All Forum Posts by: Derek L.

I tend to agree with the skeptical opinions of DMM. Have tried it in the past with over 4k pieces / mo over multiple months, I had people answering the phones, different mail pieces, different tracked phone numbers, etc., and came up empty handed (which was an accepted possibility). To those who preach consistency, make sure they're not selling you a service (MQ owns YellowLetters.com). Same goes for list brokers. They make money as long as people are mailing letters. This doesn't mean it doesn't work, but you have to go in with your eyes open. Always be aware of incentives and make sure you're aware of any biases that might exist with whatever source you're depending on for information.

The key is to track your metrics. How do you know if what your mailing is working (and what aspects are driving performance)? Are you changing things month to month and observing what happens? Do you know your conversion funnel? You should know exactly how many calls / site visits it would take to close a deal. If you're not getting enough, on average, to make back your costs in the medium / long-term, you either need to make changes or find another tactic to ensure your dollars are in some way putting you closer to the next successful deal.

Lately I've shifted my perspective to making connections with practitioners in the space. While this isn't as sexy as other tactics, over the long-term it will eventually put you in the way of people that might need the skills / time / capital you have to offer. Building up a track record of successful deals done through relationships is one of the best ways to build a business in my opinion.

I'll be attending and would love to connect. If you're interested, shoot me a DM and we can arrange a day / time. Looking forward to it!

Happy to help, shoot me a DM and we can connect.

I have and would be happy to share my experience from earlier this year. DM me and we can connect.

Here are things I highly recommend before putting out direct mail:

- How saturated is your market? Are you getting post cards, seeing lots of bandit signs, etc.? If the answer is yes, you need to really think about what will make you better than everyone else you're competing with. 

- Are you going to be able to answer calls live, right when they come in? If not, that person will likely call the next card in their stack (especially if you're mailing to the most popular lists i.e. absentee owners, pre-foreclosure, etc.).

- Are you honest with your assumptions on response rates and your marketing funnel? You don't get to a deal until you've 1) gotten the call 2) qualified the lead (are they serious? willing to take $0.60 on the dollar?) 3) made and had an offer accepted 4) gotten a signed contract 5) closed the deal and transferred title. 

- What are you expecting to net out of every deal? Be honest here as well; many will tell you that you can net $20k+ on each deal, but those deals are not as easy to find in this market as fewer sellers are willing to sell at the discount required (and there are way more investors / wholesalers out there competing). Take this number and figure it against your cost per closed contract to figure if you're operating in the black or not. If not, see if there are any spots in the funnel where you can boost response rates.

In my humble opinion, the current market is not the greatest for direct mail in larger, more competitive cities. Happy to share my experiences more if anyone's interested.

It's incredibly dependent on the market you're playing in and the resources you can dedicate to it. Unless you're running a very large-scale operation (all calls answered live, 25k pieces per month, CRM lead tracking & follow up), direct mail in larger markets will likely not generate revenue in excess of the cost. Happy to share my experiences here if anyone is interested.

Regardless of the tactic, it all boils down to a cost per lead generated (and the subsequent revenue generated). Some channels will be easier to track than others, but I always recommend having systems built out to track all your marketing efforts and ways to attribute revenue back to them. There will be varying levels of precision, but it will help you understand where to focus both your time and your capital.

I have a house under contract and during the inspection, it was noted that the exterior clean-out was missing a cap. Not a huge issue or fix. However, after visiting the property, I noticed that on the ground by the clean-out was a 90 degree elbow joint and longer pipe that ran down the side of the house and terminated about 15' away.

The clean-out is situated on the same wall as the kitchen sink and water would come out when the kitchen sink was running. My initial thought was that the plumbing had been routed outside of the house for the reasons below, but I think that's unlikely. Here are some observations / questions that I'd like opinions / theories on:

• If this is just a clean-out, why was there a pipe connected to it at all?
• I'm curious why someone put landscaping stones around the clean-out; looks like whoever had the property was accommodating this setup despite it being against code.
• The clean-out was threaded and accepted the cap (which I found nearby) which tells me it was probably originally intended to be a clean-out and not a re-routing of the kitchen plumbing.
• I ran the sink with the clean-out re-capped and nothing backed up, further confirming the point above (hopefully).
• As I mentioned, the inspection turned up no further plumbing issues, but I'm still curious about the first question.
• I've included a few pictures (it's been re-capped in some) below so you can see what it looks like.

Take a look and let me know if this is something you guys have ever seen before.

Thanks in advance!

Derek

My plan is to have the tenants pay for their own utilities to avoid that sort of waste. I would also think they would enjoy the flexibility to make those choices themselves. Is it common for people to factor utilities into the 50% number that gets set aside from the rent to cover expenses. In my analysis, I've been treating expenses as true property maintenance when things break or must be repaired. If utilities are generally included in that number than my maintenance % would be lower.

@Ed Emmons Many thanks, makes perfect sense. The biggest variable here is the maintenance and vacancies since I'm looking to buy and hold at least in the medium term. I know what I spent annually on my primary residence, but am unsure how much more those expenses will be for a tenant-occupied rental. Thanks again for the input.

@Ed Emmons Thanks for the reply. I realize the model is complex, but I'm trying to capture as many cash in/outflows as possible to evaluate the investment beyond a simple income / expense analysis. It seems that factors like how much equity is buliding, tax benefits from depreciation / expenses / mortgage interest, etc. can make a material impact on the return of the investment.

Tab one is a summary showing rental comps to estimate income, then the second section to the right details summarizes financing costs, expenses, taxes, maintenance, etc. The '30 yr Mortgage' tab is meant to capture the cash flows over time since equity will build at an accelerating rate over time as the mortgage amortizes. Tab 3 is the amortization table for the loan that adjusts for the amount borrowed and feeds those amounts into the second tab.

All this said, I recognize that the small uncertainty in many inputs can throw off the final valuations making the time spent trying to estimate them a wasted exercise.

Interested in hearing your approach if you have time to share. Are there unknowns that should be more certain? Seems you have to estimate expense, taxes, vacancies, etc. since you can't know how those will play out exactly with each property.

I'm all for simplicity if the end results are in the same ballpark and can still allow for an informed investment decision.