Does Direct Mail Work in a Hot/Competitive Market?

Question

I live in the San Francisco area and I'm new to investing. From listening to many of the podcasts, it really sounds like direct mail is one of the best strategies for finding good deals. Does direct mail work in a hot/competitive market like the bay area? Are there any tips for mailing in a hot market?

Chris Kennedy · Answer

Yes, direct mail can be a great strategy in any market. You may have a lower response rate in a hot market, but it is still an excellent tool.

We're in the south florida market which is also extremely competitive, but we get a lot of deals through direct mail.

In my opinion, there are a few keys to it being successful:

1. Consistency. You must hit the same list over and over again. You definitely get improved response and more built in trust from callers when they have seen your name 5-10 times versus a one off mailing.

2. Answer the phone or return voicemails promptly. If there is any indication of seller motivation then make the appointment and look at the property ASAP. Then make an offer - in written form. Make it real for the seller.

3. Follow-up. Even if it sounds like someone is not ready to sell just yet, but there is some indication that they will sell anytime in the next year or so, make sure to put them on your follow-up list. Most wholesalers do not follow up and lose deals because they give up after one conversation.

4. Mix up your mail pieces. We use a combination of yellow letters, typed professional letters, and postcards. We cycle through the list and use a different mail piece each month. Some people will call off one mailer, others will call off another. See what works in your market.

My associate @Miguel Maria  might be able to shed some extra light on this for you...

Jason Farmer · Answer

@Brian Armstrong

There is no secret juice or pill you can swallow, no one can predict an outcome, you just have to keep sending mail and dont stop. I here in LA which is a super competitive market, at the same time, theres so much opportunity here its almost unfair. You focus should be the type of homeowner your sending mail too...We do about 2-4 deals here a month in LA...And 99% of them are not Absentee, starting brainstorming and finding ways to mail to actual homeowners that live in the property. I cant give it all away. But start there, stay away from what everyones doing. i can say at least 85% of the calls we get these homeowners have never received  any type of letter with an offer to buy their home, and they are just amazed (or angry), mostly confused about how and why you have chosen their to house to begin with. Fresh meat..its the best way to go...

And believe me im no smarter than the next guy, so its not hard, you just need to take what i gave you and brainstorm and find out who these people are. Im not knockin absentees but its a game thats been played out and most owners, will tell you i get these letters every week....I dont feel the competitive stress, because most of the time im not competing against anyone but myself, and the fight is me sealing the deal....

What im saying may sound like jibberish to you now, but it will sink in and you'll find yourself in a pocket of your own....All this analytical thinking is a time waster, just get out there and find out how to go against the competition. I  can give yu some good pointers though PM

Good Luck

Jeff Pollack · Answer

Hey Brian,

ANY amount of direct marketing is better than none.  Do what you can afford over the course of 6 months without losing sleep if you don't get a deal.  Frequency with whichi you mail depends on the list.  If it's a mortgage late list time is of the essence, so hit them every week or so.  For absentee, equity, etc, every 4 weeks or so.  But don't overthink it.  Just start with whatever number you can afford and give you self a chance to get lucky.  One decent deal in the Bay Area will cover a lot of marketing costs.

Good luck!

Cheers,

Jeff

Antwon Austin · Answer

Chris you have really hit this on the spot answering his question....I couldnt have stated it better direct-mail is a plus! follow up is an even better plus! conversion is obviously the best plus....with that being said direct mail for me is and has been one of the most effective tools to actually closing deals.

Jeff Pollack · Answer

Hi @Josh Adamo, If I recall ListSource has those lists.  If not them definitely can get that from a list broker (google them and call a few).  Don't buy the 30 day list as it may be full of people who happened to pay a little late that one time.

Jeff Pollack · Answer

Hi @Brian Armstrong, direct mail is great and does work here in the Bay Area.  But the scale required is different than in other markets.

Based on my experience in the Bay Area vs other areas I market to (i.e. Dallas-Fort Worth, Atlanta Metro) you need to send 10x more mail pieces and spend about 10x more money in order to get the same number of quality leads/deals using the same type of list and mailing campaign.  Another difference I've seen is the number of people who respond to the mail piece only to tell you to take them off your list is several fold higher in the Bay Area than in other markets I'm familiar with.  But in the end it is a numbers game like anything else in this business.

Happy hunting.

Lee S. · Answer

I would think that even though the response rate may be less in a hot market like San Francisco, your profit on a deal would most likely be larger.  It doesn't cost more per piece to do direct mail in SF either as far as I know, stamps and supplies cost the same eh?

I've read enough about direct mail on BP that i'm very confident I'll be able to get leads/deals once I start my mailing in 3-4 weeks.  I plan to be consistent, I've set a budget that I can run indefinitely and will put money from successful deals right back into the "business" including upping the level of marketing if I need to generate more leads.

This seems to be what the successful guys are doing, consistency and snowballing profits.

Miguel Maria · Answer

I have to agree with @Antwon Austin there no much I can add to what you already mentioned @Chris Kennedy .... That is what have been working for us and I think most people. @Brian Armstrong If I have to pick one of the 4 items Chris mentioned it will be to be consistent. Does not matter the type of letter, post card, whatever.... If you are consistent sending once a month or twice a month whatever timeframe you budget for you will eventually start getting response and then from that point you will have to test different marketing strategies like Urgent Letter, Urgent Notice, Post Cards, Letter of intent, etc... Well, I think after all I did have something to add to Chris comment.. jajajajaja.... Best of luck to you!!!

Josh Adamo · Answer

Thanks

@Jeff Pollackundefined

Josh Adamo · Answer

Great thread here. @Jeff Pollack where are you getting your mortgage late list at??

Does Direct Mail Work in a Hot/Competitive Market?

Most Popular Reply