The Science of Flipping - How to Handle Short Sales

Episode Date: February 2, 2021

How to Handle Short Sales

What is up, everybody? What is up? Welcome back to the Science of Flipping podcast. I am your host, Justin Colby. And if you have not yet jumped over to YouTube, I just did a four-part segment on my flip that I just bought, remodeled with my contractor. Go over to YouTube right now, subscribe to my channel, check out the daily videos I drop on YouTube. So this video or not this video, but this episode, I should say, is going to be talking about direct mail. For many of you who have been following me for years, you know, I am a big advocate and I am very pro direct mail. And that has not changed even today as I record this January 28, 2021. Now, how I use direct mail as a moment in time has drastically changed. Now, as many of you know, this podcast is all about the right tools, systems, and processes that you want to implement in your real estate investing business. And this episode is no different.

This is going to be at the process I'm currently using with direct mail that is working really well. Now, for many of you who have already been down the direct mail path, maybe you continue to go down the direct mail path. As reference, I was doing $40,000 a month of just direct mail prior to me pivoting because of COVID. With the pivot of COVID, one of the ways that I realized, first of all, let's be honest, I was looking at my cost of marketing every month and didn't know what was going to happen with COVID and immediately pulled back the range, right? Started pivoting, immediately became fluid to what resources I actually had, what was viable, what could I do? And I knew I didn't want to be in front $40,000 in direct mail,

not knowing what was going on with COVID. So that was a really big change of direction for us. Now, not to go on a tangent, but I will tell you, if you want to have longevity in this game, you need to be fluid. You need to pivot. You need to make quick, concise decisions and go. You need to take action. And so going on my 14th year now, I started back in 2007. I have been able to pivot with marketing all along. The only time I've ever been hurt with marketing, I mean, really hurt

is when I was a one trick pony. I was only buying my deals from the auction, which is a style of marketing, right? And or the only other time is I was only doing direct mail. And when I say I got hurt, it's because the market changed. I only had one resource to find deals to buy. It hurt me. So when COVID happened, I was thankfully I was not a one trick pony. I was doing four different marketing strategies. One of them was direct mail. But what I will tell you now and how I pivoted and what is currently working so well for me is I am utilizing direct mail because of the cost of direct mail and because of the KPIs of direct mail, meaning how many pieces of mail do I need to send out? What type of callback rate am I getting from the callback rate total?

How many of those are actual seller leads? Out of the seller leads, how many appointments, offers, contracts? Because of those numbers, I have now pivoted direct mail into much more of a niche list, specifically on leads that are already in my database. We have thousands and thousands of leads in our database. We are bringing in roughly 100 new leads each and every week right now as we speak. And so the leads in my database that are not hot or in a warm follow-up, meaning having an acquisition specialist physically manually following up with them,

right, whether it's calling or texting, we are actually putting mail as a strategic follow-up method to keep them in front of us. The mail house we work with is incredible. If you just go over to Justin's direct mail, it'll bring you to OLM. OLM's mail house is fantastic. There's so much more than just a simple mail house. They have something called the investor hub that literally will track like all of your marketing and it's a great resource for you. So go to justinsdirectmail.com. It'll bring you to OLM and then OLM, you know, sign up for a login. It's absolutely free. And then anytime that you use them, they'll give you a discount if you use promo code

TSOF, TSOF, that stands for the science of flipping. Shocker. So if you do this, this is how I made the pivot for direct mail because the cost was still high. The callback ratio on cold leads was really terrible. So I now pivoted direct mail into leads within my database that I am now nurturing. The messaging is similar, but still different. Or I should say is different, but still similar. It just references, hey, I know, you know, we've spoke to you before about selling your home,

we're still interested. If you have further interest or further questions, please give us a It just references, hey, I know we've spoke to you before about selling your home. We're still interested. If you have further interest or further questions, please give us a call back phone number, right? Again, OLM will take care of that. Just go to Justin's direct mail and it brings you to all on that OLM. And they'll have all the different letters you could ever want, etc. Now, direct mail as a whole, if you're still thinking about direct mail, the other way that we are utilizing it is for niche lists. I actually had a student ask me yesterday, as a matter of fact, whether probate leads or probate lists are good lists to go after. So I answered like this, and it's very valuable, by the way. Probate lists are very good motivation lists. What I have found actually marketing directly to a probate list that I pulled versus just marketing to the area I than I did by marketing to the list. I don't know exactly why. Maybe the

mindset of the probate list, the people are now getting inundated because everyone is talking about probate lists. So everyone's mailing the probate list. And the handful of people in my area maybe aren't getting hit as often. I'm not exactly sure how that maths out. But I will tell you, I'm doing more deals in the probate vertical, I guess you could say, just because I'm targeting the area I want to be in than I am if I'm just targeting the probate list. So while probate is a very highly motivated type A lead, you also have to understand it needs to get through probate. I personally have a probate lawyer that I have basically on retainer that I use every time I'm dealing with a probate. I personally have a probate lawyer that I have basically on retainer

that I use every time I'm dealing with a probate deal. So it can get into the place where we can actually close the transaction because if it's just in the middle of probate, it is going to take you weeks, potentially months to get that needle to move and you won't be able to move the needle. It has to go through the process. So I pay a lawyer to move those deals down the process, right? And so probate are great. And by the way, if you are interested in speaking with me or my executive team about me coaching you, just go to the science of flipping.com. There's a ton of free resources there, but also there is a tab that says apply now. I do not take everybody, but click that tab, fill out the form, apply. Me or my executive staff will actually reach out to you and see if we would be a good fit

and can help you achieve the goals you want. So go to the science of flipping.com there. Now, what I will tell you is when you do a niche list, whether it be probate, divorce, pre foreclosure, foreclosure, you know, tax liens, fire damage, you name it, being consistent with those as much as anything else is really, really important. And so you don't need a big list, but being consistent, meaning you're still going to have a decent amount of spend because you're going to really want to be hitting them every three weeks. So let's just use tax liens. Depending upon where that person is in the tax lien, what tax lien it is, I need to get in front of them at a pretty

rapid pace because everyone's trying to get in front of them. And also there's a timeframe where they can remove that lien. They can catch themselves up. Well, if I get a mailer out to that tax lien seller before they make that decision and they want to talk to me first, I might be able to persuade them, sell them on me being a better option than them cutting a check to catch up to their tax lien or what have you. Okay. So direct mail is still very viable. I have pivoted on how I use it. This is my process now that is also set to change. The reason why you want to make sure you subscribe to this podcast and get notifications is because things change real time. I think we all can agree. Life is crazy right now. Things are changing, you know, daily, weekly, monthly. Make sure you're listening.

I drop a podcast a day right here. So make sure you subscribe. Make sure you get notifications when they drop. And I look forward to helping you guys on the next episode. Talk to you then. Peace.