What to do with a $1500 marketing budget?

Question

I've been marketing for wholesaling for about 3 months now but I think I need to change up what I’m doing to get some results. I have been cold calling some tax delinquent properties and have sent out some yellow letters to absentee owner with 50% or greater equity. All the calls back that I have got from the yellow letters want more than retail. Only makes sense if they have a cashflowing property, there is no need to sell at a huge discount.

My question is that I have about a $1500 marketing budget and wanted to know what the seasoned wholesaler would do with that $1500 if they started from scratch.

Would you put up bandit signs?
Start a "sell your house fast.com" website/landing page? 
Start buying the probate and inherited lists and mailing those?
Start mailing pre foreclosure lists?
Pay some bird dogs to send you vacant house addresses?
Do something else that I didn't put up here?
Buy lottery tickets?
Not even start because $1500 in marketing won’t bring enough traffic to get a deal?

I'm trying to find out what yields the highest number of motivated sellers willing to sell at a discount.

Thanks in advance

Jon Klaus · Answer

I'd call Jerry Puckett and ask him to help me put together a yellow letter campaign.  I'd expect $1500 would give me at least a 70% chance at getting a deal.  Your mileage my vary as I'm sure your deal criteria is different than mine.

Michael Quarles · Answer

Marketing is going to cost 8-12 percent of anticipated earnings and after 6 month of a steady campaign and closing learning curve it will reduce dramatically.

In the beginning there are too many variables to run the rumbers on a straight line chart.

Heck you make a bigger impact on the results then your mail piece.

Wayne Woodson · Answer

I got this ideal from another bigger pockets thread so I can't take too much credit for it but here it is. I have an excel spreadsheet where I use the following formula..

85.2 Calls / .05 = 4.3 deals  a 0.025% response rate from direct mail = 3,409 letters * 0.44 cents per letter = $1,400 The .05 is the amount of offers that should* get accepted. I found this number to be very accurate in my business.

so in this case $1,500 = 3,409 letters at .44 a letter. This should get a response rate around .025% or 1 deal per 25 calls. In this case it would be 4.3 deals. But keep in mind this is not exact but it does average out to be this in my case and a lot of other cases.

I use Chris Chico's yellow letter template and I mail to both Probate and Absentee Owner's. I mostly sort through the calls until someone excepts my "low call" offer and then send them a contract. I then wholesale the property but I suppose you could rehabb the house or just buy it and throw it up on the MLS. I recommend you wholesale it though.

I hope this helps.

Michael Quarles · Answer

Kyle.

When comparing postcards and yellow letters you should not use the cost of products however the return on investment.

Entry costs and ROI are two different animals.

Good luck

Kyle B. · Answer

Thanks for the explanation. I will have to look into that. I am probably going with the letter route as I've read it is more effective than postcards (although I'm sure you have a good reason to go with postcards).

Using this service though, you wouldn't have the letters hand written, would you. Do you have any experience in the effectiveness of hand written vs. printed? It seems the former creates more call backs but you're of course giving up a lot of time writing each letter.

Thanks,

Kyle

Wayne Woodson · Answer

click2mail is a automated mailing system. You upload a template then upload your lists and click send. There is some designing the auto fill fields but this is just an overview of the process.

The postcards on the site are a lot cheaper than the letters. The letters cost like 60 cents a piece or something like that. I think it's faster and cheap than buying paper, ink and stamps and doing it yourself.

Kyle B. · Answer

Wayne - with click2mail, are you outsourcing all the work of putting and sending out the mailings? Also, are postcards cheaper to send out then standard yellow letters in an envelope? If so, do you know what this service charges for the latter? I assume it would cost more than a do-it-yourself approach since you are paying them to do the work for you.

Apologize in advance if these questions sound juvenile. I don't have much experience with direct mailings.

Thanks,

Kyle

Wayne Woodson · Answer

You are correct in that the cost of stamps now are around 50 cents. I use click2mail so thats why I put 46 cents. I get sort of a discount by using them. Really it's more like 44 including tax. I must also admit that I don't send too many letters but only yellow letter postcards.

I have a landing page and I am on the first page of google in my market. I can say that leads to trickle in but not as much as the postcards and bandit signs.

I have found it to be 1 out of every 20 calls is a deal. I could have a higher conversion if I did subject to and short-sales  but I don't do anything but wholesale for right now.

Your right Michael. Starting out it's hard to run accurate numbers. I had interview other wholesalers to get their numbers when I first got started. This is what seems to be the average in my market and admittedly I haven't adjusted the formula in awhile so it may be lower now. I was one of your students at one time. That was back in 2010 or 2011 I can't remember.

William Kyle Walker · Answer

Thanks for all of the replies so far. 
It seems like most the consensus thus far is yellow letters. Has any one tried Google ad words?  Wayne  Woodson yellow letters and bandit signs are your bread and butter have you had any luck with other avenues? I listen to @sean terrys podcast and it seems that he gets a good amount of deals on his landing page. when someone wants to sell their home fast they Google what to do. some are led to him and they are already motivated. 
I think you guys brought up a good point on the cost of the letters. I get my name list from listsource.com.  what do you guys use? I'm anticipating that ill have to spend about $1000 per deal. Once I get one I can dump all the profits into marketing

Michael Spencer · Answer

Wayne  Woodson I think 44 cents/letter is very low. Like Kyle B. mentioned, postage right now for 2013 is 46 cents a letter. I print my own letters with a total cost (postage, ink, paper, envelope, return address) for roughly 62 cents/letter.

What to do with a $1500 marketing budget?

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