Here’s My Foreclosures Marketing Crash...

foreclosures Hey Moguls, Lex Levinrad here again with Part 2 of my foreclsoures marketing crash course lesson.

In Part 1, we talked about ways you can market to homeowners in foreclosure or pre-foreclosure or who are considering a short sale and how to find them.

And thanks to Part 1, now that you know who to market to and how to find them, today’s lesson covers specific mailing strategies, the types of mail pieces and how you can stand out from the crowd.

Let’s get to it…

You can mail any of the following items:

White Letter
Yellow Letter
Invitation
Postcard

Now, we’ll deep dive into those strategies…

White Letter

In our training for students, we use what we call a “white letter.” It’s simply a letter that we created and use with our mail merge software to put in the homeowner’s name and address along with an offer to purchase their house.

We have basic info about us and our company as well as a picture, our address, phone number and website. The response rate is not very high on these – typically around 1% to 2%... meaning that for every 100 letters we mail out, we’ll get 1 or 2 calls. However, these calls are leads.

snail In some cases, the leads might be “please don’t mail me again.” Most new investors get discouraged because they mail out 100 or 500 letters and don’t see results. The key is volume.

If you have someone else - not you (a.k.a. outsource) putting together the letters and mailing them out, and you start mailing out 500 or 1,000 letters per week – you will start seeing massive results.

500 letters every Friday is 2,000 letters per month. At a 2% response rate that is 40 leads. Even if 10 called to say ‘don’t mail me’ and another 10 are not really sure if they want to sell – then out of the remaining 20, you probably will have a least 3 or 4 solid leads. If you only buy one of these houses and wholesale them to another investor, you can make $2,000, $5,000, $10,000 or more.

What about if you wholesaled 3 or 4 houses per month? What if you mailed more letters per month? And what if you did that each and every month?

A word of caution: Do not, by any means, be the person doing the mailing. Pay your neighbors kid or your kids or someone else to do this. Your time is way too valuable to be doing activities that you can pay someone else $10 an hour to do.

If your cost on those letters was 42 cents in postage and you mailed out 2,000 letters, then the cost of your marketing campaign is $840 and your return on your investment would be outstanding even if you only wholesaled one house per month. Naturally, you would have to pay for envelopes, paper and toner, which would increase your cost slightly to about 45 cents each.

Marketing works. Sending out letters works. The biggest difference between professional real estate investors and beginners is that beginners are not willing to spend any money to market. And if they are, they are not willing to do it consistently. BIG mistake.

Having said that, white letters are not very sexy, and their response rate is kinda low, so let’s look at the yellow letter...

Yellow Letter

The concept of the yellow letter is simple and smart. You get the homeowner’s attention by mailing something different to them. There are a few companies out there that specialize in yellow letters (Google “yellow letter’). Some of these companies even provide leads and will mail these letters for you for a fee. Most companies charge anywhere from $1.29 to $1.49 per yellow letter, which includes the postage, the lead and the mailing.

This process is unique in that it is “done for you” and it is certainly different. However, one drawback is that yellow letters have become insanely popular, and tons of investors are now sending out yellow letters, which detracts from the uniqueness.

The unique approach of the yellow letter is that the letter is written in color – usually blue or red – on a yellow notepad. The letter and the envelope are handwritten or made to look handwritten. The stamp is not a bulk mail stamp but a regular stamp.

This approach is unique because it is different.

Yellow letters work well and the response rate is substantially higher than other types of letters. On some mailings, we have seen a response rate as high as 8%, although on most it’s around 5%. That is still a very good response rate.

One key thing to note, whether you send out yellow letters or white letters, is to be original. DO NOT mail out what everyone else mailing out. Do something different. Make your message unique. There are only so many times a homeowner will read: “We will buy your house for cash with a quick close and no fees.”

Try and be more genuine. An approach that works well for me and enables me to be more sincere is that I typically farm certain markets where I am also a landlord and I know the area well. (I believe in choosing a target market and learning it very well.) I am able to tell homeowners that I am a local investor with some rentals in the area (which is true), and I’m looking to purchase more rental properties.

I get a decent amount of calls off of that approach. I suggest you give it a go and see if it works for you, too.

mailbox Just remember that if you do get that call and go to visit the homeowner, you need to be prepared. And be ready with an offer price, a purchase contract and all of the forms that you will need to make an offer to buy their house.

Your goal will be to leave their house with a signed purchase contract in hand. But, in order to do that, you will need to know what their house is worth fixed up (After Repair Value), how much the house needs in repairs and what it will cost to do those repairs (material and labor). And, based on all of those variables, you will need to know how much to offer to buy their house. Remember that the price needs to make sense for an investor who is looking to fix and flip the house or buy, fix and rent it. (I will cover ARV, repairs and offer prices in an upcoming lesson.)

Invitation

A very unique approach is to use invitation envelopes and handwrite the address. Then, use a yellow letter or any color paper – even a small 8 x 5 colored notepad – and write a handwritten letter to the homeowner. Make it short, sweet and to the point.

The benefit of this approach is kinda obvious – when people see an invitation and it’s handwritten, they think they are being invited to something and they typically open it. If you use the homeowners first and last name and it’s handwritten, there is a very good chance they will open it. You can also put a business card in there, too.

Our response rate has been excellent with this approach.

But, this won’t work as well if the invitation is mailed to something generic like 123 Main St. Land Trust or 123 Investors LLC. So be creative in your approach and think a bit before mailing.

Postcard

Postcards work well, but they have a lower response rate. We have found that the key is to keep sending them.

Fortunately, you can print up postcards in bulk and mail them fairly cheaply. Look into the new USPS mail direct program, which works great for this. You can have decent postcard designed for less than $100 and use that same postcard over and over again.

Some postcard houses will design and mail out the postcard if you give them your list. I prefer to manage it in-house. But, remember, whatever you do – DO NOT do this yourself – outsource it. As an investor, your time is best served finding houses/deals not doing mailings…

Smart investors develop systems that create a steady stream of leads, which convert into houses that they can wholesale or flip. Don’t get stuck on the nitty-gritty details like stuffing envelopes or putting labels and stamps on postcards. It is counterproductive, and you won’t be saving money – you’ll be losing money.

Be creative. Be bold. Be daring. The goal is to get their attention. This is not a time to be shy. A boring generic postcard will not get as much attention as a big, bold colorful postcard. Try oversized postcards – they work much better. (It works even better if you have a bombastic website to match, such as ‘Your Name’ Buys Houses For Cash.)

And, if you want to be a top player or wholesaler in your town and can afford to do so, then match up your postcard campaign with a vehicle wrap on your car and drive all around town in your wrapped car. Mail thousands of postcards out every week in your town or target market, and in no time you will be known as the guy or gal who buys houses for cash.

Yes this will cost money… it will cost a lot of money. But are you in the business of flipping houses or is this still a hobby? If it’s a business, then treat it as such. Real investors spend money to create leads. The more leads that come in, the more houses you can buy, fix, flip or wholesale.

The more houses you flip the more money you make. It really is that simple.

fun Postcards work. Just remember to be different. Mail them 7 times two weeks apart. Then move on to another list in another target market. In marketing, they say consumers need to be ‘touched” or marketed to 7 times in order for the marketing to be effective.

There you have it – 4 awesome, solid direct mail strategies that work. Now get going on your next killer direct mail marketing campaign.

BTW - Want even more awesome info about distressed sellers and foreclosures? Check out my previous lessons here and here, in which I discussed distressed sellers who are in foreclosure or pre-foreclosure and why it’s so important to understand foreclosure laws and the foreclosure process in your state.