How to Use Direct Mail Marketing to Grow Your Real Estate Business (2024)

Direct mail marketing is used by millions of marketers all across the world to sell products—from insurance and mortgages to cable and internet to subscription services and more. Across multiple industries, direct mail marketing is a proven technique for growing your business.

We will dive deep into the topic of real estate direct mail marketing and focus on how real estate marketers can use it to get new prospects and grow your business.

What is real estate direct mail and how does it work?

Direct mail is mail sent to a targeted list of people with the assumption that a percentage will respond to the campaign. Chances are you receive a lot of direct mail every day in your mailbox at home and just consider it “junk mail,” tossing it in the trash.

Have you ever wondered why they send this junk mail? A small percentage will end up responding to the mail, and a small percentage of that percentage will end up as buyers, making their campaign worth the expense. At its core, direct mail marketing is about playing the odds.

Here’s an example. Wholesaler Kevin is looking to find real estate properties he can get under contract for cheap. However, the MLS is drying up and good deals are being bid up quickly, forcing him to look elsewhere. So Kevin turns to direct mail marketing.

• Kevin sends out 1,000 real estate postcards to a targeted audience for $1,000.
• Out of those 1,000 postcards, 5% of the people call back Kevin (1,000 x 5% = 50 phone calls).
• Of those 50 phone calls, Kevin filters out the duds, negotiates, and gets the contract on 2% of them (1 deal).
• Kevin then sells the contract to a local house flipper for $5,000.

Kevin netted a $4,000 profit with direct mail. What if he took that profit and put it back into another direct mail campaign?

• Kevin sends out 4,000 more direct mail postcards to a targeted audience, costing him $4,000.
• Out of those 4,000 postcards, 5% of the people call back Kevin (4,000 x 5% = 200 phone calls).
• Of those 200 phone calls, Kevin filters out the duds, negotiates, and gets the contract on 2% of them (4 deals).
• Kevin then sells the contracts to local house flippers for $5,000 profit on EACH, for revenue of $20,000!

Kevin now turned that $4,000 into $20,000 using direct mail marketing and could keep going to earn even more. Direct mail marketing is scalable, which means the more you put in, the more you get out. If you can get those numbers to work, you can keep earning money.

But there are four metrics to keep in mind:

1. Cost per direct-mailed item
2. Call response rate
3. Contract conversion rate
4. Wholesale fee

For a direct mail marketer to succeed, they need to master those metrics. What if only 1% of people call about your mailing piece? The numbers look very different.

The rate of return will vary depending on factors like:

• What list you are mailing to
• What your direct mail says
• How good of a negotiator you are
• The price range you are looking in
• Market conditions
• The cost of your marketing

What works for one direct mail marketer might not work for another. A good marketer is always testing, tracking, and perfecting their skills.

Who should be your target audience?

Before you start printing your direct mail, you need to decide who will be the recipient of those letters. Instead of hitting every home in an area, mail to people who fit a certain profile.

According to Joy Gendusa, CEO of PostcardMania, “You have to get the idea that ‘marketing is persuasion’ out of your head. You aren’t convincing someone to buy from you. You are showing the recipient of your card why you are the best choice in your industry.”

This quote perfectly summarizes why you should be targeting specific lists.
In an ideal world, you would only mail to people who are already interested in what you offer! You can improve your response and conversion rates by marketing to the right people. Seek out your target audience with the following ways:

• Absentee owners: These are owners whose mailing address is different from the property address. This situation could be due to a number of reasons, but it typically indicates a rental property. Many landlords find themselves motivated to sell because, frankly, landlording isn’t easy. Other times, absentee owners may be property owners who have moved from their primary residence but failed to sell their previous home.
• Inherited: This is exactly what it sounds like—people who inherited a property but aren’t motivated to care for it.
• Eviction records: During the stress of an eviction, many landlords realize they no longer want to own the property.
• Probate: When a person passes away, their home may go into probate. Oftentimes, the family needs to deal with emptying out the home, cleaning up the property, doing necessary repairs, and selling the property. This can be an overwhelming task, which means probate lists may be receptive to a direct mail campaign.
• Pre-foreclosures: When someone stops making their mortgage payment, the bank will begin the process of foreclosure. During this time, it’s possible to reach out to the homeowner and offer to help stop the foreclosure and save their credit.
• Expired listings: When people try to sell their home through a real estate agent but are unable, the property becomes an expired listing. This is when an investor can come and purchase the home from the motivated seller.
• Tax delinquent: Not paying one’s taxes is an indication there is something wrong and there may be motivation to sell.
• Divorce: When people go through a divorce they often are VERY motivated to sell quickly.

How to build direct mailing lists

Lists can be built in a few different ways. Let’s go over the three most common ones.

1. County/public records

You’d be surprised at the amount of information that can be found through public records. Generally, the county assessor’s office is the place to go. If you are unsure of where to access your local government’s public information, check out NETROnline.

2. Driving for dollars

Driving for dollars is not the fastest way to build a list for real estate investors, but it can be one of the cheapest. It’s the process of driving around and looking for properties that indicate there is a problem, such as long grass or boarded up windows. By writing down the address, you can search public records to create a list of potential sellers.

3. List brokers

Perhaps the fastest (and most expensive) way to compile a list is using a list broker. There are several large companies that you can purchase lists from, but most get their data from the same public sources that you can access. The most used seem to be ListSource, Melissadata, and Click2Mail.

When using the list brokers, you can narrow down your list to get specific. For example, you probably would not want to mail to someone who just bought their home last year, because there is likely not enough time for them to be motivated to sell.

Filter based on:

• Equity
• Number of bedrooms/bathrooms
• Year built
• Year the owner purchased
• Late payments
• Notice of default filed

It’s easy to get overwhelmed when trying to build your list. Direct mail is not about getting the perfect list, but about continually testing and tweaking it to get it right.

What to send to your direct mail list

Now that you know how to make your list, you need to decide what to send to your direct mail list. The following sections will give you a fairly good idea of what’s out there. Keep in mind: You don’t need to pick just one. Many wholesalers mail all three types on a rotation.

Whichever type you prefer, make sure to create a template in Word, Canva, or the design application of your choice so that bulk-creating these direct mail pieces is easier.

1. Yellow letters

Yellow letters are exactly what they sound like: letters written on yellow paper. Usually handwritten, these letters are designed to look like they are personal and not from a large business. This casual style is designed to encourage the lead to pick up the phone and call you.

Yellow letters can either be done by hand or printed from a computer. (You would be amazed at how realistic a printed yellow letter can be.) You can do it yourself or hire it out to an individual or large company.

To do this type of direct mail, the paper, ink, and envelopes are inexpensive (under 10 cents per piece of mail), but the preparation and postage costs add up. Expect to pay between 40 and 60 cents to do it yourself or 75 cents to $1.50 if hiring an outside company.

2. Typed letters

Direct mail does not have to be casual to be successful. Many wholesalers find success by sending more professional letters, complete with a company logo and a photo of the owner or property.

Perhaps the most common use for formal letters is the probate niche, where a bright yellow paper would simply offend the family of someone who just passed away. The cost of this type of direct mail is similar to yellow letters.

3. Postcards

Postcards can be a cost effective way to reach more people in your direct marketing campaign, as they are cheaper to produce and mail. However, many marketers believe better response rates can be achieved through letters. It all comes down to testing what works in your market.

Postcards can generally be printed for pennies, and postage for a first class postcard stamp is just 36 cents at the time of this writing, meaning you could print and send postcards on your own for under 50 cents each. Or you could hire an outside company to do it for you between 40 cents and $1.

What to write

The purpose of your message is to get the reader to call you. But that’s not a simple task. Entire books have been written on the best way to write sales messages. However, most investors would agree: Short and sweet is best.

Your message should be simple, to the point, and “benefit driven.” The recipient should be able to clearly know within seconds what’s in it for them. Some of the best messages tend to be less than 20 words and say something as simple as, “I want to buy your house for cash. I can close in 10 days. Please call me today!”

It’s also okay to get creative. Experiment!

Split testing

No matter how smart you are, the fact is that you don’t know what is going to work. Is a message on a yellow piece of paper or a message on a white piece of paper going to get more calls? What about a blue envelope versus a red envelope? We can make guesses all day long, but until you get out there and try it, an assumption is all it will be.

Split testing is the process of trying out different things and tracking the results. For example, you may want to set up two phone numbers for people to call. On half of your direct mailers offer Phone Number A with the yellow paper. On the other half, offer Phone Number B with the white paper. Then send them out and see which group produces the most calls.

It’s unlikely that small changes like the color of paper will be momentous, but even a small difference in conversion rates can make a drastic change to your bottom line, earning you much more money.

Additionally, it’s important that you allow for enough results to consider the test valid. For example, if you send out 10 letters to Group A and 10 to Group B, and Group A gets you three phone calls and Group B gets you four, don’t assume Group B was better. With such a small number, it’s hard to get a solid grasp on a “trend.” Maybe a couple people in Group A were out of town. We recommend sending to at least 500 per group.

A good marketer is always testing, tweaking, and improving in an effort to achieve the greatest return on investment. Once you “crack the code” to a successful direct mail campaign, you can ramp up your marketing and make an incredible profit for your business.

How often should you mail?

Do you remember the first time you ordered something from Amazon? What about eBay? Best Buy? Chances are, the first time you purchased from them was not the first time you heard of them. People usually need to build trust with a brand before making big decisions with the company. The same is true for wholesalers.

When a person receives your direct mail for the first time, chances are they will ignore it. However, after receiving multiple letters, they build familiarity with your brand and trust is built. Some wholesalers suggest mailing every month to your list. Others put their list on a rotation.

How often you mail will depend on the list you mail to as well as going with your gut. It can be difficult to “split test” how often to mail, so you may just need to pick a frequency and run with it. Then, continue to mail until one of three things happen:

1. They ask you to remove their name from your list.
2. You buy the house.
3. They sell the house to someone else.

Only by regular mailing can you optimize your chance of being the solution on the day they need it.

To sum up what you just read, here’s a 10-step process for getting your direct mail campaign going:

1. Establish a budget.
2. Decide who to target.
3. Decide HOW you want to target them (postcards, yellow letters, etc.).
4. Build your list.
5. Plan your split test (optional).
6. Print your letters/envelopes.
7. Answer calls.
8. Track responses from the split test.
9. Continue to mail to the list on a regular basis.
10. Land your deal.

By following this 10-step process and continually testing and tweaking different aspects about your direct mail campaign, you’ll be able to maximize your return, attract new leads, and grow your business to new heights.

Note By BiggerPockets: These are opinions written by the author and do not necessarily represent the opinions of BiggerPockets.