How to REALLY Do Direct Mail to find Off Market Deals

Mike DeHaan: [0:02] On Air brands. If you just send it to everybody, most of the people that you're sending that to aren't necessarily gonna have a reason to sell at a discount. Right? And that's one of the reasons that so many people don't believe that this works is they're like, why would anyone sell you your their house for 60¢ and a dollar? It's like, well, you wouldn't, but you're also not the target demographic. Right? But our average response ratio is about 1%. So, you know, 1% of the people that we send these letters out to give us a call. And out of those, probably about, I would say, what, 1%, not 1%, like 10% of those actually turn into a deal.

Speaker 2: [0:45] Austin. From wins, losses, horror stories, and tactics for optimizing your business, Mike and Dan take a real uncensored deep dive into the ins and outs of running a full time real estate investment and wholesaling business.

Mike DeHaan: [1:02] What's going on, guys? Welcome to episode 44 of the collecting keys real estate investing podcast. And I'm coming up on our annual sort of year here pretty quick, like our our full year's worth of doing this this thing. I always say that almost, I feel like I said, I've said like every single week now at this point.

Dan Austin: [1:20] Sure that we're still doing this.

Mike DeHaan: [1:22] But I

Dan Austin: [1:22] got energy today, man. I just, I just slugged two coffees, been awake since 03:30AM dealing with my baby. And so now I'm ready to rock and roll though.

Mike DeHaan: [1:30] There you go, new child life right there. I mean, I I was up at, 05:00 this morning, but, you know, I'm I'm in the the no child path, so it's because I had too many beers last night and I just kinda had, like, the night sweats and I just couldn't sleep

Dan Austin: [1:42] in the Yeah. I was like, I can't sleep. I've been there. Yeah. I've been there. The worst part is when you have those night sweats and you have a baby. Oh, yeah.

Mike DeHaan: [1:50] I bet. Yeah. For sure. Yeah. We we went and played trivia last night with some friends and, you know, we like they they I always have, like, beer deals. Right? And, you know, we got we got such a great brewery scene here in Spokane. Sometimes it's hard not

Dan Austin: [2:00] to indulge a little little bit. Yeah, man. It you you have to indulge why you can. I mean Yeah. You know, they they sell you on trivia, but you end

Mike DeHaan: [2:07] up drinking all their beer. I know. Exactly. And and the the thing is, though, that piss me off about, like, trivia and that sort of stuff is, like, I know people cheat. Yeah. Like and and I'm just like, just like, why? Like like, come on. You take all the fun out of it. And, like, there's no way that you knew every single answer to every question, especially when they're asking, like, dumb shit. Like, one of the questions because it's in Garland, which is like this little historical neighborhood here. And one of the questions was what three movies are currently playing at the Garland Movie Theater? Right? And it's like it's like a dinky little movie theater that's like at the end. It's like a a private movie theater, they always play movies that were in theaters, like, two weeks ago, three weeks ago. No. No. Sorry. Like, two months ago rather.

Dan Austin: [2:47] Or two years ago.

Mike DeHaan: [2:48] And and someone just, like, just, like, knew all of them. I'm like, how? Like, like, are you just, like, studying that? Like, are you a huge fan? The Garlemy's historical

Dan Austin: [2:56] you know, it's a place good here in town. It used to be the dollar movie theater. Now I think it's the dollar fifty movie theater, you know?

Mike DeHaan: [3:01] Yeah. Right now that well, they they sell beer there. That's the only reason anyone goes there is because you can drink it.

Dan Austin: [3:05] Oh, do now. I see. I haven't been in forever. So that's good to know.

Mike DeHaan: [3:09] Yeah. They have they have a bar attached. But anyway, like, when they ask that question and half the people in the room get it right, I'm like, you just know all of you know that. You guys all just freaking googled that right now really quick.

Dan Austin: [3:22] Yeah. Trivia is way less fun with smartphones. That that's very true.

Mike DeHaan: [3:25] Yeah. For sure. But, I mean, you do it on your smartphone, which is kinda cool, but it also makes it super easy just to cheat with it. I I don't know. Go ahead. I'm just bitter. I just I just hate losing, especially when I'm losing wrongfully. Yeah. So losing to cheaters. Yeah.

Dan Austin: [3:41] Yeah. Oh, buddy. Hey. You're winning at life. That's all I'm asking.

Mike DeHaan: [3:45] I'm I'm definitely feel like it sometimes, and then other times I'm like, what what the hell are these decisions that I've made? You know? But but, like, I I will say even with the the ups and downs, had some good wins recently. I finally got my problem tenant out of my That's huge. Triplex that I own. So I have this tenant that literally stopped paying rent the second there was an eviction moratorium from COVID, April 2020. They're like, cool. Well, I guess I'm just gonna be a leech now, and they stopped doing everything. And, you know, to be fair, she has always had a lot of shit with her life. Like, she, you was in a bad spot constantly, somehow can still not find a job. So, you know, I'm just being extremely sympathetic to her. Yeah. Very I I I can't relate to her situation. But, I forgot where I was going with that. Was talking shit now.

Dan Austin: [4:34] Well, I mean She those here's the thing. Those people, you're saying, and and I've heard this story from you for many times, they always have shit going on in

Mike DeHaan: [4:42] their life.

Dan Austin: [4:42] Sometimes it's self created. Right? I mean, that's that's the situation. I mean, there's, I think, still two two job openings to every one applicant right now in The US. So the fact that she didn't have a job is self created.

Mike DeHaan: [4:53] Totally. Well, actually I know where I was gonna go with what I was saying that, you know, with size of our portfolio, like, isn't that big of a deal. The thing that pissed me off about it though was she was just a real bitch to the other people in the unit. I'm like, if you're gonna be a freeloader, just be like a quiet freeloader. Don't like

Dan Austin: [5:12] Be super chill. No real bother.

Mike DeHaan: [5:13] Fuck with the other tenants. Like, leave them alone.

Dan Austin: [5:15] Like, what are you doing? You're the one nonpaying tenant and you're trash only paying tenants.

Mike DeHaan: [5:20] Yeah. Like, all the time. And she would text me shit. Like, she would reach out to me and she'd be like, you know, the the tenant in Unit Number 1 hasn't picked up their dog shit. I'm like, well, maybe you should fucking pay rent.

Dan Austin: [5:29] You're like, other unit A person in Unit 2 hasn't paid rent since March 2020. Yeah. Alright.

Mike DeHaan: [5:35] But now to be fair, I was extremely careful to not do anything like that or to be aggressive or anything in any way with her because I was anticipating have to having to evict her at some point. Mhmm. And I did not want there to

Dan Austin: [5:49] be any incriminating things. Right. To make you look like a bad landlord.

Mike DeHaan: [5:53] Yeah. But now but now she's gone so I can publicly talk shit all I want.

Dan Austin: [5:56] Yeah. She's some other landlord's problem.

Mike DeHaan: [5:59] Yeah. I mean, we didn't have to evict her though. Basically, we just posted notice and that was enough for her to be like, okay, cool. And she's left. So just but she got into some other property. It's actually somebody else's problem now. Man. Wow. And this is where it becomes the weird, like, landlord ethical issue because it's like she moving into an apartment. The apartment company called me just, like, asking questions about her, and I didn't say shit. Well, legally, you can't. Yes. Yeah. That's true.

Dan Austin: [6:23] Yes. Yes. She lived with you. No. She doesn't owe me any money because she doesn't. Right? Like, got she got got she

Mike DeHaan: [6:30] got most of it paid by the government. Yeah.

Dan Austin: [6:33] Sometimes they'll ask me if they have a pet, which I don't know if that mad why that matters. And I'll be like, don't know if they have an animal. They did when they lived with they didn't when they lived here or whatever, but, you know, like, there's only a handful of questions they can legally ask. Yeah. And then that's always like the long pause at the end. Like, is there anything else you want to share? And they, they always pause. I'm like, no. Yeah. It's like, they're not my problem anymore.

Mike DeHaan: [6:54] Yeah. Right. But, so I got that. And then a big win for me personally too, is I have with that unit and then two other units, I have three unit turns going on right now, all of which require some work. And I felt that I really grew as a person because my stress level is, like, not big. You're getting drunk

Dan Austin: [7:12] playing trivia last night. Weren't even thinking about real estate.

Mike DeHaan: [7:14] Yeah. Right? Whereas, like, like, a year ago, two years ago, I would have been so stressed about that.

Dan Austin: [7:20] You know, it's kind of cliche though, too. But I think part of it is that you you've established a team too.

Mike DeHaan: [7:26] Totally. And that, and that's the thing is, you know, they get that stuff taken care of. I just texted like two people and everything's getting done. Know, I didn't even have to go to any of the units. So it's pretty easy.

Dan Austin: [7:36] Which is tough when you're like a solo landlord, like you have one or two units, because it's hard to keep those types of people on your team or your squad. You can still do it. I mean, that's how we started. But when you have enough work that you're calling a person once a week or every, every couple of weeks, you're a top of mind for them and you're a consistent income for them. Whether they're a handyman, a carpet person, or, or whoever, it definitely helps And to have then you have that well established team because scale makes this business so much easier. You know, you're just less, it's less stressful.

Mike DeHaan: [8:10] Yeah. Well, I mean, like, I'm, I'm a big believer if you're going to do real estate, you probably should do it at some level of scale. Like, you shouldn't just do one because if you if you if you just have one rental property and something goes wrong with it, you now have a personal liability on your finances. If you have even it doesn't have to like big scale. If you have five rental properties and one of them's, you know, five units and one of them's vacant, like, the other four can probably carry that one that's vacant, you know Right. For at least a little while. You know, it's probably not gonna be able to replace the roof on that one that's that's, you know, having issues, but you can at least carry the, like, the monthly liability of it you have

Dan Austin: [8:44] that big, weird, crazy black swan event, you're a little bit safer. Right? Or you have that weird, the COVID. I mean, that's a black swan event. If you had that one property and they weren't paying rent and you're just covering that mortgage the whole time, that might entice you to sell it at a time for a price you shouldn't sell it for.

Mike DeHaan: [9:02] I mean, how houses did we buy like that over the last couple of years?

Dan Austin: [9:06] Yeah. Absolutely.

Mike DeHaan: [9:07] Quite a few. So many. Yeah. Especially especially there were people that, you know, were overly nice and they, you know, housed people that were already causing them problems before COVID, you know, when they had the ability to, you know, take care of the situation and they chose not to and then COVID happened and then they officially feel trapped then they signed off on their properties. And then we're the bad guys in that. I

Dan Austin: [9:31] I know, but I mean, it does still speak to like, I mean, if you're going to do one, why not just do five? I think five is like a solid number two, because it's like, if you, if you're, if you're, you know, going off of maybe not right now's average house price across The U S which is probably like $3.50, but maybe say it was 200. Just for easy math, you had five and you own them and paid them off. And there's $200,000 worth of equity that somebody paid off for you. That's a million bucks, not including the two to 3% on average. It increases over that time that you owned it. So if you just think about it, this is the way I think about it. Like if you're like a higher, higher, income earning person, you've had a four zero one ks your whole life and you just worked for that same company. You probably today are retiring with like a million bucks, which is not bad. It's a million. It sounds cool, but it's not a lot, lot enough to live off of like really luxuriously.

Mike DeHaan: [10:24] Yeah, not for thirty years, you know, if you're retired. Yeah, you'd

Dan Austin: [10:27] have to keep it invested and all that sort of stuff, but then you can essentially, with very little effort, buy those five properties over say a ten year period and literally easily double your net worth by the time you retire. Yeah. That's kind of what I like that. Even if you didn't collect cash flow, because you did have that, that W two job where you were, you know, putting money in your four zero one ks to get whatever, you know, lifestyle you want when you're retired to that, get to that million bucks or whatever. But then you can double it by just like keep throwing that cash flow into those properties to keep them really well maintained. So you don't have those weird nights where you're like, oh God, my roof is leaking. Cause you know, you've already established a good roof and now you've got a million to a million 5 by the time you retire, just sitting there in equity.

Mike DeHaan: [11:07] Yeah. And we're using leverage, right? Like, you know, if you use, especially if it's cheap leverage, that's the easiest way to increase that.

Dan Austin: [11:13] And then you sell them and you sell them on either seller finance or you ten thirty one them into a syndication where you're going to get a, like a quarterly distribution or something like that. Million, million and five into a very, very passive when you retire and you're tax free.

Mike DeHaan: [11:27] Holy cow. Exactly. So, I mean, honestly, selling, selling the seller finance, mean, that we've been pushing pretty heavily with sellers right now, especially older sellers looking to get out and they don't want to pay taxes. For us money is expensive. Seriously, sell it to us on seller finance. You'll keep collecting residual income. We'll pay you way more for your property than if we bought it cash. And you're not going to have to go in the market and get beat up by a bunch of, sort of retail buyers. Yep. Yep. So, yeah, I mean, that's, I mean, it's funny. Obviously, after you just kind of learn about that and the tax strategies, it's hard for me to ever want to like ever justify selling a house. Right. Like just, you know, like one that I've held for a long period of time. If my objective was not to flip it, just like selling it normally, like, would I ever do that? I would actually, it would make way more sense for me to sell it on like a wrap or to pay it off, sell it on seller finance or to do

Dan Austin: [12:12] a ten thirty one into something else. I mean, realistically, it also leads you to believe you should never flip a house either. Yeah. With the tax, from a tax perspective, right? Because you're going to collect the depreciation and you're going to

Mike DeHaan: [12:23] have to be, you're going

Dan Austin: [12:24] be able to defer taxes while you, while you own it. And if you have the most, the reason why we flip houses is mostly so that we can continue to grow our business and continue to go out and seek other opportunities that are better buy opportunities. You know, if you had like a BlackRock or another trust or another trust fund, another, giant fund out there, hedge fund that has basically unlimited dollars. They just buy shit.

Mike DeHaan: [12:46] Yeah. They're out there trying

Dan Austin: [12:47] to flip houses. They're just buying stuff.

Mike DeHaan: [12:49] No, man. We flip houses so we can afford our Ferrari payments, bro. Come on.

Dan Austin: [12:53] That's that's true. That's really mean. I've already looked at it. It's like $17.50 on an eighty four year.

Mike DeHaan: [13:00] Yeah. Eighty four months. Eighty four months. Yeah. Right. $17.50. I mean, that's actually not bad. You know? I mean, you gotta commit for that long and it is, you know, those people would argue that those assets do appreciate. I mean, we we we really should get Ferraris. I mean, we we would definitely the instant investor program would explode if

Dan Austin: [13:17] we got Ferraris and we started posting with those. Hey. I'm down. You gotta squeeze in your garage? Yeah. Don't.

Mike DeHaan: [13:25] You gotta have go to your gym. Yeah. I don't think I don't think Ferrari's worth that to me. I mean, we could just go, like, rent one. We just gotta go to, like, Las Vegas and rent one like all the other, you know, kid influencers do, you know, when they're trying to be YouTube stars. They go rent a Ferrari for, like, you know, a thousand bucks for the day. Oh, man. Yeah.

Dan Austin: [13:41] Just go

Mike DeHaan: [13:42] take a bunch of photos with it. Go hire some strippers. You're, like, hanging out with your Ferrari and your strippers, and you're like, hey. You could this could be your life. You're like, bro,

Dan Austin: [13:49] you're 19. What the fuck? Trust me. You don't have that lifestyle. If you do, it's not lasting very long. Yeah.

Mike DeHaan: [13:54] And you see you see you see those women. Those are professionals. Like, you you could They're professionals. Yeah. Seriously.

Dan Austin: [14:01] Oh, man.

Mike DeHaan: [14:01] Gosh. It's funny. But Anyhow. Anyway. Yeah. So we got, yeah, stuff starting to, you know, turn up. It's getting a little bit interesting. You're, you're crushing it on the, on the dispo side. You've taken over the dispo side of our business fully.

Dan Austin: [14:15] Yeah. Got a separation. Was thinking about it recently. I mean, we've got, we have properties like last week we've had, we had properties in one, two, three, four, five, six states in escrow, I think that are, you know, I think that as of last week, we just closed two earlier this week outside of our home market. We should be closing another one, a couple here soon in our home market. Like, yeah, it's kind of crazy. There's still buyers out there. You just gotta find them.

Mike DeHaan: [14:44] Yeah. These just gotta work for them. And I think, you know, what you're discovering, know, as you've taken over this, to decide how important it is to really have a process associated with that. Mhmm. And, you know, that there is work required on that side Yep. Of the deal. You know, I think that's the the boomer real estate mentality of everyone. Like, if you have a good deal, you'll find buyers. Like, is not true anymore.

Dan Austin: [15:07] No. Because, Dick, we've had to take down good deals ourselves that we didn't wanna take down Mhmm. And flip because we just didn't have the right buyer for it. Because we didn't have the right processes, which is fine. Cause we had a great process on the other side of things, on the flip side of things or the renovate renovation side of things. But it's like, how do you know who to call? You know, like we have, we've talked about these two little tiny homes we have, like, we don't have to do anything with them right now. They're fine. Yeah. But I'm just exploring disposition opportunities with them and hitting up other people that I know do new builds, that I know do, that would want to buy these as as land, because the homes are so small that it almost could be a net positive if you demoed them. Like, I've been just slowly throwing that out to like three or four people a week and just getting their opinions on it. Because if anything, I'll learn something from them on what the value is and where the value is at with them that we weren't looking at when we initial bought them. And then, know, best case scenario, we find somebody that's like, yeah, let's partner and do some new build duplexes on or something like that, you know, who knows? Yeah. But it's like that consistent process of like, well, we have these coming down.

Dan Austin: [16:10] We know what we, we know like where we're at with them now, but what could they be? And then same thing with when you get deals, it's like, just because you have a buyer for that one deal, like perfect, easy. Still looking for other people out there to say, Hey, how does this deal land on you? You're looking for something like this? You

Mike DeHaan: [16:25] know? Yeah. I think, I think, I think that's always huge just to be floating out opportunities to people because, you know, a, know, you never know what's going to come your way that you could have something that you weren't really expecting to part with, or we don't necessarily need to part with, but you get a deal that you're like, well, that's a no brainer. And also too, it builds credibility. You know, if people feel like you are a creator of, you know, opportunities yourself, and you have these opportunities for them to invest, they're going to engage with you more, can be more inclined to do business with you in all different facets, not even just, you know, transaction like that. They're going be more likely to bring you stuff. They're going be more likely to make connections with you. You know, they might, even if they don't buy one of your deals that you have, they might know someone that will, or if they find someone, you know, you don't have any deals available. People you've been talking to might know people that are also looking for deals that they send your way. Yep. You know, it's just like everything else. If you become the guy that has that and you can build that brand of being a strong dispositions person, you know, and this is somewhere that we've unfortunately fallen behind in the local market, especially looking at there's one company here that does it very, very well. They're kind of known as the guy. But, if you can establish that, like, it's easier to move stuff, you know, like all the time, you know, and it's easier to just have more opportunities. And not only that, but you get larger margins on deals because people will have the perception that you're the deal guy.

Mike DeHaan: [17:37] Mhmm. And they will probably come and overpay for your deals even though they don't need to because they're the only one that's bidding on it because they have the perception that it's very competitive working with you.

Dan Austin: [17:46] Yeah. Absolutely. And that is they have the perception that you're the person that has the deals and that there's a trusting relationship there because of that brand. Just like any other brand, why why people buy certain branded items because they have trust with that brand. I gotta be the best.

Mike DeHaan: [17:58] Yeah, absolutely.

Dan Austin: [17:59] But they buy it because there's trust with it.

Mike DeHaan: [18:00] Yeah, absolutely. So, yeah, stuff's still coming down. You know, we're still getting deals And, what we wanna talk about for educational portion today was how we find most of our deals, which is always a hot button topic. People that's probably the number one thing that I get asked via Instagram, via, you know, when I post things on Reddit, you know, things like that. Anyone where people engage with me, they always say, like, where do you find these off market opportunities? And people always have these really sexy, you know, sort of views and they people sell stuff. And we just do tried and true direct mail, which everyone always is fascinated by that. And they're like, so you tell me you send someone a letter, they open the letter, like, you know, they'll be like, you send them like junk mail and they call you? I'm like, yes. Like hundreds of times a month.

Dan Austin: [18:44] They have lots and lots of times a month. Yeah. Is interesting because like, even if you just look at any other influencers in their comments, like when they're going over a great deal, people are like, how do you, how do you get that deal? How do you get that deal? Like, well, we'll share it with you. Because it's not that complicated. Yeah.

Mike DeHaan: [19:00] It's really not that complicated. And there are nuances though to do it well because anyone can send direct mail. The barrier to entry for it is much lower than it used to be because there's so many different options to do so. But, there's some little tricks that we do that will make it, you know, a lot more effective for you.

Dan Austin: [19:16] There's a there's a reason why some of those influencers that are post those great deals, those deals are actually closed in, 2019 and they're not responding with how they did it because they don't know how to do it today. In today's market, they're not doing it anymore. Exactly. You're completely right. So that that's

Mike DeHaan: [19:29] a whole topic for another another day. We've on the hate train outside of the podcast for recently.

Dan Austin: [19:34] It's because you got haters now, man. I know.

Mike DeHaan: [19:36] I know. I did that deal with my first hater. But anyway, we're gonna talk about the instant investor program really quick. And when we get back, we're gonna talk about how we effectively do direct mail every single month to be getting deals on a super regular basis. So I'll be right back. Boom. Boom. The instant investor program is our twelve week group coaching program, which includes a self driven course and access to our private investor community. We will take you through the full process of how we find our leads, how we market, how we do our sales and follow-up, and how we determine the best strategy for every opportunity that comes our way. On top of that, you will also join a community of other like minded investors nationwide that are all marching towards the same goals, and you'll have direct access to Dan and myself, so you can continue learning and growing with us as we continue to adapt and grow our business. Whether you're a new investor or already established, our systems can help take you to the next level. So if you think you might be a good fit, go to the instantinvestorprogram.com and schedule a call, and we can have you talking to motivated leads in as little as two weeks. Alright. Direct mail marketing for off market real estate deals. It's one of those things that people tend to shy away from it because of the upfront cost.

Mike DeHaan: [20:43] People tend to sort of hate on it because they don't believe that it's actually real because everyone's like, it's antiquated. Right? Who uses the post office anymore? You know what? Old people and people with financial problems who don't really know how to use the Internet. Right. Don't disagree with people because

Dan Austin: [21:02] I do not use that. But, as a marketeer now, I do look at my junk mail more and I do study it, but I still throw it away. So I don't disagree with you people, but I am also not the demographic. I have a great position on my home and all my rental properties are not looking to sell, so I'm probably the wrong

Mike DeHaan: [21:18] guy. Yeah. Exactly. So Right Yeah. Right right now. You never know in the We we know there are definitely other investors that are becoming motivated sellers right now because we've been we've been talking

Dan Austin: [21:27] to them.

Mike DeHaan: [21:28] But yeah. So the main way that we find most of our deals is with direct mail. And it's not just like, you know, we pull a list of every single, you know, house in the area and just send mail to all of them that would be not cost effective. But there are methods that we do that make it much more effective. And so I'll start basically from the top of it is when you're sending direct mail, the cost is going to be much higher than if you're doing cold calling or texting or something like that. But the advantage is you can be much more strategic about who you target and you can guarantee that there will at least be, you know, you're gonna be getting in front of them for the most part. You're always gonna have stuff that comes back because it's like wrong address, things like that. But where whereas like a cold call where you're kind of just like hoping they pick up, when you send a letter, you can guarantee with a pretty high percent of certainty, it's going to at least get to them. Right.

Dan Austin: [22:17] Yeah. Because the problem with cold calling is that you're pro if you're doing it on any scale, you're going to have what, at least a triple line dialer, it's going to be dialing like three numbers at once. Whoever picks up first, if any, is who you're going talk to. So you, and you may just burn through those phone numbers really fast.

Mike DeHaan: [22:32] Exactly. And then, you know, when you do pick it up, you're have to do a really cold sales process cause they didn't reach out to you. Whereas with direct mail, it's warm because they have gotten information about you and your business. They have chew they have chosen to give you a call. Right? So the first thing that makes it very important is, you know, you wanna use a a list polling system like we use PropStream. If you go to propstream.com/mikeinvest, you can get a discount on your first month. And what you can do is you can filter by people that have distressed situations. So, you know, whether they're they're filing for bankruptcy, they have liens on their property, the property is vacant. Those are all things that you can search for because all publicly recorded within PropStream. We go this is something that we push really heavily with the instant investor program is how to actually optimize these lists and this data to make sure you get in front of them. But if you pull those groups and you mail to them directly, you're gonna have a much higher success rate because you know that those people, at least you have a strong reason to believe that those people have a high likelihood of having a situation where they might need to sell their house discount in order to build.

Dan Austin: [23:32] So when you when you say I wanna step back. So when you say like, like optimizing the data, like, is that important?

Mike DeHaan: [23:39] So the reason it's important is because if you just send it to everybody, most of the people that you're sending that to aren't necessarily gonna have a reason to sell at a discount. Right? And that's one of the reasons that so many people don't believe that this works is they're like, why would anyone sell you your their house for 60¢ and a dollar? It's like, well, you wouldn't, but you're also not the target demographic. Right? But our average response ratio is about 1%. So, you know, 1% of the people that we send these letters out to give us a call. And out of those probably about, I would say, what, 1%, not 1%, like 10% of those actually turn into a deal. Right. Right? So the number that you're shooting for is really, really small. Like, that you're actually expecting to get back, but you're still have to mark it out.

Dan Austin: [24:21] Let's do the numbers is like, so you're saying 1% response rate. So we spend, say, 5,000 letters to our market. Mhmm. We're expecting 500.

Mike DeHaan: [24:29] 50 calls. 50 calls. 500 would be 10%.

Dan Austin: [24:33] Oh, you're right.

Mike DeHaan: [24:34] Gosh. Dang. Yeah. It'd it'd

Dan Austin: [24:35] be 50 calls. 50 calls, and then five of those will convert 10%. Like, that

Mike DeHaan: [24:40] would be freaking sweet. So I can take them from back. Probably be about, like, 5% maybe. Two to three is what I would expect from about $5,000 worth of mail.

Dan Austin: [24:47] Right. So which is about like a monthly campaign for us, which is standard, you know, we're gonna, if we're gonna do like, if that's our base campaign, we're going to do at least, you know, I would say three to four deals on that. Yeah.

Mike DeHaan: [24:57] Yeah, for sure. So number one thing is make sure you target. The second thing when it comes to direct mail that so many people fuck this up. I don't know why. But I I get letters all the time and they, like, just went onto the mail house and they just select, like, the cheapest, like, you know, no work required by them option, and they just send that. Mhmm. A, those mailers always look like shit, and no one's ever gonna take you seriously when it compares to, like, a higher quality mailer that comes through. And, also, like, if you are doing that, you're doing the same thing that everyone else is. You don't stand out at all. So, like, it's low quality and it's the same. Right? So, like, it's not gonna be very helpful at all. So when you're sending these mailers, it's important that you add customizations to it, whether that be your company logo, that be, you know, different kind of envelope. You do little things to help you stand out and it's going to get you that much farther ahead versus all the other Jobos out there that are sending mail.

Dan Austin: [25:51] Yeah. Custom, which is a lot of people. Custom, like relevant copy, you know, so

Mike DeHaan: [25:55] when they're reading it, they're like, oh

Dan Austin: [25:56] yeah, a relevant event that happened or what, or, you know, something like that.

Mike DeHaan: [26:00] Yeah, exactly. I can be in the copy. It can be in the design. It can be in the envelope. It can be in the postage. It can be something creative you put in there, like anything at all. You can put freaking, I don't know. I like, we did we did postcards a while back that had, like, pictures of my dog on it. You know? Just, like, things that were, like we were, like, the people that were mailing the dog postcards. Like, shit like that Mhmm. Will really help you stand out. Yep. So that's that's the second thing that a lot of people don't do. The third thing, I think this one is actually more important than any of the other ones, and it's also the hardest people to do is direct mail is all about being consistent, right, over a long period of time. And one of the biggest things that so many investors do and people in our in our instant investor fall victim to the same trap when they do direct mail is they will send it for one month and they'll be like, I didn't get a deal. Shoot. It doesn't work. Like, this doesn't work in my market. And I hate to break it to you, but it works in every market. And Yes. If you just do one time, you know, it's just like if you get a, you know, a piece of mail or a p like a ad copy for something and you just see it once, like, oh, there it's on Facebook or you get, like, you know, one letter from, like, this random window cleaning company, probably throw it in the trash.

Dan Austin: [27:08] Right.

Mike DeHaan: [27:08] Right? You know, you see the one ad, you scroll past it. You never think about it again. I wouldn't even register with your brain. The same thing is going to happen with your business. You need to be mailing these people, the same people consistently for three, five, six, twelve, twenty four months. And you'll, you'll, you will start getting deals from people. Right.

Dan Austin: [27:26] If you think about it, put it in context, you just said twenty four months, people are like, oh my God, that's a lot. But it's like, okay, you spent $12 on a deal that just produced $20,000

Mike DeHaan: [27:34] Exactly. Right. And that, and that's the thing is people are always like, the monthly cost is so high and like it is, but the residual effects of that direct mail are extremely high. Right? So, you know, like, sure you send it over all these different months, people don't respond right away. But the thing that's great about a tangible letter is, you know, they put it in their drawer. They find it three months later. You know, they they collect all of them. You will be shocked at how many people could, like, just keep their letters. We have we have walked into houses and sellers have had a stack of our letters that's like six inches tall, you know, that they've kept for some reason and they'll be like, okay, I've never called one of these before, but you've mailed me 15 times. I'm ready

Dan Austin: [28:15] to go.

Mike DeHaan: [28:15] And that turns into something where we make thirty to forty thousand dollars Well,

Dan Austin: [28:18] then it builds brand trust. This is a legit company. They've been sending stuff to me and that, you know, and I think that does help. And then maybe they saw a different advertisement of us on Facebook or they saw on Google or something like that. And so then they start putting two and two together and takes people time. Right? And some of them, their financial troubles are just starting when we're, when we're mailing them and they just continue to excessively get worse over that period of time towards a breaking point. And we're right there when they need us.

Mike DeHaan: [28:44] Correct. Yep. And that's the other thing too, is it also gives people the ability to sort of do the analysis and make a decision. And this is why it's also important to have that brand. So we had an episode, what, five or six episodes about building a brand. And, you know, if everyone is sending these mailers, they have a bunch of them. If they're able to now take their time with this mailer, go and they have the information you gave in this mailer, you know, your business name, your website, all sorts of stuff, they can go research you, you're now even more credible. Right? Because they have this tangible thing that you sent them. They can go and they can see your brand and pictures of you on your website and they come back and that you're gonna stand out. You know, and it's a custom letter. It's not like a random Joblo thing that somebody else sent. You're gonna be so much more credible. Right? And but but I can't emphasize enough the consistency of that and how important that is because as you mentioned, Dan, they could be new to their financial troubles. And after you mail them over six or seven or eight times, they've pushed it off for so long. They can't deal with it anymore. And you're gonna be the one that they keep seeing every single month. Your friend of mine's, they call you. But also too, when there are tricky situations with people.

Mike DeHaan: [29:50] So, you know, people have gotten divorced, house is vacant, homeowner has died, and there's somebody else that has to basically come and clean up the pieces that hasn't been privy to the situation for the last six years. And your letter just happens to be sitting in that house when they show up there to clean up the mess, they're gonna call you. You know, we got a deal like this earlier this year where the guy had unfortunately passed away in the house, and his brother came to basically clean up the house, found one of our letters. So the guy called us. We had to sign around that afternoon. You know, it was the easiest deal ever.

Dan Austin: [30:23] It's a very good case study for why you do it.

Mike DeHaan: [30:25] Exactly. Right? And, you know, we we we had mailed that guy a handful of times, but the number that he called off of, we track all of our monthly numbers, was a letter that was like four months old. And he just found like the four months old.

Dan Austin: [30:36] They're not going through old man's cell phone to look for text messages and and cold call or missed calls. Right? Yeah. But they are gonna see that letter, so there's a tangible proof. Which brings me to one other point that you kind of made earlier was we know, because we are marketing in several different markets with direct mail. Direct mail works in everybody's market. It just does.

Mike DeHaan: [30:52] It does. And for for all asset types as well. Mean, we've, yeah. You know, we we've gotten deals and, you know, really strong leads on everything from mobile home parks to houses to industrial complexes in freaking Orange County, California.

Dan Austin: [31:08] Right.

Mike DeHaan: [31:08] Like as complex as it gets. Yeah. You know, multifamily properties land, you name it. We've gotten deals off of it. But the one

Dan Austin: [31:15] thing that we can confidently say is that like cold calling and texting doesn't necessarily work in everybody's market.

Mike DeHaan: [31:21] Yeah. I mean, there's no doubt for sure. Especially because people are very sensitive to things like accents of people on the phone, especially if you're using foreign cold callers. Like if you're trying to like, I know this for a fact here, so people do cold calling here. If you were trying to use an overseas cold calling service in racist ass North Idaho sorry, North Idaho, but you got a lot of racist up there, especially with people that have financial problems. It's not going to work because they do not wanna talk to the person that doesn't do that. Sensitive to that. They are. And and that's an unfortunate truth of society is there you know, a lot of the people that you're gonna be buying discounted houses from are colorful, and they're gonna have backwards beliefs. And that's not right, but you have to freaking market to that if you wanna do business. Know, as much as that sucks, that's the reality of the situation.

Dan Austin: [32:05] Yeah, absolutely. I mean, and there's, there's other reasons why it just doesn't work, but there's an unquantified part of texting and cold calling leads, because you might get good leads, but a lot of times you find it's just enough to keep your sales team busy, but it's also they're beating the hell out of your sales team. Totally. You know, these are terrible leads. They didn't raise their hand. You, you know, they, especially if you're paying for a service to send you the leads and you're not managing the cold calling yourself, you know, you, you call them back, like, I don't know, you called me. I don't want to sell my house. Like, well, the guy told me you wanted to sell your house in our CRM. I got a note that says you were looking to sell your, like, for $2,000,000 It's like, oh, okay. Well, your house is worth $50,000

Mike DeHaan: [32:43] You know, they

Dan Austin: [32:43] end up getting their asses handed to them all day. And then you get a direct mail lead that they they're not motivated to get because it's just weeded in there. Now you're wasting money on that. But the direct mail leads, they are raising their hand. They're calling you and saying, hey, I'm inquiring. They're generally speaking in a, in a reasonable mood. They're not ready to chew your head off. They might be a little bit, you know, wacky or crazy or oddballs, but that's okay. They're at least raising their hand where the cold calling and texting leads, man, they're not as always motivated. And you have to weed a lot. We lead through a lot of stuff to find them. There's deals in there. No doubt. We've done deals on both, but like, it is just a way different and something that most people don't quantify as like a pro or con of either. Yeah, for sure.

Mike DeHaan: [33:25] And, and people get drawn to those because they are cheaper per contact, but the price per contract is not. Yeah. They're getting, you're getting a

Dan Austin: [33:33] ton of leads, right? You might sit back and do nothing and you didn't spend a lot of money. You're like, look, I got 20 leads today. Yeah. Well, they are 19 of them sucked. One of them was maybe okay. That might sell to you at a, not a discount. Exactly.

Mike DeHaan: [33:45] Yeah. And when, when it, when it comes down to leads, it's all about, you know, quality over quantity. And I think that is the problem that people do fall in the trap with SMS and and cold calling especially is, you're right, you can generate a shit ton of leads. And so it's very easy for someone to and I think it's also why I see a lot of these, like, lead generation companies with people that do not have, like good process. They can actually their own deals. They're like, yeah, I know how to get people to call the phone. Like, I know how to get people like to raise their hand at least a little bit. So I agree to a second conversation is because they suck at sales. So they go and they start a cold calling company and they're like, yeah, just get people to be like, yeah, I won't do that. I'm going charge people for it. Who don't know that the service actually was fucking money.

Dan Austin: [34:24] Yeah. Cause the hard part is like the closing part of it. Right. You know, and so they're skipping ahead of that. They're skipping out of that and selling something else to you. But, and it's not that we're like totally against cold calling and SMS. We're just saying that we know that direct mail for the the, you know, pound for pound is a better way to get consistent deals, which is huge in this business.

Mike DeHaan: [34:41] Exactly. Consistent deals. Definitely not consistent leads. The leads will vary, but it is the most consistent form of deals to us and many, many, many other investors that we know about. So but, again, ultimately, though, what it comes down to, regardless of what you pick, whether it's mail, it's cold calling, it's SMS, you have to be committed to doing it for a long period of time, you know, like, bare minimum of three months. Whenever we try anything new, we do it for at least three months, and then we will assess if it was worthwhile. And, like, you know, we're mature enough for our business. We can kind of analyze the prospects and, the potential upside if we don't have any immediate return on it. So bare minimum of three months, to commit to it. And also to you have to have a good sales and follow-up process. If you don't have a good sales and follow-up process, and this can be, you know, whether in your CRM within your team, you know, like how you're making offers, like how aggressively you're doing your follow-up. If you don't have that, it was good. It doesn't matter what marketing you're not going to close So the deals just save all your money and just buy houses from Ben and I instead, with our assignment.

Dan Austin: [35:41] Yeah, absolutely. Cause I mean, follow-up's key. I mean, first of all, they have options and they have options from the comfort of their home. They're sitting in their recliner calling cards or, or whoever they're doing, you know, people are calling them because they're on a list at some point. So they have options in a convenient way. And also they can be a little squirrelly sometimes. And so it's like, if you're not following up with them and you're not selling them on the opportunity of them selling to you, it's just a waste. Exactly. Yeah. And somebody else will do it for you.

Mike DeHaan: [36:06] Yeah. You know, and, and you can call the same lead that we're talking to that called off of our postcard, And like, let's say that they had a great first conversation with you and our first conversation sucked with them for some reason or another. But we follow-up with them consistently and our sales guy, like, gets to work getting that done and you forget to call them back for four days. I guarantee you we're more likely to get that deal even though your first impression better. 100%. Cool. Right on. So direct mail, we like it. If you have any questions about that, you can always, shoot us a DM on the Instagram. I'm at Mike underscore Invest. Dan is at InvestorMan Dan. We're obviously direct mail people. We do teach that very heavily in our group coaching, which is the instant investor program. If you wanna learn from Dan and myself, you go to the instantinvestorprogram.com. You can join that program. We also have a new phase of that that we've just introduced. If you like the group coaching concept, but you also want some one on one, we have a second tier to this now where you can join the group and also get monthly one on one coaching from Dan and myself where we will sit with you on an individual call and just go over your entire business for a little bit of an extra fee there. So goodanswerinvestorprogram.com, you can get information on both of those things. And then besides that, guys, if you could please subscribe to this podcast, go download all the episodes, share this with anyone who you think might have an interest in real estate investing or you know who does, and actually wants to hear from people that are doing a true business and aren't just putting a bunch of fluff out there, that would be awesome. And, you know, we're looking to keep going.

Mike DeHaan: [37:41] So cool. Anything from you, Dan? No. I would just add, don't be surprised.

Dan Austin: [37:44] You know, Mike and I cover our podcast analytics. Mike is always surprised. Like, man, this thing keeps growing. I'm like, yeah. Because you keep telling people to download it. They're listening. Your call to actions are working. Get out there and download. It

Mike DeHaan: [37:55] does it does legitimately surprise me though. I'm not gonna lie. So apparently people wanna listen to to idiots. A few people anyways. But So yeah.

Dan Austin: [38:02] Anyways A

Mike DeHaan: [38:02] few people. Yeah. Right. Alright. Y'all next week. Everybody. Go subscribe. Talk to you guys next week. See you.

Speaker 2: [38:09] Thanks for listening. Please leave us a review on iTunes or wherever you get your podcasts, and check us out at collectingkeyspodcast.com for tips and guides on starting your own real estate investment and wholesaling business.