Thank you BP!!!! I've closed my 1st wholesale deal!
Greetings BP Fam,
Just posting here to say thank you to BP and all of the members that have helped me along the way. From podcasts to the forums to blogs/vlogs to private messages from members. The community is great. The community is tough too but I embrace challenges. Tough love also speeds up growth. :-) Proven models are what BP provides and I think that was @Joshua Dorkin mission when he started BP. When I began investing in tax liens in 2010 I did not know about BP. I did not have any proven BUSINESS MODELS to follow. I paid for a webinar about tax sales that was about two hours and at the end of it I received a powerpoint presentation to refer to. Everything else I learned from my county website, (the statutes/laws regarding tax sale in my jurisdiction), and real world experience. Moral of the story: BP has saved me tons of time and money as I expand my business.
But at the end of the day I am a firm believer in experience as the best teacher. So to all of the newbies that read this post, if you take away only one thing – here it is. Stay hungry for knowledge and take action. Use BP as a tool but get from in front of the computer, get off the smart device and take some serious action.
I joined BP in late summer 2014. After months of scouring BP I decided on wholesaling as the strategy I would attempt, beginning in early 2015. It was not easy because BP is full of great data and there are so many different ways to make money in real estate that without tunnel vision one can quickly become a victim of analysis paralysis or one may jump out there and try to do too many things at once.
So once I decided on wholesaling, I first went to my real estate attorney. He informed me it was legal and his title company could handle assignments. Next I created a marketing campaign, including a budget. My plan was to send out postcards (standard 6x4) in my farm area of Baltimore city, Baltimore County, and Harford County. Postcards will go out quarterly. Follow up will consist of a tear off calendar with a hand written note for warm leads. Texts/repeat calls/email with others. I haven’t automated follow up emails. I hear some wholesalers even have follow up texts and subscription texts. Something I want to add to the marketing plan.
I had two different lists. One I purchased from list source and the other I used a VA to perform online research to find owners in my area with citations that met some other criterion too. In total I dropped about 1900 postcards on Feb 2, a month later than my original start date of Jan 1. This taught me that I should allow for flexibility in my plans. All plans/goals are not meant to be stringent. Black and white goals have their place but allow yourself flexibility in some areas. Not meeting my original deadline did not sit well with me. Im hard on myself like that though. Just wanted to let you all know that its not the end of the world if your plans don't work out as planned. Just make some more plans. :-)
I designed my own postcards and ordered 20,000 from vistaprint; avg cost $.03. I bought so many because I made a year long commitment to this endeavor. 6 boxes of postcards sitting in my office is a constant reminder of that commitment. Didn’t go the traditional yellow postcard route or picture of a house. I set up 3 different google voice numbers for tracking purposes. One for each list and one for my website. Tidbit: make sure your postcards have a return address. My original mailing was 1900 prospects. After removing the postcards from my database that were returned, my list is now about1750. I will be saving about $50 per subsequent mailing because I had a return address on my marketing piece. It’s also important for evaluating your list and/or your list provider. If too many postcards were kicked back that would have been a red flag for me.
After the drop on Feb 2 the phones start ringing. One lady says take her off the mailing list, some retail sellers call and about 3-5 solid leads come in. Talking to sellers was one of the fears I had when deciding on wholesaling. To overcome this, I just did it. Searched BP forums of course looking for scripts and learning from the community’s experience. But ultimately it took me just doing it to get over the fear. I didn’t use a script but I did have some questions in front of me that I wanted to make sure I asked. Overall I tried to just have a casual conversation, actively listen to sellers needs and wants, and build rapport. Find something you have in common with the seller like sports, hunting, fast cars, family, anything. The easy conversation starter: the weather! Don't start off with real estate talk. If the seller wants to get straight to business that's another story. So after a few phone calls I actually began looking forward to talking to sellers. I always returned calls within 48 hours and got offers out within 48 hours after the initial conversation. I know most wholesalers say 24 hour turn around time but I wanted to give myself some cushion.
I didn’t calculate actual response rates. I am measuring my success by # of closed deals. Came close to closing an owner financed deal, had a deal that I could have wrapped up using subject to but I didn’t know enough about that strategy to feel comfortable using it, closed on one deal and another deal is in escrow. The closed deal came from the listsource list, the other deal came from the citation list. The proceeds from the 1st deal have put me in the green for this business endeavor!
I will briefly discuss the closed deal. It exemplifies the importance of building relationships, especially when you are trying to get someone to sell their house for dirt cheap, as well as dispels the myth that a wholesale deal only takes 14 days to close. Elderly lady bought this house to preserve the community. She had plans of collaborating with community leaders to use the house as a community resource. Well relationships went sour with community members and lady needed to sell to pay IRS (didn't learn about this motivation until well after our initial conversation). Well I got it under contract and was a little too ambitious. But because I had built a great relationship with the seller I was able to go back to her after having the property under contract for about 3 weeks and convince her to take $10,000 less. I am sure she would not have done that if she didn't have trust in me. I fully disclosed to her that I would be reselling the house for a profit and she was fine with that. I mentioned that several times. Disclosure. Disclosure. Disclosure. After lowering the price, I find a buyer by joint venturing with another wholesaler based in New York! The power of BP! I picked his brain, learned quite a bit, and will be working with him in the future. But closing gets delayed because property is in the name of LLC that is not in good standing with the state. I had to transport seller downtown to pay fees for LLC. Hey wait, that's not part of wholesaling! Yes it is. I was determined to do anything I could to see this deal through to the end. Another thing I would like to mention is that I had to pay an EMD of $500 to seller. She requested that be paid to her directly because she had been burned by a wholesaler before. So I did not put $ in escrow. I paid her directly and I would not recommend anyone doing that. I did it because I was confident this was a good deal but I probably wouldn't do it again. But I probably shouldn't say probably. :-) Got the deal under contract in late February and we didn't close until two months later, April 17.
My longest post by far. Just wanted to share my experience. My next mailing for this campaign is set to go out May 1. I started another campaign with a totally different set of criteria. Not even a luke warm lead came in. Mailed about 1500 postcards in mid March. For the second leg of this particular campaign I am going to try zip letters. If I would have started this campaign first I would have been extremely discouraged. Luck of the draw I guess. That’s why experience is the best teacher. You will never really know until you do it. Wholesaling is indeed earned income. This hustle has made me realize the power of rentals and passive income. But I am happy I jumped out there and I have big plans of expanding. I have hired someone to run my internet marketing campaign. I am looking to ramp up direct mail marketing and will have to hire someone to help answer phones. I am ready and excited about the next chapter in my real estate business. Hope this post inspires someone that has been sitting on the sideline to take action. Was it easy? I would be lying if I said yes. The things in life that are the most satisfying are usually the most challenging!
Happy investing BP!!
E. Harris