“Hello, my name is Marty. The company I work for asked me to drop by today to see if you’d be interested in selling your home. No? Well, if you change your mind, or perhaps you know someone in the area that would like to sell, please take my card and this information about our company. Thank you.”
From 2004-2006, I used a variation of this script to knock on 60-80 doors every weekend. I was very strategic about the doors I chose to knock on. The homeowner had to be in foreclosure, 30 days or less until their auction date. That way, I knew I was dealing with a highly motivated seller.
When the market crashed in 2007 I abandoned this approach. It didn’t make a lot of sense to knock on doors when there were so many underwater homeowners in foreclosure. The lowest hanging fruit could be plucked at the auction or on the multiple listing service.
Now in Phoenix (and many other real estate markets across the country) it feels like 2005 all over again. Inventory levels are shrinking and prices are on the rise. A housing analyst here predicts that prices will go up 25% by the end of 2012. First-time homebuyers, second homebuyers and long-term investors are gobbling up short sale and REO inventory on the MLS. Auction properties are selling for 95% of after-repair value.
I lamented this recent phenomenon in a post for BiggerPockets.com a few weeks ago (Getting Priced out of the Fix and Flip Market) and recommended a change in marketing strategy – door knocking, direct mail and new markets.
I quickly discovered that I’m a little rusty with this stuff.
Okay, I’m VERY rusty. Guerrilla marketing has changed a lot and I haven’t knocked on a door since June of 2006 – my last direct mail campaign was in 2004. Lucky for me, I have BiggerPockets.com.
Inspired by this forum post by Michael Quarles, I built a website with a Google voice number to capture leads. This took about 3 hours to create using GoDaddy and WordPress and cost about $60 for one year of hosting. The voicemail line was free because I already have a Gmail account.
The next step is to create a letter/postcard to mail out to distressed/absentee/free and clear homeowners (I already have the list, more than 20,000 names and addresses). I’ll keep you posted on my progress with this.
As for new markets – on Monday my partner Manny Romero and I drove to the Palm Desert area in California to scope out the fix and flip scene there. Manny grew up in Palm Springs and the demographics are similar to Phoenix. We met with a few Realtors and an auction bidding service (more on this in the coming weeks).
I look at fix and flipping like fishing. To find great deals you need the right bait and a lot of lines in the water. It may take some time to find the best fishing hole but the rewards outweigh the risks. Stay tuned.