The importance of using direct mail (DM) for your real estate investing business…
…without it you have no deals… without deals you have no business. Here are the 3 keys to a successful direct mail campaign.
Consistency – for a successful direct mail campaign, all experts and research point to the importance of being consistent. Your response rates start very small but exponentially improve after your 4th mailing. Example: 2% respond on your 1st mailing | 6% on your 3rd and over 80% on your 6th. Before you start this marketing tactic, commit to time, repetition and a sustainable budget. This is a numbers game. The principle proves itself over and over again IF YOU ARE CONSISTENT.
Targeted list – whether you are selling cupcakes or looking for motivated sellers with distressed houses, your mailing list is key. Make it highly targeted and keep it fresh. Here are SOME list categories of motivated sellers:
- Probate – family members of a deceased (subject to any estate planning) can end up with a property and be overwhelmed with managing it. They can be very motivated to distribute any personal property and get rid of the house. He’s where you come.
- Pre-foreclosure – if homeowner stops making payments the bank begins the foreclosure proceeding. Homeowners can be motivated to get help from you (e.g., buy their house quickly) to save their credit and stop the foreclosure.
- Divorce – unfortunately, divorcing spouse may be motivated to sell their house quickly and go their separate ways. You can provide a fast easy solution to ease this pain.
- Absentee Owners – if a property owner’s current/mailing address differs from subject property, they’re probably a landlord. Landlords can have several reasons to be motivated to sell – too remote to manage effectively, too much work to maintain, not very good at it, no longer want it, etc.
- Tax delinquent/code violation property – owners of such properties have motivation to find solutions quickly because penalties, fees and stress compound of time.
Understand the numbers and adjust. Example:
- Spend $1000/month for 2,000 letters/post cards
- 5% or 100 people respond and call you.
- After you weed out the tire kickers and bad deals, 2% or 2 people agree to sell their house to you.
- You re-sell one house to a rehabber and make $8,000.
- The other you renovate and make $20,000
Obviously there are a lot of “what ifs” here but by going through this process, repeatedly, you’ll know the numbers and grow the numbers.
I’ll post more nuts and bolts and a publish series of podcast episodes on this topic soon.
Stay tuned and build your business!
