Cold Calling and Direct Mail: Do They Work for Real Estate Investors?

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11 Jan 2022
5 min read
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For investors, particularly ones new to the real estate industry, finding success relies heavily upon a strong network of fellow professionals and a wide pool of prospective properties to buy, flip, and sell. However, sourcing real estate to invest in can be one of the more challenging aspects of the job. While an inventory shortage is not often a major challenge, the key is to know where—and how—to search for properties. While the multiple listing service, or MLS, can feel like an endless catalogue of properties, investors often seek greater discounts than what the market allows.

So, how can an investor go off-market to scour and scoop up their next project?

Cold calling and direct mail marketing have traditionally been common strategies for finding both potential buyers and sellers, but how effective are they in today’s tech-heavy world?

Cold calling and direct mail marketing in the real world

As concepts, they’re pretty straightforward, and while they may feel like similar tactics, there are key differences between the two approaches that are important to recognize, particularly when looking at the numbers.

Cold calling requires investors to initiate call after call with potential sellers—asking questions about the property, their propensity to sell, and so on—without an established relationship in place. There is no lead established to indicate whether a potential seller is likely to sell to an investor, which can make the practice feel a bit like chasing one’s tail to get a legitimate lead, however, opportunities may surprise investors if they connect with do land a willing seller.

This method is most commonly used with owners who may have their home listed for sale by owner, or FSBO—or, alternatively, if the phone number is provided as a part of the data results from a purchased list.

By contrast, direct mail marketing is still widely used and is more scalable than cold calling. Investors purchase a list of potential sellers from a national data provider that can be narrowed down to more specific, manageable results: specific markets, neighborhoods, and even types of properties can all be zeroed in on to make the process feel more strategic and less overwhelming. As a result of such services, investors begin sending out marketing materials to individual properties that offer to purchase the property, often as-is for cash.

Is it worth the effort to practice seemingly outdates tactics?

Surprisingly, it can be. With online marketing, digital ads, and social media platforms just a few clicks away, it might feel pointless to send letters to people’s homes, however, the average direct mail campaign can yield anywhere between 15%-17% return on investment. Why is that?

Direct mail efforts are more likely to reach target demographics of people who might feel less familiar or comfortable with navigating financial matters on the internet (consumers aged 45 to 54 are more likely to respond to direct mail). There’s also something to be said about the effort it takes to mail out snail mail vs. blasting off countless emails. This is more likely to get a person’s attention and follow up with an investor.

By contrast, cold calling often leads to a less than 1% positive result (such as an appointment or referral) withcalls being answered less than 30% of the time.

Ultimately, what’s most important is for investors to research common practices, make meaningful connections with others in the industry, and keep up with trends—both the modern and the seemingly outdated ones. At the end of the day, consistency and tenacity are key.

If you are ready to explore your investment loan options for an upcoming project, contact Temple View Capital Funding, LP (“Temple View”) today.