Monthly Marketing Budget

To wholesalers that are flipping 2 or more deals per month: How much do you spend per month on marketing?

Plan on $12K a year and scale up or down accordingly. Your conversions will increase as you go along if your ads are consistent, if not targeted.


how many phone calls does that kind of marketing generate per month (or per week even). Just wondering how your able to handle the volumn?

That’s such an interesting question. Before I give you my answer, let me share something else.

One of my friends spent two thousand dollars in February on direct mail pieces to 3,000 prospects using Click2Mail. He didn’t ask for my help in creating the list like he should have. Meantime, he got eight phone calls over four weeks, from 100% lousy prospects, who were at least $100k upside down. I believe he created his mailing list from (which is a subsidiary of Corelogic) which I recommend.

Meantime, my friend just selected a generic group of records and thought that would be sufficient… What he actually did, was to send targeted mail pieces to an un-targeted list.

It’s like selling discount liquor coupons to Mormons. So people with zero interest and zero resonation, as it were, received his mailers and they tossed 99% of them into the trash. I guess “some” Mormons will use the liquor coupons? J/K!

When I heard this I asked, why did you mail to prospects without filtering the list better? He had no answer other than believing in the “shot gun” approach to direct mail. That’s fine if you’re branding yourself, but not for direct response marketing efforts.

I had to remind him that, practically speaking, the more tailored the list is, and the more targeted the ad copy is, the higher the quality of responses, if not more responses per 1,000 pieces sent. Frankly, the rate of response is secondary to the quality of the responses. I can be on the phone all day with dreamers and schemers, but I would rather be on the phone for 15 minutes with the one guy that’s ready to close as soon as I can show up at his door.

I know one investor that only sends out 500 mail pieces a month and his conversion rate keeps him happy and busy.

My answer then would be to pay as much attention to the number of conversions, as much as to the conversion rate itself.

Just for giggles, let’s say my friend again spent $2,000 on three thousand mail pieces, BUT he highly sifted the list and coupled that with a highly targeted ad copy …and increased his conversion to one per 3000 mail pieces. Let’s also say each conversion represented a net profit of only $4,000 after mailing costs. That means he would gross $6,000 per conversion.

The next month he doubles the size of his mailing list to six thousand prospects at a cost of $4,000. After two conversions at $6,000/ea his net profits rise to $8,000.

Now month three, he doubles the size of his mailing list again to twelve thousand prospects at a cost of $8,000. With four conversions netting him $4,000/ea, he makes $16,000.

Mind you his conversion rate by all standards sucks drain water. But he still makes money. He just has to plow profits back in for a while to achieve a critical mass of conversions. If he stops there and continues spending $8,000/mo for direct mail, he theoretically pockets $16,000/mo with little more effort.

The real interesting thing here is that even though my friend’s cost of marketing is horrendous, and his conversion rate sucks drain water, the time spent making the $16,000/mo is relatively small …and would get smaller if he was doing the same thing over and over, and not reinventing the wheel each month.

Just for more giggles, let’s say my friend again doubled his mail list size to twenty four thousand prospects with the same criteria, conversion rate, and same relative costs. He would be pocketing $32,000/mo. Not bad for a monthly advertising investment of $16,000/mo.

I know at least two investors who are making this amount as we speak, with WAY smaller mailing lists and WAY less expensive marketing costs.

So, anyone is more likely to spend way less on marketing and get better results than my friend, simply by refining and sifting their mailing lists, if not split testing ads to the point where the most cost effective results can be attained.

I would say to…

  • start with the most sifted and targeted mailing list you can filter for…
  • mail a split-tested piece to two lists of 150/each over three consecutive months…
  • continue mailing the “better performing” ad copy and dump the other one…
  • add a new 150-piece split-test piece…and chart and compare those results over three months, and then dump the “loser” of the two…
  • once you’ve achieved anything close to a 5% response rate, then consider scaling up…
  • continue split testing against the more successful pieces with 90-day tracking periods until you retire, or die, whichever comes first.

I didn’t answer your question directly, because there’s too many variables that have nothing to do with what I do, to give you a reliable number.

However, I will say that my response rates climb to around 10% with very small lists of extremely sifted prospects after a few months of multiple exposures. :beer

Others I know get more responses, but the same number of conversions. FWIW.


What criteria do you use to filter your list?

It depends on what I’m attempting to invest in. For my good “loan-take-over” deals, I look for certain LTV’s, certain rates and terms, certain length of ownership, only original owners, 3 and 4 beds, 1800-2200 sqft, no condos, no mini-ranches, no manufactured, no mobiles, no weirdo deals, no old crap built before 2000.

In one of my farms there is 5600 properties that fit my sifted profile. I just need about 900 of them to keep me busy. Otherwise, it’s not that expensive to purchase the entire list of highly sifted records ($3600 one time) and that’d keep me supplied with more leads than I need to screw with. I can make about $30,000 to $50,000 per deal where I’m at and it doesn’t take that many deals to keep me in new BMW’s.

I also weed out the NOD’s, corporate owned, private mortgage, and rescission notice deals, too.

On wholesale deals it’s a whole 'nother ball game. You really can’t search by “ugly fixer” on That’s another post and a half.

Hope that helps. There’s even more refinement you could make by street boundaries, by school districts, by proximity to shopping, to freeways and to hospitals. In the aggregate all these influence the appeal, saleability and market value.

That all said, I’m in the perfect region with LOTS of houses and people with newer homes. There’s area of San Diego, that I’ve got to have a larger farm area, because there’s a ton of old houses. And if I want to stay with “nice” newer houses, I’ve got to bite the bullet and stay in the $500k to $700k price points. On the other hand, there’s a TON more dollars per deal to be made in that niche, despite having to expand the farm quite wide. Just saying.

How’s that?


You’ve got a great web page for “I Buy Bad Houses” It’s got everything.

Oh, wow, thanks. That means a lot coming from someone as experienced in REI as you are.

Depends on how much I earn. If I earn large profit, then I could have a higher budget range, and vice versa.

@Javipa: That was a great post! Very rich with info. I’m really curious how this will work with absentee homeowners with at least 60% equity excluding corporate owned and trustee owned properties. I’m not really bothered about the number of bedrooms or baths or square foot as there’s always a buyer for every property assuming it is offered at the right price.

That being said, please have you gone after this group of HO and is there a better way to narrow them down. I going after the equity.


Given the earlier advice in the thread, I have to ask the following.

Assume that 10% works for you and is otherwise the right number.

How do you spread out the spend? Or, at what rate of speed are you doing deals?

My point is the 10% from one deal might be the right amount for 2 weeks if you are doing a fresh deal every 2 weeks. If you only do one deal over 6 months, the 10% should be spread over the 6 months to smooth out the marketing compared to the income.

Your comments?

ayofromcharlotte, I am so sorry I missed your post and failed to answer it until now…

The only way to answer your question is to suggest you start mailing something to your sifted mailing list; 60% LTV, etc, and see what the conversion/cost ratio is.

Just plucking a number from thin air, let’s say you spend $1,000/mo on marketing from the get-go. In four months time, you get your first conversion, but it takes another five months to sell it. Let’s say you netted $40,000 on that first deal (based on a $150k house purchased at 60% of ARV, or $90k and sold for $150k with $20k in repairs/overhead) in nine months.

In the meantime, on month 5 you had another conversion worth a net $40,000, but it will take another 5 months to fix, sell and net that second $40,000. Well, within about 14 months, you’ve flipped two, $40,000 deals, and spent $14,000 in marketing to accomplish that.

Now from that 14 months of data you can project that for every $14,000 in marketing, you’ll net $80,000.

Now imagine doubling your marketing budget (and expanding the farm accordingly), you could conceivably net $160,000 in the next 14 months (spending [another] $28,000 in marketing).

Of course simply marketing more heavily in the same farm isn’t the secret. You have to have prospects to send to. I mean if there’s only two fish in the pond, it’s unrealistic to think you can catch more, just because you use a bigger net. It comes down to the actual numbers of prospects that fit your profile, not the size of your marketing budget.

OK, the conversions, if not the response rates at first will suck drain water, because your mail is not familiar with the recipient. After a few months, the recipients will become accustomed to seeing your mail piece, and as their motivation emerges, you will get calls. You’re effectively catching prospects as they fall, not really trying to shake the trees, per se. Shaking trees would be like knocking on doors.

So, start your direct mail operation and then begin tracking everything. Let the engine warm up over a few months, and don’t get discouraged by the initially low response rates. They’ll take care of themselves as you become a familiar presence in the market and you split test your mail pieces.

Hope that helps more than confuses.

That’s interesting, I never thought of using that strategy before.

Have you tried making it 15% of your gross profit?


Thanks for the post. I have a list of 22,000 people that fit my profile and I am sending 3,000 pieces per week. I just started this campaign so, it will be too early to say what the numbers will be. I have marketing budget of a year in reserve and I’m hoping I would recoup that investment on within 12 months.

So, no split testing in advance? That could be an enormously unproductive start. We want to have some idea of the conversion rate using at least one split tested mailing.

BTW, I just read a very important principal regarding split testing that I’ll share with you. Split tests at the beginning need to be highly contrasting, so that the results are obvious. After a while, we can do minor tweaks on the mail pieces, but the first ones should scream ‘not the same piece.’ FWIW

Since it is continuous marketing, I’m sending a set of yellow postcards with proven script (been tested on a smaller scale), then 45 days after, I will send them yellow letters in a canary invitation envelope, followed by another yellow post card campaign then another yellow letter in a # 10 white envelope. The contents of these media are different as well as the media carrying the messages. I don’t want the suspects to have a clue its me before they even have a chance to read the content. so im disguising the medium and also using different ad copies for each medium. I have used these copies before and im getting anywhere from 3-5% response rate, although 10% will be good. However, on my mailing to NOD, repeated mailings have increased my TOTAL response rate to about 8%.

This leads me to another question. When we talk about response rate, are we talking about response rate per mailing or response rate as a sum of all response from repeated mailings to the SAME list?

I plan on spending 1% a year on fixing my properties. So, if you have two properties that you bought this month and their value is $300k, that means you could spend up to 3k a year fixing the property. That is if the property is in good shape from the start.

If the property is not in good shape, you are talking the sky is the limit.

What time saver! Thank you for putting everything relevant to this subject in one place so that I don’t have to surf all over the place to collect it. Having the material presented by an experienced professional is an added plus.

altered due to rules violation

How many calls do i need to do in a week to do followup.