Wholesaler vs. Yellow Letter Campaign?

Question

Hi Everyone - For all the fix and flippers out there, I would love to hear about your experiences on your most successful acquisition strategies. I specialize in rehabbing SFRs for rental properties throughout Indiana which are typically <$80k and do not currently have a partnership with a wholesaler for a steady stream of deal flow.

However, I am looking to scale up so I am curious to hear from all of you on what your best successes have been in terms of cost of acquisition, rates of return, etc. between acquiring properties from wholesalers vs. running your own yellow letter or similar marketing campaign. Do you typically see that the overall cost (time and money) is more efficient working with a quality wholesaler, or do you find that your return on investment is better for running your own acquisition marketing initiative?

Braden C. · Answer

This is such great advice, anyone thinking about doing any kind of marketing should print this off and stick it on their mirror so they see it every day. There are so many different ways to find deals, and they all work! SEO, PPC, direct mail, door knocking, cold calling, driving for dollars, bandit signs, etc. Do it the right way, or don't do it at all.

Anson Young · Answer

William, this is a great question.I know the answer... its BOTH.  Networking with awesome wholesalers AND running your own acquisitions, depending on the level you want to scale.  Dont forget to snap in networking with agents/attorneys, and asking for referrals too.How are you acquiring deals now?

May Emery · Answer

@William Goss I agree that you should work both angles, but be smart about it. Many wholesaler people are mailing to Absentee Owners to find the deals they could bring to you - so don't compete against them in the sellers mailbox.

You should consider mailing to people who aren’t on every other investor’s radar.

There are some owner-occupied segments with people who share motivating factors for selling their home.

Seniors with Long-time Ownership: often ready to downsize or transition to assistance.

Homeowners with Low Financial Stability Scores (FSS): Struggling financially and likely ready to cash in on their asset.

Both these categories have additional advantages in that they probably don’t haven’t been updated and may have deferred maintenance. They won’t be expecting the same money as their neighbors with the shiny new kitchen and fresh paint.

A consistent strategy doesn't mean doing the same thing over and over. Work with 2 or 3 lists then start back from the beginning rather than hammering the same people every time you mal.

Get in touch with a list broker to get help.

Tom Shallcross · Answer

Agree with @Anson Young.  This is not an either/or binary decision.

I constantly try to network and find those who have deals to sell.  It leads to deals but it's unpredictable and you are dependent on others, thus not in control.  It doesn't mean you should avoid this strategy, it should just be considered a good supplement to SEO, cold calls, letters, or whatever - not a replacement.

For generating own leads (and I admittedly still need to continue to grow here), find your avenue on how you're going to generate leads, and go all-in for 6 months.  Not one round of mailers, not a few phone calls here and there, not a half-ass website, but a true commitment.

Andy Rumple · Answer

I agree. Do both. A good wholesaler is a better marketer in all likelihood but if you run your own campaign you will be in control of the deals you get.

William Goss · Answer

Thanks for the advice. I totally agree with making sure you are putting in maximum effort and exhausting all channels of acquisition. With that said, my question was more in terms of time allocation and personal success you've seen leveraging each different channel so we could all learn what has worked for others and get more efficient together. In this business, we know there are many different ways to allocate your time, but my goal is to eliminate pitfalls and follow the success of others who have done it well in addition to the success I have seen.

Jonathan Greene · Answer

Great advice above. Too many newer investors think they need just one source, but the best investors use all their sources, but wisely. Put it this way, relationships with wholesalers are free so why not make as many as possible. Some will be good, some won't, and generally, most wholesalers are looking to maximize their spread in the deal so unless you are a known buyer, it may take some time to win a deal. Yellow letters and building lists cost money, but they also a direct action to you. They are different, but both vital to your business as you grow.

Anson Young · Answer

"Not one round of mailers, not a few phone calls here and there, not a half-*** website, but a true commitment. "100% agree... consistency is absolute key.  Even bad mailers sent inconsistently is better than the perfect mailer sent once...

Wholesaler vs. Yellow Letter Campaign?

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