New direct mail campaign results

[Jeff Erlewine]

Well, it’s about that time. I have been lurking on the forums for about 2 years now, benefiting from everyone else’s knowledge. So, now that I have something that might be of value to someone else, I would like to start contributing. I just started my direct mail campaign and I will be documenting the results in this thread. I need to get my deal flow going and I don’t subscribe to the idea that direct mail is a dying source of motivated seller leads. As investors, we usually need owners with equity. To me, it makes sense that the 65+ crowd are the ones with the equity. And my theory is that there aren’t a lot of 65+ year old people jumping on their smartphone and Googling “we buy houses Houston” to search for cash buyers.

Just a quick overview of what’s going on before I jump into the direct mail stuff:

After 2 years of browsing the forums, listening to podcasts, talking to other RE professionals, reading books, articles, and everything else REI-related I could get my hands on, I decided to take a leap. I left my stable, good paying, 401(k) matching, pension contributing job to pursue real estate investing full time. And no…I have never done a deal. I am leveraging the money I saved up at my job to market to motivated sellers. Fix and flip will be my primary strategy. I have several years of experience as a contractor (previous life) that should prove useful for estimating and rehabbing.

The main reason I decided to start this thread is because of THIS. For those who are thinking about starting a direct mail campaign, the information in there is solid gold. There might not be a more concentrated source of DM wisdom anywhere on the internet. DO NOT start a DM campaign until you read what is in there…all 350 posts of it.

So, about my campaign…. I am working from a few different lists to market to motivated sellers:

- Absentee tax delinquencies that have not yet gone to tax auction will get a letter each month until they sell or pay the taxes

- ALL upcoming tax and foreclosure auction properties will get a “URGENT” style yellow postcard. I will mail every month, but each owner will only be mailed to once or twice each, since it is a quickly expiring list

- All probates will get a letter each month until they sell (to me or someone else)

In addition to those lists that will be handled by a mailing service, I will be personally mailing out to every new probate case in my county, the day the application hits the county website. This is so I can (hopefully) be the first person to reach out to them. There are only about 10 or so new probate cases every day that have property attached to them, so it’s a manageable amount of mail to send myself.

I filter all of the lists to match my buying criteria. I also comb the list to remove corporate-owned properties and other nonsense. For the tax delinquency, I added a formula in Excel to divide the amount of property tax owed by the total value of the property. I then deleted any properties that owe more than 50% of the value of the property. Obviously if they owe more in taxes than I can even pay for the property, it’s not a qualified lead.

Right now, these lists represent about 1,500 pieces of mail each month, but that list will grow in size as probates get added to the list. At a certain point (maybe in a year or so), the list should level off, as probate properties get sold.

Besides the auctions, all of the letters are white typed letters with a small logo, like a company letterhead. If you’re wondering why I’m not trying yellow letters first, it’s because 1) I despise them and 2) More people are probably mailing yellow letters than anything else, so I would rather do something different.

I would like to give a thanks to @Michael Quarles - The people at his company YellowLetters.com helped me out so much, from the design, to picking the right style of letter for my campaign. And they are super responsive and work very quickly.  I would also like to thank all of the experts that contributed to that huge DM thread...all of the experts that have contributed to any thread for that matter!  I firmly believe you all are a HUGE factor in the success of many, many new RE investors out there.

P.S. - This post isn't about online marketing, but just a side note to those who think pay-per-click is a magic pill...IT'S NOT. Throwing a bunch of money at a PPC campaign doesn't mean deals will come in. I started a Google Ads campaign a month ago. I thought I had the campaign set up nicely, and I tweak it every day (adding negative keywords, raising/lowering costs-per-click, removing ineffective keywords, etc.). But to date, I have spent $1,500 and got exactly 1 lead, and it wasn't a good one (property already listed on the MLS, no equity, owner needed to get max value for the property). I understand that one month is not a large sample size, but in a market area of 6 million people, I think it still proves a point that money thrown at PPC does not necessarily equal results (especially in a competitive market like Houston). I now understand the value of a good PPC management company and I am currently in the process of finding a good one to get this campaign on track.

P.P.S – Sorry this post was so long-winded. I actually have a lot more I could say about this, but I think that’s good for now.

[Jeff Erlewine]

@Jerryll Noorden

You asked a mouthful, but I'll try to address everything.

How are you planning to evaluate these campaign results?

Every person that has received a letter from me is tracked in an Excel spreadsheet that I maintain.

How do you know what number is a good campaign and what number is bad?

There is a lot of data from years and years of other people doing DM campaigns. Someone can correct me if I'm wrong, but I think 1% is a pretty typical response rate and 1 out of 20 responses will yield a deal. This means one deal for every 2,000 pieces of mail sent. A campaign that is out-performing those numbers is probably doing very well.  If it's doing worse, there is probably room for improvement.  Of course these are only averages and the specific results of any DM campaign will depend on the specific market, type of mail being sent, type of property being targeted, type of list being targeted, etc.

Also what exactly are you tracking?

I'm tracking how many times I've sent a piece of mail to a specific prospect, whether or not they responded at all, if a deal was closed, how much profit was made, and total cost of the campaign.

DMM gives you notoriously bad results.

What is the definition of a "bad result?" I think that's relative.  For example, I have spent $4,000 on Google Ads over 3 months and only got a couple leads out of it. I haven't closed a single deal yet.

If I get a good ROI from DM, I would say those are good results.

What is the goal of the campaign? Get contracts signed?, get return calls?

Of course the goal is to get properties under contract and turn a good profit.

I stopped doing DMM, so I no longer have data. And I am a data freak. I would love to use your data to analyze these results as well.

I love data, too.  I don't believe in doing any kind of advertising without being able to track the results.  That's the only way to know whether or not it's effective. I don't think the sample size of my current DM campaign is large enough to be of statistical significance yet.

Can you break down all the costs associated with this... ideally itemized.

x$ for the list

I use Real Acquisitions for the lists I pull. So, I pay a monthly fee as opposed to a fee per list and I can pull as many lists as I wish. I really like this feature so I can play with the lists and try different strategies.  I think it's around $130/mo. for the plan I have.

y$ for sending them

I pay around 85 cents per letter for a service that is done for me completely.  I just send them the list and approve the proof of the custom letter they design.  The cost per letter goes down if I send a higher volume.

Lastly,

were the mailers postcards? Letters?

I send typed letters. Here is what the letter looks like that I send to probate cases.  The letters I send to absentee tax delinquencies are similar, just with a slightly different message.

If you share these I will evaluate them for you and I will compare them to my marketing efforts and see how good or bad it is against m efforts. We can all/both learn and tweak from this.

Keep in mind though I am an SEO guy so my numbers will most likely be better but don't let this discourage you. The point of this is to see what and how to change and adapt your marketing efforts to grow bigger and better.

I am a big fan of SEO, too.  I'm working on that, and I think it will pay dividends, but it just takes some time.  Houston is a very competitive market, so I think it is important to have multiple marketing channels going at once. We're currently doing PPC, DM, and SEO.  I actually think they compliment each other very well.