70,000 Mail Pieces in 2014; What Did I Get For It?

70,000 Mail Pieces in 2014; What Did I Get For It?

Real Estate Investor · Nashville TN · Member since 2009 · 287 posts · 171 votes

Here are my results after about $67K worth of direct mail cost in 2014.  It would be awesome is we could have everyone who has sent more than, say, 5,000 mail pieces, to post their REAL WORLD results as well.  

Collectively, it would be cool to see what if any patterns emerge in terms of mail pieces that have done best, what the response rates have been, the overall profit and return people have made from their direct mail efforts, etc.

This should hopefully answer a lot of newbie questions on potential response rates, how much profit they might expect from their marketing efforts, and the sheer volume of mail required to generate ANY deals at all.

The majority of lists I mail to (approx 80%) are high equity (40% or more equity) in zip codes close to me in DC metro area- all lists purchased on listsource.

All my mail pieces go to a simple, personal sounding voicemail.  I've found, after 2 years now of sending 40,000 plus mail pieces each year, that the people who hang up and don't leave messages are virtually never motivated sellers.  If they're motivated, they leave a message.  It's for this reason I don't pay for a call answering service to receive the messages.

OVERALL NUMBERS:

Spend: $67,000

Total Profit: $106,000 (not counting one I renovated and will be selling early this year)

Net Profit: $39,000

Return on Spend: 58.2% (pretty sweet)

*Note- this profit calculation does not include the cost of my time required to get this profit, which was quite significant.  This includes the initial phone call, driving out and meeting the owner at their house, follow-up until I have signed contract back, and the BS associated with title problems, seller's getting cold feet and trying to back out of contracts, and all the other stuff that comes up from contract signing to actually settling on the house.

BEST PERFORMING MAIL PIECE:

Handwritten letter on yellow lined paper with handwritten invitation (A6) sized envelope in random colors (pink, light blue, yellow, etc)

I have graphics on BOTH the letter and the envelope- things like dollar signs, stars, arrows, houses, etc- whatever random stuff I could think of to make the letter more eye catching and 'WTF' eliciting when opened by the homeowner, so they would actually read it.

SECOND BEST PERFORMING MAIL PIECE:

5.5 x 11 inch yellow post card (big post card) with somewhat handwritten looking font.  Includes various graphics (similar to the yellow letter)- i.e. star, house, arrows, etc.

MAIN THOUGHT AFTER THIS PAST YEAR:

Hypothetically discussing what might and might not work when it comes to direct mail is only worthwhile to the extent it provides new ideas for things to test in the real world. Beyond that, trying to imagine what will or will not do well is pointless.  

Only way to know what will or will not work is to pick ONE variable and split test it by sending each half of mail pieces exactly the same, to same list, with the exception of the one variable you are trying to test. 

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Realtor · Lafayette, LA · Member since 2011 · 297 posts · 175 votes
11y

Seems risky to me. I can call 5 fsbos a day(Free) as a realtor, list their house and make $100,000 every 4 months. That's a net of $100,000. 

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  • Washington, DC · Member since 2012 · 57 posts · 34 votes
    11y

    And this profit is from turning around and wholesaling the contracts after you settle with the original owner? Just wondering if these numbers are for fix and flip deals, wholesaling deals or some combination of them both. 

    PS: Thanks for providing your numbers and insight to the community. That is awesome. 

  • Residential Real Estate Broker · Sacramento, CA · Member since 2010 · 16 posts · 18 votes
    11y

    Jonathon, thank you for sharing this information. What will your marketing budget be for 2015? Did you get as many deals as you could handle for the year? 

  • Residential Real Estate Agent · Groveland, FL · Member since 2012 · 504 posts · 395 votes
    11y

    I'm not so sure it's the opening as much as the timing. It has been said "The first vacuum cleaner salesman never has a chance. It's the 4th, or 5th, or 6th one that the housewife buys from."

    So, I think it's a magic number, and that number varies from person to person. So, grind the magic beans. Go listen to a GURU on a mountaintop. It's not WHAT, but WHEN. My opinion.

    How many times have I entered a house I bought, only to find a stack of "Yellow Letters" on the kitchen counter-all opened. Why did they select mine? 

  • Real Estate Investor · Nashville TN · Member since 2009 · 287 posts · 171 votes
    11y

    @Account Closed I think for this year I'll probably up it to about $100K and see if the profit and return on spend stays at same ratios I experienced last year.  If there's always a 30%+ return on spend there really isn't any reason I can think of not to keep upping the marketing spend it as long as the return stays in a similar ballpark.

  • Real Estate Investor · Nashville TN · Member since 2009 · 287 posts · 171 votes
    11y

    @Joseph Ball yeah timing is everything on this.  

    If you have a way to make sure your mail pieces are more likely to hit when someone is really thinking about selling, please let me know.  

    All that I've found so far is that you're more likely to be at 'right place at right time' by sending out 50,000 mail pieces a year than 5,000, and 5,000 more likely than 500, etc.

    Also is you send out a lot of mail would love to see what kind of response rates and profit you get from your efforts.  Would love to learn from others.  I'm certainly no expert.

  • Realtor · Lafayette, LA · Member since 2011 · 297 posts · 175 votes
    11y

    Seems risky to me. I can call 5 fsbos a day(Free) as a realtor, list their house and make $100,000 every 4 months. That's a net of $100,000. 

  • Wholesaler · Rochester, NY · Member since 2013 · 100 posts · 23 votes
    11y

    Awesome thread @Jonathan C. 

    Do you have plans on going solo in the near future? 

    I was going to ask if you had any ideas on how to increase the margin before I read that you co-wholesale. Going more independent would certainly increase your profit margin. 

    Regardless if you don't and continue your current course, do you have any other ideas on how to increase the spread? 

  • Real Estate Investor · Nashville TN · Member since 2009 · 287 posts · 171 votes
    11y

    @Eric M. thanks man.  

    Would definitely like to go solo soon.  I've built a buyers list the traditional way- getting tons of Realtor email addresses from MRIS, calling 'we buy houses' signs, networking at REIAs.  I've found though for some reason that through my efforts the prices I can get for houses I'm wholesaling are way less than what I get through my partner/friend's buyers list.

    Any thoughts on that at all?

    In terms of way to increase the spread, I'm going to be a little more on top of my leads this year.  There were times I didn't follow-up on messages I received as aggressively as I need to. I'm also going to start putting call in leads in an email rotation every month or two, but I've found people hesitant to give email addresses.  So any ideas/scripting on how to ask people who call you for email addresses would be helpful as well.

    Right now basically I've just thrown more money at it every year because I will, about once a year, get that wholesale deal I can renovate and sell and make 60-100k, which covers the year worth of marketing cost (just didnt get it last year- pushed to early this year due to contractor problems).

  • Investor/Realtor · Wentzville, MO · Member since 2014 · 846 posts · 431 votes
    11y

    @Jonathan C.   Great stuff!  How many years have you been using direct mail?  I am curious to see how fast you ramped up your monthly budget for DM.  

    My partner and I started our direct mail campaign 6 months ago and have been spending 1500 per month.  We are slowly going to up it as 2015 progresses.  So far in 6 months we have made 38,000 and acquired 2 rentals from the leads.  We are also currently negotiating 3 more properties that we came into contact through our DM campaign.

    I look forward to being in your shoes!

  • Real Estate Investor · Nashville TN · Member since 2009 · 287 posts · 171 votes
    11y

    @Ryan Billingsley been doing direct mail since 2010.  

    2010- 23,481 

    2011-12,400  (wasn't sure I was getting enough return to justify high volume mailing)

    2012- 6,000 (wasn't sure I was getting enough return to justify high volume mailing)

    2013- 35,000 (decided I was getting enough to justify high volume mailing)

    2014- 70,000

    2015- prob 100,000

    You're getting a great return- do you have further info you can post?  What kind of mail piece you send?  What list/lists you send to?  Who fields calls (voicemail, you, answering service)?  What's your response rate been?

  • Wholesaler · Rochester, NY · Member since 2013 · 100 posts · 23 votes
    11y

    @Jonathan C. As far as getting the e-mails, I have two thoughts:

    First, throwing the question casually into the beginning of the conversation between two simple questions. As long as they seem comfortable and open with you, I see sellers being fine with giving it to you. 

    Second, when dealing with out-of-state or absentee owners, I always ask for the email in order to send them current photos of their property. Typically sellers are thankful for receiving the photos since they aren't always able to easily see their properties.  

    I think all of your ideas are great... I also fall victim to not responding in an adequate timeframe too. Let's both work on being more on top of responses!

  • Real Estate Investor · Destin, FL · Member since 2015 · 131 posts · 64 votes
    11y

    @Jonathan C. - props for having the stones to throw your metrics out there for the world to see and looking for tangible ways to improve them.  If you don't measure it, you can't improve it.

  • Investor · DMV Maryland · Member since 2013 · 867 posts · 370 votes
    11y

    Thanks for sharing.  I'm preparing for a big mail campaign and would like to keep capitalizing on it year after year as you too are doing.

    @Stephen Hundley 

     I have not started calling FSBOs but think 5 a day is a  number I can handle.  Any tips are appreciated on how to best start that conversation (do you end up listing or do you end up wholesaling them - I'm thinking the former)

  • Real Estate Investor · Raleigh, NC · Member since 2012 · 427 posts · 297 votes
    11y

    Great post. Thank you for sharing. 

    Did you print all these in house? I see "All American Printing" referenced once but nothing else. 

  • Investor/Realtor · Wentzville, MO · Member since 2014 · 846 posts · 431 votes
    11y

    @Jonathan C. 

    We use Jerry Puckett for our direct mail.  The format we use is hand written yellow letters.  We buy our leads from lead source and target high equity owners, absentee owners, and out of state owners.  We also target the specific property type and zip codes we like.  We let our calls go to voicemail.  We don't have the exact numbers on our response rate but it has been going down towards the end of the six month period.  We are pulling a new list in February and we expect it to be even better.

  • Realtor · Lafayette, LA · Member since 2011 · 297 posts · 175 votes
    11y

    @Christina R.  

    I end up listing them as an agent. It's a pretty easy conversion process. Sometimes I even up the price when I list and sell it in less than a week. Everyone is happy. 

    I listed and sold 50 homes last year at an average price of $210,000. My avg days on market was 27 and add about 33 for financing and my avg time it took to get paid was only 60 days. At a 3% commission that's $6,000/week listing one house per week. 

    To me that's a lot less risky than direct mail. Btw my avg cost per listing was only about $300/house. 

  • Ann Arbor, MI · Member since 2014 · 1k+ posts · 997 votes
    11y

    that's great stuff but you mentioned that the calls go to a personalized voicemail service.  why don't you take the calls yourself?  

  • Birmingham, AL · Member since 2012 · 115 posts · 28 votes
    11y

    This is a great thread! As a "wholesaler" who just sent out my first batch of letters, its interesting to see response rates and different tactics!

  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    11y

    @Jonathan C.   based on this I appreciate your Candor.. If this is typical of the direct mail marketing efforts I can't see how anyone would do this. as Opposed to just selling RE. If one spent half that amount as a RE Agent I bet they would make twice as much with much less risk.

    That all said I suspect others do better and of course you have those that send out 10k letters and never get a response.

    I do direct letter campaigns in certain markets but they are totally different than what y'all do. I am in the South this week so my Yall is coming out.. Off to Oregon tomorrow though.

  • Investor · Cedar Park, TX · Member since 2014 · 317 posts · 74 votes
    11y

    Thank you for posting this. Your posting is both informative and inspiring.

  • Investor · Buffalo, NY · Member since 2014 · 83 posts · 46 votes
    11y

    @Jonathan C.,
    Thank you for sharing your numbers. It is a brave move on your behalf so I applaud to you! When I was reading your post these are some of the first thoughts I had:
    + You are saying that your buyer list is not as good as your partner's. Have you contemplated on spending small portion of your marketing dollars onto forming a better quality buyer's list? Better not dollars, but your time, like calling and asking what your local investors are looking for. I don't mean your competition like We buy houses guys, or realtors or other wholesalers. I mean the guys who are doing rehabs and landlords. These are the guys who can "afford" to pay slightly more than your competing wholesaler. Also, I would track who your partner is marketing your contracts to. If let's say s/he is marketing to rehabbers, I would find nearly every full time rehabber in the area, get their info and market to them before I would contact my partner. You can find them through the permits they are pulling, hard money lenders and the noise in the neighborhood. If you see that a particular company is pulling permits on consistent basis, you really do want to find a way to get in contact with the acquisition person. Also, if you happen to drive to and from your appointment and hear construction noise, do not pass by but get out of the car and get their info. You might come across a rehabber or the landlord. Also, contact hard money lenders in your area and ask them who they are lending to for rehabbing.
    + Since you already got negotiation with the sellers under your belt, have you tried wholetailing? You will keep most of the spread in your pocket. @Michael Quarles and @Aaron Mazzrillo talked about it during their podcasts and on the forums. Some other people might as well, but these two pros stand out in my mind. Maybe someone else can chime in and point to wholetailing pros?
    +Even though you seem to be comfortable talking to the sellers, how about trying new negotiating techniques to get better prices. I understand that it's challenging, but one can always strive to improve and make a better spread!
    + You are talking about marketing to high equity and absentee landlords. I wonder if you include high equity absentee landlords who also have a violation or who also inherited the property how would it change for you. Instead of one base and one sub-group, you'll have one base and two sub-groups. It will be a better quality list since the landlords would be motivated on two levels instead of one? Again, pros like @Michael Quarles @Aaron Mazzrillo and @Jerry Puckett talked about it.
    + Finally, you are stating that your partner has a better buyer list. Could it be that her/his attitude on approach is more confident? I don't know you personally, so I can not tell, but if you are offering your contract to your buyers and let's say getting $100K and your partner is offering the same house to their buyers and getting $115K, I would wonder what is it that I'm saying, how I'm saying and when I'm saying affects the bottom line.

    Again, thank you for sharing your numbers!

  • Real Estate Broker · Indianapolis, IN · Member since 2014 · 3k+ posts · 2k+ votes
    11y

    @Jonathan C. I work with @Ryan Billingsley 

    We both work 8-5 day jobs and simply can't take the calls live. I am sure that we missed a few that "fell through the cracks" but I can't complain with 38k in profit (not counting our 2 rentals) off of roughly 9k invested. Most of the people who are interested leave a VM. We also take any calls we can live as they come in. Most of them leave a vm and we return the call within 10-15 minutes.

  • Real Estate Investor · Baltimore, MD · Member since 2014 · 18 posts · 6 votes
    11y

    @Jonathan C. Thanks for sharing your statistics!  What percentage of those letters from 2014 are follow-up letters or are you constantly buying lead lists and sending one letter to each?

  • Real Estate Investor · Rancho Cucamonga, CA · Member since 2014 · 258 posts · 90 votes
    11y

    Jonathon, you could do better. that is too much money to get that return.

  • Real Estate Investor · Nashville TN · Member since 2009 · 287 posts · 171 votes
    11y

    @Eric F. I print the yellow letters and 'professional letters' and envelopes in house.  The postcards are outsourced to a local print shop- all american printing.

    @Jay Hinrichs it may or may not be typical- would definitely be interested in other real world results from high volume wholesalers just to see what other people are getting for it.

    In terms of risk and what you get for it, important to point out also get leads on rental properties. For example, in 2013 I bought 3 townhouses in northern VA as a package deal on owner financing. This is where being an investor vs agent comes in handy- as you get all the benefits of owning the real estate, but by all means if anyone can call only 5 FSBOs a week and make $400k a year, they should go for it :)

    @Patrick Britton found if they're motivated they leave messages, if not, they hang up, so didn't see a benefit to getting the calls.  Also, would be a pain to have to take the calls as they come in.

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