Best strategy for the budget-conscious newbie

9 Replies

Hi all,

I haven't met many of you yet, but my name is John and right now I'm doing my homework and building a network so I can get involved in the St. Louis market. Obviously, there's a lot of fluff and guru rhetoric out there about wholesaling so I'm hoping some experienced folks will share their insight and advice.

I'm considering starting one of two ways. Which will have the best ROI?

1. Invest in direct mail marketing with a month budget of $350. From what I've learned on BP, I should expect to find a deal within 6 months. Although I can part with $350/mo, I'm apprehensive to jump in because I don't want to loose this money.

2. Drive around on weekends and evenings, look for For Rent signs and call owners to find one who wants to sell. I expect this will be slow going but the monetary risk is lower. I'm attracted to the idea finding my first deal this way and using the proceeds to fund strategy #1.

Penny for your thoughts?


Of the two methods listed above I would say driving for dollars would have the highest ROI. Think about it, you spend $40 to fill up your car with gas and drive around finding for rents, distressed property and FSBO's.. You can even hand out business cards and flyers along the way.

Of course you will waste ALOT of time and time is money. In my experience post cards have brought me the most leads and deals overall. Are you strapped for cash or just nervious about getting started?

Originally posted by @Wayne Woodson:
Of the two methods listed above I would say driving for dollars would have the highest ROI. Think about it, you spend $40 to fill up your car with gas and drive around finding for rents, distressed property and FSBO's.. You can even hand out business cards and flyers along the way.

Of course you will waste ALOT of time and time is money. In my experience post cards have brought me the most leads and deals overall. Are you strapped for cash or just nervious about getting started?

Thanks for your response, Wayne. It's not that I'm strapped for cash as much as I'm allergic to loosing money. Although I'm in marketing professionally, I've never launched a direct mail campaign and want to make sure the dollars I invest are allocated for a strategy with a good return. I don't want to waste money.

Can you speak a bit more to your experience in starting out with postcards and what it yielded?

This is a great question. I am eager to hear more responses. Wayne Woodson I am both strapped for cash and nervous to start out. I live in New York where the property rates are high, not sure where I fit in as a newbie and with these flat pockets.

I am not much one for driving around looking at houses. You have no idea who owns them, if they are owner-occupied, have renters, vacant, whatever, nor do you know if the owner has any equity, etc. so it can take TIME to track down all that stuff. But if you have more time than money, I suppose you might find a deal driving around.

If you want to buy houses from motivated sellers of distressed properties, you'll find that this is a MARKETING challenge. Direct mail can be a winner because the seller calls you if your message appeals to them. Pay-per-click is also a good strategy, but you'll find that people that fill out forms on the Internet often fill out multiple forms on multiple sites to create competition among investors. Leads from direct mail tend to have less competition. And I prefer direct mail because I can target just those people in the houses and equity positions that I care about...

P.S. on a tight budget like $350 per mo., you need to do POSTCARDS, not letters. You can create and mail postcards for 50 cents, whereas letters can cost up to a dollar to produce and mail. So, hit 700 people with postcards every month vs. 350 people with letters. GO FOR QUANTITY (the most you can touch in each mailing) and FREQUENCY (touch them monthly).

Medium wbh square logoDev Horn, We Buy Houses® | [email protected] | 877‑932‑8946 | http://webuyhouses.com/profile/arlington

It takes money to make money (despite what the guru's say) so never think of this as loosing money but investing money. If you do steady marketing in this business and manage your leads you WILL make money. If I was first starting out again I would start small then scale up, I had to learn this the hard way. My advice would be to start with 20 postcards a week ($9 a week is easily affordable) and work on handling the calls and creating good scripts and systems. Then after you do that and get confidence scale up.

I would transition to postcards as soon as you can as you will discover driving for dollars gets old quick. Also if you don't know how to talk to sellers it will be a waste of time.

Originally posted by @Dev Horn :
I am not much one for driving around looking at houses. You have no idea who owns them, if they are owner-occupied, have renters, vacant, whatever, nor do you know if the owner has any equity, etc. so it can take TIME to track down all that stuff. But if you have more time than money, I suppose you might find a deal driving around.

If you want to buy houses from motivated sellers of distressed properties, you'll find that this is a MARKETING challenge. Direct mail can be a winner because the seller calls you if your message appeals to them. Pay-per-click is also a good strategy, but you'll find that people that fill out forms on the Internet often fill out multiple forms on multiple sites to create competition among investors. Leads from direct mail tend to have less competition. And I prefer direct mail because I can target just those people in the houses and equity positions that I care about...

Thanks, Dev. What are your thoughts on a $350 budget? Assuming the list is properly filtered, is this enough to smoke out the first deal? And assuming I can negotiate with sellers and effectively analyze properties in order to bring value to investors, do you think 6 months is realistic for finding a deal?

@John Voirol

Welcome. Mailings are a series of 7 letters spaced out but are merely one way to develop deals. Have you built the foundation below.

Check out the Start Here page http://www.biggerpockets.com/starthere

Check out BiggerPockets Ultimate Beginner's Guide - A fantastic free book that walks through many of the key topics of real estate investing.

Check out the free BiggerPockets Podcast - A weekly podcast with interviews and a ton of great advice. And you get the benefit of having 60 past ones to catch up on.

Locate and attend 3 different local REIA club meetings great place to meet people gather resources and info. Here you will meet wholesalers who provide deals and all the cash buyers (rehabbers) you will need.

Two Great reads, I bought both J. Scott The Book on Flipping Houses,The Book on Estimating ReHab Costshttp://www.biggerpockets.com/flippingbook

Couple of great reads

Good Luck

Paul

Originally posted by @John Voirol :
Originally posted by @Dev Horn:
I am not much one for driving around looking at houses....

Thanks, Dev. What are your thoughts on a $350 budget? Assuming the list is properly filtered, is this enough to smoke out the first deal? And assuming I can negotiate with sellers and effectively analyze properties in order to bring value to investors, do you think 6 months is realistic for finding a deal?

Hey man - it is what it is. The bet place to start is WHERE YOU ARE. Could you go "faster" with $500 or $1000 a month. SURE. But $350 is a better start than 90% of the people I hear saying they want to get into real estate with zero money. They will reach 0 people per month, while you can touch 700 every month. I'd put my money on you. =)

$350 is a fine place to start if you are COMMITTED to a minimum of 5 to 7 repeated mailings to your list. We have a free REI education video (The Rule of 7) that talks about why this is so important....

Medium wbh square logoDev Horn, We Buy Houses® | [email protected] | 877‑932‑8946 | http://webuyhouses.com/profile/arlington

It seems that jumping into direct mail, regardless of budget, is the unanimous winner. Thanks to all who provided input. Feel free to link to any compelling threads regarding list providers and direct mail vendors.