How to Dominate a Market with Low Cost Postcards
|There are no magic bullets in marketing, but I have developed a system which comes pretty darn close. I reported in the last issue of this eLetter about my new postcard campaign. Here's an update:|
I mailed 10,000 oversized postcards to one zip code. I saturated every home with my message. The total cost was less than $3,000. We received about 35 calls, only .35% response. But I bought 5 houses out of 35 leads on the first mailing! The response rate should remain the same or improve as I remail to the same neighborhoods, allowing them to see my message multiple times, giving my self increased credibility. Plus some the postcards will be saved, and I'll get more calls from this initial mailing down the road.
I bought one out of 7 houses for sell. I usually buy one out of 10 to 15. The increase in closing ratio, I believe, was a result of targeting the right neighborhoods and getting my entire sales message (my famous "advertorial") in their hand... and my new headline. These sellers were much more prescreened than if that called on a sign, classified ad or a regular smaller size postcard.
** $145,400 IN CASH AND EQUITY IN ONLY 6 WEEKS FOR $3,000 **
Here are the actual results:
House #1: This house valued at $134,900 fixed up. It needs carpet, paint and some trim items. Seller owed $89,000 plus $6,000 in back payments. I purchased for amount owed (subject to) plus $500, or $95,500. We have it under contract with a tenant/buyer for $132,000 "as is". We got our buyer in with the first month's rent, $3,500 non-refundable purchase plus some repairs to be done prior to occupancy. We have a positive cash flow. Equity gained: $35,500
House #2: Seller owed $106,000 plus several back payments. I bought for what the seller owed (subject to), about $109,000 with $3,000 down. The seller used the money down to get the loan current. House needed carpet, paint, sod in front yard, roof (unexpected.oops!) and some misc. repairs. The house did not sell quickly "as is" so we are fixing it up. It is offered for sale for $144,500 fixed up. The repair costs are $12,000. Because of roof, this is a tight deal on a fixer upper. Equity gained: $23,900
House #3: Seller owed $94,000 on a first, $10,000 on a second and $6,000 in arrears. We purchase for the $110,000 owed subject to. After repaired value is $159,500. It needs $15,000 in repairs. Currently being offered at the after fixed up price, "accepting offers as is". We made up the back payments and paid off second with cash generated from buying house #5 below. Has not sold as is yet so we are about to rehab. Equity gained: $34,500
House #4: This house is in great shape and valued at $157,500 with terms. We took over a nice $110,000 first mortgage subject to, put $2,000 down and the owner carried back $20,000 with no payments or interest, due in 5 years. We held a "round robin" open house for one hour and found a tenant buyer with $5,000 down plus the first month's rent. We had it cleaned and the carpet stretched. We also spent $500 fixing up the front yard. Because of the $20,000 (deferred down payment," we have a nice positive cash flow. Equity gained: $25,000
House #5: Valued at $165,000-$170,000. It is on the market for $179,500 with terms. My office may have sold it yesterday for $10,000 down to a tenant/buyer. House is in great shape, nice neighborhood. Owner bought for daughter and it had been vacant for 4 months without being marketed. He owed $18,000 on a first mortgage. I offered him $63,000 cash and $90,000 in 5 second mortgages secured by 5 different properties including his house, 3 of the houses above, and one of my "keeper" rental properties. Terms on his equity is 6% accumulated interest, no payments, 5 year call and the right to substitute collateral. He is a retired military officer and did not need income but wanted interest on his equity. I got a new hard money loan for $123,000 at 11% and walked away from the closing table with $60,000 cash(!) less closing costs. Equity gained: $26,500
Total equity gained on 5 houses: $145,400
Cost of mailing: $3,000
(Better than the stock market?)
The cost per deal for marketing is $600 per house, higher than my average $350. But I spoke to less sellers, saw less houses and can EASILY repeat as often as I want, anywhere in the country!
|Full-time investor Richard Roop has been called The Marketing Consultant for Real Estate Entrepreneurs. He is the President of Bottom Line Results, Inc., a real estate acquisition company located in Woodland Park, Colorado since 1996. As a successful marketing consultant since 1984, Richard specializes in providing innovative business and marketing advice to real estate entrepreneurs. He is the author of the "How to Sell Your Home in 9 Days" book. Richard Roop's articles have appeared in various entrepreneurial, real estate and marketing newsletters across the nation. |
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