All Forum Posts by: Erin Elam

Yes, in fact, this varies - pretty dramatically - in different areas of the country (send 1,000 letters in LA and prepare for maybe 3 calls, certainly not 10).  I'm not a big fan of "response rate" as it can be a misleading measure of marketing efficiency.  I can increase my response rate by diluting my marketing message (i.e., "I buy any house at any price... or, my wife and I love your house and want to pay you top dollar for it", etc.).

Contrast that to the typical "cash offer" message -- "I pay CASH, close FAST, and buy in AS-IS condition."  If the homeowners are not motivated by cash, speed or the fact that they have a house in need of repair, they might not respond to this message.  But when they do, it tends to be an excellent lead.

If you are a wholesaler or rehabber, you need MOTIVATED SELLER LEADS from people with DISTRESSED PROPERTY.  You can get plenty of curiosity-seekers with a "my wife and I love your house, I pay top dollar" message, but most those calls will be worthless to you, and you'll weed thru a lot of them to find actual motivated sellers.  (I also think half the absentee owners are other investors that are wise to the yellow letter tactic; I prefer to send variable print postcards or professional letters to absentees...  Owner occupants are better targets for the typical yellow letter format.)

The metric that matters most is simply "Return on Marketing".  It will not be revealed to you in a single mailing, but over time you evaluate your marketing spend as a % of your revenue to see how your marketing is "working".  In 6 months, you might spend $6,000 on marketing and generate $30,000 in revenue, giving you a 5X Return on Marketing. From a business perspective, that number will be a lot more revealing to you than response rate. 

#1- If the house is a rental or tenant occupied this should not really be a huge consideration.
       You will value it more by income unless it is in a pricey area.
#2-If house is a rehab and is empty then your scheduling should be more flexible and bringing them
      on first visit would be ok if cleared by owner.
#3-If house is owner occupied then definitely tell the owner that other people are coming and give an
      estimate of how long it will take.

#4-In ANY case I would not pay for an inspection until I was certain I was going to get a favorable
      price from the seller. Do not spend your teams time or resources on deals that are not deals.

We have bought 3 houses in the past 2 years and we're seeing about a 15% ROI. We stick with houses under $170k.

What about staging yourself via Ikea? Some of their sectionals diassemble flat for next time. I believe Ikea has a pretty good idea what young people think is hip and cool decor. Also, I have often wondered if many of the younger set would like to buy a semi-furnished place....you could offer a flip furnished for an additional few grand (if you choose wisely at Ikea) and tell us how it flies. That would be like $20 a month (over 30 years) for brand new Ikea stuff in your new house. I would be attracted, especially if I were moving and the move is 5k to bring my old crap from Ohio.

We typically charge around 1% for houses in the 500k - 600k range for full staging, which usually doesn't include the smaller bedrooms. That includes up to 3 months if needed, furniture and decor.