There are no magic bullets in marketing, but I have developed a system which comes pretty darn close. I reported in the last issue of this eLetter about my new postcard campaign. Here's an update:
I mailed 10,000 oversized postcards to one zip code. I saturated every home with my message. The total cost was less than $3,000. We received about 35 calls, only .35% response. But I bought 5 houses out of 35 leads on the first mailing! The response rate should remain the same or improve as I remail to the same neighborhoods, allowing them to see my message multiple times, giving my self increased credibility. Plus some the postcards will be saved, and I'll get more calls from this initial mailing down the road.
I bought one out of 7 houses for sell. I usually buy one out of 10 to 15. The increase in closing ratio, I believe, was a result of targeting the right neighborhoods and getting my entire sales message (my famous "advertorial") in their hand... and my new headline. These sellers were much more prescreened than if that called on a sign, classified ad or a regular smaller size postcard.
** $145,400 IN CASH AND EQUITY IN ONLY 6 WEEKS FOR $3,000 **
Here are the actual results:
House #1: This house valued at $134,900 fixed up. It needs carpet, paint and some trim items. Seller owed $89,000 plus $6,000 in back payments. I purchased for amount owed (subject to) plus $500, or $95,500. We have it under contract with a tenant/buyer for $132,000 "as is". We got our buyer in with the first month's rent, $3,500 non-refundable purchase plus some repairs to be done prior to occupancy. We have a positive cash flow. Equity gained: $35,500
House #2: Seller owed $106,000 plus several back payments. I bought for what the seller owed (subject to), about $109,000 with $3,000 down. The seller used the money down to get the loan current. House needed carpet, paint, sod in front yard, roof (unexpected.oops!) and some misc. repairs. The house did not sell quickly "as is" so we are fixing it up. It is offered for sale for $144,500 fixed up. The repair costs are $12,000. Because of roof, this is a tight deal on a fixer upper. Equity gained: $23,900
House #3: Seller owed $94,000 on a first, $10,000 on a second and $6,000 in arrears. We purchase for the $110,000 owed subject to. After repaired value is $159,500. It needs $15,000 in repairs. Currently being offered at the after fixed up price, "accepting offers as is". We made up the back payments and paid off second with cash generated from buying house #5 below. Has not sold as is yet so we are about to rehab. Equity gained: $34,500
House #4: This house is in great shape and valued at $157,500 with terms. We took over a nice $110,000 first mortgage subject to, put $2,000 down and the owner carried back $20,000 with no payments or interest, due in 5 years. We held a "round robin" open house for one hour and found a tenant buyer with $5,000 down plus the first month's rent. We had it cleaned and the carpet stretched. We also spent $500 fixing up the front yard. Because of the $20,000 (deferred down payment," we have a nice positive cash flow. Equity gained: $25,000
House #5: Valued at $165,000-$170,000. It is on the market for $179,500 with terms. My office may have sold it yesterday for $10,000 down to a tenant/buyer. House is in great shape, nice neighborhood. Owner bought for daughter and it had been vacant for 4 months without being marketed. He owed $18,000 on a first mortgage. I offered him $63,000 cash and $90,000 in 5 second mortgages secured by 5 different properties including his house, 3 of the houses above, and one of my "keeper" rental properties. Terms on his equity is 6% accumulated interest, no payments, 5 year call and the right to substitute collateral. He is a retired military officer and did not need income but wanted interest on his equity. I got a new hard money loan for $123,000 at 11% and walked away from the closing table with $60,000 cash(!) less closing costs. Equity gained: $26,500
Total equity gained on 5 houses: $145,400
Cost of mailing: $3,000
(Better than the stock market?)
The cost per deal for marketing is $600 per house, higher than my average $350. But I spoke to less sellers, saw less houses and can EASILY repeat as often as I want, anywhere in the country!
Monday, March 30, 2009
Sunday, March 29, 2009
Get Comfortable With Your Direct Mail Houses
It is a lot of work getting your direct mail pieces out. What happens is that if you are trying to do everything yourself you finally get to a point that you don’t want to do it anymore. Mail houses are very inexpensive and here’s why. The United States Post Office offers a presort discount. If you will bundle the mail according to their specification and bundle it to the first three digits of the zip code USPS will give you an even better discount. If you will do all 5 digits of the zip code, they will give you the best discount. If you will do a zip plus 4 presort, in other words sorted all the way down to the carrier route, USPS will give you the best discount.
A mail house will sort it for you and apply that discount to your fee. What that means is if you are at home trying to do it yourself you will pay full postage. Not to mention the hours lost. The savings that you get from the postage will almost pay for the mail house. Let me give you an example and a resource. Alliance Productions, Inc., talk to Mike and tell him you are one of my students and he will give you special pricing. He will print up your postcard, presort, and charge you 24 cents for the preparation and 24 cents for the postage if you are using the half sheet postcard. The half sheet postcard is the best size because it stands out in the mail and it is big enough for you to get plenty of advertising copy on it. The post office is going to charge you regular first class postage as if it were a letter, currently 41 cents. With the presort discount the mailhouse is only going to charge you 24 cents. A 17 cents savings that is then applied to the production of the piece. You are saving 17 so each piece is only costing you 7 cents.
When I say that he is doing the production that means that he is doing all the card stock to go out, the cutting of it, the ink to go on it, because if you do this at home you are going to spend an awful lot of money on ink in your printer. And then he applies the stamp and takes it to the post office, all of the production for 7 cents each. It is well worth it. There is no way that you can do it for that price at home. If you are interested in doing direct mail call him.
You can use a mail house near you as well. I did a lot of research and found him to be one of the cheapest and he understands our business. You can send him a download of the addresses you want it to go to, send him a download of the marketing copy you want and he will merge those two together and create the postcard, print it up, bundle it, get the presort, and take it to the post office.
Mail houses are a much easier way to get your marketing out the door. Let other people do it. Outsource it so that you have more time to put into your business. All you have to do is send him your addresses, send him your marketing file and you are done. That marketing piece is done and off your books. In fact, you can get so good you have five different pieces that you normally send out. You can give all of those to him in advance. Send those to him and say this is mailing one on such and such date, mailing two on such and such date, etc. This is how you want to set up your business so that you are not being consumed by all the individual tasks. Your focus should be on getting more sellers in, negotiating with them, negotiating with buyers and answering the calls that come in from your marketing. That’s where you are going to make your money.
A mail house will sort it for you and apply that discount to your fee. What that means is if you are at home trying to do it yourself you will pay full postage. Not to mention the hours lost. The savings that you get from the postage will almost pay for the mail house. Let me give you an example and a resource. Alliance Productions, Inc., talk to Mike and tell him you are one of my students and he will give you special pricing. He will print up your postcard, presort, and charge you 24 cents for the preparation and 24 cents for the postage if you are using the half sheet postcard. The half sheet postcard is the best size because it stands out in the mail and it is big enough for you to get plenty of advertising copy on it. The post office is going to charge you regular first class postage as if it were a letter, currently 41 cents. With the presort discount the mailhouse is only going to charge you 24 cents. A 17 cents savings that is then applied to the production of the piece. You are saving 17 so each piece is only costing you 7 cents.
When I say that he is doing the production that means that he is doing all the card stock to go out, the cutting of it, the ink to go on it, because if you do this at home you are going to spend an awful lot of money on ink in your printer. And then he applies the stamp and takes it to the post office, all of the production for 7 cents each. It is well worth it. There is no way that you can do it for that price at home. If you are interested in doing direct mail call him.
You can use a mail house near you as well. I did a lot of research and found him to be one of the cheapest and he understands our business. You can send him a download of the addresses you want it to go to, send him a download of the marketing copy you want and he will merge those two together and create the postcard, print it up, bundle it, get the presort, and take it to the post office.
Mail houses are a much easier way to get your marketing out the door. Let other people do it. Outsource it so that you have more time to put into your business. All you have to do is send him your addresses, send him your marketing file and you are done. That marketing piece is done and off your books. In fact, you can get so good you have five different pieces that you normally send out. You can give all of those to him in advance. Send those to him and say this is mailing one on such and such date, mailing two on such and such date, etc. This is how you want to set up your business so that you are not being consumed by all the individual tasks. Your focus should be on getting more sellers in, negotiating with them, negotiating with buyers and answering the calls that come in from your marketing. That’s where you are going to make your money.
Free Corvette With Purchase!
I used ‘U-Haul' money to purchase a really great house ‘Subject To'. It was 4bd, 3ba, 3 car garage, 2 fireplaces, tile roof, 1/3 acre lot house and only one year new. I guess the buzzword is it was a ‘Pretty House'. However as with any house I only give the seller a small sum for their equity, then it is ‘Gorgeous' to me forget about ‘Pretty'.
The time period was December a few years ago. Those that remember it was very slow for home sales. It was the 15th of the month close to Christmas and I had only bought and sold 4 or 5 properties. The home was advertised for $15K down in the local paper. No calls were coming in; the Grinch was staring me right in the face and laughing. It looked like Santa wasn't coming this year. I called a friend of mine in the used car business and asked him if he had any "sexy" used cars for a good price. He said he had an '84' Corvette in super condition. This was a bad year for Corvettes so it kept the price down, but fit right in to my plans. It was a decent car but not in super condition. You know how those used car salesman are even if they are friends. I purchased the ‘vette' for $3,400.00.
My New Ad Read:
$20K down – No Qualifying
4bd, 3ba, 2800sq.ft., 3 car gar.
1 year new, close to shopping,etc.
FREE CORVETTE W/Purchase
Call owner 555-1212
You noticed I added $5K to the down payment to cover the cost of the car plus a little extra for Christmas shopping. When the ad broke in the newspaper the phone did not stop ringing, one call after the other. I sold the home the same day the ad came out and probably could have sold a dozen more, if I had them.
Every house we buy has a personality of its own, much like you and I. This home looked like it was built for a Corvette owner. If the buyer did not own one he would when he bought the home. There are basic amenities plus copy I place in my ads. However, I use marketing techniques using the personality of the house to match the personality of my potential buyer.
You can get top dollar for the home you have advertised if you use the proper ad copy. Be creative in your marketing efforts. I am not saying to go out and buy a car for every home you sell. But, I am a firm believer that the home sells itself. Just envision who would buy the home, then be creative in your ad so that it fits the person or family reading the ad.
The time period was December a few years ago. Those that remember it was very slow for home sales. It was the 15th of the month close to Christmas and I had only bought and sold 4 or 5 properties. The home was advertised for $15K down in the local paper. No calls were coming in; the Grinch was staring me right in the face and laughing. It looked like Santa wasn't coming this year. I called a friend of mine in the used car business and asked him if he had any "sexy" used cars for a good price. He said he had an '84' Corvette in super condition. This was a bad year for Corvettes so it kept the price down, but fit right in to my plans. It was a decent car but not in super condition. You know how those used car salesman are even if they are friends. I purchased the ‘vette' for $3,400.00.
My New Ad Read:
$20K down – No Qualifying
4bd, 3ba, 2800sq.ft., 3 car gar.
1 year new, close to shopping,etc.
FREE CORVETTE W/Purchase
Call owner 555-1212
You noticed I added $5K to the down payment to cover the cost of the car plus a little extra for Christmas shopping. When the ad broke in the newspaper the phone did not stop ringing, one call after the other. I sold the home the same day the ad came out and probably could have sold a dozen more, if I had them.
Every house we buy has a personality of its own, much like you and I. This home looked like it was built for a Corvette owner. If the buyer did not own one he would when he bought the home. There are basic amenities plus copy I place in my ads. However, I use marketing techniques using the personality of the house to match the personality of my potential buyer.
You can get top dollar for the home you have advertised if you use the proper ad copy. Be creative in your marketing efforts. I am not saying to go out and buy a car for every home you sell. But, I am a firm believer that the home sells itself. Just envision who would buy the home, then be creative in your ad so that it fits the person or family reading the ad.
Five Ways to Profit from Every Meeting with a Seller
You can make a profit from the deals you find, even when the deals aren't a fit for your real estate business. Here are five tips to make sure you get paid for your time.
1. Sign Up the Deal!
This is the most obvious way to profit from every appointment you make.
2. Turn Your "Junk" Into Gold
Take the people you meet who just are not a fit for you and refer them to people in your network who can profit by the referral. This builds value into your referral network. For example: You meet with a seller who really would do better to refinance the house. You simply say, "I can see it's not a fit for me to buy this house. Your best option really is for you to refinance the property. Here's the number of a great mortgage broker I know [give him the number], and if I remember, I'll ask her to give you a call next week to see if she can help out." Then pass the seller's name and phone number on to your mortgage broker. Over time this will encourage your mortgage broker contact to pass leads to you, such as buyers whose loan fell through. There is a motivated seller now!
3. Get Information on Local Market Conditions
Use the meeting to get information for the resale market and for the rental market. Find out:
What are rental and resale prices like?
How long are properties staying on the market?
What types of properties are most in demand and what types are least in demand?
What is the perceived market conditions according to the sellers?
4. Learn From the Appointment
This is the ultimate way to leverage yourself. What went well with the appointment? What will you do differently next time as a result of what you learned on this appointment? Make sure you take five minutes and debrief yourself in writing!
5. Future Deals
Follow-up, follow-up, and follow-up with all of these sellers.
1. Sign Up the Deal!
This is the most obvious way to profit from every appointment you make.
2. Turn Your "Junk" Into Gold
Take the people you meet who just are not a fit for you and refer them to people in your network who can profit by the referral. This builds value into your referral network. For example: You meet with a seller who really would do better to refinance the house. You simply say, "I can see it's not a fit for me to buy this house. Your best option really is for you to refinance the property. Here's the number of a great mortgage broker I know [give him the number], and if I remember, I'll ask her to give you a call next week to see if she can help out." Then pass the seller's name and phone number on to your mortgage broker. Over time this will encourage your mortgage broker contact to pass leads to you, such as buyers whose loan fell through. There is a motivated seller now!
3. Get Information on Local Market Conditions
Use the meeting to get information for the resale market and for the rental market. Find out:
What are rental and resale prices like?
How long are properties staying on the market?
What types of properties are most in demand and what types are least in demand?
What is the perceived market conditions according to the sellers?
4. Learn From the Appointment
This is the ultimate way to leverage yourself. What went well with the appointment? What will you do differently next time as a result of what you learned on this appointment? Make sure you take five minutes and debrief yourself in writing!
5. Future Deals
Follow-up, follow-up, and follow-up with all of these sellers.
Finding Motivated Sellers: Luck or Hard Work?
Did you just hear about the investor in your local RE club that closed on a deal netting them $15,000 and they didn't even have to lay a hand on the property? Or what about the person that just bought that rental house on the same block for 30-50% less that what you paid for yours? Are you at the point of scratching your head and thinking they're just lucky? Or probably that's all they do and just don't have a life outside of real estate....right?
Somewhere in between total luck and absolute sell-out hours chasing deals is where you should be in finding truly motivated sellers, or rather having them finding you. It's a weird coincidence that the smarter I work, the luckier I get finding great deals. Did you catch that? It's not always about how many hours you put into real estate and how hard you work at your marketing program that produces the best results which is finding great deals that puts money in your pocket and that's what real estate investing is all about.
Let me share with you some simple principles in marketing for the independent real estate investor. You may already be in tune with some of these, but let's all take a pulse-check here and make sure we're on the right track.
1) What Are You Hunting?
I'm asking what types of properties and real estate opportunities are you seeking? The more narrow your focus and marketing efforts can become to a target group, the greater success you will experience. If you are seeking wholesale opportunities, then you will not gain very much success putting out "I Buy House/Lease Option" bandit signs next to established neighborhoods. In addition, you will not gain a favorable response direct mailing to preforeclosure prospects if the primary weapon in your arsenal is cash-only deals with hard money lenders that don't go above 70% LTV.
The marketing medium you use and the message you accompany with it that hits the right target market turns sellers into motivated sellers. There simply is no generic marketing message and medium that is a "one-size-fits-all" approach in real estate.
2) Just How Much Money Can You Spend?
Now, we're talking about something that hits home real fast when it's about coming out of pocket with hard-earned money in the "hope" that it will come back to you in the form of truly motivated sellers. If you're first starting out in real estate investing then it's imperative that you have a short-term budget to work within so that you're not forgetting about paying for all the other necessities in life: food, shelter clothing!
You simply DO NOT have to have a large marketing budget to be effective to grow your RE business. One §.34 postcard netted me §8,400, so it's all about hitting your target market as explained in #1. However, be realistic about what monetary constraints you have and how to incrementally build your marketing program as you experience more and more success.
3) Track Your Results!
Oh, we miss the boat on this one so much. When you are incorporating bandit signs, direct mail, flyer campaigns, etc... it can start to get confusing where and if your success rate justifies the marketing mediums you are using. Tracking your responses and closures of deals is necessary so that you can identify areas that need to be tweaked or worked on. Most importantly though when you find out that great mailing list is really working or the flyers in a particular neighborhood is getting tremendous feedback....then go in for the kill! I mean when you are measuring success and can track it effectively it allows you in full financial confidence to justify increase in marketing expenditures for areas that are producing the results desired.
My hope is for you to realize that marketing to the real estate investor is the lifeblood of his/her business. Great deals rarely come knock on your door to find you. They find you when you have a marketing system implemented that is like a funnel prescreening sellers for motivation and directs them to then contact you immediately.
Somewhere in between total luck and absolute sell-out hours chasing deals is where you should be in finding truly motivated sellers, or rather having them finding you. It's a weird coincidence that the smarter I work, the luckier I get finding great deals. Did you catch that? It's not always about how many hours you put into real estate and how hard you work at your marketing program that produces the best results which is finding great deals that puts money in your pocket and that's what real estate investing is all about.
Let me share with you some simple principles in marketing for the independent real estate investor. You may already be in tune with some of these, but let's all take a pulse-check here and make sure we're on the right track.
1) What Are You Hunting?
I'm asking what types of properties and real estate opportunities are you seeking? The more narrow your focus and marketing efforts can become to a target group, the greater success you will experience. If you are seeking wholesale opportunities, then you will not gain very much success putting out "I Buy House/Lease Option" bandit signs next to established neighborhoods. In addition, you will not gain a favorable response direct mailing to preforeclosure prospects if the primary weapon in your arsenal is cash-only deals with hard money lenders that don't go above 70% LTV.
The marketing medium you use and the message you accompany with it that hits the right target market turns sellers into motivated sellers. There simply is no generic marketing message and medium that is a "one-size-fits-all" approach in real estate.
2) Just How Much Money Can You Spend?
Now, we're talking about something that hits home real fast when it's about coming out of pocket with hard-earned money in the "hope" that it will come back to you in the form of truly motivated sellers. If you're first starting out in real estate investing then it's imperative that you have a short-term budget to work within so that you're not forgetting about paying for all the other necessities in life: food, shelter clothing!
You simply DO NOT have to have a large marketing budget to be effective to grow your RE business. One §.34 postcard netted me §8,400, so it's all about hitting your target market as explained in #1. However, be realistic about what monetary constraints you have and how to incrementally build your marketing program as you experience more and more success.
3) Track Your Results!
Oh, we miss the boat on this one so much. When you are incorporating bandit signs, direct mail, flyer campaigns, etc... it can start to get confusing where and if your success rate justifies the marketing mediums you are using. Tracking your responses and closures of deals is necessary so that you can identify areas that need to be tweaked or worked on. Most importantly though when you find out that great mailing list is really working or the flyers in a particular neighborhood is getting tremendous feedback....then go in for the kill! I mean when you are measuring success and can track it effectively it allows you in full financial confidence to justify increase in marketing expenditures for areas that are producing the results desired.
My hope is for you to realize that marketing to the real estate investor is the lifeblood of his/her business. Great deals rarely come knock on your door to find you. They find you when you have a marketing system implemented that is like a funnel prescreening sellers for motivation and directs them to then contact you immediately.
Finding Good Deals in Real Estate
A thriving real estate investor or retailer solves a lot of other people’s problems; that’s how you become successful. The more knowledge, ability, experience, contacts, and resources you have, the more solutions you can begin to offer people in solving their problems. In addition to this, you will be ahead of the pack if you can get people calling or coming to you with their specific problem first. That means you have to advertise the fact that you are in a position to help while being fair, trustworthy, and accurate in making quick decisions before the competition tries to persuade these people first.
For the above reason alone — competition — you will need to understand marketing. That means deciding on what you are going to specialize in, developing a method to define your target audience, and then attracting them with a well-written message using the different types of media to get the word out. That last paragraph brings up a good point: What exactly do you want to specialize in? Following are some categories from which to choose:
* Condos, vacation property
* Single-family homes
* Apartments for one to four families (residential duplex, triplex, fourplex)
* Commercial— hotels/motels, strip malls, office complexes, mobile home parks, storage units, parking lots, garages, restaurants, stores, apartments for five or more families, and so forth
* Industrial—factories, refineries, manufacturing plants, and so forth
* Farms—commercial, industrial, or agricultural, depending on zoning
* Raw land—lots, vacation, recreational, sub-dividable residential, commercial, industrial, agricultural, and special purpose
* Special purpose—churches, schools, hospitals, power plants, theaters, sports arenas, golf courses, marinas, and so forth
# Here are some examples of how you might go about finding some good deals:Look at bulletin boards, local papers and small independent publications. This goes for every publication you get. Make sure you get one of the first copies off the press. Go to the facility that houses the presses and get your copy before the ink has a chance to dry. Let no one beat you to the punch.
Better yet, advertise yourself and get people who are thinking about selling to call you before they actually tell the world through an ad.
# Look at the legal section of the newspapers. Contact heirs and attorneys, and sales in the garage or estate sale sections. Also, 20 percent of people who have garage sales are planning on moving soon. Ask about their house or their neighbor’s homes. Always keep your antenna up! Your odds of success increase when you choose large population centers and remain in the market constantly on the lookout for your type of deal.
# Look for vacant houses that are run down, fire damaged, or abandoned, with city notices evident. Talk to the neighbors of these homes. They usually know who owns it and what is going on. They have an interest in seeing it restored to beauty. It sure is a shame you can’t look in the mailbox to see who is receiving mail at the property in question—wouldn’t that be easy? Walk up to a property and look in a window to confirm that it is indeed vacant—but don’t endanger yourself by getting bit or shot! Use common sense. Contact out-of-state owners through property records or by letter and/or phone. Leave your cards on the door.
# OREO stands for Other Real Estate Owned. Make friends with your local lenders and let them know you are the one to call when they have a foreclosure looming or in progress. Hint: If you prequalify with lenders beforehand, they may call you sooner.
# Watch the local paper for foreclosure auctions, tax sales, and HUD and VA listed properties. Note: Auctions held in bad weather where the property absolutely must be sold are your best chance to limit competition and get property at rock-bottom prices. Because there is no low limit on what can be accepted (no reserve) you may win big.
# Real estate agents are going to try to sell you something! When you approach them be very specific with them and tell them to call only if they have an absolute steal. Ask agents to give you those expired listings since they couldn’t sell them. Suggest a 2 percent commission if they will assist with closing the paperwork after you make the deal with the seller on your own.
# Don’t be so selective. If the property is an absolute steal, lock it up and sell it to somebody who does like to work with that type of real estate. Get the option and hand it off to another buyer. Look for distressed sellers in addition to distressed property.
# Post fliers everywhere—colleges, Laundromats, shopping centers, bowling alleys, public bulletin boards, churches, local businesses, wherever large numbers of people congregate. Give them a chance to give you a lead on a hot deal. (For example, print up cards that say “I pay $500 to you at closing if I buy a house that you told me about! Do you know anyone who is selling property? Please call [your name] at 555-1212.”) Print quality business cards.
# Join organizations of all types. The sky is the limit. There are so many—just pick the ones that you would be interested in truly being a member in and let it be known you pay bounties for consummated (closed) deals.
# When you use headhunters, leave out no one. Property managers, moving companies, relocation services, neighbors, landlords, tenants, the mailman, the paper boy, gardeners, landscapers, service technicians, pest control people, friends, acquaintances, relatives, and other investors. You name it!
# Everyone should know they can make $500 if you end up buying a property they tell you about. Enlist your army! Give each of your soldier’s stacks of your cards for exponential growth.
# A special note: Water, gas, and electric company personnel who shut off utility meters can be very good bird dogs when it comes to finding property that is in trouble or vacant. Make sure they have your cards.
# Have at least 10,000 business cards printed with your offer of the $500 bounty and hand them out in stacks to everyone you can.
As you grow, you might consider TV, radio, phone books, billboards, street benches, bumper stickers, and bigger commissions. Use your imagination.
# Put up signs telling people you buy real estate.
# Make multiple lowball offers on overpriced properties and walk away. Don’t deposit earnest money but they may stew on your offer and call you a month later accepting your deal. Leave the offer with them.
# Older people should not be left out. They are very valuable informants. They know everything and need people to talk to! Listen to them. Go to free seminars on real estate. Do this not only to learn about real estate but also to capture names and circulate among real estate–minded people. Once you have their names, call your own club meeting and network to prosperity. Find your mentor here.
# Go to where people are buying those “by owner” signs. Ask them what they are selling. Follow them home and get the first look! Be first or lose the deal.
# Try offering 15 percent less than what you intend on paying. You never know; they may accept it. If they don’t, you can still negotiate up to 15 percent more and get it for what you originally were willing to pay. If it’s any higher, walk away but leave the offer on the table (the offer stands).
# Make your offer easy for the seller to understand. Get the option to buy but use a contingency to protect yourself. Iron out the details later but lock it up now!
# Buy from sellers who tend not to care: seized, foreclosed, tax sales, corporations, nonprofits, disinterested heirs, probate attorneys, and private auctions.
# Try just helping someone to sell his or her property even if you don’t want it. Be a friend and offer to help for nothing in return. You will be amazed at what happens when you sincerely try to help with no thought in mind of making money. This is a magic bullet in disguise.
Those are some of the basics of advertising and finding the opportunities to buy real estate below market. The old saying goes: You make your profit when you buy, not when you sell. (20 percent off retail, minimum).
For the above reason alone — competition — you will need to understand marketing. That means deciding on what you are going to specialize in, developing a method to define your target audience, and then attracting them with a well-written message using the different types of media to get the word out. That last paragraph brings up a good point: What exactly do you want to specialize in? Following are some categories from which to choose:
* Condos, vacation property
* Single-family homes
* Apartments for one to four families (residential duplex, triplex, fourplex)
* Commercial— hotels/motels, strip malls, office complexes, mobile home parks, storage units, parking lots, garages, restaurants, stores, apartments for five or more families, and so forth
* Industrial—factories, refineries, manufacturing plants, and so forth
* Farms—commercial, industrial, or agricultural, depending on zoning
* Raw land—lots, vacation, recreational, sub-dividable residential, commercial, industrial, agricultural, and special purpose
* Special purpose—churches, schools, hospitals, power plants, theaters, sports arenas, golf courses, marinas, and so forth
# Here are some examples of how you might go about finding some good deals:Look at bulletin boards, local papers and small independent publications. This goes for every publication you get. Make sure you get one of the first copies off the press. Go to the facility that houses the presses and get your copy before the ink has a chance to dry. Let no one beat you to the punch.
Better yet, advertise yourself and get people who are thinking about selling to call you before they actually tell the world through an ad.
# Look at the legal section of the newspapers. Contact heirs and attorneys, and sales in the garage or estate sale sections. Also, 20 percent of people who have garage sales are planning on moving soon. Ask about their house or their neighbor’s homes. Always keep your antenna up! Your odds of success increase when you choose large population centers and remain in the market constantly on the lookout for your type of deal.
# Look for vacant houses that are run down, fire damaged, or abandoned, with city notices evident. Talk to the neighbors of these homes. They usually know who owns it and what is going on. They have an interest in seeing it restored to beauty. It sure is a shame you can’t look in the mailbox to see who is receiving mail at the property in question—wouldn’t that be easy? Walk up to a property and look in a window to confirm that it is indeed vacant—but don’t endanger yourself by getting bit or shot! Use common sense. Contact out-of-state owners through property records or by letter and/or phone. Leave your cards on the door.
# OREO stands for Other Real Estate Owned. Make friends with your local lenders and let them know you are the one to call when they have a foreclosure looming or in progress. Hint: If you prequalify with lenders beforehand, they may call you sooner.
# Watch the local paper for foreclosure auctions, tax sales, and HUD and VA listed properties. Note: Auctions held in bad weather where the property absolutely must be sold are your best chance to limit competition and get property at rock-bottom prices. Because there is no low limit on what can be accepted (no reserve) you may win big.
# Real estate agents are going to try to sell you something! When you approach them be very specific with them and tell them to call only if they have an absolute steal. Ask agents to give you those expired listings since they couldn’t sell them. Suggest a 2 percent commission if they will assist with closing the paperwork after you make the deal with the seller on your own.
# Don’t be so selective. If the property is an absolute steal, lock it up and sell it to somebody who does like to work with that type of real estate. Get the option and hand it off to another buyer. Look for distressed sellers in addition to distressed property.
# Post fliers everywhere—colleges, Laundromats, shopping centers, bowling alleys, public bulletin boards, churches, local businesses, wherever large numbers of people congregate. Give them a chance to give you a lead on a hot deal. (For example, print up cards that say “I pay $500 to you at closing if I buy a house that you told me about! Do you know anyone who is selling property? Please call [your name] at 555-1212.”) Print quality business cards.
# Join organizations of all types. The sky is the limit. There are so many—just pick the ones that you would be interested in truly being a member in and let it be known you pay bounties for consummated (closed) deals.
# When you use headhunters, leave out no one. Property managers, moving companies, relocation services, neighbors, landlords, tenants, the mailman, the paper boy, gardeners, landscapers, service technicians, pest control people, friends, acquaintances, relatives, and other investors. You name it!
# Everyone should know they can make $500 if you end up buying a property they tell you about. Enlist your army! Give each of your soldier’s stacks of your cards for exponential growth.
# A special note: Water, gas, and electric company personnel who shut off utility meters can be very good bird dogs when it comes to finding property that is in trouble or vacant. Make sure they have your cards.
# Have at least 10,000 business cards printed with your offer of the $500 bounty and hand them out in stacks to everyone you can.
As you grow, you might consider TV, radio, phone books, billboards, street benches, bumper stickers, and bigger commissions. Use your imagination.
# Put up signs telling people you buy real estate.
# Make multiple lowball offers on overpriced properties and walk away. Don’t deposit earnest money but they may stew on your offer and call you a month later accepting your deal. Leave the offer with them.
# Older people should not be left out. They are very valuable informants. They know everything and need people to talk to! Listen to them. Go to free seminars on real estate. Do this not only to learn about real estate but also to capture names and circulate among real estate–minded people. Once you have their names, call your own club meeting and network to prosperity. Find your mentor here.
# Go to where people are buying those “by owner” signs. Ask them what they are selling. Follow them home and get the first look! Be first or lose the deal.
# Try offering 15 percent less than what you intend on paying. You never know; they may accept it. If they don’t, you can still negotiate up to 15 percent more and get it for what you originally were willing to pay. If it’s any higher, walk away but leave the offer on the table (the offer stands).
# Make your offer easy for the seller to understand. Get the option to buy but use a contingency to protect yourself. Iron out the details later but lock it up now!
# Buy from sellers who tend not to care: seized, foreclosed, tax sales, corporations, nonprofits, disinterested heirs, probate attorneys, and private auctions.
# Try just helping someone to sell his or her property even if you don’t want it. Be a friend and offer to help for nothing in return. You will be amazed at what happens when you sincerely try to help with no thought in mind of making money. This is a magic bullet in disguise.
Those are some of the basics of advertising and finding the opportunities to buy real estate below market. The old saying goes: You make your profit when you buy, not when you sell. (20 percent off retail, minimum).
Finding Buyers In 2008
Times they are a changin'.
Whereas in 2005 finding a buyer for your wholesale deal was easy, we are now faced with a much more challenging predicament. I have personally coined this annoying situation as "Reality."
"Reality" sucks. We all know this. Normally I can effortlessly bend it to my will, but it's actually putting up a pretty good fight this time. You see, what I want it to do is put things back the way they were a couple years ago. A couple years ago, if I so much as sneezed I would have rehabbers (buyers) lined up around the block thinking that was a secret signal that "the deal was in," or something. Here's a typical scenario from "back in the day" (which was a Wednesday by the way):
Rehabber #1: He sneezed. It's on!
Rehabber #2: Oh hellz yeah. It probably has at least $9,000 of equity in it just like the last one. I'm paying cash.
Rehabber #37: You guys are idiots. He has a cold. It doesn't mean anything (as he secretly shimmies his way closer to me while butting everyone else in line).
Rehabber #1: How do you have that much cash?
Rehabber#2: I refinanced my house and pulled the equity out. Duh. Where does anyone get money from these days? Idiot. I bought my house in 1999 for $125,000, and it just appraised for $750,000. I did a 125% LTV cash out re-fi with negative amortization at .0027% APR so my payment is only $1.75 a month. They wrote me a check for over $600,000. Cool huh? Have you seen my new boat?
Rehabber #1: But you only make $35,000 a year as a fire fighter.
Rehabber #2: I know. Isn't America amazing? I love this country. My payment goes up to like $19,000 a month at some point. I forget when. I'm sure it'll all work out. I think I'm gonna bid $10,000 over the asking price to make sure I get this one.
Ah the glory days. I'm not gonna lie - it was fun to be a wholesaler back then. And you know what? It's still fun! We simply have to adjust our sails and do things a little differently is all.
Up until about a year ago, the only thing I did to sell my properties was blast out an email to my investor's list. That was it. I would then choose between 19 different offers that I would receive on each deal. I'd always pick the buyer who I felt was going to be the least amount of hassle (namely - whoever was paying cash and closing quickly).
This is not enough anymore.
The following is exactly what you must do if you have any hopes whatsoever of making big money wholesaling real estate in this current market:
Create A V.I.P. Program For Your Buyers And Let Them Know About It
People love to feel special. I know I do. And they love to feel special because they are special. If they were hairy monkeys, they would love to feel like hairy monkeys. If they were squishy jellyfish, they would love to feel like squishy jellyfish. But they are not hairy monkeys or squishy jellyfish. They are special humans. And if we make them feel like special humans, they will like us more and be more inclined to buy.
Call All Your V.I.P. Members In Advance On All Deals
This is a pain, and it almost qualifies as work in my book, which is why I never used to do it. But oh well. We gotta do it if we want these houses sold.
The way a buyer gains membership into your exclusive V.I.P. program is to simply buy one of your properties, and close on time. That is it, and that is all. Simple enough? I have people all the time ask me to call them in advance when I get deals in. Well tell these people that you only do this for your V.I.P. members. Explain to them how they can be a part of this elite group. Explain to them that they are currently very "un-cool" by not being on your V.I.P. list. Show them how to be cool.
Give Your V.I.P. Members A Discount
Here is how it goes: You get a new deal in-house and decide you want to make $12,000 on the flip. Your purchase price with the seller is $100,000. Before blasting out the email and whatever else it is you are planning on doing to market the property, you call every single person on your V.I.P. list.
"Hey - Sam! Sammy Sam! Sammaaaayyyyy! What up, Dawg? Listen, I got this new hot, hot property that you have got to check out asap. I'm going to start marketing it tomorrow, but I wanted to give you the personal heads up because you're fabulous and I love you more than all the rest. It'll be sold for $115,000, but we'll give it to you for $112,000 since I know you can close quick. Check it out and get back to me, alright?"
It's just that simple. You will sell more properties this way. Trust me. People are more apt to respond to a personal "insider" phone call about a "new" deal than they are to a mass email that goes out to 2000 people.
Make it happen.
Whereas in 2005 finding a buyer for your wholesale deal was easy, we are now faced with a much more challenging predicament. I have personally coined this annoying situation as "Reality."
"Reality" sucks. We all know this. Normally I can effortlessly bend it to my will, but it's actually putting up a pretty good fight this time. You see, what I want it to do is put things back the way they were a couple years ago. A couple years ago, if I so much as sneezed I would have rehabbers (buyers) lined up around the block thinking that was a secret signal that "the deal was in," or something. Here's a typical scenario from "back in the day" (which was a Wednesday by the way):
Rehabber #1: He sneezed. It's on!
Rehabber #2: Oh hellz yeah. It probably has at least $9,000 of equity in it just like the last one. I'm paying cash.
Rehabber #37: You guys are idiots. He has a cold. It doesn't mean anything (as he secretly shimmies his way closer to me while butting everyone else in line).
Rehabber #1: How do you have that much cash?
Rehabber#2: I refinanced my house and pulled the equity out. Duh. Where does anyone get money from these days? Idiot. I bought my house in 1999 for $125,000, and it just appraised for $750,000. I did a 125% LTV cash out re-fi with negative amortization at .0027% APR so my payment is only $1.75 a month. They wrote me a check for over $600,000. Cool huh? Have you seen my new boat?
Rehabber #1: But you only make $35,000 a year as a fire fighter.
Rehabber #2: I know. Isn't America amazing? I love this country. My payment goes up to like $19,000 a month at some point. I forget when. I'm sure it'll all work out. I think I'm gonna bid $10,000 over the asking price to make sure I get this one.
Ah the glory days. I'm not gonna lie - it was fun to be a wholesaler back then. And you know what? It's still fun! We simply have to adjust our sails and do things a little differently is all.
Up until about a year ago, the only thing I did to sell my properties was blast out an email to my investor's list. That was it. I would then choose between 19 different offers that I would receive on each deal. I'd always pick the buyer who I felt was going to be the least amount of hassle (namely - whoever was paying cash and closing quickly).
This is not enough anymore.
The following is exactly what you must do if you have any hopes whatsoever of making big money wholesaling real estate in this current market:
Create A V.I.P. Program For Your Buyers And Let Them Know About It
People love to feel special. I know I do. And they love to feel special because they are special. If they were hairy monkeys, they would love to feel like hairy monkeys. If they were squishy jellyfish, they would love to feel like squishy jellyfish. But they are not hairy monkeys or squishy jellyfish. They are special humans. And if we make them feel like special humans, they will like us more and be more inclined to buy.
Call All Your V.I.P. Members In Advance On All Deals
This is a pain, and it almost qualifies as work in my book, which is why I never used to do it. But oh well. We gotta do it if we want these houses sold.
The way a buyer gains membership into your exclusive V.I.P. program is to simply buy one of your properties, and close on time. That is it, and that is all. Simple enough? I have people all the time ask me to call them in advance when I get deals in. Well tell these people that you only do this for your V.I.P. members. Explain to them how they can be a part of this elite group. Explain to them that they are currently very "un-cool" by not being on your V.I.P. list. Show them how to be cool.
Give Your V.I.P. Members A Discount
Here is how it goes: You get a new deal in-house and decide you want to make $12,000 on the flip. Your purchase price with the seller is $100,000. Before blasting out the email and whatever else it is you are planning on doing to market the property, you call every single person on your V.I.P. list.
"Hey - Sam! Sammy Sam! Sammaaaayyyyy! What up, Dawg? Listen, I got this new hot, hot property that you have got to check out asap. I'm going to start marketing it tomorrow, but I wanted to give you the personal heads up because you're fabulous and I love you more than all the rest. It'll be sold for $115,000, but we'll give it to you for $112,000 since I know you can close quick. Check it out and get back to me, alright?"
It's just that simple. You will sell more properties this way. Trust me. People are more apt to respond to a personal "insider" phone call about a "new" deal than they are to a mass email that goes out to 2000 people.
Make it happen.
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