I’ve had what many would call extraordinary success with the yellow letters. They are the cornerstone of my investment strategy.
Here are some tips that have really helped me be successful in my yellow letter campaigns:
- Do your research on your lists.
I usually do very narrow mailings. Meaning, I will only do one county, and very specific people. My last mailing was for one of the counties in New York City, multifamily only (2 family up to a 16 unit apartment building.) Also, I only sent it to people who were in default of a mortgage, not people getting divorced or sued. Just people in trouble with banks. (My reasoning there was to get a handful of short sales.)
- Get buyers before you even send out the first letter.
I go to REIA meetings, I have a good rapport with the investment community. Make sure you know some buyers who will purchase these houses as soon as you get them. Talk to your investor friends, tell them what you’re up to, and what you have in store for them. This way, you can just assign any contracts you get from the yellow letters and get paid within 15-30 days.
The more you do, the more responses you will get. I realized that after sending out my first 250 letters (September 2004.) I got 37 responses, went to see 11 of the homes. Signed purchase agreements on 7 houses. Assigned 3 contracts, purchased a two family house with a conventional loan (at 70% LTV with no money down) to rehab and flip, two short sales fell through, and one contract was a dead deal.
If you are curious at my total income from that particular yellow letter campaign (rehab included) just look at my username.
- Use technology! (It’s the 21st century, for the love of pete!)
I should really approach Ron about creating my own product for his yellow letters. Here’s what I have done to expedite the YL campaigns:
I created a database system that automatically downloads the Lis Pendens off of PropertyShark each week. It whittles down the list as per my specifications (multifamily, zip codes, etc.) It then creates a mailing list of the properties I want to send letters to.
It imports that mailing list directly into MS Word, to fill in the blanks of a form letter version of the yellow letter, so all I have to do is load up my color laser printer with yellow legal paper, and print them all at once. (Oh, yeah, I guess I forgot to mention that I had a graphic designer create a TrueType Font of my own handwriting.)
So, once a week, run the mailing list and print out the letters, and stuff them in the mail. Get a good color laser printer that can feed envelopes (HP or Xerox is good.) Get the envelopes that you don’t need to lick, just pull and peel. Stamps only. You don’t want anything that says “this letter is from a company.” These folks are avoiding any letter from a lawyer, bank, real estate agent or an investor. Most haven’t come to terms with the fact that they are losing their home. Denial.
The whole idea of the yellow letter is to get people who need to sell their house calling you. If you do it right, that is exactly what should happen. Once they are calling, it’s up to you and your training to get the deal and get the deed. So, in closing, the yellow letter is just a tool. It gets people who are in a very motivated position to sell their house on the phone.