Idea for leads. Any thoughts?

Question

Has anyone considered sending out direct mail to agents as one part of the their marketing campaign to develop leads? (And send out multiple mailings, of course)

Example......

Messaging would be something like:

"Sell more homes! I buy houses from agents that they usually can't sell. All cash, all conditions, and maintaining seller privacy. Be a dual agent with me every time."

With the low number of pieces of mail, you could spend more to send out mailers that get opened (hand written envelopes, first class mail...etc.).

Ray Lai · Answer

@Jeff Macdonald

Gotcha, if that's the case you have a choice to make and it should be dependent on your strengths and weaknesses. If you excel at managing flips, you could always source deals through your local  wholesalers and focus on the flips. If you enjoyed talking to people and finding deals, then wholesaling and direct mail may be in your future. Plenty of guys on here that have been around and are vertically integrated. I'm figuring that you want to source your own deals so here's a potential gameplan for you to use to do your own DM campaign.

1) Attend your local REIAs and network, you need to build a buyer's list of investors that will buy your properties and network with other people in our industry. 2) Next develop your strategy, build a list of at least 200 properties to mail to. Response rates are typically 0.5-2% so the bigger the list the better. Options include driving for dollars, absentee, probate, using listsource if you're not in a competitive market, buying lists that are exclusive for your market type (we partnered with a guy that does this) 3) Start a sustained direct mail campaign. First batch with postcards, then follow-up with yellow-letters. There’s no point in starting if you can’t sustain because statistical data shows that responses typically occur after at least 3+ mailings. You want to use postcards first since they are cheaper and some may bounce so you can remove the bad ones off your list so you don’t waste money mailing to bad addresses. If you wanted to, you can even skiptrace the bad addresses to find where the owner moved to and target the right address.  For fulfillment you can do it yourself to save money if you're broke, but ultimately if you want better response rates and focusing your time on value-add, then you'll want to outsource fulfillment to a shop that has economies of scale and can offer you great rates (see attached). Remember, a campaign usually doesn't get a response until 3+ mailings. A lot of newbies quit after 1 or 2 letters without realizing that people don't open the first letter they see. Focus and sustainment is the key. I'd recommend a different marketing piece every 4 weeks for 5-7 months from data analysis, but you should test this out for your market and see what works best response rate wise.

Also, when you become more advanced you'll want to do split testing and other methods. You should always be tracking your response rates and seeing what lists work bests. It’s always best to include a website and a local phone number on the postcards as well to maximize your responses.  Another protip: If you’re in a competitive market, deals are harder to find however if you do find a deal, someone will be much more likely to split the profits and show you the ropes if you make a friend in the industry. It’s better for them to get half the profits than no profits, and you gain invaluable experience as they take you through the process with them.

Regards, Ray

Jeff Macdonald · Answer

@Ray Lai

Good points. To give you a little more info, I am a flipper with one deal under my belt, looking to step up my lead generation to get my next house to flip (I need to update my profile).

My understanding is that some sellers really don't want lots of people walking through their house, so they don't want it listed on the MLS. But, now that I think about it, I have seen houses listed on the MLS with the caveat "house not available for walkthrough until offer is accepted" (or something like that). So, I guess that is what agents probably would suggest.

Ray Lai · Answer

Are you asking as a wholesaler or as an investor? I read your profile and couldn't tell. As a wholesaler this strategy is dubious at best because the agent needs their commission and the house has already been listed on the MLS and it usually sells quickly unless they are asking way too much so those leads would be useless (e.g. in San Diego homes that need full rehabs listed on MLS for 90% of ARV). There are no margins from the wholesaling game.

If you are an investor using direct mail to reach out to agents to broaden your potential network to buy homes, it might make more sense if you are in a highly competitive market and were having no luck at all finding deals and were throwing a hail mary.

Regardless, why would you do this? When you can actually look for real deals that have margins for you to rehab (as an investor) or wholesale?

Let's say an agent does get your mail and has a dud they can't sell, that dud is likely overpriced and has been seen by everyone else in the market because MLS is viewable to all. Do you want to go after only duds that no one wants and deal exclusively with homeowners with unreasonable expectations of their property value? I mean you could easily access MLS via redfin for free and find those types of properties in minutes.

@Jeff Macdonald hope that helps

Idea for leads. Any thoughts?

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