"How to Use Direct Mail for Raising Private Money”

Have you ever used direct mail before?

 

You know; the type of marketing where you send a physical mailing to somebody's home so that they can touch, feel and read a marketing message in their hands?

 

It seems as though everywhere I look and everything I read is all about "online, digital and social" marketing. Nary is anything written anymore about direct mail. Sure, there are some people here and there who use it for their real estate investing businesses - and kudos to them - but the digital advertising tidal wave has engulfed just about everybody in business.

 

And, if it's engulfing you, you may be flushing hundreds of thousands of dollars in private money right down the toilet.

 

Here's what I mean:

 

Direct mail is a very tried and proven method for getting results with your marketing. You never have to guess if you ran a direct mail promotion correctly or not. Why? Because you either get orders or you don't. It's a pure blank white canvas of business opportunity - one of the last remaining vestiges of pure "winner take all" capitalism remaining.

 

With many other forms of media used in marketing, you cannot and will not know the true results of your efforts. For every one real estate investor (or agent) that knows precisely where their leads came from (and also: what the cost to get that lead was and how many leads they need to close a sale, lifetime value of customer) there are probably 1,000 that do not.

 

The one big thing most real estate investors miss the boat on when raising private money is that they think of getting private investors as a financing process.It's not. Getting private money is a marketing process.

 

For those select few that understand this, the next step is implementation. And here's how it usually goes: post on real estate message boards, blogs and online classifieds that they 'need a private lending partner'. Ambitious investors may even get a website specifically for private money - but they will completely mess up this website. The site won't talk about the benefits for investing in real estate passively. No. Their websites will basically be geared toward somebody who has been to the same boot camps and other seminar training that they have. As you probably know, the response and ROI for these types of websites is pretty low.

 

So, this brings us back to one method (note: I did not say the only method) that has proven to work in marketing anything and everything for over 100 years: direct mail.

 

Here are the basics of using direct mail (the right way) to get private money...oh, also...please remember that there are legal and securities laws issues on marketing for private money that vary from state to state. It would be exhaustive and unproductive for me to go into all of this here. Just do the right thing and get a securities lawyer's opinion and/or ongoing counsel when you get really serious about raising private money.

 

    * Send a sales letter - a sales letter is just that: a letter you write to somebody where you enter into a conversation already going on in the prospects mind and show them how you have a cure for what ails them. Don't use a lot of hype. Write for emotion and use enough logic to justify a prompt response (oh...and give a reason for prompt response, too!)

    * Offer free information (not brochure or 'credibility kit') - either a free report/white paper or prospectus - Always remember that people like to buy - they do not like to be 'sold.' I know this sounds like a philosophical argument two French guys had back in the 1700's, but it's very true with anything you want to market or sell. Your free information is what's called a 'soft sell'. Learn to use and master this and you will get monster results.

    * Use a #10 envelope with a live first class stamp or send FedEx - Many direct mail pieces fail not because the message was bad nor because the offer was bad nor because the list was bad - many of them fail because they intended reader did not get or open the envelope or package. Using a good old #10 or FedEx will cost more but the resulting response should easily overcome this extra cost

    * Send follow up mailings (min. 3 mailings) - many direct mail promotions fail to yield a return on investment because the sender gives up if they don't break even on the first mailing to the list. Show some persistence and send at least 3 mailings.

    * Have a 'backend' sequence in place - if your call to action is a phone call, then make sure you have a business line, a receptionist (or virtual receptionist perhaps) and/or voice prompts

    * Use a good mailing list - talk to a professional list broker and do not use 'compiled' lists whatever you do.

 

Whew!

 

Does that seem like a lot of work?

 

Well...it is, sort of. But as long as you remember the 80/20 rule (80% of the wealth is controlled by 20% of the people, 20% of your time drives 80% of your results) you should have no problem investing some time and a little bit of money where most of your competitors will not.

 

Earn Nightingale (founder of Nightingale-Conant) was one of the best inspirational speakers of all time. He was quoted as saying: "if you want to know how to become successful - and you have no other model to go by - just look at what most people are doing and...do the exact opposite."

 

I couldn't agree more. Especially when getting private investors to fund your deals.

 

-Happy Investing