How big of a list - for starters?

Question

For the last year I've been beating my head against a wall trying to work short sales via MLS. I've decided finally go the motivated sellers route. I'm fortunate to have capital to be able to jump right into direct marketing and am ready to buy my first list.

I've seen here and understand not to start with "too big" of a list. And also that I need a list big enough to move the needle. So, not too big or not too small - I need something juuuust right. ;-)

How many should I start with to get my feet wet, to refine my message, to get my phone conversation down?

I've gone to listsource and filtered one of my favorite areas to about 1100 names. Do you think that is that big enough to get 1-3 houses from a year (mailing to monthly)?

I plan on adding more towns (potentially 5,000 names) as I refine my message, etc. to get up to my 6 houses per year goal.

Aaron Mazzrillo · Answer

In my opinion, 1,000 names mailed to monthly will produce a deal or two, but it is way to often to mail such a small list. The first thing to do when deciding you are going to go the marketing route, is to figure out how much money you can comfortably flush down the toilet every week and you won't lose sleep over it. The next step is to decide how you intend to contact each person on that list. Let's use your numbers. You plan on mailing to 1,000 people once per month. If you send letters, your budget should be $1,000 (if you do most of the labor yourself). If you send post cards, your budget should be about $500. I'll run with the $500 number since most investors new to the marketing game freak out when I talk about spending $5,000 or more a month mailing. You have $500 to spend and decide post cards are the route you are going to go since your cost of entry is the least expensive. So, we have $125 dollars a week we would be comfortable dropping in the trash and we wouldn't lose sleep over it. If I planned on spending $125 a week, I would want a list of at least 3,250 names (which is actually still a relatively tiny list.). Mail 250 names each week for 13 weeks. Then, on week 14, you start over. About 10% will be RTS (return to sender) or NIXIE. So, at the end of your 13 week cycle, you might want to grab a few hundred more names. This way, you will stay within your budget and hit your target list 4 times a year with quality prospects. Since it is such a small list, you should remove the nixies from your list as they come in or put them in a shoe box and do them all at once on week 13 before you add the new names to your list. If you get into bigger lists, say 25,000 names or more, sometimes it is easier just to throw them away or pay a person to do them for you. It just depends on if you want to keep working the same list or plan on pulling a fresh list every 6 months or so. You say you are going after motivated sellers so I am assuming you mean absentee owners which really isn't a motivated seller list. If you mean people facing foreclosure or upside down on their mortgage, then you would want to hit them more often than 4 times a year. You might decide to hit them every month or every 3 months and therefore you need to adjust your list size. Good luck!

Aaron Mazzrillo · Answer

Thanks, when you make a million $, don't forget about me at Christmas.

Jon Klaus · Answer

I started on a list of 1100 in June. I've mailed to it 4 times since then. It's down to about 900 now. I got two excellent deals from the campaign. I'll hit the list again, but taking a break on it now.

Aaron Mazzrillo · Answer

Listen to the podcast I did. I shared my criteria on it: biggerpockets.com/show37

Aaron Mazzrillo · Answer

The only reason I say that is because there is no guarantee you'll get a deal. Just because someone sends mail it doesn't equate to capturing equity. There are two other very important factors and lots of little ones. The two important ones are; how effective are your copy writing skills and can you negotiate? A person may get calls, but it doesn't mean they will be able to convert them.

Shaun Reilly · Answer

Again I am not an expert in direct mail at all but I think without any distress and not even being absentee you probably will need a MUCH bigger list to hit a meaningful number of leads. I actually agree with you that you never know and if you are in front of them (And I will guess few if anyone else is hitting those mid level equity owner occupants) you might get some deals eventually. If you are taking this route you might want to look into EDDM from the USPS. Get a big discount on postage and can send oversized postcards under the parameters they have. Issue is you have to hit EVERYONE in the area you choose. So people with no equity, renters etc. However you can blanket an area cheap.

Bob C. · Answer

Its to everyone/both. I'm thinking "ya never know when someone needs to sell". Just got to be in front of them when they decide its time. Distress lists are VERY small around here. Maybe 10% of that list. I figure they are included and the rest - you never know. They've been there a while, it may be time to move. @Aaron. Copy writing (and testing/measuring) is one of my top strengths. (I used to do email marketing and website conversion optimization) Negotiation is a pretty good one of mine too.

Shaun Reilly · Answer

Thought I already posted this but must have lost it somewhere. Is this to owner occupants, absentee or both? I am new to this aspect but I have to assume with no other distress the owners would have to be an especially low conversion.

Bob C. · Answer

Ok... some terminology clarification on my part. Maybe I don't mean motivated sellers this is who I'm thinking of mailing to: A single zip code (on of the larger towns near me) 3-4br SFR 10yr+ ownership 45% equity =1100 (I'm in a rural area) Aaron: I like your mindset - it has to be money that I'm comfortable flushing down the toilet. A deal or two from that list would be very satisfying. 1/mo to often? That's good news. Quarterly helps stretch the budget.

Steve K · Answer

Agreed. Almost everyone I know who has owned rentals in other states for 10+ years gets piles of postcards and letters. Would you be willing to share some of your preferred criteria you use for building a solid list?