Direct Mail Marketing Advice

[Mike Clancy]

Hello!

My wife and I are just about to send out our first DM campaign. We are going to rehab SFR's outside of the Seattle area and need your feedback.

Our budget for DM for right now is $2,000/month and our goal is to find a property under $100K for our first flip (very doable outside of the Seattle area). 

Does this criteria for our DM list sound good to you?:

70% or higher equity; 2/1 or more (even 2/1's are selling like crazy in our local market); Under $100K mortgage balance; Built between yrs.1900 thru 2000; Absentee Owner: Last recorded transfer of ownership yrs. 1900 thru 2000.

$2,000 is a lot for us right now for advertising so we want to ensure we are mailing to the correct audience of motivated sellers.

What do you think?  Any feedback is welcome and appreciated!

Mike 

[Curt Smith]

Hi Mike, good question, very good.  From your filters you sound like you are tweeking listsource.com.  What listsource does not have and you are missing from your filters is "stress".  Think about it, none of your filters actually target (directly) sellers who are likely to NEED to sell.  I subscribe to Kent Clothiers find motivated seller now service, which deliver nationwide lists for truly vacant houses.  You'd think vacant would be a lot of stress.  It isn't!!   I've been mailing this source for some time (they have made recent improvements) and everyone wants "zestimate".  It's always the direct marketure's job to be very skilled at negotiation and getting a seller with equity to give you that equity in your low ball offer.  Think about what I just said?  You need to be skilled enough to show why a marginally motivated seller should sell way WAY below zestimate and why that is in their best interests (and actually show up at closing).   Very few folks have the needed negotiation skill level.  Getting the phone to ring  with sellers calling is easy.  Depending on the lead filter your deals per call will vary very widely.  1 in 1000 might be the end of the day number.  At best 1 in 200 calls.  This is assuming you are a skilled negotiator.

Read this list source review and comments: http://retipster.com/real-estate-data

What is missing from most list sources with some exceptions mentioned above are:

- late on taxes  (others say this is the hottest lead source for motivated sellers).

- late on mortgage payments. Note the NOD sales cycle is very fast and takes advanced skills typically.

- probate / inheritence of excess property.  Note that probate is not as fast or easy as you might think.  Families take often a year to decide to sell, and worse you are negotiating with more than just 1, often a few sellers who have dreams of new cars and cruises from the proceeds.  :)

- burnt out landlords (eviction court).  or vacant houses (see above).

- devorces, you can find these folks post decree by searching for "quit claim deed" in the last 1-3 months.

You are thinking about trying to wholesale these prospective deals.  I suggest you search BP on these therms:  "wholesaling is hard" "wholesaling needs many skills".

We've been working REI for 6 years now and have built a rental portfolio that has allowed me to quit my high paying office job 2 weeks ago and I'm in a mentoring and leadership role in my local REIA. This is my plan post w-2 job cutting me off from buying rentals with bank financing:

- I'm going to market for LOW equity deals.  Because HIGH equity deals are much much fewer.  Lots of folks have low equity and need to move and get rid of their house yet don;t have cash to close or fix up.  These folks would be glad to have me call.  Folks with equity are never happy to have an investor call especially when your offer takes most of their equity.  BTW folks think they have much more equity than they really do, so this is an educational effort.

- You offer to take over control of the house via lease / option, or buying subject too.  Some times a small amount of cash is needed to help them move or buy some of their equity.  

- Landlords and flippers will still pay a fee to have you assign over these deals just like high equity deals, but the seller discussion is easier.

- Sources of leads are the above and:  late on taxes, low equity and quit claim deed, 

- and very immportantly: Expired MLS leads. In todays low days on market the main reason why a house doesn't sell and the listing expires is negative equity and the asking price being way way over market. These sellers are motivated (as a percentage) and glad to have someone offer lease and option to buy some years down the road to build equity.

Terms for you to study:  wholesaling lease options, sandwich lease options,  buying subject to.

@brian gibbons  (look up Brian)