This introduction to direct mail for real estate video walks you through the steps of a direct mailing campaign to show you how direct mail works from start to finish. The concept of direct mail in real estate is that you are mailing a list of property owners in order to find the sellers that are the most motivated to sell. Usually the most motivated sellers are the ones that have some form of distress (hence the term distressed sellers). So when you are talking to sellers ask yourself this simple question: “Is this seller really motivated”. 9 out of 10 will not be. You are looking for the 1 seller that is motivated to sell. That is where you will find your best deals.
The first and most important component of your direct mail campaign is your list. You have to have a good list and your list needs to be targeted for your approach. If you are a landlord looking for rental properties your list will be different from a rehabber who is looking for properties to fix and flip. So put some time into thinking about your list.
If you are wholesaling you are flipping houses to cash buyers. So ask yourself what your cash buyers want and the type of properties they are looking for will dictate your mailing list. Generally speaking if you are wholesaling your cash buyers are either landlords looking for rental properties or rehabbers looking for fix and flips. So one of the first steps of defining your list is identifying what you are looking for which can be very different if you are looking for fix and flips for yourself versus wholesaling to other investors.
So your list is very important. You need to know what type of properties you are looking to acquire and then target those properties and the owners of those properties. When you first start out one of the easiest lists to obtain is List Source (http://www.listsource.com). Many new investors start out with an absentee owner list (also known as absentee landlords). If you are a beginner this is a great place to start. The concept is very simple. These are properties where the owner of the property does not live in the property. They figure this out based on where the property tax bill is mailed to. This is a very easy and cheap list to obtain and it’s a great place to start. However it is also the most frequently mailed to list – so keep that in mind.
Once you have your direct mail list, the next step is to figure out what you are going to mail. Postcards will cost you anywhere from 1/2 to 1/3 of what yellow letters will cost in postage. However, our results indicate that you will get anywhere from 2 to 3 times better results with hand written yellow letters than you will with postcards. If you are mailing 10,000 pieces a month then mailing letters makes no sense. However if you are mailing 500 pieces a month it might make a lot of sense. That is how I started out, by mailing 500 yellow letters at a time. And on average, I would get at least one deal per mailing. Some mailings I got zero deals and other mailings I got 2 or 3 deals but after a year of looking at the numbers we were consistently getting one deal per 500 letters mailed. With postcards, our numbers are 1 deal per 1,500 to 2,000 mailed.
So make a decision on what your approach will be and decide if you want to use yellow letters or postcards. Once you have made that decision, your next step is to choose a mailing house. We have one for our students at http://www.lexdirectmail.com There are many direct mail houses out there (just Google Direct Mail For Real Estate). How much you pay will depend on how much you mail. If you are mailing postcards a few hundred at a time expect to pay around 50 to 60 cents per postcard. If you are mailing tens of thousands of postcards you can probably get your rate down to 35 cents (or less). Yellow letters will usually cost you around 99 cents a piece. So you can see that in scale with large volume the cost is almost exactly 3 times higher to mail yellow letters than to mail postcards. However if you mail smaller amounts the cost is only twice as much and the results generally pay for that extra postage spend. It is also more unique (although many investors use yellow letters).
Before you do your first mailing, put some time in to thinking about the phone number that you will use. Who is answering the calls? You or someone else? Will you always be able to answer? Or do you have a job and need someone to answer for you? These are all considerations that you should think about BEFORE you mail your first direct mail campaign.
Whatever phone number you use, even if calls are coming to your cell phone I highly recommend that you use a call tracking service like Call Rail (http://www.callrail.com) so that you know which marketing piece generated which phone call. For example you may have multiple campaigns going. One month you might mail postcards and the next month you might mail yellow letters or put out bandit signs. But you need to know how many calls you are getting so you can analyze your data and keep track of your KPI’s (Key Performance Indicators). You need to know how many pieces were mailed, how many leads came in, how many appointments were set, how many houses under contract and how many houses sold. Ultimately you want to see the profit you made and compare that to what was spent on the mailing. So tracking is very important and that is why you want to use a call tracking service.
Once you have your list, your mail piece and your tracking number you are ready to mail. The key thing with mailing is consistency. I have seen many beginners that start out strong mailing 5,000 pieces for a month or two but then they quit. You are much better off mailing 500 pieces a week for 6 months and then analyzing your results. If your campaign after 6 months cost you $6,000 but resulted in 5 deals which made a total profit of $67,000 would you mail again? Of course you would. So make sure you are consistent. Figure out your budget and what you can realistically afford (including the cost of postage and the cost of the list). And then set yourself a mimimum of 6 months.
The rest is theoretically easy. Sellers call, you go on appointments and come to an agreement on what price you will buy the house for. You then flip that house and get ready to close and get paid. I say theoretically that it is easy because as you can see in the video, the process is really simple.
Here’s the hard part. When you offer $100k and the seller wants $130k at what price do you agree to buy the house? That is where knowing your comparable sales, repair costs and your market comes in. And most beginners don’t know that. It will take you time to learn that and I encourage you to invest in your education of understanding After Repair Value, Comparable Sales and Repair Estimates BEFORE you mail. That way when you do speak to sellers and go on appointments you will actually know what to do. We have a wholesaling real estate boot camp where I personally spend 3 days teaching the above three topics. You can find out more about the wholesaling Real Estate Boot Camp at https://www.lexlevinrad.com/distressed-real-estate-boot-camp/
When you speak to sellers, you will need to keep track of your calls. For that you want to use a Customer Relationship Manager (CRM) which is software that can help you keep track of your leads. We have one that we developed for our students at http://www.lexrealestatesystem.com
The goal with the CRM is to have all of the information about every single call logged into the CRM. Every time you speak to a seller you should note the mailing piece that was used (from the tracking number) and you should make sure you save the seller’s address, name, email address and phone number. All notes from your conversation with the seller should be typed out and saved in the CRM. By having a CRM you will be able to track your KPI’s and you will be able to never lose a lead. If you don’t have a CRM you will scribble notes down on a notepad and a month from now you will have no idea where those notes are. That is the value of having a CRM.
Direct Mail works. A lot of beginners will tell you it doesn’t because they mailed once and quit. But all of the pros are doing direct mail. In my mastermind, we have guys mailing north of 100,000 mail pieces every single month. Direct mail works. Remember that the most important thing is to be consistent.
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