My wife and I have officially rebooted our real estate business. I wanted to post the details in case it can help others.It also serves as a little bit of accountability for us.
I started purchasing real estate in 2004 while attending Texas A&M University. Once I graduated and got a nice paying job I still managed the properties I owned, but unfortunately I became too comfortable to aggressively expand my business. That all changed after I got married.
Late in 2012 I reorganized and developed a business plan & strategy for a new real estate business. The objective was to purchase distressed single-family properties using private or hard money, rehab them, then refinance and lease them. That strategy seemed to be the best way to become a buy & hold investor for cash flow with little-to-no money down needed. My wife was hesitant at first, but she decided to go along with the plan to see how it worked out (she's now fully committed).
By December 2013 my wife & I purchased 3 properties. Two of them were already rehabbed, leased, and refinanced. The process was completed for the 3rd property by March 2014. That is when things got interesting.
My First Multi-Family
I ran across a deal on a very distressed 29 unit Class C apartment complex. At first I was not very interested, mainly because the price was out of my range and it was a deviation from the business plan. However, after working the numbers and securing the 100% financing I determined that the price and upside potential was worth the risk (You can read more about that deal here). This was a huge step for us into unfamiliar territory! For me it was almost like my very first real estate purchase all over again. We were both excited though!
The decision to purchase that apartment complex was not a bad one to make, but in hindsight it may have not been the best decision for us at that time (I say "may" because we learned a lot that will help us in the future). The saying goes "You don't know what you don't know" and that was very true in this case. I calculated that the purchase price was low enough to where there was plenty of room left for to make mistakes and still come out okay. Of course, now I realize that if we had purchased the property with a partner experienced in multi-family investing the learning curve cost would have likely been much cheaper.
Ultimately, we owned the apartment for 16 months. We fully intended on refinancing it to hold long-term once the property was rehabbed and stabilized.However, after a 6 month refinance quest ended up with us being declined by more banks than I can remember we decided it was time to sell. We could have tried holding it longer to find a willing lender, but it was better for us to take what learned and cash out.Looking back and knowing what I know now I am certain I could have purchased it differently (like using a partner) and it would worked out much better for us. But again, you don't know what you don't know. It was time for us to move on.
Now cashed out of the apartment (and our 3rd SF purchase), all credit lines paid off, and with seed money for marketing, my wife and I wanted to get things rolling again. Because the apartment deal took up all of our spare time and capital resources we were basically starting over. We had not done any marketing since purchasing the apartment!
I still have a full-time job that I enjoy and my wife is a stay-at-home mom, which is also a full-time job. Our free time is limited, but after being stuck on 1 deal for 16 months we were ready to get things going again - fast. To help us make the most of our time I worked extensively on our business systems while the apartment sale was waiting to close. Here are a few of the things that we did:
- Redefined objectives: Cash flow is still our overall objective, but with houses selling so quickly in the Houston area we decided rehabbing & flipping is the best short-term strategy for us to build up cash to be used on future multi-family properties.
- Marketing Plan: We will be sending absentee mailers out every 4 weeks for 7 months. Each batch will have between 800-1000 names. The first mail campaign went out November 3rd (and we're already working on a deal). It was a specific postcard mailer that will be followed with generic postcards. For split-testing purposes the second mail campaign will be a typed letter in Invitation envelope starting in December. The plan is to work those two lists until we get our first deal. We will apply profits from any deals to add additional mail campaigns until we have about 1000 going out each week (or as our time allows). After the 7 week campaign is finished I will convert the list to a mixed campaign (postcards, letters, zip letters) that will go out continuously every 6-8 weeks. A new 7 month mail campaign will then replace the expired campaign.
- Real estate license: I finally got licensed.It's been on the "to-do" list for a while. In a fast market like Houston it is vital for a flipping business to be able to quickly pull comps. It also saves us about 3% on the back-end sale.Over time that will definitely add up a nice chunk of change. That is why I used every spare block of time I had to complete all of the courses online in 4 weeks. Now being a licensed Realtor I've learned about a number of other systems that Realtors use to streamline tasks. The tools alone are worth the effort to get licensed!
- Website: This was another item on the "to-do" list that never got done. I've built a website before and hated doing it. I wanted this one professionally built, but at a cheap cost. Luckily I was able to find a freelancer on Elance.com to do it for only $400. Check it out here.
- CRM: My wife and I want to build a well-oiled real estate investing business. As for any scalable business, having a customizable, team-friendly customer relationship management system to track our business in a variety of different ways is essential. Excel documents could have worked for us in the short-run, but we'd need to migrate to a CRM eventually. We went with Zoho CRM and so far have been very impressed with its capabilities. I am constantly learning new features that will help us streamline tasks.
- Phone system: We were already using VoiceNation for our phone system so this was not really a change. Google Voice has many of the same features for free, but since we are already with VoiceNation we just made a few changes to meet our current needs.
Over the years we have learned a lot about what to do and even more about what not to do. With that experience and these systems in place we are very excited about the future of our real estate business. We will continue to push forward while learning from other real estate investors in our area and on BiggerPockets.
I look forward to reading everyone's feedback and comments.
Nice work. If you don't mind, what do you do with the CRM? Do you track people who have purchased and leased from you, is it a database of contact info for everyone from contractors to leads to partners?
@Dana Whicker , I primarily wanted a CRM to track leads and keep up with their status. I also wanted to be able to track marketing effectiveness. Zoho CRM does all of that and so much more. It can integrate and appropriately tag/associate various items such as sellers & properties, offers, documents, marketing campaigns, etc. It does require subscription though. There are free CRMs out there, but Zoho was the only one I found that was customizable enough for me and would grow with my needs.
Wow, really fascinating story, thanks for sharing. Learned a lot just reading through it.
If I may make just one suggestion - there are a few minor spelling mistakes on the website. Maybe I'm just incredibly nitpicky, but might be worth going through it during some downtime to fix those. Unless you're not really focusing on the website for leads, in which case, doesn't matter!
Again, thanks a bunch for sharing. And best of luck to you!
@Lucas S. Thanks! Please message me with the spelling mistake(s) you noticed. I couldn't find any, but then again I am not very good at proofreading.
Great info Chris, thanks for sharing! I have been mailing to a smaller list of probates for a few months now and have been planning to ramp things up for a while. I appreciate the info, this will help me as I start to plan my marketing campaign. Good Luck!
@Chris Bounds Thanks for sharing. I love the perspective on the learning curve of owning the apartment building. Sounds like you might be able to write a blog post about your 16 month experience!
Sounds almost identical to my direct mail campaign I just started. I haven't planned on using any CRM site (was going to use google docs) but after reading this I am going to do more research on them. Do you happen to still have the contact to the guy that built your website? Also, I would love to know when you get your first property on contract seeing how you started around the same time as me if not a month before. We can make a friendly game with who closes one first (;
@Micah Copeland Surprisingly the very first call I got is now set to close next week. I only received 1 other call, but they were unmotivated. My second batch for this list and first batch for another list will go out over the next 2 weeks.
I used elance.com to find a web developer. The guys that did mine did a good job, but I wouldn't use them again. I found a better guy that I will use next time on my RE site. I used him on my personal blogging website and he did a great job. He is helping my friend with her business site too. PM me for his info.
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