Newbie at the End of the Budget

Newbie at the End of the Budget

Midlothian, VA · Member since 2013 · 23 posts · 1 vote

So I've come to a point where my marketing budget has been mostly spent for the next 45-60 days. I've sent roughly 350 yellow letters, and no halfway decent leads. I have had leads however they were all either upside down or have done enough renovations recently to suck the profit potential out for themselves. I have driven for dollars and attempted to reach those absent homeowners who have abandoned the properties and nothing yet! I am determined and committed to making this work however at this point I'm at a loss as to what to do next; send 45 more yellow letters or purchase 3-4 bandit signs?? which one is likely to yield the highest response or the best lead for a wholesale deal? or should I take those last few dollars and hire an inexpensive skip trace service to locate the owner(s) of some of those abandoned properties? Any and all help is gratefully appreciated!!

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Specialist · Grand Rapids, MI · Member since 2011 · 61 posts · 23 votes
13y

While 350 letters is not anything huge, I'm more a believer in the system you have set-up to market to those 350 people (opposed to simply the "number" you send out).

Meaning (and this is nothing new, there is a ton of information on BP about it), you need to have a system and budget allotted to contact these 350 people over the course of time. Most people won't reply after the 1st "touch", but if you hit them a 2nd, 3rd, 4th, etc. time, your response rate will go up.

So, to answer your question, I think your best bet is to continue to hit up those same 350 people. You can add in some more, but you can't give up after only one "batch".

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  • Investor · ST. Augustine, FL · Member since 2013 · 92 posts · 31 votes
    13y

    Tony,

    If I was in your situation, I would do one of two things.

    1) Find a wholesaler to partner with, and act as their bird dog. Learn from them and build up your bankroll until you can start up a well funded marketing campaign.

    OR

    2) Find an investor/rehabber to partner with, and have them fund the marketing, and they get first dibs on all deals, and a cut out of anything that gets wholesaled. ( This one might be tough unless you have a relationship with someone like this already)

    You could also door knock, this only costs you time and gas money.

    When I did my first few deals as a real estate agent, I needed tons of help along the way. I don't understand why so many people think they can do a wholesale deal without having any experience with real estate transactions. I'm speaking in generalities, since I do not know you or the amount of deals you have done.

    People seem to think wholesaling doesn't cost any money. It does, marketing can get expensive and its a must if you want to have leads flowing in all the time.

    Good skip tracing services are EXPENSIVE. I know Lexis/Nexis is around $1000 per month, and that is not even for unlimited skips. You usually have to sign up for a contract for a specified period of time.

    - Ryan

  • Investor · Jersey City, NJ · Member since 2013 · 129 posts · 122 votes
    13y

    Hi Tony Thompson , I am a newbie myself so I dont know how much help I could be. But I am curious, where did you get your list of homeowners to market to? What were all the different sources?
    Also, what criteria did you use to narrow down your leads?
    What kind of yellow letter did you send? (what was the text and what did it look like). What was your total cost per letter? (list + paper + ink + stamp, etc)
    How many calls did you get so far in total? How many were tire kickers/ how many were annoyed/ how many were kinda sorta interested?

    Sorry for all the questions! As a newbie, for me it is helpful to hear what other people have tried and what worked best and what didn't. It can help me decide what to do next.

    Btw, I have never tried a bandit sign. How many calls have you gotten from those?

    Also, I don't know about your area, but in NJ/NY it is pretty easy to track down an owner of an abandoned property for free (or very little cost) so I don't see why you should waste your money on a skip trace service.

  • Investor · ST. Augustine, FL · Member since 2013 · 92 posts · 31 votes
    13y

    Mala S. I'm also in NY. Vacant and distressed properties are usually a great source of motivated sellers. A lot of times, it takes more than the address of the tax bill, and googling the persons name, cheching whitepages, facebook, radaris, etc..

    Skip programs are pretty amazing, they'll tell you the adress of a person if they are renting, as well as phone numbers (cell and landlines), family members, etc... This is a way you can get the deals that others can't.

  • Investor · Jersey City, NJ · Member since 2013 · 129 posts · 122 votes
    13y

    Ryan Thomas Hmm, I will be looking into skip programs now, thanks! I've learned like 10 new things today :)

  • Real Estate Investor · FL · Member since 2011 · 586 posts · 360 votes
    13y

    Tony Thompson 350 letters really isn't a lot so I wouldn't be discouraged that you didn't get a deal yet. I have wholesaled several hundred properties and I average just over 1 deal per 1,000 letters. I am sending 1,000 letters per week though. 3-4 bandit signs probably aren't going to do much at all. You never though, you could get a deal on the very next letter you send or the very first sign you put up.

    Is it possible for you to cut your costs some? Are you writing the letters yourself? Are you paying regular postage or do you have a bulk permit?

    Can you put this on hold for some time while you save up more money?

  • Specialist · Rockland, MA · Member since 2010 · 7k+ posts · 2k+ votes
    13y

    Tony
    Couple of thoughts...
    A buddy goes door to door in neighborhoods for the local politician. He keeps his eye out for opportunities

    Have your agent give you daily the MLS expired listings. Call them alert them their house is no longer marketed they will not know your a hero. Ask them why it didn't sell. Explore with them their pain. Ask if they want to sell quickly for cash... if they don't tell them you have an excellent broker they should talk to,, get a referral for the listing.

    Paul

  • Specialist · Grand Rapids, MI · Member since 2011 · 61 posts · 23 votes
    13y

    While 350 letters is not anything huge, I'm more a believer in the system you have set-up to market to those 350 people (opposed to simply the "number" you send out).

    Meaning (and this is nothing new, there is a ton of information on BP about it), you need to have a system and budget allotted to contact these 350 people over the course of time. Most people won't reply after the 1st "touch", but if you hit them a 2nd, 3rd, 4th, etc. time, your response rate will go up.

    So, to answer your question, I think your best bet is to continue to hit up those same 350 people. You can add in some more, but you can't give up after only one "batch".

  • Dev HornPro Member
    Flipper/Rehabber · Arlington, TX · Member since 2013 · 1k+ posts · 2k+ votes
    13y

    Hi Tony Thompson - I totally agree with Clay Huber. Work that list (assuming you started with a good one), touching them at least 5 times.

    One of my larger targeted lists is about 2,000, but I also have a small list of 50 out-of-state owners in my area that have 100% equity - I treat that small list a bit differently (send them different postcards/messages) than the larger list. In general, it costs me 50 to 70 cents each time I "touch" these targets with direct mail.

    There are also ways to carpet bomb areas - such as "shared mail" which can be somewhat targeted and costs only $1,600 to deliver a large postcard to 10,000 addresses.

    Depending on your budget, you can layer these techniques so you are always coming at the market from several different directions at a reasonable cost for marketing.

    Best Wishes!

  • Midlothian, VA · Member since 2013 · 23 posts · 1 vote
    13y

    @Mala S. my cost per letter was .85 moving forward it will be significantly less. As far as the letter it's a pretty generic letter "dear homeowner, I'm interested in purchasing your home at

    I pay cash, purchase as-is and close fast. If interested in selling please call me at... Tony Thompson". I've had about 6 calls 3 asked me to remove them from list, 2 were upside down, 1 won't budge on his price and believes he will get more if he lists it, and the place is literally a dump; I believe I will get that one but its gonna take awhile we have great rapport lots in common. I only purchased 5 bandit signs that all disappeared overnight. So I figured I'd wait before investing in those again until I get my budget replenished. And lastly the tax records for those I would consider a skip trace service are not correct, one owner I have mailed letters to 6 addresses in 4 different states and I used priority for those.

    @Braden C. I realize that 350 isn't a lot and I can't be discouraged. I just falsely assumed that I would get more calls than I've gotten.

  • Lender · Greater LA/Orange County area, CA · Member since 2012 · 3k+ posts · 3k+ votes
    13y

    You really have to get into the mind of the property owner. Just because they own a property that's sitting vacant doesn't mean that they're motivated to sell!

    There are SO many factors to consider. I personally went through a period when I had about 6 or 7 vacant properties, mostly because I was busy doing other, more profitable things (and another period when I was dealing with health issues).

    Just because you come across a vacant property, you don't know why it's vacant. You don't know why the owner isn't doing anything with the property. You don't know if they are alive or dead, have mental capacity or not, incarcerated, drug/alcohol problems or severe mental and emotional problems. Or, in active denial about dealing with a house that has perhaps been a reoccurring problem.

    When fishing with letters, you are not going to catch many fish using a single bait and casting once. You'd do we'll to make a connection in your letter ("here... fishy fishy") and then try different baits (headlines, or problems solved) over multiple, sequential letters.

    Your most powerful tool will be the ability to connect and resonate with the owner. If you get them in the phone, learn what going with them in their personal life. What's difficult or challenging right now. Find out how you might be able to offer a way to make life easier.

    Once you discover how to do this, you will be handed key after key that unlocks how deals are made (not found).

  • Real Estate Investor · Cleveland, OH · Member since 2013 · 173 posts · 18 votes
    13y

    Great post, lots of great answers. Tony Thompson , I would also suggest you save up, and also do another follow up mailing. Is your area a bad area for bandit signs? I would not put the money into skip tracing, but continue what you are doing, and maybe find some additional ways to find deals.

  • Real Estate Investor · Lansdowne, PA · Member since 2013 · 1k+ posts · 656 votes
    13y

    I agree with Tony you should search for a JV opportunity with a realtor, wholesaler, private lender, contractor.... Yellow letters are only one of many marketing techniques. Whatever you do don't give up but adapt and prevail instead.

    Kudos,
    Mary

  • Real Estate Investor · Lansdowne, PA · Member since 2013 · 1k+ posts · 656 votes
    13y

    Oops, I meant I agree with what Ryan stated.

    Additionally, you have to take into consideration on what your pitch is after the calls come in which may need tweaking.

    Kudos,
    Mary

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