Monthly marketing budget Direct Mail VS deals$?

Question

On average how much direct mail do you guys mail monthly? average pnet income monthly?

J Scott · Answer

Can any of you guys talk to how many times and at what intervals you re-contact your prospects?

We are planning on three mailing to the distressed owners (30/60/90 day mortgage lates).  The first week a letter, the second week a postcard and then the third week another letter.

We'll play around with formats and how much time between the mailings, but that's where we're going to start.  Any feedback/thoughts on how others do it is always appreciated!

Jerry Puckett · Answer

Yes, but bear in mind that many of the people you will be mailing to receive many other such pieces of mail. Even the niche markets like probate are now glutted with other investors. I turned out to an open house the other the day that the seller had arranged by inviting all the investors she had received mail from after her father's passing. There were 6 of us.

Still and all, I think the cost of direct mail yields a good return. A good campaign can often bring more than one deal, (maybe a choice flip, a wholesale or 2, maybe even some "sub to" deals) and several referrals. The referrals more often than not pay for the marketing. When you use the MLS, you're paying commissions on every deal you do.

There is also a point of diminishing returns if you're a one man show. I find that if I send out more than 1000 pieces of mail in a week (3-$500), I get more response than I can effectively handle on my own, and my deal ratio actually goes down.

I've never crunched my numbers just this way before, but now that I do, my results look to be about the same as Gary Parker; 8%. In full crank mode, I send out 500 pieces of mail a week (.37cents apiece for postcards, or .50 cents apiece for yellow letters), and I average 6.5k per month. But that's just for wholesaling...

If I were actually able to turn the properties like J Scott does, and have multiple projects going at once, the returns would be much higher.

J Scott · Answer

I don't have enough data yet to know what my numbers will look like, but I've heard from a few different investors that they generally generate about 10x their direct marketing spend in profit.  So, if they're spending $1000/month in direct marketing, they're generating about $10,000/month in profit.

It's a small sample, but a couple of these investors have been doing this for years.

J Scott · Answer

I think the key is, that 10% (or 8% as others here have mentioned) is what can be expected once you've gotten good at the marketing.  We sent out our first batch of distressed property letters this past week, and the response was less than what we had expected (though we got two great leads that will make us money from the real estate agent side of things).

We plan to spend the next 6 months testing our marketing -- everything from types of envelopes, different content, different colors, types of stamps, types of return address labels, handwritten notes, business cards, mailing days, etc -- to see what works and what doesn't work.  It's quite possible even after many months, we may not be good enough to be earning what Gary Parker and Jerry Puckett are earning, as they've been doing this a much longer time, I presume.

So, while the numbers thrown out may be accurate, don't assume it's easy to achieve them...

Gary Parker · Answer

melissadata.com or leadlist.com for absentee owner and such.  blackbookdata.com for 30/60/90 and other direct mail leads.  There are others.

Steve K · Answer

Good thread, thanks for sharing your experiences.

Where are you guys finding your lead lists?  Buy them direct from yellow letter companies, other online sources, hire your own offshore person to scour public records?  I know it's probably different depending on the type of lead you're chasing but just wondering.  Clearly I've never done any direct mail.

Gary Parker · Answer

In Utah we have 90 days from NOD then 3 weeks to sale and they have to be at least 90 days late.  When you say 30/60/90 I am assuming you mean days late on payments.     So in Utah if you marketed to 90 day lates you would be getting people as they receive their NOD.  I found two things when I was experimenting with 60/90 lates.   First, I actually researched the 90 day lates to see how long it took to actually become a NOD.   Rarely did I find a 90 day go to a NOD.  I thought this odd and I questioned the data.  This was 16 months ago and a lot of foreclosures were in limbo though.  The second thing I learned mostly when marketing to NOD's was people become more motivated the closer the sale date gets.

Thinking out loud, since this is a group I well go back to at some point, I wonder if longer times between mailings at first then increase the frequency as the sale date gets closer?

Jerry Puckett · Answer

It is just about impossible to effectively market to pre fore closure in Texas for various reason. They get a 28 day notice and boom, their house is auctioned. No NOD, no nothing.

But for other types of prospects, I have the best results with a 6 week rotation. My lists are split into six, each week I mail to one sixth of the master. I send two letters and a postcard on this rotation. (So prospects get 2 letters and a post card 6 weeks apart.). After that, they get moved to another list that sends a letter (or postcard, depending on my mood among other things) every 3 months until they sell to me or tell me to go away.

Probates are a little different, and I've explained that elsewhere.

Gary Parker, thanks for all your kind remarks. Most of my marketing expertise I picked up right here on BP (mixed with a healthy amount of stage and sales experience).

Gary Parker · Answer

How to handle the leads?  When I started I was in the mind frame of more more marketing and even more marketing.  Then it hit me I was not paying attention to my current leads the way I should.  I am now concentrating on building a data base/marketing system to better handle the front end.  The back end will be addressed after that.

I was very happy when I first understood this.  I am even testing some lists that I have not mailed to for over a year with decent results.  I know I mentioned I started direct mail in September last year but I did try some things in the past and only mail once.

Yep.

I need to clarify my 8X returns.  That is comprised of 2 rehabs, 2 wholesale deals and some real estate agent stuff.  Jerry Puckett has learned how to use direct mail more effectively than I have; therefore, his returns are obtained much easier than mine.  He is wholesaling.   I mean this with the up most respect and compliments Jerry.  I HAVE to do the rehabs to make a living and expand my business.    Rehabs take a lot of time even when everything is subbed out.  I can only imagine when I have the marketing knowledge of Jerry and the rehab systems of J  Scott in my arsenal!   Maybe I'll even get so go I can just wholesale!

Joel Owens · Answer

I prefer to have a typed letter with a handwritten outside envelope.I have  a business card inside the envelope.

I target sellers in commercial real estate.Some like using the giant corps with the robots and others like a personal level of service and to feel like a valued client.

There is plenty of opportunities to go around for everyone.I think mailers that are targeted are worth a ton in return for the money.Nobody mails anything anymore.

My best returns are SEO  and forum posts (time in) and my mailers (time and money).

Monthly marketing budget Direct Mail VS deals$?

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