Real Dealz 197 Transcript: How To Effectively Use Direct Mail In Today’s Market w/ Justin Silverio
Announcer: Welcome to the Real Dealz Podcast! The consistently #1 real estate investing podcast on iTunes. This is the place to be in order to transform yourself from a hopeful investor to a highly skilled deal finder. Now, without further ado, let’s get into the show. [singing 00:00:20]
Tucker: What is up everybody out there in listener land? This is episode 197, the Real Dealz Podcast. Hey, I’m back as always and I am your host Tucker Merrihew. I want to thank you guys for joining me for another episode. It’s past Christmas. We made it folks. We made it past the holidays. We’re not quite past New Years yet but we made it past the holiday. At least the first holiday, Christmas. Hopefully all you guys had a great time with your families and doing the Christmas thing. You know, we’ve got two little kiddos and we did the … I think you guys have seen that movie, Four Christmases. That’s kind of what my Christmas is like. We did three, which isn’t four but it feels like a lot. Especially when you’ve got two kids under three, that’s for sure. So it was interesting. A few meltdowns. A lot of back and forth. A lot of hustle and bustle. Not exactly the relaxed Christmas morning type thing where you just kind of lounge around, eat some food, and watch some Christmas shows or read your new magazines, play with your new toys, depending on how old you are. Although some of our adult listeners may still play with toys. Who knows?
Tucker: But either way it was fun but it’s good to always kind of close that chapter and move on as we head into the New Year. Obviously New Years is going to be falling on Sunday evening and then New Year’s Day is this next Monday. If you guys are listening to this when it first comes out it will be Friday-ish. So now it’s time to plan what we want to do for 2018. So I took the time this past weekend, kind of the extended weekend really, to kind of think about the direction we want to take a lot of things and things that we want to accomplish. And basically do some goal planning and readjusting.
Tucker: I look back at the goals from last year. I see what we accomplished, what we didn’t accomplish. But more importantly, kind of adjusting my vision. There’s nothing really wrong with putting goals down on paper and then adjusting where it is you want to go. The important thing is you put them down on paper because then as you reflect on them you can see how much you’ve either grown as a person or a business owner or just decided that maybe certain things aren’t what you really want. And you just adjust and you kind of move forward with that in mind.
Tucker: So anyway, I took some time this last weekend and kind of did those things for myself. And I would strongly suggest that you guys to all that as well for you personally and for your business also. So anyway, good break. Hopefully you guys enjoyed your Christmas break as well. But we’re back this week. If you did not already, check out last week’s show. I wanted to put out a really awesome show before the Christmas break. And we did that with my man Brian who was on last week. The dude is an absolute beast. And he’s definitely an entrepreneur like a lot of us. We slow down, we step away sometimes if we can and our business is mature enough. But sometimes we get bored and we have to be involved.
Tucker: So this whole mantra that’s out there about basically retiring to a beach somewhere and doing nothing when you’re younger, or not even younger but just in general. I think it’s kind of a fallacy because at the end of the day, how long can you do nothing before you’re just bored as shit honestly? And that’s kind of the way I look at it. So real estate is one of those things that’s great in that way because you don’t have to. You don’t have to fully step away. You can do what it is that you love about your real estate investing business if your business has gotten to that point where it’s big enough and you’ve got the right people in place. And if not, you’ve obviously got to keep grinding it out and doing all the things that your business needs to have done so that ultimately you can get there and just kind of focus on the things that you enjoy doing.
Tucker: But the great thing about real estate is that you can always kind of dial it back so that you’re involved in some way, shape or form, even as you head later in life. One of the biggest lessons that I learned is my grandfather had a business. It was an alarm company and that was his life, for like ever. And when he sold the business back in the mid 90s, he basically started dying that next day. It was nice to sell and get a check for it and all that, but he basically, that was his life. And then he handed it off and he had to figure out, Who am I without this business? And he was far enough along in life at that point, he was in his 70s already. He wasn’t going to go out and start another business and so I think ultimately he ended up getting very bored, and that was the day that he just started dying a little bit inside. And as unfortunate as that sounds, it’s the reality for a lot of people that create businesses, sell the businesses, and then they really don’t know what to do with their time.
Tucker: The beauty of real estate is, is we don’t ever have to completely punch out, right? You can sell a project, but that doesn’t mean that you can’t play around with a new project or get involved with a new project, or a different part of real estate. That’s kind of the beauty of this business. And that’s why I love it so much.
Tucker: So, anyway, a little side thought there. But make sure you go check out the interview with Brian. We talk a lot about his business and the things that he does, but the dude is an absolute beast, as I said. And his business is cranking out 200+ deals this year in 2017, with him kind of half way there, half way out of there. Sort of quasi-retired so he says. That’s last weeks show.
Tucker: This weeks show, I’ve got a really cool show for you as well, another guest. A multi-time visitor to the show and just an all around great guy. Mr. Justin Silverio is here this week and we are going to talk about how to effectively use direct mail in today’s market. There’s been a lot of chatter out there in the real estate groups, within Facebook, and otherwise, talking about basically a lot frustrations that people have with direct mail, because they’re not sending out 2000 pieces and landing a deal where they can assign it for a $100,000 profit.
Tucker: That’s kind of where the bar has been set. That’s the internet mantra so to speak, that if you’re not doing that you’re obviously doing something wrong with direct mail. And that’s just not the truth at all. Direct mail is a very effective way to generate deals. It’s our primary way of generating deals. But the truth of the matter is you have to be more consistent about it. You have to send more volume. And you have to have a better back end system to take those leads and cultivate them and turn them into deals. So, I want to give him the floor. I want to let him sell you guys. Since he runs Open Letter Marketing as well as his own investment business, I want him to tell you. I want you guys to hear it from the horse’s mouth, what he’s seeing for all of his clients that are effectively using his service in order to generate leads and deals in this new market, or this highly competitive market I should say.
Tucker: And so I think you guys are going to get a lot out of this week’s show. So that’s what I’ve got on the agenda for this week. Now before we get into that, a few things I want to talk about. Number one is our housekeeping items, as I always do. Our Driving for Dollars app, I mentioned it on last week’s show. We are in the middle of doing some data updates for you guys. The biggest thing is that we’ll now be able to pull owner phone numbers for you guys. So basically we do a skip trace for you on the spot. You’ve got their mailing address, whether they live on the property or not. The app will tell you that, so if you know if it’s owner-occupied or if it’s an investment. But then it will also give you their phone number. So at that point you can create your direct mail campaign internally or by simply just clicking one button within the app you can send it to Justin at Open Letter Marketing and he can get a direct mail campaign going for you, or one that you’ve pre-set up for whatever list it is that you want to send him.
Tucker: And it’s really that simple. And then you can send that direct mail at market cost, which is a lot less than some of our competition that’s charging around $2 a postcard and a pull to send that stuff out, which is just insane. So this is an app that’s actually built to create larger Driving for Dollars lists, which you are going to need if you want to be successful. You can’t send one-off postcards and expect that you’re going to run a business out of that these days. This app was built to essentially help you run a real real estate investing business and not somebody that’s just kind of poking around, trying to play around in this game.
Tucker: Now, on top of that, being able to pull the phone number and there’s a number of other data points that we’re negotiating to add to it as well that are just kind of supporting cast data points. We’ll get into that probably more as I can make the official announcement, but for sure the phone number. We’re going to be integrating that over the course of the next few weeks here so you can get that. And then at that point you can either turn your cold callers loose. You can turn yourself loose on calling. You can set up some type of a [inaudible 00:08:05] to follow up with your direct mail. You can do all kinds of things to layer your marketing and ultimately increase your deal flow from creating these custom Driving for Dollars lists. So it’s really cool stuff on the horizon and we’re continuing to work hard to constantly improve and put additional value in with the app for all you guys that are using it. So go check it out. It’s free to download, and, as always, you get a five property free trial once you do. And if you like what you like, then you can just buy as much data as you need to build the list that you need in order to market to them.
Tucker: Now, one other announcement that I wanted to make is I’ve been working behind the scenes on putting together a coaching program that’s a personal consulting program. So basically one on one stuff and we’re going to look to roll that out sometime in February. We’ll probably take on just a few clients at a time. We’ve had a lot of people that have reached out and we’ve had quite a bit of demand for that. So we’re going to put something formal together. I’ve been doing some consulting on the side here and there as time allows. It’s been pretty stretched thin, so I kind of let people in as I’ve got time. But we’re going to have more of a formal program that we’re going to give you guys all the details on coming up here sometime in January.
Tucker: But if you’re interested at all in one on one consulting, a little more direct help from me, and get my two cents on how your business is set up, help you set it up if it’s not, and help you move forward with creating a marketing machine, putting deals together. Maybe you want to get into the development side of the business, new construction. Maybe you want to get into wholesale or maybe you want to segue from wholesaling to rehabbing and you need somebody that knows all the pitfalls along the way. Feel free to reach out to us and we’ll put you on the list of potentially interested people that we can plug into that program once we have it up and rolling. So make sure to reach out to Dan and he will be happy to talk with you.
Tucker: Now, before we get into this interview, Justin, real quick, what’s up with myself and TTM over the course of the past week. Biggest thing. Obviously I mentioned it a little bit in last week’s show, but the tax reform is done. It’s signed. It’s law. It’s the way of the world. And fortunately as many of you guys have probably read up on it, they preserved the primary residence tax exclusion, which save me a whole shit load of money heading into this next year. Because I’m going to be selling my personal residence. I’m going to be putting it on the market here in probably about a week, and we’re got some pretty heavy gains on that. And prior to them leaving that primary residence exclusion alone, I would have owed easily six figures in taxes that I wouldn’t have owed otherwise. And so I’m glad to see that they left that alone. A few other wins. A few other losses. But overall it didn’t end up being nearly as bad for real estate as the initial versions looked like. So pretty excited about that.
Tucker: There’s a lot of stuff as I wrote about in Real Dealz monthly this week, that we’ll see how it all shakes out. I know a lot of accountants are trying to get their head around this and figure out all the loopholes and everything else, but it looks like it’s going to be a little bit of a learning curve to figure out how we can best utilize the new tax code to minimize our taxes. But all in all the biggest take away is real estate didn’t get punched in the mouth as bad as I thought I would.
Tucker: Now, with that said, the market is staying pretty strong. Financial markets have reacted positively to the news. And the overall sentiment about real estate is high. Builder confidence levels came in, I think, at a level of 74, I just heard yesterday for this past month, which is very, very, high. So what we’ve decided is I feel like we’re in the, maybe we’ll call it the eye of the hurricane. Everything is calm. Everything is good. But I just don’t believe that our economy overall is in great shape long term. And so I think we’re in a very good spot right now with consumer confidence, builder confidence, demand for housing. And so what we’ve decided to do is we’ve decided to sell off a lot of stuff. We’re going to take our winnings off the table. We’re going to hit the reset button. And as we head into 2018, we may leave a little bit of money on the table for not developing some of the stuff that we have that we’re going to be selling. But I feel like we’ll be able to get in and out of some shorter term projects with that money. If we take it off that table we’ll make a little bit of money on the ones we sell and then we’ll make up a fair bit of the difference doing some shorter term projects over the course of the next year.
Tucker: I just want to remain nimble for what I think will be an eventual downturn. And ultimately that’s when the most money is made. So I’m just kind of preparing for it now. We had a big talk about it yesterday. We got a bunch of stuff that we’re going to be listing over the course of the next week or two, and just want to take advantage of all that. So anyway, that’s where we’re at. That’s where my head’s at as we head into 2018 marketwise. Had a big meeting with the City of Lake Oswego this last week. We’ve got a big townhome project and part of selling off some of our stuff is so that we can do really cool projects like this. It’s going to be a four unit townhome project or a commercial building.
Tucker: It’s only about, I don’t know, less than a quarter mile from my new house. So it’s close proximity to my life and it’s right where we want to be. It’s in a rapidly improving part of Lake Oswego. And it could be a really, really cool project. So this is one that ultimately I did a breakdown for everybody in our DFA, we could sell two townhome units and basically break even on all the capital and money that we’d have into the project. Keep two, rent them for a good amount, or sell them at that point, depending on what the market is like. So it gives us some leeway on getting out of those or keeping them for a good amount of cash flow. So just really cool stuff on the horizon for us as we get into bigger and bigger redevelopment type projects.
Tucker: And then lastly, of course, I’m selling my own home here very shortly. I’m wrapping up my new one. If you guys are friends with me on Facebook, you can go check out. I posted some pictures this past week of the progress shots. We’re probably about a month away from finish. So really excited about that. And then once we get finished with the house, I’m going to finish up my basketball court behind it, our indoor basketball court that we’re building there. So I’ve got to source the floor here soon. And all that good stuff. So I’m getting excited. It’s going to be pretty, pretty cool.
Tucker: But anyway, I’m rambled long enough. So without further ado, let’s jump into this conversation that I’m having with Justin Silverio, all about how to be effective with using direct mail in today’s market.
Tucker: All right, Real Dealz podcast listeners. I want quickly about our show’s sponsor, Iron Bridge Lending. If you guys have not reached out to Iron Bridge already to talk to them about funding some of your upcoming foot projects, I highly encourage you do to so. I’ve known the owner of Iron Bridge for a very long time. I’ve personally borrowed millions of dollars from the over the years to do a number of different projects. And I can say, without a doubt, they are the best hard money lending company I’ve ever come across. And that is the reason why they are the sole sponsor of this show. I’ve had a lot of other companies reach out to me and want to sponsor this show, but I just won’t do it.
Tucker: I feel like I need to be genuine in who we have sponsoring the show. And it needs to be somebody that I’ve personally done a ton of business with. So I personally vouch for their ability to be the best, hands-down, in the world of hard money lending. You won’t find better programs. You won’t find better terms. And they’re lending, or will be lending, in over 20 states. So chances are if you’re hearing this in whatever state you’re in, it’s definitely worth it to check out their website, reach out to them, see if they’re lending in your state. And if they are, I would absolutely encourage you to do business with them.
Tucker: Another very cool thing to note is that they have a program for most rehabs where you can actually borrow up to 90% of the purchase price. Now this is given the fact that you are actually buying a deal, which if you’re listening to this show, that means you probably are. But if you have an actual deal on the table, they’ll fund up to 90% of your purchase price. And they’ll even give you rehab funds on top of that. Which means that it only takes 10% down to get into a project. Which is unbelievable in the hard money world. So do yourself a favor. Reach out to Iron Bridge Lending. Have a conversation with them. See if they are a good fit for you and for your next project. I can guarantee you that you’ll be happy that you did.
Tucker: All right podcast listeners, I’ve got a … I think he’s a three time returning guest. So you get the trophy, Justin, if there was one for three time guests on the show. But, welcome back.
Justin: Thank you. Thanks for having me back. This is great.
Tucker: Hopefully you had a great Christmas. I know you’re hanging out at the in-laws, which is good for you because I know some people wouldn’t want to be caught dead hanging out at their in-laws for a long amount of time. So that means you must have a good relationship with them, which is great.
Justin: Yeah. I’m lucky that I have a very good relationship with them. So it’s great to be down here and have some time off.
Tucker: Fantastic. Well I actually had the in-laws staying at my house last night so I didn’t have a choice. I was the one hosting company versus the other way around. But either way, I have good in-laws as well, which is a good thing. But, hey, before we dive too much into family dynamics, the reason why I wanted to get you back on the show is I wanted to talk about the state of direct mail marketing. And just really where we’re at with it. I’ve seen it go through a pretty big change over the last few years, yourself included I’m sure. It used to be easy, easy, easy to get the phone to ring and get leads in your phone. Now it’s become a little bit more difficult, mainly because there’s just been a lot of people just kind of jumping in and playing around in it. And so I want to give you the floor and maybe you can give us in your opinion the state of the market in terms of using direct mail to find deals as we head into the beginning of 2018.
Justin: Yeah. I completely agree with you. Over the last couple of year direct mail is a very easy way to get in touch with homeowners, get the deals under contract where you didn’t have any competition. Now I’ve seen a lot more people dive into direct mail because it’s been such a great avenue. So response rates are decreasing and it’s getting a little bit more difficult to get deals. However I see a lot of people doing direct mail incorrectly. So if you have a good grasp on how to do direct mail and being consistent with direct mail then you will still be successful with it. But I have definitely seen a change over the last, especially the last year, in people getting involved in direct mail.
Tucker: I agree with you. I mean we’re obviously very consistent about it here. I mean even just a couple of weeks ago we put a deal under contract that I was going through the numbers. We’re closing here next week, but I was reassessing numbers on it yesterday. And we’re picking it up for 270. It probably needs 25 grand worth of just spruce up. And if we put it on the market for 399, it’ll probably get bid up maybe another 10 or 15 grand above there. And it’s a simple ranch rehab. But that was a result of direct mail. That’s what everybody wants when they venture into it for their first campaign, but I wish I could say that was our first campaign in that area, but it wasn’t. We’ve been mailing that area for a while and this was just the time that this person decided to respond.
Tucker: But the point is they responded. Those deals are definitely out there. But it takes a lot more cultivating these days which I think is why a lot of people have frustrations with it. Because they want the instant gratification of their marketing. I think a lot of that has to do with just the mantra of the internet and instant success and everything like that. People feel like if they don’t get that on their first 2000 letter drop, then screw direct mail. It doesn’t work. But with that being said, what are some of the biggest learning lessons that investors should know about using direct mail these days that you’ve seen with yourself and, obviously, all your clients that you service at Open Letter Marketing.
Justin: So a couple of things that I see people doing incorrectly that I think is really hurting their response rates or their ability to be successful. One is that they kind of just go one and done. They send out a bunch of mail. They have a budget. They do it all at one shot. They don’t get a deal off that. And they say, You know what? Direct mail isn’t working. When I try to tell everyone, Picture yourself doing this for the next six months. Get your budget. Know what you need to do for the next six months. And allocate that over the six months that you have so you can consistently hit these people over and over again, so you can build that rapport and that consistency with them. That’s huge.
Justin: Doing the one and done, I just tell that that’s a waste of money. Because the chance of you getting a deal is probably going to be lower that if you are consistently mailing to them over and over. The other thing is lead list. Lead list is huge. And I see a lot of people just going off list source and going with your standard absentee owners. And when you’re in a hot market, those are saturated. Those lists are very, very saturated. So making sure the quality of your lead list is top notch like doing driving for dollars, mixing lead lists, layering lead lists of top of each other. That’s even more important in saturated markets.
Justin: So I don’t see too many people really honing in on great lead lists. So a lot of my time for myself, my own investment business, I spend a lot of time on just cultivating great lists and making sure I’m hitting them. And then the other thing I see is people are just doing the same old, same old with direct mail. They’re doing the same postcard, the same letter that everybody else is doing. So when these people get stacks of 10 or 20 letters and they’re all the same and nothing makes them stand out from anybody else, they don’t have a really good shot of getting a deal over anybody else. It’s just a luck of a draw. So getting yourself … Using a little bit more creative or unique mailers definitely helps to get you to stand out.
Tucker: You know it’s funny. I was listening to another podcast this past week and the guy is a good podcaster. I don’t want to dis on him and all, but he was talking about … He’s finally reflecting on the mail pieces that he actually sends. And I wanted to reach through the phone and be like, “It’s about damn time, people.” Think about, you have to put yourself in the position of the person receiving that direct mail piece. So when you’re sending the same old yellow postcard that says “third notice, I need to get a hold of you or your house is going to explode” kind of thing, right? You’ve got to think about how that impacts the person getting it, or how does that make them feel. You really have to think about that. And then also think about what it is you’re sending them and how to get their attention in a positive way. So I think you’re right there. People just, they don’t want to put a lot of thought into it, and then they also don’t want to commit to marketing being an ongoing action for their business.
Justin: Yeah. Sometimes people just get a little bit … I guess I would say lazy, in the fact that they don’t want to reinvent the wheel, so they use the same thing that everybody else really uses. But the important thing is that I always look it from the perception of somebody that’s getting my mailer. If I’m sending the same mailer that everybody else is sending, how is that going to be perceived by them. Whenever I send to somebody I want to make sure my mail piece, what I put together represents myself, the quality, the trust. Building on that, that’s very important.
Justin: So there’s specific things that I include in my mailers and what I do to them to really present that to the home seller. Just recently, just going off of what you said about the deal. Someone just called me after four years of mailing to them. It looks like we might be getting a deal done. And I just got another property with my mailers because of the niche marketing that I’ve been getting into, that we picked it up for 550, we’re wholesaling it for 650. So not having to do anything with it. So those deals are still out there and you just need to make sure you’re doing the direct mail how you need to do to be successful.
Tucker: I’m going to bounce all over the place here because I don’t want to deviate too far when we hit good topics. There’s a big mantra out there these days that’s being packaged up by a lot of the guru crowd to get people’s attention, which is like the multiple points of motivation list, right? It’s like the ultimate list of people that, for whatever reason, may want to sell. Like, let’s say, they have a code violation. They have high equity. The equity would be code violation, high equity, and they’re four months behind on their mortgage, right? Something like that. So what in terms of the super list, I know you’ve been doing this for a while, and you do it for your clients as well. How do you layer those things. What are just a couple of examples of some stuff that you use for layering to have those multiple points of potential motivation we’ll call it.
Justin: When I build a lead list, I go basically town by town. So I build my lead list for each town before I move onto the next. And when I’m looking in those towns … because I do a bunch of different things. If someone’s renovating, doing new construction, wholesaling, all those, so they can layer in Driving for Dollars, tax liens. They can do code violations. They can add in absentee and equity owners but only to see if they are layered on or included in other lead lists. If they are, then I put them onto my super lead list, is what I call it when they’re in multiple lead lists. But then if they’re not in my super lead list I’ll remove them from my list, because I don’t want to mail to people that are just on the equity list because I know everybody else is mailing to them. But I will include them if they’re part of another, like a Driving for Dollar list or they have code violation.
Justin: So I have probably about 15 different lists that I do that with, and layer them on top of each other. Some of them I only include if they’re on my super lead list, and then remove them if they’re not. But other times I’ll include them only if they’re on that one list. So there’s a lot of layering, a lot of thinking about it. So that’s why it takes a while to create a really strong lead list that I’ve been getting good results off of.
Tucker: And I’m assuming, too, that some of that is more specialty type redevelopment lists, and things like that that you can custom create, obviously. We do a lot of that here and a lot of those types of leads as you’ve probably found, they don’t really show up on many of the other lists either. So you obviously lump those into super leads, because nobody’s really mailing a lot of stuff that needs heavy redevelopment because it just doesn’t fit within the box of normal stuff.
Justin: Absolutely. And it really depends on what your investment focus is. A wholesaler’s focus is going to be different from a rehabber’s versus a developer’s. So really understanding what it is you’re looking to do, and how to start, and what lists to cultivate, is really important. Because one list is not going to be good for everyone. And one list might be amazing for one investment focus but not really that great for another investment focus. So you really have to understand where to start and what lists to use.
Tucker: Yeah, I think that’s a good point. Like going back to the deal that we’ve got under contract that I was talking about earlier in the past week. That was probably your more typical wholesaler, rehabber list, whereas we have other lists in different parts of town that are more zoning, lot size, spaced. So those are two different types of product, two different types of businesses that consume those leads or will take those and then put them to retail at some point via redevelopment or otherwise. But, yeah, it’s important to differentiate the two. And just know what it is that you’re looking for.
Tucker: Now, that’s not to say as a wholesaler you can’t go after those types of zoning, lot size, type leads but you need to know who it is that you’re selling that. You’re not going to you typical rehabber, that’s for sure. And I’m assuming … What about that deal that you got? I think I read about, that wasn’t a typical wholesaler or a rehabber type sale, the one that it looks like you’re going to make six figures on the flip.
Justin: Yep. This one was off a list where it was zoned for multi-family use but the use of the property was actually single family. So it was a zoning play. So we don’t have to do anything. We just got it under contract. We already flipped the contract right to a developer. So we don’t have to do any fixing up or anything like that.
Tucker: But the point is when the lead came in you knew exactly who your buyer is for sure.
Justin: Absolutely.
Tucker: Which is an important thing to know as you as the business owner for basically your lead machine. So what are some of the things, then, that those clients that you have at Open Letter and obviously yourself, we’ve talked about a few. But maybe a couple of others, that they are doing that makes them successful? Just consistency, understanding that marketing is an ongoing action. Anything else that jumps out at you?
Justin: Yeah. I would say those two things: consistency, lead lists, making sure they have good lead lists there. And using unique or creative mailers to get them to stand out. Things that they’re putting into the letters. Always having your logo on it, to brand recognition. The more times they see a logo the better chances that they have to remember you because most people remember image better than they do a name. And just knowing that direct mail, yes, it is costly but it does work.
Justin: And I see a lot of people that just get really nervous about spending. So they either just don’t get into it or they stop because they might not see the results on a first couple. But knowing that direct mail works and understanding that. And is it a little bit costly? But the deals work that otherwise feel really high for us. And I would say the other things is follow up. Not just follow up on direct mail but follow up on the calls. So normally for me it takes a couple of calls for me to get even to the property and then to work out a deal. So if you lose that follow up, you’re losing a lot of deals. So making sure that the follow up is there is very important. Answering as many calls as you can or using call service to help answer.
Justin: Because I know when I was doing real estate investing part-time, and the calls were going to voice mail it would take maybe five to ten times of me calling them to try to get them back on the phone, just to find out that it was a bad deal. But how much time did it take me to do that for each person? It was crazy. It took so long. So I would say those things are the most important.
Tucker: Yeah, I think back end, getting the phone to ring is kind of step one these days. Step two is obviously answering the phone, whether it be you or a call service like Ryan’s Call Porter. Something along those lines, or yourself internally, being able to kind of sift and sort the lead or qualify it right away. So like you said, so you’re also not spending hours chasing people down after the fact to be able to basically say, well, they want 120% of retail, it’s no deal right now kind of thing. You want to be able to get through that.
Tucker: But then also having somebody who is qualified to talk to them and figure out, does it look like a deal? Is there any opportunity there? Those types of things. I think a lot of people just kind of shoot from the hip and they don’t think about the back end before they start the front end. And so they have some conversion issues that happen, and then they want to blame direct mail for not working also.
Justin: Yeah. One other huge thing I would add in is that people that starting off real estate investing and using direct mail. When I started off doing direct mail I was new at real estate investing. And I guarantee I’ve missed a lot of deals because I didn’t know how to convert the deal, or what I should do with it once I purchased it. So I see a lot of people that their deal rate is probably lower because they’re new and they’re having a tough time even evaluating the deal or figuring out the rehab. There’s a bunch of different things that you can mess up. But you have to understand that that’s going to happen regardless if you do any other form of marketing. And just talking with seller, you’re going to screw up. You’re going to make mistakes. Your deal rate is going to be much lower, but as you learn and go through you’re going to be much more successful just because you have a better understanding of real estate investing.
Tucker: I couldn’t agree more. No matter where you spend the money or the time to generate the leads, you’re going to screw some of them up. That’s just the reality, and so you can’t blame direct mail for that because if you aren’t using direct mail you’re going to screw up leads from any other source as well. So I think direct mail becomes a scapegoat for a lot people there because they’re spending money on it and they’re so hypersensitive to the fact that they are. I had some conversations with some people not to long ago, and they’re like, “I have to spend $4000 to get a deal with direct mail.” I’m like, “Well, how much money did you make on the deal?” “One hundred grand plus.” It’s like what are you whining about? Just not up there partner. Put on your big boy pants and …
Tucker: I broke it down in a podcast not too long ago but if you’re buying off the [inaudible 00:31:07] you’re probably going to make 30 grand on that same deal. And you’re paying a buyer’s agent probably eight grand, right? So just keep it all in perspective. But, yeah, you’re right. You’re going to screw up some deals and some leads initially. So just factor that in. It’s just a cost of doing business. It’s cost of learning. It’s about getting over the hump, getting better at sifting and sorting leads, talking to people, putting deals together. And then also at the same time, just continuing to market because it’s an ongoing action. I think that’s the biggest thing I’ve heard from people, is they just don’t understand that direct mail or PPC or whatever, it has to be an ongoing action. And if it’s not, then you might as well just throw your money away in my opinion.
Justin: Yeah. I agree. I agree.
Tucker: So with that said, let’s talk about some other cool things that you’re doing. And we’re doing some of this as well, with layering our marketing, right? Direct mail’s kind of the foundation of how we generate leads. But what are some cool new products or things that you’re able to do for people, or that you’re doing internally, in terms of maybe on the digital side to layer your marketing as a nice complement to the direct mail?
Justin: Yeah. So direct mail, as you said, is kind of my base. I’m always doing that because it’s directly getting to the people that you want to prospect. So based on property, location, all of that, very easy to hit them with direct mail. Everybody has a mailbox that owns a home. So in addition to that on a digital side, we’re doing IP marketing. IP marketing is a way to get in front of people on their computer. We can use the same mailing list that you’re actually mailing to to identify their IP addresses so that now you can hit them with banner ads. So that’s one thing that we’re working with and offering to our customers.
Justin: Internally, I’m doing that for my real estate investment company. I’m also doing Facebook marketing to reach out to not only the people on my list, but focus areas where I really want to build a big brand. So certain towns near me where I’m doing a lot more development and high end development, I want to just saturate that market with my name. So Facebook marketing, I’ve tagged onto that as well.
Tucker: So maybe expand on that a little bit. Are you able to just do a geo-targeting in terms of a general area? And then you’re putting ads to those people for a branding awareness type ads?
Justin: Yeah. Right now I’m doing geo-targeting on just people that are in the town and a radius around my town, and everyone that owns a home. So in Facebook you can identify people that own a home. But there is a lot of stuff that you can do with Facebook as far as targeting. And they have a ton of data behind them. So you really can get into a niche of what exactly, who you want to target. You can even do “likely to move” as one of the options.
Tucker: Really?
Justin: You can, yeah.
Tucker: I wonder how they do that? I’m imagining that they have an algorithm … I think the average person owns their home for seven years. So maybe if they’ve had them in Facebook at that same IP address for six years, maybe it triggers as a “ready to move”. I don’t know. That’d be interesting.
Justin: Yeah. I want to see how they do that because I see a lot of websites that you can sign in using your Facebook login. So if people are going to these other websites that are maybe for sale or looking for a home, that are linking with Facebook. Maybe they’re identifying that and seeing that they’re going to these other websites, so they’re pulling that information off there.
Tucker: Or Siri’s just listening to them talk on their phone and then relaying that information to Facebook behind the scenes.
Justin: That’s probably true. She turns on all the time for me even though I don’t want her to.
Tucker: So, that’s cool. So basically than with that, the Facebook marketing, the IP targeting specifically with what you’re doing for your clients. They can kind of I assume schedule that around the direct mail then, so that you’re setting the table for your direct mail pieces that are coming, or after the fact, after they’ve got the direct mail piece to re-remind them of you being there and the services you provide?
Justin: Yeah, that’s right. So we sandwich the direct mail with the IP marketing, one week before and one week after direct mail hits. It’s important for us in Open Letter Marketing that we do everything that’s very hands-free for the investor because me, as an investor, I know how much time direct mail takes to do it yourself and to do all these different other avenues and methods of marketing. So we try to do everything in house and make sure the timing of everything works really well. So when people are running campaigns, we’re setting all the IP marketing and the direct mail up so they don’t really have to think about it.
Tucker: Yeah. And I think that’s a big thing because it can become a little cumbersome for the actual investor to try and manage all these things themselves. And so to be able to set it and forget it with the marketing sequence and then the IP targeting on top of that. It’s a huge advantage to be able to outsource that. That’s for sure.
Justin: Absolutely.
Tucker: You know one of the things I wanted to talk about was the integration of your services with our Driving for Dollars app. There’s a few other apps out there, but I just wanted to air out the relationship that we have with you on the podcast here. So basically people can go on the app. They can create the list that they want, and then they can export that list directly to you, correct?
Justin: That is correct.
Tucker: And at that point they could, even if they wanted to, probably ahead of time, to set up some type of account with you. And then once that list is exported to you they could run a direct mail marketing sequence or they could also [inaudible 00:36:30] the IP targeting as well, just as simple as a conversation or an email with you, I would assume.
Justin: Yeah. You’ve got it. So once they send it over us, we get an email, we have their information. So we generally pick up, give them a call, to set up their account and walk them through the process. We want to make sure that it’s very easy to go from your program to ours. So we’re trying to work on as smooth an integration as possible. So that’s our focus, is to just make it very streamlined for them.
Tucker: Yeah. Very cool. It’s definitely the way to do it. I’ve harped on this on the podcast before, but any list that you’re going to be marketing whether it’s Driving for Dollars or otherwise, you can’t expect to send 20 pieces of mail and generate any type of deal. So we built the app to easily build bigger Driving for Dollars lists. I’m assuming, just out of curiosity, what is the universe of people that you market to? It’s easily in the thousands and thousands, right?
Justin: Yeah. I have a list of about 12,000 I think right now. 12 to 15,000. And I think the way you built it is correct because I see a lot of people asking me, “Why do you have minimums of 200 for open letter marketing?” And it’s very important that 200 is the bare minimum. You want to be doing much larger lists than that, mailing out to. So for you to build the program around more of the quantity I think that’s really important, because if they send letters to 20 people … Direct mail is all about numbers, and making sure your lead lists are a good amount of size is important.
Tucker: Yeah, I agree. It’s 2010 when we first started sending yellow letters. You could send 100 yellow letters, and you’d probably get 10 calls. But 2010 was long ago now. We cross into 2018 this next week.
Tucker: One other thing I wanted to mention before we end is, you know the phone’s been ringing. I apologize for those of you that can hear it in the background but as we head into the holidays generally phones slow down, right? For anybody that was mailing over the holiday, maybe it was their first tour of duty in direct mail this holiday season. Generally speaking for all of your clients, phones kind of slow down from between Thanksgiving and New Year’s, right?
Justin: Yeah. I would say calls definitely die off around Christmas, New Year’s. However, this year because it’s been more competitive and I think you said you did this same thing, I’ve still been active with direct mail. But January was really where I start to push out a lot of direct mail because beginning of the year, after the holidays are over, people to get back into their cycle, and the call rates go back up, and more people are looking to sell their homes. Because over in the Northeast, we already have snow on the ground and people just don’t want to deal with it. So if their house needs a lot of work, or their heater goes, their furnace goes, then, yeah, they give us a call.
Tucker: As you mentioned, we kept mailing pretty hard through, basically post Thanksgiving all the way through now, and then we’ll continue through January. But as you probably heard, the phones were very quiet last week, leading up to Christmas. And it always seems every year that it’s like the faucet turns on and I never know when it’s going to turn on. It could be January 2nd, could be January 15th. But once it turns on it’s crazy the amount of leads that come back in. And we’ve been continually mailing and marketing to kind of force that faucet to come on as early as possible this year. The phone’s been ringing off the hook today and here we are Wednesday after Christmas when we’re recording this.
Tucker: So it looks like it’s starting a little earlier this year than I thought, but the point is that if you have been mailing around this time of year and you’re not getting the greatest response rate, just wait, keep mailing, the phone will start ringing. It’s just a matter of what date that kicks in now. If you’ve got a ton of snow on the ground, like you guys do in the Northeast, maybe it’s a little bit later and they have to clear up slightly. But if you’re in the rest of the country, it could be a little earlier as well.
Justin: Yeah. Definitely.
Tucker: So for everybody listening, if they want to hook up with you and look at what it is that you can do for them, the different marketing pieces that you can send and the different additional services in terms of digital marketing and layering and everything else, what would be the best way for them to get a hold of you?
Justin: Yeah. So our website is openlettermarketing.com. But they’re more than welcome to shoot me an email even if they have questions or anything like that. My direct email is justin@openlettermarketing.com.
Tucker: Perfect. Well we’ll make sure to put a link in the show notes as well to both, and then that way people can easily find you if they want to track you down and they want to complain about their direct mail doesn’t work. Which then the solution would be, well, just have Open Letter Marketing do it, right?
Justin: Exactly. You got it.
Tucker: Hey, well, thanks for joining us and I’m sure people got a lot out of this. And unless you have any parting words of advice for everybody, we can put a bookend on this.
Justin: As always, Tucker, thank you very much. Appreciate it.
Tucker: All right, guys, what did you think of that interview with Justin Silverio? Pretty cool, huh? We’ve mapped through pretty much all of the major pitfalls and things that you need to know about using direct mail in today’s environment. It’s definitely different than it was a few years back. There’s no question about that. But you can still be very, very successful using direct mail as the main foundation for all of your marketing, and then building off of that.
Tucker: So we really broke that down in this interview. Hopefully you guys enjoyed it. Now, before I get out of here this week, I wanted to give you guys a closing success quote as I always do. And I really like this one. I was looking around and this one really resonated with me, and I think it will with you guys as well, especially since we were talking a lot about marketing and specifically direct mail marketing in this episode. So the quote is by a fellow named Tom Fishburn, and it goes, “The best marketing doesn’t feel like marketing.” I like that. And we just actually redesigned a lot of our direct mail marketing pieces here and the whole point of it was to not feel like marketing. And so anyway, we’ll see how it does, but, hey, if this guy said it then maybe we’re on to something, right?
Tucker: So anyway think about that when you’re designing your direct mail, or your marketing for your business. And think about all the things that we said in this interview. And we’ll see you guys next week.
Tucker: [music]
