Have you ever wondered what are some of best methods to generate consistent deals every month for your real estate business? If you want to take your business to the next level, don’t go anywhere. You’ve come to the right place.
Everything You Need to Know About Direct Mail Marketing
In this article, I am going to share with you how to effectively use direct mail marketing to create a consistent deal flow every month for your real estate business.
The beauty about direct mail marketing is that you can implement this marketing method in every market. So, follow the simple steps I am going to share in this article and you will become a real estate marketing machine.
Direct mail is predictable and can generate a consistent deal flow every month. Therefore, if I need to increase my deal flow, I know exactly how much it will cost me and more importantly, how many more leads and contracts I can expect. The most successful investors utilize direct mail as their main marketing source to get more leads.
You can get deals from multiple sources such as networking, MLS, or at the county auction. However, when the markets heat up, the competition may increase and the number of high-quality houses that make good market sense may decline. This means that your deal flow will dry, especially if your business depends on the acquisition of new properties every month.
However, if you implement direct mail you stand to gain a lot. I want you to be determined to make direct mail work. If I did it, you can do it as well. The best thing about direct mail is that any type of investor, be it a wholesaler, flipper, landlord or commercial investor, can get the best deals if they deal directly with the owner.
Having a well-thought direct mailing campaign is very important in any business. To create a successful direct mailing campaign, you need to consider the following 5 steps:
- Define your Market;
- Organize the Mailing List;
- Create the Marketing Piece and Message;
- Be Consistent;
- Return Calls on Time.
Step 1: Define Your Market
You need to conduct thorough research on your market based on the real estate strategy you will be using.
A good way to start is to find where most investors are buying homes to flip and where landlords are buying homes to rent. Afterwards, create a database around those zip codes.
If you have access to MLS or know a realtor, you can get a list of all cash transactions in the last 4 to 6 months by zip code. Also, you can use an online company like listsource.com to create this list.
Take a step further and see what type of properties they are buying, the year built, square footage, sale price, lot size, number of bedrooms, and number of bathrooms.
For example, I have a list of zip codes that I target on a regular basis and here is my criteria for single family homes:
- Year Built – 1920 to 1995
- SqFt – 650 to 3200 sqFt
- Lot size 1000 to 45,000 sqFt
- Bedroom 2 or more
- Ownership 10 years or more
I have the list setup this way because when we remodel homes, we can add a room, a bathroom, or a square foot to the house.
I also use a different criteria for other lists such as high end rehabs, multifamily, mobile home parks and land.
Step 2: Organize the Mailing List
This is one of the most important parts of every direct mailing campaign. A few years ago a professional marketing organization did a research. They tracked and measured direct mail responses from a group of companies over a period of time.
They discovered that 70% of success from direct mail comes from your list. The other 20% of success comes from message clarity and the last 10% of success comes from how the e-card is designed, colors, layout, etc.
Therefore, to succeed you need to focus on getting a good quality list. This will represent 70% of your success.
There are a tons of lists out there that you can potentially mail to, but the most famous list of all is the Absentee Owners. This is the list that everyone who gets into direct mail starts with.
This is one of my favorite lists as many absentee owners or landlords are equity rich, but cash poor. While others don’t know how to manage their property the right way, they have gone through several evictions, their houses are outdated, need lots of repairs, and they are very motivated to sell.
The competition is very high if you are using this list, but every year I keep buying properties from absentee owners. Absentee owners can also be divided in smaller buckets based on their motivation:
- Bucket 1 – Absentee owners – out-of-state, they are the most motivated ones. Managing one house or just a few houses from out-of-state is not easy.
- Bucket 2 – Absentee owners out-of-city.
- Bucket 3 – Absentee owners that live in the same city or nearby rental property.
Another good list to mail is the High Equity Owners list with 10 yrs or more of ownership, 40% or more of equity and 45 years of age or older. Keep in mind the hardest list to find, the better value it generates because there will be less competition who has the same list and you will have a higher response rate.
Some of these hard-to-find lists will require someone to go to the court house or city hall, so if you can get this information you have a higher advantage than your competitors.
There may be some list providers locally that can offer these lists, but if you want to save money you may have go to the source and do some digging yourself.
Here are some hard to find lists:
- Eviction List
- Code Violation
- Tax Delinquent
- Fire Damage Properties
- Probate or Inherited List
- Condemn Buildings or Dangerous Buildings
- And Finally your own Driving for dollars list.
You can also use the Free Craigslist and Zillow list. This list can be created from house for rent found in Craigslist and Zillow.com. Some of these homeowners moved out of the house and they think they can be great landlords. In the county records, their houses do not appear as absentee owners because they just moved out and the county records have not been updated yet.
Since not that many people target this list, you may be the only one interested in buying their home, thus, minimum to zero competition. And the best part is you didn’t have to pay to get this list.
If you want to save money just call them or text them: “ Hello Mr landlord I just saw your house for rent in Zillow and I know the house is for rent, but I would like to know if you are interested in selling it?”
Now that we’ve discussed the mailing list lets move to Step 3
Step 3: Create the Marketing Material and Message
There are 3 different types of marketing you can mail including:
- Postcards
- Printed Letters
- Handwritten Letters or Yellow Letters
In general, the highest response rates will come from yellow letters, followed by printed letters and finally postcards. It is up to you to pick one of these 3 options.
Now that you have picked the marketing piece you will be mailing, it’s time to craft the message. The goal is to grab the attention of the person reading the marketing material because in just 3-5 seconds, they will decide if they’ll give you a call, or save it for a future call or trash it.
This is the part where you need to be extra creative and write your own copy. Make sure to test your creative copy over time.
Use online samples to create your own creative and eye-catching copy. Similarly, you can borrow samples from other real estate investors and create your own version.
Don’t just copy what is written by someone else, because that message may work well for them in their market, but may not get the best results in your market.
For example, I know investors that get great responses from ugly letters or ugly postcards, those with typewriter font that look like they were written 30 years ago, while others get better responses from professional letters with their logo and company name.
It is important to test your message overtime so you can determine what works for you.
In the show notes below, I am going to place a link to my ebook: Marketing Guide for Real estate investors, where I share information about all my different marketing strategies and tips to generate leads.
Please don’t use “ We Buy Houses” in you marketing material as the main headline as this is the same message used by many investors that don’t take their time to craft a great message.
It is advisable to make the letter about the owner of the property as much as possible and not about you! Nobody cares that you are the best “house buying company” or “a premium investing firm in town”.
Remember people you are sending direct mail to only care about what is going on with them, therefore, write your sales copy to address their needs and situation. Importantly, make sure to craft the message according to the list you are mailing.
Step 4: Be Consistent!
To get the best results, you need to be consistent with your marketing for 4 to 6 months or even longer if you can afford it. This means mailing every week for 4 to 6 months non-stop.
If you don’t have money, you are advised use the other marketing strategies that are free or low cost marketing methods that I shared in prior podcasts.
If you are only sending 1000 postcards at one time and then stop, you are wasting your money. You need to be sending postcards every week to different prospects and repeat every 60 to 90 days.
If your list is smaller or you want to be more aggressive in your marketing mailing every 30 days, you can’t just do one mailing one time, or two mailings 8 months apart. You need to come up with a consistent mailing schedule. My suggestion is to reinvest your profits to increase your marketing.
So, from your first deal, take 100% of profit and send more direct mail, then use the profit from your next deal and reinvest so you can eventually have a consistent deal flow.
To maximize your direct mail, you need to be in contact with your list at list 6 or 7 times. The problem is that many investors stop after the 2nd or 3rd mailer.
There was a research done a few years ago and it was discovered the number of deals closed grew after the 5th contact by 81%, but most people stop at the 2nd or 3rd mailing where percentage of deals closed is only 4 and 6% respectively.
If you have only $500 a month to spend on direct mail marketing, start by driving for dollars and send yellow letters. Afterwards, reinvest the funds and target the hard to find lists and keep reinvesting until you have enough money to target absentee and high equity.
Now lets review the final step 5
Step 4: Return Calls on Time
Now you mailed your marketing, leads have began calling you, that’s awesome, right? It’s time now to return calls on a timely basis, if you want to make money.
You will be surprised how many people don’t return the calls on time or wait several days to returns calls, and then get upset because direct mail doesn’t work. Ideally, you need to call your leads back within a few minutes or answer live.
I know that many of you may have a full time job, so create a simple voicemail that goes like this:
“Hello, I am sorry I missed your call, if you have a property for sale, leave your name and phone number and I’ll call you right back.” Make sure to return all calls during lunch time or right after work.
A research done at Harvard University found that response from leads decreased 10 times if a lead isn’t called back within five minutes. So, if you take more than a day to a few days to return those calls, the house may already be sold and the chances of that lead calling back or answering is very low.
You may think there is a lot of competition from other investors using direct mail marketing, but in reality there is not much. I have bought properties from people that said they called 7 companies and I was the only one that returned their call.
You will be surprised how many people spend money in direct mail marketing, don’t call their leads back or call them 5 days later. In direct mail, the faster you call them the better chances you have to buy the property.
You will get calls from people just fishing or calling to be removed from the list, but the ones that call with a property to sell, more likely they will sell within 12 months.
Create a list of people that called you and had a house for sale, but they were not ready to sell right away, and follow up every 30 days to 60 days. This follow up list is where you will be buying the great majority of your properties.
The money is in the follow up, you already talked to the owners, got their property address, phone number, and maybe emails. Stay in contact with this list forever, by calling them, send them text messages, emails and direct mail marketing still works.
Just some final words
Many people spend too much time wondering which is the best letter to create the best results, but in reality they only need to start taking action and send direct mail to get results fast.
Please don’t think too much about the perfect letter, just focus on getting a good quality list. Jim Rohn once said “Either you run the day or the day runs you”
Also, Listen to our podcast for more details to succeed in direct mail marketing.
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