Direct Mail - The Good, The Bad, And The...

Editor’s Note: Dennis Fassett is a former corporate finance executive turned real estate investing “Cash Flow Mercenary.” Dennis specializes in single-family and multi-family cash flow properties and thoroughly enjoys assisting his fellow investors with their own strategies, including how to buy your first apartment building.

As an ongoing contributor to Mogul’s “Market News Updates,” Mr. Fassett provides us with his own unique, lively, and thought-provoking commentary on the timely industry news and events of today that are impacting our industry. And be sure to check out his other super-helpful Market News Updates. For now, enjoy...

From Dennis Fassett, Cash Flow Mercenary...

Guess What? I got REI mail!

Actually, it’s probably not that big of a deal in the grand scheme of things, because I do get a lot of mail.

You see, I own a bunch of rental houses, and that’s the ticket to membership in that elusive group of supposedly “motivated sellers” called Absentee Owners.

Perhaps you’ve heard of us?

Of course you have! And so has everyone else. Because every noob this side of Albuquerque is laser focused on making sure we hear from them at least once a month.

But I received a mailing recently that I wanted to use as an example of the Good, The Bad, and The Ugly of Direct Mail, because it had a good deal of each…

The Good

So what was good about it?

A couple of things, actually…

First, it came in a “thank you” note-sized envelope. (Ask your wife or girlfriend if you don’t know what that is). I consider that a “good” because out of all the mail I’ve received from other investors since I started buying them in 2004, this is the first time – ever – that I’ve received one in that size envelope. So, good job, sender.

good The second good thing?

The envelope was addressed by hand. Yes, you can tell. And the letters weren’t uniform so it looks like it was really by hand and not one of the new handwriting machines or fonts.

And the third good was the address sticker on the back flap that looked like one you’d buy to use for your Christmas cards. Not handwritten but well done.

The Bad

It’s difficult to know where to start with the bad on this one...

Let’s start with the actual list.

If you’ve been a real estate investor for longer than 30 seconds, you should know that we’re in the midst of a reasonably robust seller’s market with limited supply. And that rental demand is similarly robust making vacancy rates pretty low across the board.

So then why does it make sense to carpet bomb rental property owners - who make up the vast majority of absentee owners - with mail?

By way of example, the house referenced in the letter I received has been rented for about 6½ years to the same tenants, who have never been late with the rent.

What do you think the probability is of me wanting to sell?

How bout zero.

And I dare say it’s pretty much the same for most other rental owners right now.

So list choice = bad.

The next “bad” was the letter itself. It was your standard issue yellow letter in red handwriting font. Why is this bad? Because I have a pile of other yellow-letters-with-red-font that are word for word exactly the same as this one.

To be honest, there are three different variations that I get… but every yellow letter I get falls into one of the three piles without fail.

Why is that bad?

the bad Because if I was a real seller, do you think I’d even read the 8^th or 9^th letter I got with the exact same wording and layout as the ones before? Probably not unless my rental house had just burned down or something.

The crazy thing is, after 13 years of having rentals and receiving piles and piles of these letters, I have never once received a custom-written letter. Ever. You think that might be an opportunity?

The other “bads” on this piece included the barcode on the front, the tell-tale mark of junk mail, and instead of a live stamp there was a sticker that said “presorted standard.” These may not make a difference to the average Joe or Joan, but why take the chance of having your letter tossed into the trash can on the way in from the mailbox?

And The Ugly

Unfortunately, the ugly was rampant in this mail piece.

I decided to play prospect with this one and do what a motivated seller might do if they received this type of unsolicited mail…

The first thing I did was go onto Facebook and try to find the sender. Nothing.

The second thing I did was look on Twitter. Nothing.

The third thing was looking on LinkedIn. I found three people with the same name locally, none of which had their picture or any mention of real estate investing in their profiles.

Then I moved on to Google. I looked them up with a search term: first name + last name + real estate Michigan.

Not one single hit.

So then I Googled the phone number they included. Nothing again.

the ugly What a shock.

So for all intents and purposes, this person is completely invisible on the internet where it counts most: establishing credibility and a personal connection with a seller.

So what do you think the odds are that a motivated seller who received this letter and couldn’t find anything about the sender, would call?

Pretty low I’d say, if not zero.

So take heed from this.

Can you get deals from these types of mailings? Absolutely.

But direct mail is about opens and conversions, and to do both you need to stand out from the crowd.

Otherwise you may as well just flush your direct mail budget down the drain.