yellow letters to absentee owners

[Tiffany Robinson]

I am thinking of getitng a list of absentee owners from a very known site and startind sending out letters to find asbentee owners sellers. Starting with 500 letters in the Houston area. Does this or will this actually work?

[Dev Horn]

Originally posted by @Jay Hinrichs:

@Rob Scarborough 

  Just like you have the 2% rule for figuring cash flow you have the 1% rule in direct mail marketing... depending of course of the area of the country.

So 500 letters to answer your question directly.. If you got 5 calls and close half a deal that would be normal.. 1000 letters should get you one solid closing. So for 85 calls that's probably 5000 or more letters....

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.