This is my first post on this site. I’ve been lurking for quite some time and must say that this forum is the best I’ve found.
I’m focusing my real estate career towards wholesaling Single Family homes. Seems to be the easiest route in the beginning. If there is one thing that I’ve learned from reading numerous books and this forum is that marketing will make or break you in this business. I’ve started to put a marketing plan together for direct mail by using www.melissadata.com and http://www.usps.com.
There is a minimum fee of $350.00 for around 2,350 properties with www.melissadata.com which isn’t bad considering the numerous paramaters used with their service. I do think that the fees for http://www.usps.com seem a little high. They want .45 cents/postcard to create, stamp, and then mail. This adds up very quickly with 2,350 properties.
I have a great career in pharmaceutical sales and have saved plenty of money to start this business but do feel that spending $1750.00 for an initial direct mail campaign seems costly?? Maybe not?? What does everyone think? Do these costs seem reasonable?
I want to go the direct mail route because I don’t have a lot of time due to my pharmaceutical sales career and feel that direct mail would provide more flexibility if it were outsourced.
I can’t recall what I paid for names in the past, but the numbers you’re talking about don’t sound bad (about 15 cents each?), IF the list is good. You seem to think you have chosen good criteria, so maybe the list is OK.
As for USPS, keep in mind that postcards cost 26 cents to mail, so you’re paying that regardless of where you go. That leaves 19 cents as the cost for creating and handling, etc. If you call around to other letter shops, can you do better? Maybe, but probably not by much.
You could just have the postcards printed and then do the mailing yourself. You might save a little money, but it will take more time.
The real key here is the list and how many times you plan to mail to it. I don’t think one postcard mailing is going to get you much response unless the list is awesome. I hope you’re not planning to get a 2% response like you hear so many people talk about.
How much are you willing to spend to get a deal? What would be your goal with the mailing at $1,750 in terms of calls, appointments, and closed deals?
Thank you PaulBroni for your response. I do have some more questions based on some of your statements and then I will answer yours.
“The real key here is the list and how many times you plan to mail to it. I don’t think one postcard mailing is going to get you much response unless the list is awesome. I hope you’re not planning to get a 2% response like you hear so many people talk about.”
You mention if the list is good… Could you please expand on this? The list I’ll be using will come from melissadata.com specifically searching for homeowners who have lived in their house 10 years or more, priced $70 - $115, and 15 years or older. Do these paramaters sound right? If not could you please elaborate on what you typically do for a credible list?
Your questions:
How much are you willing to spend to get a deal?
Depends of course but I understand that you have to spend it to make it. In the beginning more to establish brand. How much would you recommend to start?
What would be your goal with the mailing at $1,750 in terms of calls, appointments, and closed deals?
Good question - I like how you think here. Being in sales the past 7 years has shown me in order to hit goals I should quantify as much as possible. Not sure how to answer. Do you have a good goal for someone starting part time?
And do you plan to mail to the list again?
Yes… I’ve read enough to understand that direct mail is a very low response rate and that you have to keep your message in front of the right people in a consistent manner. I am curious of when would be an appropriate next date for mailing? Next month, quarter, or???
Great info and again I appreciate all of your contributions.
Paul is extremely knowledgable, so I won’t answer on his behalf, but will give my take on it.
Your criteria is ok. I assume you are targeting those who lived in their house 10 years or more because that indicates they have enough equity and the house may need repairs. I never mailed to such list, but logically makes sense. One could also argue however, that if they lived there 10 years, they are not interested in moving. One way to find out is to run a test by sending your postcards to 500 to 1000 people over the span of 3 to 4 months and see the results. You should hit them at least once a month.
The response you are looking for is about 0.5%. That will heavily depend on your message though.
As far as what it will cost to generate a sale, this is difficult for anyone but you to figure out but you should set some expectations. Since you are wholesaling only, you need to make sure your cost is minimal because your fees may not be high enough to survive the game. Lets say you mail to each house 4 times, costing you $3 each. 1000 houses, thats $3000 in costs. If you pick one house only and wholesale it for $5,000 then cool beans… but it took 4 months to generate that $2,000? now what? I am not saying this will happen, but you should plan it.
Using the above example, each hit will cost you $3 for example. Lets say you expect to get 0.5% return, then thats $150/response. Your ability to negotiate, your list, and ability to analyze the deal will provide you with the cost per transaction/sale.
Now, with this knowledge (again, we are assuming 0.5% return and mailing 4 times once a month with the cost of $3/house for stamps, printing, labor…etc), can you bring down the cost of response from $150 to lets say $50? or are there other marketing methods that may increase your response or might be more cost effective?
I’ve read numerous posts from you Fadiz and they all have been very helpful. I believe you are in Houston, TX where I’m located. Maybe someday our paths will cross doing business. Thank you for your insightful reply.
A couple of questions pop into my head regarding your post.
“Your criteria is ok. I assume you are targeting those who lived in their house 10 years or more because that indicates they have enough equity and the house may need repairs. I never mailed to such list, but logically makes sense. One could also argue however, that if they lived there 10 years, they are not interested in moving. One way to find out is to run a test by sending your postcards to 500 to 1000 people over the span of 3 to 4 months and see the results. You should hit them at least once a month.”
The reason I selected the above criteria is because they seemed to be the most logical according to melissadata.com. Obviously I’ve never done this before and am not really sure what works and what doesn’t. How can I obtain more targeted lists??? Also, what services are you using to obtain this info? It seems that they’re a couple of businesses that sell this information. Which is the best or the most accurate?
Again I guess the minimum number of people that can be purchased from Melissadata is 2350 properties. Should I mail to all of them at once or break them up into 500 or 1000. This would lower my costs initially.
I will also be advertising through a couple local newspapers in my area as well. More eggs in the basket are always better.
Thanks, I am a good student so I am only relaying what I have learned. I am actually in San Antonio, TX but I do go to Houston from time to time.
I dont go after rehabs and I don’t wholesale, so my criteria is different. I would narrow it between 5 and 10 for example, in older neighborhoods that tend to have more repairs needed.
I would send out to 500 to 1000 for few months to test the message and impact of your selected market and post card content. There is really no way to know unless you test it or talk to successful investors in your area.
Have you tried bandit signs? As far as ads in the paper, they are not that effective. They are ok if the cost is reasonable, but I would not rely much on it myself. Again, it goes back to the cost per lead and cost per sale.
Wow I can’t believe its been one month since I first posted these questions. Well I’ve gotten the list from melissadata.com and am ready to start the direct mail campaign. I called the post office to process the mailers and everything was going smoothly when the lady stated I needed a return address for each post card. I then stopped everything because I didn’t want to use my home address.
I did some research on these forums and found that I should use a UPS address. Their pricing is around $160/year for a small box. This didn’t seem bad so I started filling out paperwork which obiviously needed my name and address but then asked for a company name.
I then started wondering if I should set up a LLC first???
If not, should I just put my name and the ups address for the return address?
The fees to get a LLC setup are going to be around a grand and am not sure I need one so early in the business… What does everyone reccommend?
If not should I at least set up some sort of business to get my company’s name out there first???
I will answer your intial question. Filter your down some, so you can make in more manageble. For instance,break it down into the zip codes that you really want to hit. I would hit those zip codes at least 3 times over the next four to five months.
If your list is any good, you should have a response on the first mailing, and every mailing from there. Just maximize your mailing piece, so you can get the best results.
Now to answer your latest question, i agree a grand is pretty hefty starting out. One thing you can do is go to your county and set up a dba, at least that would keep your name off the post cards. It will require the party to work a little extra to find out who is behind the scene. Dba should only cost around $40.
CharlottePlayer thanks for your help! I actually have narrowed it down by zipcode with the list that was purchased. I filtered close to 500 names that fit my criteria. When you say maximize my mailing to get the best results, can you elaborate?? Do you mean changing the content of the postcards each mailing or??
You also mention setting up a DBA to keep my name off of the post cards. Sounds like a good idea but just curious why I should keep my name off the mailings? Whats the risk by having my name on the postcards?
Fadi thats weird… So to clarify, when you are mailing your postcards the only address on them is the senders address and the post office is fine with that? The lady I spoke with specifically stated that she could not send any direct mail without a return address to each post card :banghead… Is this in writing somewhere??? I will call today for clarification.
Funds are not a problem at this point to set up a LLC but I’m thinking I should wait until I’ve completed a couple of deals. What do you all think?
I went ahead and set up my UPS address. Costs aren’t bad and this will give me opportunity to put a return address on post cards.
My questions now are:
1.) USPS will create post cards for a fee. 2 sided, color, black and white are some examples that can be purchased. What is everyone’s recommendation for color? I would assume 2 sided color but you know what they say about ASS U ME.
2.) My next question is regarding the message: I’ve seen numerous examples – We buy houses…yada yada. I will be marketing directly to abandon homes, ugly homes, landlords. I’m sure marketing depends on each different market but does anyone have suggestions on what to put on post cards for the above criteria???
What goes on the card is a whole different subject. Put yourself in your seller’s perspective… imagine yourself in their situation… what would make you pick up the phone and call?
CharlottePlayer, Is standard card stock only black and grey? I’m thinking I should shell out the extra money and go for the 2 sided color gloss post cards.
Fadi, I’m going to try this on my postcards:
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