By Jason R. Hanson, author & founder, National Real Estate Investor Month
Listen; before you read any further, go grab a pen and pad of paper, because this is going to be one of the most valuable articles you’ve ever read. You’re going to learn how to dominate your local niche of absentee owners and easily make six figures a year from this group.
Now, I’m sure that you know there are several niches you can target such as absentee owners, free and clear, bankruptcy and probates. Here’s why the most profitable niche to target is absentee owners:
1. There are many statistics that show the average landlord lasts only 3-5 years. This means that there’s always going to be a huge number of landlords wanting to sell their property (this large turnover means money in your pocket).
2. Most landlords are amateurs and have no idea what they’re doing. They buy their first rental property as dollar signs dance through their head. They quickly realize they needed to treat the rental as a real business. Perhaps they didn’t screen tenants very well, or perhaps they’ve had a vacant property for months. Whatever the reason, the rental property quickly turns into a nightmare and they want to quickly off load it to someone like you.
3. Since landlords don’t live on the property, they have very little emotional attachment to it. They didn’t raise their children there and spend the last 25 years in the house. Because they’re not emotionally involved, it’s much easier to do business with them.
4. As we know, during the boom several years ago, 25% of home purchases were second houses. Right now, there are hundreds of thousands of landlords who you could be assisting.
So, you’re probably wondering how to locate and market to these landlords so you can start making money off of them? Well, my favorite way to target landlords is through direct mail (letters and postcards).
The first thing you need to do is decide what ZIP codes you’re going to invest in. And thanks to technology you can choose to invest all over the United States using the Internet, email and fax. Once you’ve identified your ZIP codes, it’s time to order your list of absentee owners. The list company that I use is Melissa Data. When you order your list you’ll want to call them on the phone and have one of their representatives assist you. Don’t order the list over the Internet (you’ll see why in a minute). You’ll want to order the list over the phone because there are seven very important criteria you’ll want to follow. So when you have the representative on the phone, tell him/her that you want to purchase a list of absentee owners in the following ZIP codes (name your ZIP codes) and then give them the following criteria:
1. Only houses built after 1950.
2. Houses over 1,000 square feet and no more than 2,500 square feet.
3. Properties must be at least three bedrooms.
4. Only single family houses, town houses, duplexes, triplexes and quads (absolutely no condos).
5. Houses that are at least 10 years old.
6. A total assessed value of under $250,000 (you want houses on the lower end of the value for your area. In my area it happens to be $250,000, however, in your area it might be $150,000).
7. Purchase 2,000 names. You need at least 2,000 names if you’re serious about closing deals. The more names you order the better because remember this business is simply a numbers game. Obviously, the person who sends out 20,000 letters a month is going to close more deals than someone who sends out 1,000 letters a month.
Once you’ve ordered your list it will be emailed to you in an excel spreadsheet. Next, you need to plan your marketing campaign. With absentee owners, you’re going to want to mail the list a total of eight times, sending them mail every 2.5 months. It’s extremely important that you mail the list at least eight times, once every 2.5 months. On each mailing your response rates will go up and I know many investors who get 75% of their deals after the seventh mailing. Think about it this way: Most people don’t follow up. You’ll join the top 5% of real estate investors by sending out eight pieces of mail.
Now, you need to know what to mail these landlords, right? Well, do a combination of letters and postcards. The first time send a letter, the second time a postcard, the third time a letter (you get the point). Before you run off and just use any letter or postcard, you need to have marketing materials that work. Both your letters and postcards need to have powerful headlines that grab your prospects attention: Here are some of the headlines from my postcards and letters:
“Would you like to learn how to eliminate tenant problems forever?”
Are Your Tenants Giving You A Headache?-Here Is Your Prescription For Eliminating Tenant Hassles Forever!
Sell Your Rental Property And Close In 30 Days Or Less!
After you have a headline that is going to get your readers attention, make sure that in the body of the mail piece, you list all of the benefits of working with you, such as:
-you can eliminate tenant hassles forever
-you’re not a Realtor and don’t charge any fees or commissions
-you’ll buy their house “as-is”
-you’ll close on the date of their choice
-you’ll buy the property whether it’s tenant occupied or vacant
One of the most important parts of a direct mail piece is to give a reason for your prospect to respond. This can be a Free Special Report or Free audio CD. Personally, I prefer the Free Special Report and the ones that I offer people are:
“The 5 Little Known Ways to Eliminate Tenant Hassles Forever!”
“How to Sell Your House in 11 Days, Regardless of Your Current Financial Situation”
“The Five Biggest Mistakes You Can Make When Selling Your House To A Real Estate Investor And How To Avoid Them”
Don’t mail a letter or a postcard if it doesn’t have a strong headline, lists the benefits of working with you, and offer people something free when they respond.
Alright, so you have your lists, you have your direct mail piece and it’s time to send it out. So how do you get your direct mail in landlords’ mailboxes without licking thousands of stamps and driving yourself crazy?
Use http://www.click2mail.com. You can upload your postcards and letters in just a few minutes and you’re done (remember, you want to be able to spend your time the way you want, so automate everything you can). When it comes to postcards, use the large, yellow card.
In this brief article, I’ve given you enough information to start profiting from landlords within the next 30 days. As always, remember the key to success is implementation (an idea without action is worthless).
—Source: Investing With the Stars Real Estate May 25, 2009 (www.realestaterichesblog.com). Jason R. Hanson is the author of The Convert Guide to Real Estate Wealth: Confessions of a Former CIA Officer.