Direct Mail on a Budget for Real Estate Investors
You’re looking for ways to boost your income as a real estate investor, but you don’t want to sink a lot of money into it; direct mail could be your answer. If you look at the most successful real estate investors, the ones who are doing a large volume of work, you’ll see that they use direct mail on budget as a major source for generating leads. Direct mail is one of the most effective tools to generate deals for your real estate business. If you overlook this important resource, you are missing out on a tremendous opportunity to grow your business.
If you’ve never tried direct mail, you may feel intimidated, and if you don’t know what you’re doing, it can get expensive as well. That’s why I want to share a few tips here to get you started and keep you on an affordable budget.
First, there are some metrics that you must keep in mind.
- Response rate- This refers to the number of people who will contact you after you send a given number of postcards or letters. The response rate for most companies is around 1%. That means for every 1,000 pieces of mail sent, you’ll get about ten calls.
- Leads per contract- Basically, this means the number of leads or calls you’ll need in order to get a contract.
- Consistency- You can’t be hit or miss with your direct mail campaign. You will need to send out your pieces faithfully for 6 to 8 months before you can get a feel for what your response rate and leads per contract are.
Set Up Your Budget
Why should you care about these metrics? Because they will be the tools that help you scale your marketing later on. For example, when I’m using direct mail, I know that I need to send out around 9334 postcards to get a house under contract. If I want to buy ten properties per month, then I know exactly how many pieces of mail I need to send out. So, you can see how important consistency is.
To start out, you should have a minimum marketing budget of about $300 per month, and you should be able to allocate that same amount consistently for the next 6 to 8 months. For your direct mail campaign to be a success, it can’t be hit or miss. Be faithful, or you’re wasting your money. It’s been proven that in this industry you should send out mail to those on your list 5 or 6 times. If you are that persistent, your chance of getting a deal could be over 80%! Unfortunately, many stop after only three mailings. Their chance of getting a deal is only around 6%. What a difference persistence can make!
Your best bet is to mail to those on your list every 30 to 60 days, depending on the size of your list. If your budget is small, then your list may be small too. If so, it’s best to mail to your list every 30 days.
The direct mail on budget task might seem overwhelming in the beginning, but you can break it down into more manageable steps. For instance, if you have a list of 100 homes, divide it by 4 and start a routine of sending out mail weekly to a quarter of the list. When the month is up, start over with your first group of 25 and so on. This can help keep it from being too mind-boggling.
Get a Good Quality List
These are all great tips so far, but just where can you get this magical list that we keep talking about? After all, about 70% of your direct mail success hinges on the quality of your list. If your budget is small, you’ll need to use your own initiative and ‘drive for dollars’ to create a list. Drive through older subdivisions with homes built in or before the 1980’s and look for distressed homes or vacant properties. By doing it this way, you’ve already prequalified the home, and you know the condition of the property.
There are only so many hours in a day, and you may have other commitments. If you don’t have the time to ‘drive for dollars’ and you have a little extra in your budget, you can buy a list at your county records. It may take a few calls or emails on your part to find just the right department, but once you do, the list should be fairly cheap.
Another option is a third-party provider. You might be tempted to try buying your list from Facebook or at your local real estate club; my advice is, don’t. These lists are almost always outdated. Listsource.com, on the other hand, is an excellent resource. They’re good about cleaning their data and keeping things current. Try focusing on homes that have been owned for at least ten years, with equity of 50% or more, and that are medium price or below in your market.
Finally, let’s look at your mailing piece itself. Your lowest cost option will be postcards. Click2mail.com has postcards for 35 cents that are 3 x 5.5 inches. They do offer other sizes as well, and you’ll get a better deal on the price the more you order.
Your message should be fairly simple. Here’s a rough outline:
Headline: Urgent Notice or Attention about your Home or Property info
Message: I am interested in buying your house at 123 Main St.
I am a private home buyer who is looking to buy a property in the area.
Call me at (555) 555-5555 to discuss my competitive offer.
I pay cash, close quickly and I can buy your house in as-is condition, so you don’t have to fix anything.
Looking forward to your call, Hector
It’s as easy as that. Sellers will get in touch with you. When the calls come in, you can either answer them immediately or let them go to voicemail. Just make sure that you return those calls ASAP. You likely won’t be buying a property from everyone who calls, but you should keep their information in your database and follow up every 30 days with a call, text or postcard. Your main goal is to make your phone ring!
So, let’s do a quick recap.
- Before you start your direct mail campaign, be sure you can sustain a minimum budget of $300 a month for 6 to 8 months.
- Keep a record of your metrics, response rate, and leads per contract.
- Mail to your list every 30 days and repeat at least 5 or 6 times.
- Get a great list.
- Start with postcards and keep it simple.
- Return calls in a timely manner.
- Keep a database of people who called to follow up.
Don’t give up. Keep plugging away, and this information can get you one step closer to your goals.