Investor · Indianapolis, IN · Member since 2013 · 647 posts · 196 votes
I have been told by a few respected individuals in the community that I am over analyzing the criteria for my list and that I just need to get started. I do agree that analysis paralysis is preventing me from pulling the trigger. However, when I plan on shelling out $5,000 towards my overall campaign (multiple letters to absentee owners) I want to be somewhat confident that I'm targeting the right absentee owners.
Anyone who uses wholesaling as a strategy, and has had success with direct mail in the past if you could share the criteria you have used for building your list it would be greatly appreciated. I really want to make this $5,000 work for me. I plan on sending 500-1000 mailers per month depending on the # of absentee owners I have access to based on my criteria.
The struggle I'm finding is that some successful wholesalers are saying that 10+ years for length of residence is important because it's hard for ListSource to ultimately determine equity in a home and there's a good chance someone with 10+ years in residence has enough equity. However, what if they have recently refinanced?
Is LTV or Equity % important. What if someone owns the home outright, and therefore there wouldn't be any LTV. How are these list providers determining equity?
I guess I would like to hear what success you have had with direct mail if any, and if so what did your list look like? From there, I am sure I will have the confidence to settle on my list and pull the trigger with my $5,000 marketing budget.
My question is what are you selling? I do admit that you do make a lot of sense, but really you're that much more luckier than everyone else that you're able to confidently say just gamble and go for it?
What am I selling? Directly, not a dang thing. Indirectly, maybe just an idea. The idea that you will never know the outcome if you don't take a chance. I don't buy 100% of the houses I don't make an offer on. All the houses I drive by every day that I don't own don't do a thing for me. I get no benefit from them. Of course, I can't buy any of them if I don't let those owners know I might be interested in buying them.
Now, the ones I do own and rent out pay my mortgage, buy my groceries, pay my health care, cover the vet bills, pay for my automobile insurance, the visits to the dentist, chiropractor, and yearly medical check ups. The houses I own pay my airplane tickets and hotel rooms when I take vacations or attend seminars, cover my utilities costs, buy my clothes, pay my internet bill, cover my phone bill, and buy the gas for my car. I'm a pretty low lifestyle kind of person, but there's not much I can't go buy today if I really want it. Luckily, I don't want much so it works out quite well.
Of course, I never would have purchased that first house if I didn't decide that the money sitting in my bank was really not doing anything for me. That it was more of a liability than a parachute or safety net. See, the fear of losing that $5,000 has you so paralyzed, you can't do anything. It's just $5,000. My visa bills (personal & corporate) every month are more than that. When times are slow, I spend more money. Because I know, without a doubt in my mind, that investing money into my business will produce a good return. It will come back and bring more with it. If I don't spend that money every month, whether I get a deal or not, if I let the fear of losing money keep me from doing business, I might as well just sell all my houses, put the proceeds into government securities, and go get a cushy job working 9-5, 5 days a week, with good health benefits, a soft chair to sit in, and hopefully some kind of pension at the end of it all.
If I had $5,000 sitting around and the fear of losing it was keeping me from doing anything, I'd just spend that ****. I'd get it out of my life as fast as I could. Cuz once it's gone, I've got nothing to be afraid of any more. I will also then realize that when I wake up in the morning, I still have my arms, legs, hands, feet, I have my wits, I have my knowledge, I have the ability to go out and get some more money and spend it all again. Money isn't a security blanket. It won't work as a parachute. If you think losing $5K is going to end your life, I think you ought not to get into this business cuz I've lost so much more than that I can only laugh about it. $5K is a pittance. I can't even take a decent vacation with $5K. Airline tickets alone cost me almost that every year when the wife and I fly over to Asia.
Only when you realize what money truly is will you have the internal power to easily dispose of it. I know for every dollar I spend on marketing, I get back more than $2. I never fret about spending money on marketing. Just spend that ****. Get it out of your life so you can stop worrying about it.
Urbana, IL · Member since 2012 · 1k+ posts · 425 votes
13y
Ben,
You're not going to like this answer but go experiment with your cash first. You're not going to be able to know what works in your market without testing it out first and that is going to take some cash. And what I mean be testing is to figure out what works better, postcards or yellow letters, door knocking, etc? And you need to figure out what neighborhoods might be more apt to respond to those mailings. And then what type of property and situation are you looking for? You'll need to cater your messages differently if you're catering to people in preforeclosure versus those who have 100% equity versus those who have 20% equity. I don't believe the 10+ years is going to be as accurate as if you were to just put in the equity amount. And don't blow all your money on one mailing list. You'll read time and time again that most people have to mail 3-4 times to the same property in order to get a response. The key is being consistent. And keep in my listsource might not have all the up to date mailing addresses.
As for critieria from list source - I believe what i have done is 3/2s with 60% equity in a range of 100k to 250k for appraisers value only in certain zip codes. It was something similar to that.
I would experiment with your mailings. Send one type of letter to homes owned free and clear. Send another type to those who are absentee that are 30+ years old. You're kind of creating your own niche but you have to find which ones work first.
Investor · Indianapolis, IN · Member since 2013 · 647 posts · 196 votes
13y
@Steven J. Thank you for the feedback. I have settled on testing direct mail first, and yes I do plan on sending multiple mailers using my budget. That is why I plan on only spending $500-$1,000 per mailing. Here is a screenshot of a list I build using listSource:
Do you see any issues with this criteria? You can see it returned 689 addresses.
Urbana, IL · Member since 2012 · 1k+ posts · 425 votes
13y
Ben,
I would not use $ amount for equity. Someone may have 50k in equity but thats not much on a 500k home. Go for % of equity instead. And as for 2-5 bedrooms I would limit that to 3 bedroom only just because those are the bread and butter houses. 2 beds don't sell as quickly and 5 beds will be a little harder to sell as well.
those are great points that you make especially regarding equity in$ vs %. I have heard a lot of recommendations for 3br as well. Thanks for the input. What investment strategy are you practicing (wholesaling, fix and flip, buy and hold)? Have you had success in direct mail?
Flipper/Rehabber · Arlington, TX · Member since 2013 · 1k+ posts · 2k+ votes
13y
I agree with Steven, don't use Equity $ - use Equity % instead. However, be aware that Listsource.com charges 10 cents per record for using the Equity %.
I've never seen the "LTV" filter on Listsource.com - not sure where you are selecting that - hhmmm... but LTV is jus tthe reverse of Equity %.
You might also consider Click2Mail.com. They allow you to use LTV at no additional cost. That said, we think that Listsource probably has the highest quality data of any available source.
Everyone mails to Absentee, so you might also consider doing half to Absentees and the other half to High Equity Primary Homeowners in your target price range & geos.
Developer · Philadelphia, PA · Member since 2013 · 1k+ posts · 902 votes
13y
@Michael Quarles All great info and much appreciated, I do have one question regarding last sale date though. If you're specifying equity range why would the last sale date be of concern? I'm racking my brain to figure that one out. Thanks in advance for answering my newbie question!
Urbana, IL · Member since 2012 · 1k+ posts · 425 votes
13y
If people have bought in the past couple years there is very little chance they will have any equity built up in that time. Its kinda of the same idea of people having lived in their homes for 10+ years. Michael does make a good point about that. It helps to also narrow out those who aren't yet ready to move on. The average amount of time people spend in a home is, I believe, 7 years. I probably wouldn't be a very motivated seller if I had moved into my home only 2 years ago.
Investor · Noblesville, IN · Member since 2013 · 68 posts · 10 votes
13y
I'm learning a lot from all this as well. Good replies guys. Using % is a lot better than an actual figure amount. But is $500 to $1000 too much for a test. We do about $300 to $600 per month in Indiana for direct mail (which mails out about 800 postcards a month) and we get about 7-10 leads and usually 2-3 close. We are pretty small real estate firm and we do direct mail to acquire properties as well. But our acquisition department is only one guy and he can't handle that many leads. I just came on board as a marketing director and we are still testing. Any thoughts??
Forgive me, I'm new...What is the NCOA? For last 7 years you are saying last purchase date 7 years ago...however won't you lose out on inheritance properties if you use last purchase date? What if someone inherited a property a year ago and has all that equity but they didn't purchase the home?
Flipper/Rehabber · Arlington, TX · Member since 2013 · 1k+ posts · 2k+ votes
13y
Ben - I'll take on the easy ? posed to Michael:
NCOA is the Post Office's National Change of Addresss database. From Wikipedia:
"National Change of Address (NCOA) is a registry of people who move or otherwise change their address in the United States. It is maintained by the United States Postal Service and access to it is sold to firms that engage in direct mail; use of NCOA is required in order to obtain bulk mail rates, as it minimizes the number of misaddresses and eases the job of the postal service."
Investor · Riverside, CA · Member since 2011 · 2k+ posts · 3k+ votes
13y
I don't care what anyone tells you about how to tweak your list and select the best criteria. There is no magic pill. Sitting around at home playing with lists doesn't buy houses. I mail every absentee owner. I don't care if they got the house yesterday. Why? I bought a house a few months ago for $105K and it is now worth $200K. The owner paid cash for it in 2009. After rehab and sales expenses, I could net $65K today. I'm renting this house and will collect income on it for... decades? How much money do I waste mailing everything? Lots. But certainly not $65K worth over the last few years and the cash flow off this one house will cover the few hundred people I mail each month that do not fit the perfect criteria. And, I've purchased many, many houses from people who have owned stuff for less than 3 years.
I understand you have a limited budget and your thought process is if you can hit the highest response list, you increase your odds. This is Vegas baby and it don't work like that. A lot of this IS pure luck. My letter gets there and it is the day she decides to sell has happened a lot less than my letter gets there last week, but today she gets a letter from someone else and she decides to sell to that person. Luck of the draw plays into this game A LOT.
However, your budget will be completely blown if you spend all your time marketing to the perfect list, but send the wrong message, don't know how to negotiate, or don't make an offer. Time to get cracking and practice your phone skills. You can tweak the letter with each mailing and track response.
We like to do the really targeted stuff (absentee, probate, etc.) but also like to layer on top of that some very broad things like EDDM, door hangers, etc. Just get your message out there!
Mansfield, TX · Member since 2013 · 207 posts · 26 votes
13y
@Ben G. Honestly Ben instead of paying more for equity % just use the deed date for an approximation. Go back 15 years and more. Equity % is just a rough approximation there is no telling if they refinanced the home yesterday or pulled the equity out from it.
Anything 15+ years on the deed date will likely have equity. But again just like equity % its just an approximation.
Investor · Riverside, CA · Member since 2011 · 2k+ posts · 3k+ votes
13y
Just got a call and she said "I've gotten a lot of letters, but I decided to call you first." I don't know why this person picked my letter over the others she has received. I don't really care. What appeals to her won't work on the next one. Some like vanilla. Some like chocolate. Some like strawberry. I personally prefer Neapolitan.
Thank you for your insight. I will definitely run my list through the NCOA. I agree that Aaron does speak words of wisdom. Thank you for taking the time to give back and respond to my questions.
Well you would think as a poker player I would be able to pull the trigger and gamble on the list I choose to mail to. However, I'm so scared of failing on this investment that it's keeping me from going for it. I've heard so many things from the yellow letter sellers, from the gurus, and from those who failed, and from those who gave up too easily that I don't know where to begin? For every podcast I hear of those succeeding I read ten more posts of those who have failed. I'm not in the business of investing $5,000 on a 10:1 shot!
From what you are saying it sounds like that I just need to roll the dice, send the letters, get on the phone and begin. My question is what are you selling? I do admit that you do make a lot of sense, but really you're that much more luckier than everyone else that you're able to confidently say just gamble and go for it?
My question is what are you selling? I do admit that you do make a lot of sense, but really you're that much more luckier than everyone else that you're able to confidently say just gamble and go for it?
What am I selling? Directly, not a dang thing. Indirectly, maybe just an idea. The idea that you will never know the outcome if you don't take a chance. I don't buy 100% of the houses I don't make an offer on. All the houses I drive by every day that I don't own don't do a thing for me. I get no benefit from them. Of course, I can't buy any of them if I don't let those owners know I might be interested in buying them.
Now, the ones I do own and rent out pay my mortgage, buy my groceries, pay my health care, cover the vet bills, pay for my automobile insurance, the visits to the dentist, chiropractor, and yearly medical check ups. The houses I own pay my airplane tickets and hotel rooms when I take vacations or attend seminars, cover my utilities costs, buy my clothes, pay my internet bill, cover my phone bill, and buy the gas for my car. I'm a pretty low lifestyle kind of person, but there's not much I can't go buy today if I really want it. Luckily, I don't want much so it works out quite well.
Of course, I never would have purchased that first house if I didn't decide that the money sitting in my bank was really not doing anything for me. That it was more of a liability than a parachute or safety net. See, the fear of losing that $5,000 has you so paralyzed, you can't do anything. It's just $5,000. My visa bills (personal & corporate) every month are more than that. When times are slow, I spend more money. Because I know, without a doubt in my mind, that investing money into my business will produce a good return. It will come back and bring more with it. If I don't spend that money every month, whether I get a deal or not, if I let the fear of losing money keep me from doing business, I might as well just sell all my houses, put the proceeds into government securities, and go get a cushy job working 9-5, 5 days a week, with good health benefits, a soft chair to sit in, and hopefully some kind of pension at the end of it all.
If I had $5,000 sitting around and the fear of losing it was keeping me from doing anything, I'd just spend that ****. I'd get it out of my life as fast as I could. Cuz once it's gone, I've got nothing to be afraid of any more. I will also then realize that when I wake up in the morning, I still have my arms, legs, hands, feet, I have my wits, I have my knowledge, I have the ability to go out and get some more money and spend it all again. Money isn't a security blanket. It won't work as a parachute. If you think losing $5K is going to end your life, I think you ought not to get into this business cuz I've lost so much more than that I can only laugh about it. $5K is a pittance. I can't even take a decent vacation with $5K. Airline tickets alone cost me almost that every year when the wife and I fly over to Asia.
Only when you realize what money truly is will you have the internal power to easily dispose of it. I know for every dollar I spend on marketing, I get back more than $2. I never fret about spending money on marketing. Just spend that ****. Get it out of your life so you can stop worrying about it.
off topic however some investors don't utilize the absentee list to it fullest.
Each absentee list has four prospect groups associated to it and most only go after a seller.
The four groups
Seller
Investor buyer - possible buyer of your contracts or deals
Investor Lender - possible HML or JVP
Tenant buyer - LO, Sub2, contract for deed or straight purchases
Seems a little weird to send the same people a "I can take this monkey off your back letter" then send them "I know you understand the value of income properties, are you looking to buy more?" one.
I don't care what anyone tells you about how to tweak your list and select the best criteria. There is no magic pill. Sitting around at home playing with lists doesn't buy houses. I mail every absentee owner. I don't care if they got the house yesterday. Why? I bought a house a few months ago for $105K and it is now worth $200K. The owner paid cash for it in 2009. After rehab and sales expenses, I could net $65K today. I'm renting this house and will collect income on it for... decades? How much money do I waste mailing everything? Lots. But certainly not $65K worth over the last few years and the cash flow off this one house will cover the few hundred people I mail each month that do not fit the perfect criteria. And, I've purchased many, many houses from people who have owned stuff for less than 3 years.
I understand you have a limited budget and your thought process is if you can hit the highest response list, you increase your odds. This is Vegas baby and it don't work like that. A lot of this IS pure luck. My letter gets there and it is the day she decides to sell has happened a lot less than my letter gets there last week, but today she gets a letter from someone else and she decides to sell to that person. Luck of the draw plays into this game A LOT.
However, your budget will be completely blown if you spend all your time marketing to the perfect list, but send the wrong message, don't know how to negotiate, or don't make an offer. Time to get cracking and practice your phone skills. You can tweak the letter with each mailing and track response.
If you are reading this thread - PRINT this response. Post it in front of you and EVERY TIME you find yourself asking "what if" questions - read it! There is some great advice on this thread form some really good and experienced direct mail investors, but this one response should trump them all, IMO. If you never get started, nothing else matters. If you don't know what your saying or how to talk to a seller, nothing else matters.
I like the response so much, I copied it and sent it to a few of my staff as a reminder that sometimes you just have to start making $%*t happen! There will be plenty of time for tweaking later.
Urbana, IL · Member since 2012 · 1k+ posts · 425 votes
13y
@Michael Quarles I too am interested in how you use that list to figure out which ones are investor buyers, lenders, and tenant buyers. You've brought up a very interesting point. As soon as I read it I noticed there is something there. I'd love to hear you expound on it.
And @Ben G. go read some motivation books. If you haven't already read Rich Dad Poor Dad. That will probably show you its not so wise to let yourself be afraid to invest.
