Which Envelope Would You Open? How to Buy Undervalued real estate with Direct Mail.
We have been sending landowners offers to buy their land since the late 1999s. Just before I sat down to write this, I looked back to find out that we have sent about 1.2M mailers out over the years.
I’m confident we have made just about every mistake a real estate company can make in this area. But I think we have it figured out now.
Here’s what works for us:
Just between us, I haven’t sent out a mailer in over two years. Why? Because the number of phone calls we receive on a daily basis from the letters we sent out from 1999 to 2013 is over whelming. We have more than 500 acquisitions in review right now.
We figured out how to do the perfect mailer and I’m going to share it with you here:
- Get great data (property ownership data).
- Scrub that data down to perfection (remove the owners who probably won’t respond).
- Put together a compelling cover letter and purchase agreement (or use mine)
- Stagger the release dates for the letters so you can manage the inbound calls.
If you do these four tasks with precision, you will knock it out of the park. Our effective purchase rate is 1.5% to vacant land owners. Our back tax mailer rate is closer to 11% (sending mailers to owners with properties that have associated accumulated back taxes).
Let’s look at these four steps more closely:
- The only place to get great, fresh data is from a professional real estate data company. The kind that have a direct feed into the county database and provide all kinds of data about real property, not just the simple kind that you and I want which is ownership. We buy all our data from Real Quest/Core Logic which is a division of First American Title (FATCO).
Trust me. Don’t horse around with these data list companies or even with the data directly from the county. The reasons for this are beyond the scope of this Blog.
- You can get a great list of property owners of all of the buildings in Manhattan and send them a letter offering to buy the property for $1,500.00 each and you will incite a riot.
Or you could get a list of vacant land owners for properties between 2 – 5 acres in upstate New York where the taxes haven’t been paid in 3 years, there’s no debt and the owner of record is deceased and send a letter to the heirs of the property with an offer which explains how this is your business and how you have helped thousands of people out of this situation.
A heart felt, professional letter offering help and payment for the land.
Trust me. If you show them the respect they deserve, they will sell you their property for just about any price and thank you afterward. We have a bulletin board with tons of hand written letters thanking us for buying their land.
One comes to mind: A woman called me several years ago after she received our letter. We ended up buying her mother’s 40 acre property in Northern Arizona for $4,000.00. A few months later, I received a hand written note from the same women. She thanked me and told me that I saved her life. She and her mother took the money we sent and whet to Hawaii for the last months of her mother’s life as she was suffering from terminal cancer.
My point is this: Many property owners (regardless of property type) don’t know what to do with their real estate when they are ready to sell. They need a kind, well written letter from you offering help and payment.
- Letters on colored paper, postcards and other types of processed, cheap, disrespectful correspondence don’t work. You are spending the money on postage and data, do you really want to slap together the final piece of the puzzle? You are free to use my template.
- When we send out direct mail, we put the whole thing together about once ever few months and then “release” parts of it in the mail each week. If you do it correctly, you will get tons of phone calls and mail.
Remember, you need to take a look at the deal after everybody has agreed on the price. Its takes a lot of time, especially in the beginning.
So which envelope is best? The first one. It’s blank. You need to at least open it to see if it’s something that needs to be shred etc…
You are Not Alone in Your Real Estate Ambition.