Merry Christmas BP!
I was skimming through the pages and couldn't find a thread on this so I thought I would create one to see how fellow BPers did this year. How many wholesale deals did you do this year? How much marketing did you end up doing? What are you going to do differently next year that you didn't do this year? What goals do you have for 2013 and how do you plan to reach them?
I'm relatively new to wholesaling and will be sending my first mailing of 500 yellow letters to absentee owners on Jan 2. My plan is to send 500 letters bi-monthly and remarket to my leads every 60 days for a total of 4 times per unique lead over a 6 month period. I plan on sending a total of 23,000 yellow letters this year (just shy of $15,000 in marketing costs) but plan to jump that number higher with the help of either VA's or PATLive (maybe both). My 2013 goal is to systematize my wholesaling business and start rehabbing.
Hope all of you have a great Holiday Season!
Hello @Michael Spencer and Merry Christmas. I started direct mail about 18 months ago. I now spend about $1000 a month on direct mail marketing which netted 2 wholesale deals, 6 rehabs and 6 or 7 listings. My goal for 2013 is to concentrate on developing a plan centered around web based marketing. I am very happy with my volume but that could easily change, so developing other avenues of marketing make sense for me.
Hey @Gary Parker -that's great. Out of curiosity (and you don't have to let us know) what kind of return on investment do you get from your direct mail efforts? Obviously enough to make it worthwhile. Any other tips for people starting direct mail?
And @Michael Spencer - One wholesale deal :) I'm not a big wholesaler, but I found a property last January on the MLS, offered just $16,000 to the seller and she took it. So I just assigned it to a fellow investors.
I'd actually like to do more wholesaling. Flipping is tough in my neck of the woods, so I'm going to transition out of that and into wholesaling for buy-and-hold guys instead. I think :)
Keep us updated Michael on you journey. I'm always curious to see how those direct mail campaigns go.
@Gary Parker - I have a similar question for you. For the $1k per month in costs, how much profit was made on the 2 wholesales, 6 rehabs, and 6-7 listings? Also, were the listings short sales or standard sales and how much time and effort was needed to go through all the leads to get to the results?
I started wholesaling in June by sending postcards to 1000 absentee owners and to probates. I closed two deals (from postcards) within 3 months but have had zero leads since. I switched to yellow letters to test that marketing strategy and have no motivated leads from those letters.
For 2013 I think I need to change up my lists. For absentee owners I use the following criteria for a 5 county area: out of state, equity of 51%>, SFR, last sale date 10 years ago or earlier. With this criteria I keep getting the same properties. I market to them each month but I need to reach new sellers. Looking for suggestions on getting new leads.
@Brandon Turner & @Will Barnard I am going to make an embarrassing admittance. :-) I started direct mail in the last half of 2011 and didnt really start tracking my marketing costs until about September this year; although, I could go back and recreate. I use Quickbooks and would do things like put the cost of stamps in "postage" rather than in a "marketing" account. In September this year I started making all my entries very specific to what they are for. For example, 99% or so of my postage is for marketing so it is expensed as marketing now. I also started out making my own post cards, letters and such. I did all the stuffing of envelopes etc. I now hire out some of my post cards with yellowletters.com, hire a neighbor girl to address envelopes for the ones I hand address, pay someone to stuff envelopes and so on.
My second admittance is that I also managed the rehabs myself and do some of the work. I mostly do some of the work because it is just easier to get it done rather than find someone to do a 2 hour job when there is not more for them to do for a full day.
So the point of all this is that I dont want to spend the time to determine what my return on investment was at this time. However, for 2013 I will much better prepared to answer that question. Also, two of the rehabs are going into 2013 so only 4 rehabs for 2012 but I got the deals in 2012.
Another factor that will affect my ROI is my profit from the rehabs (obviously). What I mean by that is I only did two on my own with hard money and the other 2 completed ones I partnered with a money partner which of course reduced my profits. One of the partnered deals I did was by meeting an investor that does about 75 deals a year and partners on most of his deals. We hooked up because of my marketing. The 2 on going rehabs one is on my own with hard money and one is with a money partner.
So after saying all of this and not having looked closely at my books, I made a GROSS profit of about $78,000 on my rehabs.
So the point in all of this is to start off keeping good records, your marketing costs are always evolving as more work is hired out and rehab profits will evolve as one is able to do more on their own rather than partner with people.
As far as the wholesale deals went I made $7000. Honestly I was afraid to take on the work with what I had going on at the time. I have been doing rehabs for several years, but I had a partner that handled the rehabs 100%. I door knocked and found deals back in the day before the RE crash.
I made about $30K GROSS on my listings and they were all standard listings. Remember all of these numbers are gross profit. I have my marketing, costs to be an agent, fuel, and so on. It adds up fast.
As far as time spent going through all the leads that is interesting. There were times when I was actually not able to get to calls and return them with everything else going on. Then there are times I would give up my ice cold Coke Zero for a phone call! There were even a few times this year I didnt even look a a house because I could tell the caller wasn't that motivated. When I am slow I will look at anything to try and make a deal; when I am slammed that will not happen. I took Sharon Vornholt's advise and purchased the ACT data base and implemented that this year. I even spent the money and hired a consultant to help me set it up so I didn't have to go through the learning curve. One of my best decisions on the year. Going through leads and follow-up takes a tremendous amount of time.
I am at the stage in my business that I want to grow but am honestly working 12 hour days. I have been direct mail marketing for such a short time I am not even sure I can match what I did in 2012 let alone grow my business. If I can stay consistent the next hurdle is just as hard as starting out was. To get to the volume when I can hire a project manager, have time to develop good systems, actually track marketing and and improve response rates and so on is tough but worth it. I LOVE THIS BUSINESS.
Lastly, I learned most of what I am doing with direct mail through BP. I really read most of the marketing threads. This is such a great resource and people are so helpful. People like @Jerry Puckett , @Chris Colvard and Sharon Vornholt have taken time from their day's work to help me. I am very grateful.
Gary, thank you for being so candid. To be clear, I was not looking for net results only the gross spreads. In other words, of each of the flip opportunities, not concerning partnerships, what was the buy plus rehab vs the sold price? The commissions you posted perfectly. 6 or 7 that grossed $30k and $7k on the wholesales.
The reason for my questions is that I have considered marketing and also considered having my main agent I work with market in the same way, thus, he gets commissions, I get rehab opps. I just want to know how much time and work goes into the follow up, add the hard costs of marketing, then the gross spreads of the profit streams and decide for myself if it is a worth while endeavor for me or not.
For me I am going to keep helping clients with commercial real estate and do more of my own commercial deals.
I will wholesale some if I can get the seller down low enough and just buy cash and resale myself and also I am buying up cheap commercial land that banks are dumping for a 2 to 3 year hold and exit.
Flips with rehabbing I just do not have the time to want to do something like that and do great closing deals and my own investments.
@Will Barnard obviously a 50K profit on a 100K purchase/rehab (PR) is different than a 50K profit on a 150K PR. Ill give you three examples of three of the 4 actual deals rather than just throw out a percent. On two of these profits were split but I didnt consider that in these numbers.
57,537 profit / 171410.08 PR = 33%
40,988 / 132,137 = 31%
28,918 / 122,318 = 23%
These numbers do not include marketing. I think when all is said and done my marketing will be about $12K for the year.
One thing to keep in mind is that I only rehabbed what I thought were the least risky deals. By this I mean I didnt fight other investors for skinnier deals. There is a lot of competition here and I think I could have easily done two more deals but with less profit. My model does include slowly increasing volume with less profitable deals.
Thank you Gary, that was most helpful. Looks to me like the marketing you did/are doing is well worth it. I would love to replicate that here.
@Kelly P. as you can see by my posts I am no expert and new to direct mail marketing. However, I would caution you about switching marketing strategy so fast. I have gone 7 weeks with no calls except the take me off your list, how did you get my name etc. Then 2 deals from the same marketing in 2 weeks. For me I discovered it was best for me to stick with a couple of categories and concentrate on them. For example be the best at absentee owner marketing rather than good a 4 different categories.
Thanks Gary. I concentrate only on wholesaling via absentee and probates. I am testing yellow letters to see if the higher response rate can turn into a deal. Either way, post cards or yellow letters, I am continuing to market monthly to the same list. That is where my issue is. Yes I will market continue to my current list but want to expand to get more leads. When I contacted my list provider after 3 months for an updated list, only 180 new names popped up. I think I have to tweak the criteria to get more names and would like some input on what criteria everyone uses. Thanks.
You must be a BiggerPockets member to post on the forums
Join the world's largest, most open Real Estate Investing Community online, 100% free forever!