Marketing Response and Inflated Expectations

10 Replies

So I started a reasonable sized mailing campaign for my first attempt and have been receiving a decent amount of contacts.  While I have enjoyed the conversations with these homeowners, I am starting to see a trend that people seem to expect that they can sell their house for current value +10-20%. 

Yesterday I had a lady contacting me saying she would take nothing less than half a million for a manufactured home that is currently renting for 1,100$.  It just makes me smile :)

Do others see a lot of this stuff as well?

@Derrick Strope

Hysteria has been a little crazy, particularly in urban areas. On the edge of Seattle, you are definitely seeing a bit of that craze. People in NYC talk about paying 1M+ for a condo and call it an investment, knowing that the rent on the unit is nowhere near 10,000 (1%), I am completely shocked. 

This in turn ups the confidence of everyone on the outskirts, and even people in areas where the gain is not that crazy are seeing gain, because cash flow investors are heading to their regions. 

I would consider going for some geographical diversity or a little further out. Right now NYC and most of NJ is crazy hard for me, and I imagine Seattle greater area is very similar.

This is exactly what I have been experiencing with my direct mail campaign. Not everyone is motivated to sell, they may want to sell but your job is to find the highly motivated sellers. 

This is where it becomes tough but within time you will have someone that is motivated to sell and is not attached to the property. It's actually a huge hassle for them or maybe they need the money badly. 

I have also found that ARV x 70% - repairs does not work in my area. So much competition, I am getting outbid by a long shot. So learn your local market and talk to your buyers to see what exactly they're looking for.

Originally posted by @Trevor Ewen :

@Derrick Strope

Hysteria has been a little crazy, particularly in urban areas. On the edge of Seattle, you are definitely seeing a bit of that craze. People in NYC talk about paying 1M+ for a condo and call it an investment, knowing that the rent on the unit is nowhere near 10,000 (1%), I am completely shocked. 

This in turn ups the confidence of everyone on the outskirts, and even people in areas where the gain is not that crazy are seeing gain, because cash flow investors are heading to their regions. 

I would consider going for some geographical diversity or a little further out. Right now NYC and most of NJ is crazy hard for me, and I imagine Seattle greater area is very similar.

Just crazy.  Yeah, just yesterday I sent out another batch to my old hometown which is on the east side of Washington state.  Not rural but definitely not anything like Seattle metro, hopefully those fetch me some realistic contacts.

Originally posted by @Jeremy Ferguson :

This is exactly what I have been experiencing with my direct mail campaign. Not everyone is motivated to sell, they may want to sell but your job is to find the highly motivated sellers. 

This is where it becomes tough but within time you will have someone that is motivated to sell and is not attached to the property. It's actually a huge hassle for them or maybe they need the money badly. 

I have also found that ARV x 70% - repairs does not work in my area. So much competition, I am getting outbid by a long shot. So learn your local market and talk to your buyers to see what exactly they're looking for.

 What I am starting to notice after a few conversations, if you are targeting absentee owners - you are going to hit a lot of investors who are going to play ball with you to see if they can get a deal out of it.  I had a property lead tonight that turned into a lender/buyer, it's funny how these things work.

Originally posted by @Derrick Strope :
Originally posted by @Jeremy Ferguson:

 What I am starting to notice after a few conversations, if you are targeting absentee owners - you are going to hit a lot of investors who are going to play ball with you to see if they can get a deal out of it.  I had a property lead tonight that turned into a lender/buyer, it's funny how these things work.

 Hey Derrick,

clarification...what do you mean by play ball?  waste your time?  see if you're legit?  see what you're doing? 

cheers

p.s. how many letters have you been sending?  

Originally posted by @Patrick Britton :
Originally posted by @Derrick Strope:
Originally posted by @Jeremy Ferguson:

 What I am starting to notice after a few conversations, if you are targeting absentee owners - you are going to hit a lot of investors who are going to play ball with you to see if they can get a deal out of it.  I had a property lead tonight that turned into a lender/buyer, it's funny how these things work.

 Hey Derrick,

clarification...what do you mean by play ball?  waste your time?  see if you're legit?  see what you're doing? 

cheers

p.s. how many letters have you been sending?  

Patrick, I think mainly to see if they can find a good exit strategy. They have no real intention of selling but are willing to chat about it, build a rapport and enjoy the conversation of another investor. Of course if the offer is right and they make out great, I am sure they would sell however they aren't going to jump at 70-80% ARV.

I shot out about 1k on my first mail up north of Seattle and doing another 500 towards eastern Washington.

Edit: I wouldn't call it a waste of my time, although it may be to some degree.  Since I basically found someone that wants to take deals off my hands tonight, it's worth it to talk with these guys.

I spent almost an hour on the phone with an 82 year old investor and he shared all kinds of great stories.  It was interesting :)

Hi Derrick, I see this often and when I do get motivated sellers I often feel shock because they are like 1/50 calls. I cannot believe what the market is willing to pay for houses!

Originally posted by @William Johnson:

Hi Derrick, I see this often and when I do get motivated sellers I often feel shock because they are like 1/50 calls. I cannot believe what the market is willing to pay for houses!

 Great to hear, I just need 41 more calls needed then! :)

Thanks for sharing @Derrick Strope !  

Can we have some details please?  

Who are you using for your mailers?  yellowletters.com?  

Did you buy an absentee owner list from someone or are you putting in the research to find these addresses yourself?

When you say "north of Seattle" are you mailing to Snohomish county only (besides the east side mailers you mentioned).

@Aaron Ramm correct on the Snohomish County, I decided to go with those who have 100% equity to start with (also absentee).  I am not using a mailing service, starting out I wanted to handle it all myself.  Lists purchased from MelissaData and Listsource.

From the eastside I have access to MLS, so I compiled my own lists.

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