One critical part of Real Estate Investing is mailing offer letters to potential sellers. Because of the cost involved, new investors are often looking for ways to reduce costs in this area of the business. In this attempt, I frequently get asked whether you should use First Class mail when you can save $.16 per mailing using standard mail.
I choose First Class mail because Standard mail, while cheaper, has a slow delivery time. Standard mail also does not include forwarding or return service (this is important), which means that if the seller has moved, they will never get the letter; the USPS disposes of it. From a cost perspective, you’re saving money on the front end. But in reality, you are losing money; here’s how.
Some of your letters will never see the intended recipient with Standard Mail.
Let’s go deeper with this.
According to the US Census Bureau, “In 2021, 8.4% of people lived in a different residence one year ago, down from 9.3% in 2020”. Meaning that over two years, 17.7% of the population moved. That means that 17% of your offer letters must be forwarded to be delivered to the intended recipient. Imagine if you send the letters with Standard Mail; potentially, one in five of your letters will never make it to the seller.
| First Class | Standard Class | |
|---|---|---|
| Letters Mailed | 100 | 100 |
| Return to Sender (7%) | 7 | 7 |
| Letters Forwarded (17%) | 17 | 0 |
| Letters Delivered to Sellers | 93 | 76 |
| Total Cost per 100 Letter | $83.00 | $67.00 |
| Cost per letter delivered | $.89 | .88 |
As you can see, you are only saving one cent per letter delivered. Don’t forget that first-class mail is delivered more quickly, in one to five days. On the other hand, Standard mail takes five to twenty-one business days.
Is it worth 1 cent more per delivered letter to have it delivered faster? I think so!
Now, let’s talk about the real unknown factor: the open rate. First Class mail looks official and important and gets opened (in most cases). Standard mail, on the other hand, looks like marketing mail. In my house, my rule of thumb says if the mail is standard, it doesn’t even deserve to be opened and is, therefore, thrown away.
I’m not alone; according to facts from the New York University School of Law about junk mail, “44 percent of junk mail is thrown away unopened”.
Therefore, even if you save one cent per delivered letter with Standard mail, considering the opening rate, your cost per letter opened is likely much less with First Class mail compared to standard mail.
Which is better? I believe First Class mail is the best.
