes
    10y


    @John Chapman Thank you for the feedback.  It sounds like my list and mailer are problems.  I guess the only other major variable is timing.  It may sound like a rookie mistake, but my reason for not modifying the letter was that it has been proven to work and I didn't want to inadvertently decrease the response rate by modifying it.  The same is true for the out of state equity owners.  There are many resources that point to this list being the low hanging fruit so I figured why not start there.  Again, it doesn't seem to be working out.

    Could you expand on what type of target list may get better results?  Probate, divorce, code violation, etc...  There are quite a few to choose from.  Where would you start if this was your first campaign?

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  • Paul Felix
    OP
    Austin, TX · Member since 2015 · 31 posts · 13 votes
    10y

    @Franklin Romine

    Thank you.  You and John agree that the standard yellow letter isn't good enough.  To be honest, I'm very surprised.  I tend to over research stuff and could probably gather dozens of threads, blogs, and articles that make it sound like the yellow letter when done "right" will generate response.  The funny thing is that I broke my mailing into two sets of 500 to try to throttle the incoming calls.  I just made myself laugh (sort of)!

    0Reply
  • Dannielle Spencer
    Beacon, NY · Member since 2015 · 16 posts · 7 votes
    10y
    I'm not an expert either but I've been doing quite a bit of research on this myself because I'm doing my first marketing campaign this month. I recommend listening to Michael Quarles podcast on marketing (#81) if you haven't already. I think the biggest thing that I've learned so far is that you may need to touch people up to 5-7 times before you start to see a lot of calls come in. Being that you are in a very active area that may actually be to your benefit if you can find a way to stand out with your mailings because the people you are marketing to will already have received other marketing material and your marketing can build on that. When I went to do my mailers I made my own postcards via VistaPrint and pulled a list for my area for 1,300 homes via Listsource. In Listsource I chose absentee owners with 90-100% equity. I'm planning on running a campaign with 1/2 the list for at least 4 months and then adding on to the list as I go. I haven't sent it all out yet but I'm happy to let you know what happens when I do!
    4Reply
  • John Chapman
    Investor · Dallas, TX · Member since 2009 · 718 posts · 913 votes
    10y

    Paul, again, I'm not  purporting to be an expert, but I'm happy to share how I do things.  I should caution that I'm a buy and hold guy, so I try to generate lists that are more targeted to those types of investments.   I also use a mail service that I've been very happy with over the years.  Shoot me a PM, and I'll give you the details.

    0Reply
  • Steve Vaughan
    Rental Property Investor · East Wenatchee, WA · Member since 2014 · 10k+ posts · 16k+ votes
    10y

    Maybe try postcards? Hard to not read those before tossing them.  I use postcards and try and trigger a few possible pain points.  Tired of being an absentee owner? Landlording getting you down?  That kind of thing.

    I'm no expert on DM pieces, though.  I hope when you do get a deal you remember how hard it was and how much it costed in time and dollars before you sell it (or your interest in it) off for a quick one-time payday at a high tax rate @Paul Felix!

    0Reply
  • Dannielle Spencer
    Beacon, NY · Member since 2015 · 16 posts · 7 votes
    10y
    Also I learned from Michael Quarles that going for good equity is best because that list will include all of the probate, absentee etc. I chose absentee with high equity because that gave me the right size for the amount of money I could spend.
    0Reply
  • James Wise
    Real Estate Broker · Cleveland Dayton Cincinnati Toledo Columbus & Akron, OH · Member since 2013 · 30k+ posts · 20k+ votes
    10y

    Make a more targeted list.

    I do very targeted marketing and have several different types of marketing for the type of list I am mailing to.

    1Reply
  • Cody Alexander
    Real Estate Professional · Bakersfield, CA · Member since 2014 · 205 posts · 87 votes
    10y

    The Letter will get you calls, the calls will just be a mixture of everything including tire kickers. I think the list is the main problem. This is the the criteria thats working for us right now: 

    • 30% or more equity
    • SFR
    • 4 Year ownership
    • 2-4 Bedrooms
    • 65% Absentee including Trusts and Corps
    • 35% Owner Occupieds Not including Trusts or Corps

    Equity is a huge factor, without equity you can't by the house at a discount.

    Keep in mind, direct mail is all about touches, you need to touch them a minimum of 6 times. Switch up your mail piece with each touch. Yellow Letter, small text PC, professional typed letter, Zip Letter, Large text PC, greeting card, full color pictorial PC...ect. Cluster marketing is key.

    3Reply
  • Paul Felix
    OP
    Austin, TX · Member since 2015 · 31 posts · 13 votes
    10y

    @Dannielle Spencer

    Thank you for the info.  I'm listening to podcast 81 as I type.  I didn't buy my list from listsource, but I think it is fairly accurate.  I'm a data guy in my full time gig and was able to collect all of the cad and tax data from my target area directly from the municipal sites.  I don't know directly how much equity the owner has, but the deed date is available.  Maybe I should limit the list to people that have a deed that is 10 years old instead of 5.

    Please do update me on your mailer results.  The more details the better.

    0Reply
  • James Palin
    Dallas, TX · Member since 2014 · 189 posts · 39 votes
    10y

    @Paul Felix

    A lot of what I have read and researched is that repetition is the key.  We all know they will not always call you on the first mailer you send them.  Sometimes it takes sending out mailers every month or quarter, sometimes for a couple a years before you get a response.  A common theme I have heard is that the owner is on their timeline, not yours.  Something has to happen that triggers them to finally want to sell their home.  Could be a death, divorce, bad tenant or any number of things that will finally cause the owner to make a decision to finally sell the home.  Persistence is the key.   They will remember the guy that sent them something every quarter for a couple of years over the guy that sent one or two pieces of mail and gave up.

    I agree with @John Chapman.  Absentee owners may not the strongest marketing demographic because they don't have the biggest sense or urgency plus that is the list that gets hit the most.  Divorces and probates are good because there is usually a party (or parties) waiting to get the proceeds of the sale.

    Also go for something unique.  I knew an investor who put a childhood picture of himself with something like, "Would you sell to this kid?" Kind of cheesy? Yes, but he got some leads out of it.  I am not saying I would do this strategy, but you have to be unique from everybody else.  You just need to do some research and brainstorming.  Good luck to you.

    0Reply
  • Cody Alexander
    Real Estate Professional · Bakersfield, CA · Member since 2014 · 205 posts · 87 votes
    10y
    Originally posted by @Paul Felix:

    @Dannielle Spencer

    Thank you for the info.  I'm listening to podcast 81 as I type.  I didn't buy my list from listsource, but I think it is fairly accurate.  I'm a data guy in my full time gig and was able to collect all of the cad and tax data from my target area directly from the municipal sites.  I don't know directly how much equity the owner has, but the deed date is available.  Maybe I should limit the list to people that have a deed that is 10 years old instead of 5.

    Please do update me on your mailer results.  The more details the better.

    Unfortunately that's not the best way to figure for equity. For a 30year FHA loan at 4.5% interest, there is only 20% equity in 10 years. That's why you really need to use a list provider that has an equity filter.

    1Reply
  • Paul Felix
    OP
    Austin, TX · Member since 2015 · 31 posts · 13 votes
    10y

    @Cody Alexander

    Thank you for the response.  I understand that mailing consistently is key, and I plan to mail indefinitely.  What I'm not clear on is what the response rate should be on mailer number 1.  What would you consider an adequate response rate on the first mailer.

    On the list criteria I think I have a list that meets your criteria with the following exceptions.

    • 30% equity is assumed via a 5 year deed.  If you amortize a loan with a 5% rate, assume 10% down payment, 7% annual appreciation (market specific), and 30 year note then the loan balance will be lower than 70% of value even after moderate rehab costs.
    • I did not mail to entities; only people.  I also did not mail to owner occupied.

    What I'm honestly struggling to understand is how these list criteria difference will change the response rate.  In other words, are people that live in their how more likely to respond than an absentee owner?  Would an entity owner be more likely to respond than a human owner?  Or, is it more that you believe absentee owners are over marketed too making owner occupied properties more likely to respond?

    Thank you again for the feedback.  I really do appreciate it. 

    0Reply
  • Cody Alexander
    Real Estate Professional · Bakersfield, CA · Member since 2014 · 205 posts · 87 votes
    10y

    We don't really differentiate between absentee and owner occupied, we typically just split it about 60/40 absentee/owner occupied.  I would pull a list from List Source witht he following criteria:

    • SFR
    • properties under median value
    • 2-3 bed
    • 4+ years of ownership
    • 30% or more equity

    @Michael Quarles contracted 58 homes last month (some in Texas), using that criteria and the exact same letter.

    1Reply
  • Roy Oliphant
    Rockwall, TX · Member since 2014 · 380 posts · 211 votes
    10y

    @Cody Alexander

    @Paul Felix asks a very good question.  Counting 6 touches before you get to a 2% response rate is pretty misleading to newbies.  It would be very helpful to know an expected rate on a single touch basis so you can calculate the real cost and effort of getting to a deal stream.

    1Reply
  • Paul Felix
    OP
    Austin, TX · Member since 2015 · 31 posts · 13 votes
    10y

    @Cody Alexander raised some legitimate questions about the list that I'm targeting.  So, I did a little research into the difference between my list criteria and the data available from listsource.com.  I think everyone knows what listsource.com offers so I'll quickly describe how I pulled my list. 

    My target area is Travis county.  TravisCAD has an online search tool that allows users to pull detailed appraisal, deed, and ownership info on properties in Travis County.  I have an application that scrapes this data on a nightly bases and collects details on all properties in the county.  I have validated that the data I collect matches the data available online via the TravisCAD search tool.  This data is then augmented and cleaned in ways that are not relevant to this discussion.

    Here's how ListSource compares to the TravisCAD data.

    The above chart is show cumulative results.  At the top level (all properties) list source is missing 11% of the properties in Travis County.  When you filter to include out of state properties in Travis County, List Source offers only 53% of the total properties.  You can read the rest of the criteria applied and see the difference.  This is why I prefer to pull the data myself.

    I did not apply the 30% minimum equity filter to my target list.  Based on List Source data 72% of the properties that meet all other criteria also meet the 30% minimum equity criteria. 

    It is reasonable to assume that 72% of my list also includes properties with 30% minimum equity based on the above.  If we hypothetically exclude the remaining 28% from my list, then the new response rate would be 0.55% (2 out of 360 instead of 2 our to 500).

    Disclaimer - I am only looking at counts, not individual properties.  There is a small chance that my list if completely wrong.  This is highly unlikely as I have validated my data against the county data and it matches 100% of the time.

    Mathematically, it doesn't seem to add up.  Something else must be going on.  I haven't seen anyone else report a 0.4 to 0.5% response rate on a yellow letter mailer.

    The problem must be in one or more of these buckets:

    • Mailer - I realize it is the same old yellow letter that everyone else uses, but there is just so many accounts of good response that I tend to think this is not the main issue.
    • List - The owners I'm mailing to meet the suggested criteria with minor discrepancies that are not mathematically significant.  I do not have any filters to verify the competitive environment however.
    • Timing - Not sure if this is a factor or not.  I've seen posts that say some mailers just don't get response while others do and nothing changed except time.

    @John Chapman made a point that seems to make sense.  Maybe the owners I'm targeting is being marketed to by many other investors.  Is there any way to confirm this?  Or, maybe this mailer did just that.  Not sure. 

    0Reply
  • Paul Felix
    OP
    Austin, TX · Member since 2015 · 31 posts · 13 votes
    10y

    Correction - List Source count at the > 0 sf living area data point is 2,532 which is 75% of the TravisCAD data.  Not really important, but better to be accurate.

    0Reply
  • Joel OwensBusiness Member
    Moderator
    Real Estate Broker · Canton, GA · Member since 2010 · 15k+ posts · 11k+ votes
    10y

    Mailing is a long view game. You will get some in between NOW sellers but the others fill the pipeline.

    Pretty soon you should have many sellers coming to you at various points in time. One might tell you to F off but another says "help me" and you do well off of one purchase and sale.

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  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    10y

    @Paul Felix  hard to get a reading with such a small mailing.. also your mailing to a market that is probably hammered.. the better markets are like that.

    the success direct mail  home buyers I know here in our market send out at least 10 to 20 times the amount of mailers per run.. 

    remember a 2% reponse rate can be handled pretty easily.. and rule of thumb is for every 1000 letters you hope to at some point hail 1 deal.

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  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    10y

    @Cody Alexander  can you share how many mailers went out to produce 58 buys in one month for buyer quarles?  this will give those who want to 10X their business a reality check into how much marketing capital one would need up front to create that kind of pipe line

    Podcast Guest on Show #222
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    1Reply
  • Aaron Mazzrillo
    Investor · Riverside, CA · Member since 2011 · 2k+ posts · 3k+ votes
    10y

    Based on your letter and your list, what you basically did was decide you were going to open a restaurant at the food court. You got a sign that says "We Sell Food" and when you wrote the executive plan for your business, you wrote, "Make money off of people who eat." 

    1. Get a better list. 

    2. Write a better letter that specifically talks to the people on that list. 

    3. Stand out from the crowd in the mailbox. 

    4. Close more deals.

    3Reply
  • Hugh Ayles
    Cedar Park, TX · Member since 2015 · 377 posts · 200 votes
    10y

    @Paul Felix

    I have not started our mail campaign yet.

    From what I have heard from others, people are receiving stacks of mailers in the Austin area.  It comes down to timing as to whether they call you or someone else.

    0Reply
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