106: How to Use Direct Mail to Find Great Apartment Deals

SHOW NOTES FOR EPISODE 106 – HOW TO USE DIRECT MAIL TO FIND GREAT APARTMENT DEALS

One of your goals in finding great properties is to purchase an “off-market” deal significantly below market price.  And although most people say brokers are the best source for off-market deals, EVERYONE is pursuing brokers for the same purpose.  In this episode, Bill explains how direct mail can also be a powerful strategy for finding great off-market deals.

Introduction

Your goal in finding a great property to purchase is to get an “off-market” deal.  And although, most people say they find off-market deals or “pocket listings” from their commercial broker, EVERYONE is trying to get their broker contacts to give them their off-market deals.  In today’s highly competitive environment, you need to find other sources for these deals.  In episode #093 with Michael Becker, entitled “Working With Brokers and Finding the Best Off-Market Deals,” Michael outlines in great detail how to get those off-market deals from brokers.  Also, on my episode May 10^th Blog Article entitled “10 Best Ways to Find Great Investment Properties” I share a number of ways you can find off-market deals, of which direct mail is one.

Direct mail is relatively easy to do, low cost and can be easily targeted.  A typical campaign can cost you $1 per letter (sometimes less) and, if done properly, can yield you a 2-5% response.  So, for $500 you can mail to 500 highly targeted apartment owners and should get anywhere from 10 to 25 responses.  If just one of those responses ends up in a deal, that $500 was a cheap investment.  I know people who are just starting and some who have large organization looking for 2-300 unit apartment buildings that do direct mail.

Now, keep in mind, the larger the apartment asset the more difficult it can be to reach that key decision maker via direct mail, especially if institutional investors are involved, but you still never really know.

Nonetheless, it is important to have a multi-pronged marketing approach that will cast a big net and include multiple different techniques that might include regular broker calls, craigslist ads, internet searches, driving for dollars…. to find the really great “diamonds in the rough.”

Here are the basics of Direct Mail.  Keep in mind, with direct mail, results may vary and you need to continually test and track your results.  Revise, test and track again.  And repeat.  Over time, you will eventually find what works well for you.

You can get people to do all this for you: from your kids or grandkids who want to earn extra money, older people in retirement homes to professional services.  Put an ad in craigslist to recruit.  Pay 10-12 cents per envelope.

Who do You Mail to?  –  Determine Your Target Audience

• First you must determine where you want to mail
  • In your hometown?
  • If, out-of-state or out of your area, hopefully, you have done your market research and determined your top 3-5 target markets
  • Once you know where, narrow down your “who?”
• People who are most likely to want to sell
  • Someone who has owned the property for many years
  • Are older now, self-managing, don’t have the energy to manage
  • Mom & pop owners
  • Non-owner occupies
  • Self-managing
  • Also, out-of-state owners
  • Have had many evictions (Housing Court), health violations
  • Pre- or current foreclosures
  • REO Bank Owned – local banks, find head of REO

Obtain Your Mailing List

• Best is at the County Assessor’s office
  • Criteria: Ask for all the 2-4 family owners, All the 5-plus unit owners
  • Format: Excel spreadsheet so you can sort by field (state, # of units, how long they’ve owned the property)
  • They will quote you a price
• MLS
  • Expired listings
• Drive-Bys
  • Look for places that are rundown or out-of-step with the other good properties in the area
• List Brokers:
  • Dunhill
  • Claritas
  • com
  • com
  • Will charge $.25-35 per name

You Need to Develop a Letter That Will Get Opened

• Hand addressed
• Blue ink
• Nice penmanship
• #10 envelope (colored)
• Live stamp (not metered) – TIP: crooked stamps get higher open response
• Return name and address needs to be personal, not a company. Some say “no return address” but if it’s a new list company, without the return, you don’t know how many bad addresses you bought.  And you can get refund for bad addresses on your list.  No PO Box.  Some say no name???

Sample Letter:

Date

Name
Their Home Address
City, State, Zip

Dear Mr/Ms:___________________________

Headline (centered): I’m Interested in Buying Your Apartment

I’m interested in buying your property.  Are you interested in selling?

I currently hold a portfolio of properties like yours and I’m looking to add more.  As a property owner, I realize that there are a number of reasons why someone may be interested in selling.  Everyone has his or her own reason and my question to you is, are you now ready to sell?  If so, I am ready to buy.

I can close quickly or delay the closing as long as you like.

Please contact me at your earliest convenience so that we can discuss the sale of your property.  Call me now at my phone number.

I look forward to hearing from you.

Sincerely,

Bill Manassero

P.S. To get the best price for your property, call me at my personal number (949-XXX-XXXX).

Get the Letter Read!

• Advantage with postcards – they always get read! – Have a strong headline!
  • TEST a postcard!
  • Fancy, professional vs. more personal, simple card
• Do something crazy that attracts attention
• Advantage to letter – can get much more info in there
  • Colored letterhead – goldenrod
  • Can include a fax-back sheet form or reply card
  • Can include “gimmicky things” that can get their curiosity to open the letter…
• Headline
  • “No Sweeter Experience Than Selling an Investment Property That Has Become a Pain in the Butt!” Include a piece of candy in the envelope (gets higher open rate if something bulky inside – 6-8%) – Dave Lindahl
  • A BOLD headline telling them you want to buy their property
• First sentence needs to draw into second, needs to draw into next
• Some use “problem, problem, solution (selling to you)”
• Sign the letter with your name – no company names
• S. 2nd most important message goes there
• Call to Action
  • Have two – one on the PS
  • Should say “Call me now!” not “I look forward to hearing from you” — STRONG call to action!
  • Each sentence needs to get them to want to read the next and so on…
• You can get help writing this letter if you are not comfortable
  • Fiverr – look for people that are experienced writers of real estate direct mail letters/ad copy for $5-20 per letter

How Many to Mail?

• You don’t want to mail a lot
• Start with 2-300
• As you refine your mailing effort, make it more effective, you will want to increase

Be Prepared to Respond

• Whether you give them a special number to call, a fax back, email or special website to respond to, make you, make sure you havve someone to answer the phone or get back to them quickly… otherwise it’s a waste of money

In Conclusion

• This should become a regular part of your marketing efforts, any good deal prospecting effort has multiple ways to create “streams of leads”
• Mail once a month, once every other month, but be consistent
• Like clockwork
• If you take the time to do it right and just keep pressing forward…
• You WILL see results!

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