Choosing the Right Target Market Part 2
A couple of weeks ago I talked about choosing to market for houses in areas that were more likely selling a home creatively. I also went into the fact that I want the price of the house to be around the median for the area because that sells the fastest. Also I don't want to market to houses that are old and would require extensive remodeling before I sell them.
So I first go about looking for neighborhoods that have seen a historical abundance of foreclosures or at least foreclosure notices. Why, because if there have been a number of notices it stands within reason that there will be a number of them in the future as well. Neighborhoods don't change their makeup very quickly.
I like to do a little bit of work narrowing the area where I market, so that I am more efficient and can spend more money per lead. I want to be able to get a higher response rate and be able to hit the leads more often. By doing this I get the chance to know my market and neighborhoods and become the expert while doing so. I narrow my competition at the same time so I am not being compared to another investor by price and how I buy my house.
Being a techie I take things one step farther than most other investors. I upload into Microsoft MapPoint or Microsoft Streets and Maps the excel spreadsheet file of all of the foreclosure addresses in the last several years. I then visually map these out on the screen so that I can view the foreclosure density of neighborhoods. This way I can choose these specific neighborhoods and mail to those houses in the neighborhood that meets my investing criteria.
If I spend fifty cents per address getting a more likely prospect I consider it well worth it. The nice thing is you can buy a mailing list that meets your criteria such as the age of the house, what type of mortgage the owner has, how long the owner has lived in the house and many other demographics you could possibly think of. And then you just bump these up against those neighborhoods and mail only to those houses.
Most of you already know that I am a big believer in sequential mailings. The more times that you hit a prospect with your message the more likely they are to respond to you when they are ready to respond. I heard that it was called front of the mind awareness. This is what brand advertisers are going for. I have even had sellers tell me that they had seen my signs all over and then responded when they got my letter because they hadn't gotten the number off the signs. What I didn't tell them is that I had not put a sign in their neighborhood for over a year. I was getting credit for other peoples advertising money. You gotta love that.
Yes I know this sounds a little complicated. Yes I know that it is easier to send a postcard to those people in pre-foreclosure that to do what I am talking about. The problem is you are going head to head with most other investors when you are mailing postcards to the pre-foreclosure market. I know that most of the National speakers won't tell you that, they will tell you to mail a postcard because it is cheap and easy and that is what most people want to hear.
I guarantee that I get a better response from my mailing campaigns in a tough west coast market than another investor who is just sending a single postcard. So invest the time to define your target market and you will become the expert in your area and be able to buy more houses that you ever though possible.
Alameda County • Contra Costa County • Marin County • Napa County • San Francisco County • San Mateo County • Santa Clara County • Solano County • Sonoma County
I always have been asked about using the “Yellow Letter”. This is a letter that is hand written or appears to be hand written on a yellow legal pad of paper so that it looks like an investor actually took the time to mail each one individually. This is a good technique used in the proper neighborhoods. It does get people calling in and it makes the investor seem very busy.
I spoke with several speakers about this mailing and one confided in me that he teaches this method because the investor gets responses from it and that it makes him, the speaker, look good. The funny thing about it is that this speaker knows that the number of useful leads is actually below average from his other mailings.
When I do my marketing I do it in such a way that I only talk to motivated sellers rather than every Tom, Dick and Harriet that wants to sell their house. I would rather direct them to my website or automated information line rather than talking to all of these people.
Recently I had a mentoring student who used the Yellow Letter call me frustrated. She mailed out thousands of yellow letters and had over 200 phone calls in less than two weeks. Her days were spent trying to get the answers to her questions from these people. At the end of the exercise she swore that she would be happy with just buying a single house from those leads.
Frustrated at spending over a week following up and tracking down she had come to realize that there was not a single motivated seller in the bunch. All wanted full retail; a few others wanted more than the house was worth and a few figured that by discounting $10K was enough for an investor to make a profit on the deal. She finally realized that putting people through some prequalification before she spoke with them is much better than dealing with all of these phone calls.
