D4D, Direct mail, and Wholesalers which works best?

Question

Friends,A penny for your thoughts on advertising being that I'm very much small time I am looking for your opinion and maybe what worked best for you. So I am on the hunt for my first deal and after about a month with the MLS I got nada so far, a couple close ones but at the end of the day nothing.So I am looking into off market and I have designed my postcard printed em off at Staples and I am about to get ready to drop them off at perspective homes.I am wondering if it is better to make a website to help legitimize my business or is that something that can be done down the line?Also do you think wholesalers are a good option, or know of any lists I can get on to get looked at for incoming deals?Thank You,-Jacob

Jeff Stephens · Answer

Hey Jacob! I wanted to offer a different perspective on this topic. In my humble opinion and experience, the most important question to ask is not "which is best," but rather "what strategy will generate leads with the Negotiation Dynamic I want to have?” What is a Negotiation Dynamic? The Negotiation Dynamic is the context of the conversation you are about to have with the Seller. The Negotiation Dynamic is like a stage, where the performance (your negotiation with the Seller) is about to play out. And that stage is set by your lead generation strategy. In other words, HOW you generate a lead has a huge impact on the Negotiation Dynamic you will walk into. Let me give you 3 simple, relatable scenarios as an example: #1: A Seller submits their information on your “we buy houses” website. What’s the Negotiation Dynamic? Because the Seller has self-identified themselves as someone who is “motivated,” and they have reached out to a cash home buyer, the dynamic is this: “we both know I need to sell, and all that matters here is price. Give me an offer, I’ll get 8 others, and then I’ll pick the best one.” The stage is now set, based on your approach, and will lead to a certain dynamic in the negotiation. #2: You are driving for dollars, and see a rundown house, so you knock on the door. What’s the Negotiation Dynamic? The Seller realizes you see imperfection (and opportunity) in their house, so they feel singled out. They’re also forced to react to your unannounced arrival--you’re standing right in front of them, and now they have to respond, whether they are comfortable or not. The stage is now set, based on your approach, and will lead to a certain dynamic in the negotiation...a completely different Negotiation Dynamic than the first example. #3: You sent a letter to the owner of a rental property in your town, simply introducing yourself and expressing interest in their property, and they call you back. What’s the Negotiation Dynamic? You have no idea if the Seller is actually motivated or not; the Seller doesn’t feel you targeted them because you think they are distressed, rather just that you like their property. The conversation may move toward a sale, or it may fizzle and go nowhere. The stage is now set, based on your approach, and will lead to a certain dynamic in the negotiation...a completely different Negotiation Dynamic than the first or second examples. These are three entirely different scenarios, that will naturally lead to three entirely different potential deals. An important point: none of these strategies is “good” or “bad.” None of these Negotiation Dynamics is “better” than another. The real question is, “what Negotiation Dynamic do you WANT to have?” Which one fits your personal style best? Which one will allow you to shine? Which one fits your deal strategy best, and your business model? Which fits your skills best? Once you know, then you can work backwards from the type of Negotiation Dynamic you want to have, and develop a lead generation strategy that will give you more of those situations. I hope that helps!

Jacob I Strauss · Answer

Lauren, Thank you for your input yea I am seeing something similar at the moment basically homes I could scoop up for 500k and resale for 620k but between the rehab required and loan costs it leaves razor thin margins even with a simple 25k rehab doing work myself in SD I lose money on this due to closing costs alone. Looking at 71,000 combined by my estimates of 4% on loan origination, and 8% selling. It seems my purchase price needs to be in the 450k range with a sale in the 600s to see good healthy margins. I've only been at it a short while but I suppose this is really just showing me whats possible in my market and where I need to buy @ to make a profit.

Debbie Fales · Answer

Hi Jacob ~ We have some clients who have had success with probate leads. Check out All The Leads or US Probate Leads for details and training. Good luck!

Cameron Braig · Answer

@Jacob I StraussBallpoint marketing can be a helpful direct mail company. They have a deep product line and real estate experience so they understand different use cases, best practices and biggest challenges. They could certainly help in the process of further legitimizing things.

Lauren Cutchen · Answer

Currently doing D4D and other direct mailers myself. Been getting few legit leads over the last couple months by doing a mailing campaign partnering with another investor. Rarely something comes up on the MLS. And when they do, it's a bidding war. But stick to your plan. One other thing you can have your realtor search for is owner financing terms. And maybe you can refinance out of it in a few years. Setting up a website and landing page for people to visit does make your business look legitimate. I have been exploring carrot.com for their content and strategy. Haven't decided on that route yet. It's important to have some sort of lead capture system. I would also post on local facebook groups for what you're looking for. I'm about to ask if anyone has a neighboring house that's been vacant for years. Phrase the questions differently and see what you get. Local guys directly say, I buy houses for cash - call me. Recently signed up and contacted a couple wholesalers in the area. I haven't had any luck and none of the deals look good so far. I am not picky and flexible with the types of houses, yet there's nothing so far. There's one nationwide wholesaler that I joined their mailing list for, and as a realtor, I cross checked their comps. Seemed spot on. Just no room for profit. Join a local real estate meet up group. If there aren't any, create one. Better to network than do it by yourself. Good luck!