How has direct mail treated you in your market?

Question

My market is pretty competitive, so brokers and rehabbers came to us to get a leg up on the competition. While I love direct mail, the sellers have almost become numb to it because there are so many new "investors" entering the market every year. So cold calling sellers is the way we get a leg up on our competition. I imagine that this is the case nationally, also. What we do is tedious and requires thick skin. Any absentee direct mail response rate statistics would be greatly appreciated on this forum!!

Justin Silverio · Answer

Like everyone else, Boston is a crazy hot market.  I'm sending out DM and am still getting a 2% response rate, while most of my competitors have said they are getting <1%.  However, as we all know, response rate is merely a way to compare and has no economic meaning in the business.  Deal rate or ROI is what's important.  Our ROI on DM over the last year has been 10x+.

DM does work!  9 times out of 10, the reason why people have difficulty or poor results with it is because they aren't doing is correctly.  You're not going to get good results if you don't have a great list, great mailer, great consistency and great follow up.

Yia Her · Answer

I have started DM this year in March.  First mailers brought in 9 calls, 2 potentials and 1 in the deal right now.  It did take a while for us to work with the seller(s) but patience and rapport is key here.  Personally DM works for investors because you're really trying to buy a property that is deeply discounted and for that matter, you'll definitely need to reach someone who maybe on the older side who still use the old fashion mails and read them.  On the other hand, if you're thinking about targeting millennials creatively, you'll need to asses the following: How many of them own homes? Are the homes they own distress or in need of "love"?  Will they take an offer 50% 60% or 65% of market value?  But I do believe that other creative ways to market to select individuals using skip tracing, drive 4 dollars, door knocking are all still effective.  Its how you do it that matters.  I think your goal in DM has to be specific for this work.  I would love to hear about other ways to market to them.

Ryan Ball · Answer

Our returned mail is very low but I spend a lot of time up front to put the list together.  The county auditor website where we invest provides very good data if you know what to search for and how to manipulate the data you get.  It takes some time to compile the lists but it is more accurate and targeted than anything we could buy.

Ryan Ball · Answer

We have pursued a similar strategy as @Collin Schwartz with only mailing multi family owners.  We initially mailed any property with two or more units in our target neighborhoods and had about a 6-7% response.  We quickly learned that we needed at least four unit properties to get our desired ROI so started only mailing this group.  Our response rate has gone down to about 1-2% on our most recent mailings. The most recent mailing was very focused on a specific area where we own two buildings that have been great performers.  We sent 100-ish letters (fourth time we hit this group) and received only 1 call.  However, it was from an owner who had 120 units scattered across 9 buildings and wanted to retire.  We are now under contract for 45 units at a great price.  We have only purchased one other building over three years of doing mailings but the persistence has paid off.

Ethan Summers · Answer

@Collin Schwartz Most of the transactions i've closed have been due to constant contact/ followup sequences. I agree its definitely more difficult to find a great deal buying from an investor because most times they have the means to either sell their property as is, to another investor already within their network. I will second the fact that everyone will sell at some point. With that being said i've set followup sequences that demand contacting at minimum 7 times. I use a great CRM to help me track this and create automation within my business. If you have any questions on the tools im using to make this process seamless dont hesitate to shoot me a personal message. Thanks for sharing your experiences!!

Justin Silverio · Answer

@Ethan Summers I agree that things are changing as we start to target millennials, however, everyone that owns a house, has a mailbox.  So by sending mail, you are directly targeting your prospect.  Also, think about the emails and ads that are saturated online (look at the right column-->).  Couldn't you say that online marketing is saturated as well?  I think there are many ways to successfully market to homeowners and everyone feels more comfortable or has a reasoning to do it one way or another.

Don't get me wrong though, multiple marketing strategies is the best approach but I have seen how well DM works so it will always be in my arsenal.

Ethan Summers · Answer

@Yia Her Great success story for you DM i love it.

To answer your questions from my research there are about 74 million baby boomers & about 75 million millennials. With that being said around 35% of millennials own homes which is roughly 26 million homes to target. When it comes to creating offers Ive ran into baby boomers who wont just sell there property at 50% of market value. So i truly believe creating great offers that provide profit come from solving problems. Given deals ive worked on in the past there are plenty of problems to be found in both respective groups. Not to mention the average American home buyer sells their home or has to refinance every 7  years or so. Wouldn't you assume a generation consumed by technology glued to a computer or mobile device screen would want to see your message on that screen? I agree with a previous comment on this thread every home owner has a mailbox. Do you think our job as marketers is to be seen everywhere, being omnipresent?

Ethan Summers · Answer

@Ryan Ball truly inspiring DM story. Have you received any returned mailings have you run into any trouble with locating multi family unit owners mailing addresses? I think you both have a great strategy because the SFR market is highly competitive.

Collin Schwartz · Answer

@Ryan Ball great story. Your persistence certainly paid off good luck sealing the deal on the rest of the units. It really does only take one response to change everything.

Collin Schwartz · Answer

@Ethan Summers yes I was able to maintain contact but was able to switch conversation to the phone. Only one individual did not provide his phone number but he did provide me all pertinent information relative to his property. Yes I am only focusing on multi families, it is harder to get the great deals vs SFR as these are also fellow investors, but everyone will sell at some point. As I said a major perk is the fact that many of the individuals have multiple properties and enjoy talking about investing. The callers will provide useful information even if they are not looking to sell. Omaha is a fairly competitive market and my focus is on the hottest areas. With that being said taking the time to cultivate a quality list in areas that I am familiar with seems to be helping me so far.

How has direct mail treated you in your market?

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