Direct Mail involves making offers to buy land off-market at around 40-45% of market value via physical mail. Each envelope includes a specific cash offer based on extensive data analysis, and a legal binding purchase agreement.
While some software (like Pryced) can be useful for data analysis and comp reports, when it comes to pricing mail we feel differently. we actually advise against blindly relying on it for pricing mail, as it may not yield the best results.
We had someone using a mail pricing software come to us asking why they have sent 50,000 mailers, but had only received two deals from them.
On average we see (good quality) deals come through every 2,200 – 2,500 mailers sent.
It comes down to HOW you are pricing your mail. If we spend time pricing each property with research backing our numbers, we have massive success vs when we have used software generated data.
In order to break our process down, we have separated it into three stages. These stages have proven to be extremely effective for pricing land, and we use them in our own business.
2) Gathering good quality comps and avoiding outliers.
3) Inputting data, including different price per acre for different acreage ranges.
We also want to stress the importance of using accurate comps. Having a few great comps is more valuable than having many mediocre ones. Outliers should be avoided to maintain accurate pricing.
If you have done enough research, have quality data, and price effectively, you WILL see the results.
Ron: Welcome to the real estate investing podcast, where we help you unlock your potential freedom through land investing, real estate investing, and entrepreneurship. Hi everybody. Welcome back to the real estate investing podcast. I’m your host for this episode, Ron Apke. And today we’re going to talk about pricing mail for land effectively in 2023.
And this is a really key aspect of being a successful land investor. With how we do things, we send out blind offers. So we are going to talk about all about pricing your mail, getting the best results from pricing. But before we get into that, let’s go over a question from one of our discord members.
This question is from Jennifer. Jennifer asked, I’m coming in to this program with about 4, 500. What do I do if I get a deal for 20, 000 and I don’t have that money? Really good question, Jennifer, appreciate the question. And I think that’s a good one to go over because there’s a lot of people like trying to get into land investing.
They have four or five, 6, 000 for marketing, but they don’t know what to do once they get the deal. They don’t know how to actually purchase the property, how to get financing for the property. So what we do, Jennifer, and we do it for a lot of new members. Fund deals. So basically you bring me your deal for 50, 000.
We all think they can sell for about a hundred thousand Daniel, myself, um, our community or our team will pay for that property and then we’ll have a profit spill on the backend. So let’s say you buy for 50, 000, you sell for a hundred thousand. You’re going to get a percentage of that 50, 000 profit.
We’re going to get a percentage. You’re going to keep your 4, 000 of market money. You’re not putting any money towards the purchase of the property. And then, uh, once you get that profit, you can reinvest that maybe into a deal or maybe just into more marketing and scaling up your business. But really good question.
Really appreciate that question. Other than that, guys, let’s get into the show. And like I said, the show is all about pricing mail. Keys to pricing mail effectively to get the most deals in 2023, I’ve sent out, we send about 40, 000 mailers per month. Right now we do have a trained data analyst who prices our mayor mail for us.
But that being said, that’s something that I completely taught him for. I’ve sent out millions of priced offers and it’s, it’s something you’re going to learn. Like you are not going to come in and do this. Expertly the first time and first, let’s just get into what do we mean by pricing mail? So this is your first time listening to us and you’re, you might’ve left by now if you don’t even know what this means, but, uh, I’m going to break it down in a very basic terms.
So what we do is acquire land off market land at about 40 to 45% of market value. When I say pricing mail, what we do is send bulk mail. So we send, we suggest for members sending at least three to 4, 000 mailers a month to start. Like I said, our business, we send 30 to 40, 000 depending on the month. But every one of those pieces of mail is going to have a price on it.
So when I’m sending a letter to John Smith, the letter is going to say, Dear John Smith, I’m interested in buying your property in X County, and I’m going, I’m willing to pay 50, 000 cash. I’ll close in two, two, two weeks, whatever it is, that 50, 000 is not just a number we throw out there. That is a lot of data that we pull to see what we can offer for properties.
So that is what we mean when pricing mail. Each acreage range in a County is going to have its own price. Five acres might be priced at 4, 000 an acre. 20 acres might be priced at 3, 000 an acre. It’s going to vary. We have about three hours of education on this within our program, but that is what I mean when we’re talking about pricing mail going forward, but other than that, let’s get into kind of the beef of the show, the meat of the show.
So one thing people use a lot of. Is priced P R Y C D. This is a software that prices your mail automatically. I am not an advocate for it necessarily in terms of letting it price your mail. There are some really cool tools, some pieces on priced that you can use, but priced if you go on price, you put in a county and you say, I want this price at 40% and then you just take that for what it is and you send that mail out the door.
I have seen people come in with 50, 000 mailers sent, and they have two deals. This is legitimate numbers of people who have came into our, come into our program from somewhere else that pushed using price and they were just sending mail with priced over and over putting tens of thousands of dollars into mail and yielding very few results.
Like I’ve said before, and I’ll say it again here is we get a deal for about every 22 to 2, 500 mailers. I’ve seen people go on and I, we had one person in particular and I, it happens. Honestly, guys, it happens weekly or monthly where I talk to people and they’re saying they’re struggling with their mail yield.
And then I asked them, how are you guys pricing your mail? And nine times out of 10, they’re saying they’re using priced. And I asked them, are you using as a tool, like you’re using as a resource or using it to like price everything. And more times than not, they tell me like, they were just using exactly the numbers, priced spits out and sending the mail like that.
This is, they, they have some really cool comp reports on their price. That is great with comp reports, stuff like that, visualizing what you’re doing. But as far as taking their numbers. Putting that on your mailer and sending that out the door I’ve seen anywhere. I, I, what I, the constant number I see is about a deal for every 10, 000 mailers.
And I don’t know what percentages they’re putting in the issue with pricing your mail, the most important thing about pricing your mail. Is pricing as much mail accurately as possible. You cannot do it perfect unless you handpick each property, which we do not tell you guys to do. It’ll take forever.
It’ll take months and months to get 2000 mailers out the door. But that being said, if I can price 80% of my mail really well, that is going to yield pretty solid results. Land is going to lay differently. You’re going to have some land in counties. That is really sloped. You’re going to have some land in counties that is wet.
We’re not trying to remove all of those, but the normal pieces of land within the county that aren’t in an HOA or just something odd with the property, I want 80%, 90% of those to be priced at 40 to 50%. That is how we are going to get as many deals as possible. When I get deals back and everything’s coming, like looking like I’m pricing it correctly, that’s when we have counties that we absolutely kill it in, get five deals for 5, 000 mailers, that kind of stuff happens if you are sending those out correctly.
Um, but like I said, priced can be a tool, a resource. I’m not pushing you guys away from it. But I don’t want people putting in 40% for X County and just trying to get, just trying to use it as an end all be all for pricing. I think there’s great tools within it for sure, um, but do not use it as an end all be all in my opinion.
So finally, let’s get into like, I talked about price. I talked about, uh, what, what pricing means for us. Like what is actually pricing? How do we price? Like, that’s kind of the main topic of this episode is how do we price effectively? So there are kind of three stages to pricing and we do everything by county in terms of like, we’re pulling, we’re pulling data from a county.
So let’s say I’m in Hamilton County, Ohio. It’s not a great County for this business model. But that being said, I’m going to use it as an example in this. So let’s say I pulled data in Hamilton County, Ohio. Say I pulled two to 20 acres. The first thing you need to do is decide how you’re going to price it.
And when I say that, I mean, are you going to price it by the entire County where everything in the County has the same, uh, pricing points, or are you going to price it by zip codes? Are there key things that kind of separate like, okay, Western in the County is more expensive than Eastern. I need to split this up a little bit.
That is the first really key. Some people will split it up into five and six pieces. If you have enough data. You can do this stuff. If you do not have enough data in the County, do not force splitting up the County into zip codes and the latitude and longitude, whatever it is, do not force that stuff, your results are going to suffer, but that being said, if you have enough data and you know, like, okay, Southern Southern of this County is a lot closer to the city.
It seems like the prices are 20, 30% higher than the Northern portion. Like, okay, let’s split this County into two. And price the Southern portion, 20, 30% higher to get me better results. So if I did that same thing with a County and priced it by County, one area of your County, the Southern part is going to be either really underpriced or the top It just impossible to do that perfectly unless you start splitting it up.
So that’s step one, divide the County, make a decision. And you can look at Zillow. You can look at Redfin. You can look at comps. To make decisions on this stuff. So number two is actually pulling comps. So you want to pull comps and look into detail. So if I’m trying to price four to six acres, I’m going to try to find as many five acre comps in that area as possible.
You want to make sure you’re not using bad comps. This is a really, really important part. So if I see a bunch of four acres selling for 40, 000 five acres selling for 50, 000, both those are 10, 000 an acre. And then I see a six acres selling for 120, 000. which is 20, 000 an acre. You do not want to use those outliers.
Those outliers will kill your pricing. They’ll either make you overpriced or underpriced. And you can see on the other end, if I saw a six acres for 18, 000, that’s going to be significantly underpriced. And that is going to mess up my data on that end. So that is a huge, huge part to this. When you are pricing, make sure you avoid outliers.
Like that is so, so important. Get good quality comps. And we always say this, Dan and myself always say this. Get a few, get a decent amount of good or great comps opposed to a ton of okay. Comps, a ton of okay. Comps is going to yield far worse results than three, four or five really solid. Great comps. Like I said, we’re trying to price 80 to 90% of our land accurately.
Those great comps is just are that average land. So if I can find out what five acres of average land is selling for in the County, that is going to be that 80 or 90%. And then finally, the last part is just inputting your data. So you’re going to have all this data. You’re going to say, okay, four to six acres.
I want to offer 5, 000 per acre. It’s using your Excel. It’s dragging it down into each column and inputting your data for each acreage range. You should have different price per acres and that naturally. So two acres is going to sell for more price per acre than 10 acres. That’s just a Costco effect.
Guys. The more you buy like the bulk of anything, if it’s same, so two acres right by each other, if it’s the same product, uh, the 10 is going to be cheaper per acre. So make sure you’re doing that. Make sure it makes sense. So typically when we break, break things down into the acreages, it’s like two to four acres, four to six acres.
Six to eight. Eight to 12, 12 20, and so on. And those are going to each have different offer prices per acre. So that is really important. Do not do two to six acres. If you’re doing two to six acres, those two acre comps or those six acre comps are going to throw off everything. You’re just going to have some weird average in the middle.
That doesn’t really make sense. We’ll sometimes even do two to three acres. 4 to 6. It just depends on the County, but I know if you’re, if you’re trying to bleed in five acres with one and a half acre comps, those are going to be completely different. One and a half acres might sell for 15, 000 an acre.
Five acres might sell for 5, 000 an acre. It can be that dramatic when you’re talking about a building lot versus a five acre, like just a five acre lot. Other than that, guys, the last thing I wanted to mention before I get off the air. Is do not take too much time doing this. There’s no perfect result for pricing.
There is not the way we do things. It’s a shotgun approach. It’s a bulk approach. We are trying to hit a lot of sellers. That being said, take enough time on it where you feel good about it. But what we always do, we have deadlines for everything. Okay. End of the day, Friday, we want to get 5, 000 mailers out the door, have it priced.
And I tell my data analysts like have it priced to the best of your ability, but we’re not extending that deadline. We are going to get it out then I’m going to send out the door. I am going to, um, review your results on the back end, but I’m not holding that mail up to try to make it perfect because no pricing is ever going to be perfect.
Other than that, guys, thank you so much for watching. If you guys have any more suggestions. For a future podcast, future YouTube, put it in the YouTube comments. Please like, and subscribe our YouTube channel. Other than that, thank you so much. We’ll see you next time. As always, thank you for joining. Please do us a huge favor and like, and subscribe our YouTube channel and share this with a friend.
It really means the world to Ron and I, but more importantly, it could help change the life of someone else. Thanks for joining and we’ll see you next episode.