Second Week Door Knocking - Results and Revision of Plan

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Second Week Door Knocking - Results and Revision of Plan

John Hyatt
Investor · Glendale, AZ · Member since 2015 · 113 posts · 47 votes

My goal is to get 50 units via Subject to and then sell them on a Rent to Own in Arizona to create a passive income of $5,000/month. This is just the beginning and then I will take that money and invest in Mobile Home Parks and so forth. What I am doing:

1) Door Knocking on FSBO, Pre-Foreclosures, and Rentals. I look for properties in my area on Zillow and then check the tax records to see if they are owner occupied. If so, then I Knock on their door.

Here are My results this week I went with a friend who worked for Merrill Lynch and built a large portfolio door knocking:

Knocked on 12 doors and only 3 people answered, the other 9 I left my note card and business card.

The houses that did answer here is what happened:

House #1: Woke the lady up and she said she wasn't interested.

House #2: House sitter answered the door and said the owners wouldn't be interested, but he will give them my card (not holding my breath lol).

House #3: Homeowner said they weren't interested, we asked three times (of course added info each time) and she was still not interested.

Things I learned this week:

1) Door knock later in the day like 4pm - 7pm when people are home.
2) Have better flyer to hand out and business card.
3) Always ask three times - never going to see them again anyways.

Next steps:

1) Create a flyer or Postcard that we can hand out
2) Create a more professional business card (currently have my ASU email)
3) Knock on moor doors
4) We are going to pick two neighborhoods and test a different marketing plan in each and whichever wins we take the winner and then a new idea and repeat.

Questions:

 1) A lot of the people that I have been door knocking don't seem like they are in pre-foreclosure. Is Zillow Pre-foreclosures accurate? or am I just not saying the right thing? I currently say "I want to buy your house" or "Do you want to sell your house?"

2) Any tips or advice?

Thank you in advance!

-John

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Bryan L.
Residential Real Estate Agent · Cookeville, TN · Member since 2013 · 1k+ posts · 948 votes
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Try saying, "My partners and I are looking to buy some houses in this area/neighborhood.  Who do you know that might want to sell?"

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  • Bryan L.
    Residential Real Estate Agent · Cookeville, TN · Member since 2013 · 1k+ posts · 948 votes
    11y

    Try saying, "My partners and I are looking to buy some houses in this area/neighborhood.  Who do you know that might want to sell?"

    4Reply
  • Steven J.
    Urbana, IL · Member since 2012 · 1k+ posts · 425 votes
    11y

    You might have better luck checking the legals in the classifieds of your paper. I've been finding probate leads there but I also see foreclosures occasionally there as well.

    You'll have to be very careful when you do get a foreclosure lead. I get some really huffy and puffy leads with probate because they want to know how I found their information, their address, and how I knew a family member passed away. I'm still working on the proper strategies there. 

    I think @Bryan L. is right on with how you should approach a cold lead, maybe even your foreclosure leads. If you approach them all just inquiring about homes for sale they won't feel as threatened hopefully. Also, if you're going to start drilling questions make sure you ask to do that first. This allows them to feel in control of the situation but allows you to start your pitch/speech/whatever it may be. I'll follow this thread here as I want to know how your future door knockings go.

    1Reply
  • John Hyatt
    OP
    Investor · Glendale, AZ · Member since 2015 · 113 posts · 47 votes
    11y
    Originally posted by @Steven J.:

    You might have better luck checking the legals in the classifieds of your paper. I've been finding probate leads there but I also see foreclosures occasionally there as well.

    You'll have to be very careful when you do get a foreclosure lead. I get some really huffy and puffy leads with probate because they want to know how I found their information, their address, and how I knew a family member passed away. I'm still working on the proper strategies there. 

    I think @Bryan L. is right on with how you should approach a cold lead, maybe even your foreclosure leads. If you approach them all just inquiring about homes for sale they won't feel as threatened hopefully. Also, if you're going to start drilling questions make sure you ask to do that first. This allows them to feel in control of the situation but allows you to start your pitch/speech/whatever it may be. I'll follow this thread here as I want to know how your future door knockings go.

     Hi Steven, I tried searching online for classifieds. Are the probates something that is only published in the newspapers classifieds? Do I need to purchase the Sunday newspaper?

    Great advice thank you! 

    0Reply
  • John Hyatt
    OP
    Investor · Glendale, AZ · Member since 2015 · 113 posts · 47 votes
    11y
    Originally posted by @Bryan L.:

    Try saying, "My partners and I are looking to buy some houses in this area/neighborhood.  Who do you know that might want to sell?"

     Thank you Bryan! I will try that next weekend and report back my success! 

    0Reply
  • Steven J.
    Urbana, IL · Member since 2012 · 1k+ posts · 425 votes
    11y

    You're correct. I don't have to subscribe thankfully to the newspaper service here. And the legals are only online, they don't put them in the print. 

    0Reply
  • Steven J.
    Urbana, IL · Member since 2012 · 1k+ posts · 425 votes
    11y

    @John Hyatt

     Hows this week of door knocking going?

    0Reply
  • John Hyatt
    OP
    Investor · Glendale, AZ · Member since 2015 · 113 posts · 47 votes
    11y

    Hi Steven, 

    Long story short, I didn't get to make it last week. I am going on vacation this weekend, but will be back at it next week full force! Thank you for the follow up, I did get one FSBO that I am going to go look at the house tonight before I leave tomorrow on vacation. Crazy how a little bit of effort pays off, I want to not only continue but door knock more and longer.

    -John

    0Reply
  • Carl Mcknight
    Rental Property Investor · TN · Member since 2013 · 54 posts · 50 votes
    11y
    Hello John, and good luck on your endeavor. Can you elaborate a little on your strategy; 50 units for $5k in passive income? That's $100 /month in income per door. Have you factored in fix up costs, title fees, insurance, taxes, possible foreclosure on the buyer, (holding costs) etc prior to finding a rent to own purchaser? Not saying your plan can't work, just would be interested in a few more details. Thanks and good luck!
    0Reply
  • Robert Davidson
    Corte Madera, CA · Member since 2011 · 59 posts · 38 votes
    11y

    Two sources for foreclosure leads are RealtyTrac and Property Radar.  Both are subscription but IMO very reasonable.  You're wasting a lot of time with Zillow and checking tax records.

    It's irrelevant if the house in foreclosure is owner occupied or occupied by a renter (maybe not paying rent.)  You may have a couple of hoops to jump through on non-owner occupied but check your state foreclosure laws with an attorney.  Paying for an hour or two consultation with a real estate attorney will be well worth it.   In California if a tenant is occupying a foreclosure they have to be given 60 days notice to vacate.

    2Reply
  • Raju Pothuraju
    Investor · Springfield, VA · Member since 2015 · 35 posts · 6 votes
    11y

    @John Hyatt

    Thanks for posting your experience of door knocking. I have been in a different marketing effort for years and nothing replaces face-to-face interaction with potential clients.

    0Reply
  • John Hyatt
    OP
    Investor · Glendale, AZ · Member since 2015 · 113 posts · 47 votes
    11y
    Originally posted by @Carl Mcknight:
    Hello John, and good luck on your endeavor. Can you elaborate a little on your strategy; 50 units for $5k in passive income? That's $100 /month in income per door. Have you factored in fix up costs, title fees, insurance, taxes, possible foreclosure on the buyer, (holding costs) etc prior to finding a rent to own purchaser? Not saying your plan can't work, just would be interested in a few more details. Thanks and good luck!

    Hello Carl,

    My goal is $100/month per door after everything, all costs, yes. I know not every deal will be able to cash flow $100/mo, quite honestly I would probably take a deal even if it didn't cash flow if I could get some equity or if they already paid several years on the loan. My dad and his investors are financing the deals if for some reason we need to fix it up or renter is late, etc. We want to get as many properties as we can over the next couple of years.

    0Reply
  • John Hyatt
    OP
    Investor · Glendale, AZ · Member since 2015 · 113 posts · 47 votes
    11y
    Originally posted by @Robert Davidson:

    Two sources for foreclosure leads are RealtyTrac and Property Radar.  Both are subscription but IMO very reasonable.  You're wasting a lot of time with Zillow and checking tax records.

    It's irrelevant if the house in foreclosure is owner occupied or occupied by a renter (maybe not paying rent.)  You may have a couple of hoops to jump through on non-owner occupied but check your state foreclosure laws with an attorney.  Paying for an hour or two consultation with a real estate attorney will be well worth it.   In California if a tenant is occupying a foreclosure they have to be given 60 days notice to vacate.

    Thank you Robert! I agree, Zillow has been getting me on a lot of dead ends...also very time consuming!

    0Reply
  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    11y

    @John Hyatt

      this model is fraught with peril I have seen more than one company get totally fubared with it... you buy sub too put basically a glorified renter or sub prime borrower in the property they don't pay ( which happens a lot if not to almost all of them.. you then have little to no cash flow to start you have no equity really.. and you have a night mare.. I would rethink this whole model.. I bailed out a group of investors here in PDX listen to the same guru or who ever espouses this model...  it got so bad because they were defaulting on the underlying sub too's and those folks go their credit trashed and they turned them into the AG and they got in a heap of trouble.. I ended up cashing 20 of the 30 out.. the rest went down the toilet.  bottom line is just rent the place's do not give them any equitable ownership so when they want to leave they just leave instead of claiming an ownership interest.

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  • John Hyatt
    OP
    Investor · Glendale, AZ · Member since 2015 · 113 posts · 47 votes
    11y
    Originally posted by @Jay Hinrichs:

    @John Hyatt

      this model is fraught with peril I have seen more than one company get totally fubared with it... you buy sub too put basically a glorified renter or sub prime borrower in the property they don't pay ( which happens a lot if not to almost all of them.. you then have little to no cash flow to start you have no equity really.. and you have a night mare.. I would rethink this whole model.. I bailed out a group of investors here in PDX listen to the same guru or who ever espouses this model...  it got so bad because they were defaulting on the underlying sub too's and those folks go their credit trashed and they turned them into the AG and they got in a heap of trouble.. I ended up cashing 20 of the 30 out.. the rest went down the toilet.  bottom line is just rent the place's do not give them any equitable ownership so when they want to leave they just leave instead of claiming an ownership interest.

     Hi Jay,

    The guru you are referring to is John Burley? The guy who invested Robert Kiyosakis money (author of rich dad poor dad)? 

    0Reply
  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    11y

    it maybe the kids I bailed out were Rich Dad poor dad deciples it was the first time I had ever heard of that book or that author.. this was 2005 ish... they ended up being my best team of bird dogs and door knockers I bet they acquired well over 100 sub too for us.

    this was in the day here in Orygun that it was legal to buy a sub too and keep the owner who was in foreclosure on as the tenant.  They NEVER worked.. we ended up evicting them.

    These kids bought as I said about 35 of these here in PDX  with little to no equity. then sold to sub prime type borrowers .. it all looked good on paper until the buyers started to default in mass. and they did not have enough cash flow to pay the underlying mortgages. so the underlying mortgages were going into default.. the sub prime rent to own or lease to own or owner contract squatted in the houses.. they did not have the money to pursue evictions or foreclosures.  The owners of the houses they bought sub too started filing complaints with the AD.. and they got in a mess of trouble.  I did work outs with about 20 of them. and helped them get through them..

    When we did sub too our company was VERY well capitalized and we could at any time payoff a mortgage with cash in full if the alienation clause was invoked by the underlying lender. I have no way to know your financial capacity of course.. but these are the pit falls of this model... if you want to aquire 2 to 5 million in sub too debt you should have 1 mill or more in liquidity to make sure you don't get your sellers in a default situation.  Or the ability to refi or what have you.. But if you sell on contract to sub prime owner occ's you just lost your ability to refi.. and ergo you need a boat load of cash to keep you going if you have defaults and you will have defaults.

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  • William Hochstedler
    Broker · Logan, UT · Member since 2013 · 1k+ posts · 1k+ votes
    11y

    Can you elaborate on what changed legally (i.e. state, federal, etc)?  We're seeing clauses in bank short sale docs that prohibit us from leasebacks of any kind.  On a cash purchase, I don't understand why the bank would insist on this.  Are these two things related?

    Thanks again, Jay.

    0Reply
  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    11y

    @William Hochstedler

      Orygun and Wash. both passed similar laws in 07 when the foreclosure crisis was starting.  There was an extreme amount of fraud happening in the Sub too industry and that included foreclosure rescue's  California has a similar law as well.

    If a house has a notice of default filed  and its owner occ.. it is illegal to keep the owner in the house as a tenant...

    Its also anti equity skimming laws.. if you buy a preforeclosure and sell it with in a prescribed amount of time can't recall exactly but its about 24 months.. your required to split what ever profit you made with the person you bought it from .. etc etc.

    I got out of that form of investing when these Senate bills were adopted as law.

    To my knowledge it is not federal its state specfic

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  • William Hochstedler
    Broker · Logan, UT · Member since 2013 · 1k+ posts · 1k+ votes
    11y
    Originally posted by @John Hyatt:

    3) Always ask three times - never going to see them again anyways.

     I don't know if this is consistent with your experience, but I have found, like all marketing, going back is important.  When I work my farm area, I go back to the same properties regularly to establish rapport.

    Also, when dealing with pre-foreclosure, many borrowers (particularly with certain banks) are getting strung along with mortgage workouts.  They think they have everything under control until they don't.  By returning several times, you might be the person they call when they hit a wall with the bank or you might go back just when they're at their wit's end and want to talk.

    For me, the one-and-done numbers game isn't much better than direct mail.  By door knocking you can get something that direct mail can't do: feedback.  Many people don't open up the first time.

    Thoughts?

    1Reply
  • John Hyatt
    OP
    Investor · Glendale, AZ · Member since 2015 · 113 posts · 47 votes
    11y
    Originally posted by @William Hochstedler:
    Originally posted by @John Hyatt:

    3) Always ask three times - never going to see them again anyways.

     I don't know if this is consistent with your experience, but I have found, like all marketing, going back is important.  When I work my farm area, I go back to the same properties regularly to establish rapport.

    Also, when dealing with pre-foreclosure, many borrowers (particularly with certain banks) are getting strung along with mortgage workouts.  They think they have everything under control until they don't.  By returning several times, you might be the person they call when they hit a wall with the bank or you might go back just when they're at their wit's end and want to talk.

    For me, the one-and-done numbers game isn't much better than direct mail.  By door knocking you can get something that direct mail can't do: feedback.  Many people don't open up the first time.

    Thoughts?

    Hi William,

    Good points, my friend that I was door knocking with is more aggressive than I am. I've been reading Tom Hopkins how to sell anything and what I am getting is that I need to develop my own style and I am more relational like you suggest. I am now doing a combination of Mailers and door knocking. Thank you for advice!! I am using this cool app Spotio now as well, I highly recommend it.

    -John

    0Reply
  • Roy Schauer
    Problem Solver / Investor · Anchorage, AK · Member since 2012 · 118 posts · 34 votes
    11y
    I work with pr-foreclosures a lot. They are public record, so find out where they have to be published. The courthouse is usually one, but not the most efficient method. We have a local Journal of Commerce that publishes them. For the western states, WWW.USA-FORECLOSURE.COM is a free service that allows you to set up area notifications.  Another good service, but it's a pay site, is WWW.FORECLOSURES.COM.  They allow you to set up search perimeters so that you can get an email every time a new property is added that meets your criteria. I have mine setup for my area to alert me for any properties with at least 20% equity, under $400k.  Saves me a lot of time searching and now I spend that time qualifying and making contact.

     Also setup bird dogs, people who would either need money, or are constantly out in the neighborhoods and come in contact with these houses. I have a stay at home mom that I've shown how to look for properties and what makes it a good deal in my eyes. Also I have a guy that works for the local gas company who does the turn offs for properties.  When he sees a house that's vacant, or been neglected, and has to turn off the gas, he sends me the address. I give it to my stay at home mom to research and give me what she finds and I do the contact from there. If I get it under contract, whoever was involved gets $500 each. But I've spent the time to show them what I'm looking for and given them the tools to do it.  

    I've also partnered up with realtors and the local real estate investment group to let me know when they see deals. I either let them stay involved, ie realtors to make their commission, or I pay them a wholesale (finders) fee. A lot of times, beginning investors will be able to find a deal, they just don't know where to go from there. So I do a mini-mentoring program to show them how I research and make contact. I know have a decent reputation in the realtor community of being able to help them sell properties that are problem children for them and they can't get rid of. Typically the 90-120 days on market.  

    I hope these ideas help.  There are a lot of people out there that would love to partner up and learn how to make better money.  If nothing else, put together a small investor network to help partner up on deals. I've now got so many coming through that I can't handle them all so I pick the one's I really like, and on the others I either partner up with other investors to leverage their time and my knowledge, or I wholesale them to experienced investors. There are really just too many possible deals out there right now. And with the economy doing what it is, I think there will be even more opportunities.



    Originally posted by @John Hyatt:
    Originally posted by @Robert Davidson:

    Two sources for foreclosure leads are RealtyTrac and Property Radar.  Both are subscription but IMO very reasonable.  You're wasting a lot of time with Zillow and checking tax records.

    It's irrelevant if the house in foreclosure is owner occupied or occupied by a renter (maybe not paying rent.)  You may have a couple of hoops to jump through on non-owner occupied but check your state foreclosure laws with an attorney.  Paying for an hour or two consultation with a real estate attorney will be well worth it.   In California if a tenant is occupying a foreclosure they have to be given 60 days notice to vacate.

    Thank you Robert! I agree, Zillow has been getting me on a lot of dead ends...also very time consuming!

    1Reply
  • John Hyatt
    OP
    Investor · Glendale, AZ · Member since 2015 · 113 posts · 47 votes
    11y
    Originally posted by @Roy Schauer:
    I work with pr-foreclosures a lot. They are public record, so find out where they have to be published. The courthouse is usually one, but not the most efficient method. We have a local Journal of Commerce that publishes them. For the western states, WWW.USA-FORECLOSURE.COM is a free service that allows you to set up area notifications.  Another good service, but it's a pay site, is WWW.FORECLOSURES.COM.  They allow you to set up search perimeters so that you can get an email every time a new property is added that meets your criteria. I have mine setup for my area to alert me for any properties with at least 20% equity, under $400k.  Saves me a lot of time searching and now I spend that time qualifying and making contact.

     Also setup bird dogs, people who would either need money, or are constantly out in the neighborhoods and come in contact with these houses. I have a stay at home mom that I've shown how to look for properties and what makes it a good deal in my eyes. Also I have a guy that works for the local gas company who does the turn offs for properties.  When he sees a house that's vacant, or been neglected, and has to turn off the gas, he sends me the address. I give it to my stay at home mom to research and give me what she finds and I do the contact from there. If I get it under contract, whoever was involved gets $500 each. But I've spent the time to show them what I'm looking for and given them the tools to do it.  

    I've also partnered up with realtors and the local real estate investment group to let me know when they see deals. I either let them stay involved, ie realtors to make their commission, or I pay them a wholesale (finders) fee. A lot of times, beginning investors will be able to find a deal, they just don't know where to go from there. So I do a mini-mentoring program to show them how I research and make contact. I know have a decent reputation in the realtor community of being able to help them sell properties that are problem children for them and they can't get rid of. Typically the 90-120 days on market.  

    I hope these ideas help.  There are a lot of people out there that would love to partner up and learn how to make better money.  If nothing else, put together a small investor network to help partner up on deals. I've now got so many coming through that I can't handle them all so I pick the one's I really like, and on the others I either partner up with other investors to leverage their time and my knowledge, or I wholesale them to experienced investors. There are really just too many possible deals out there right now. And with the economy doing what it is, I think there will be even more opportunities.



    Originally posted by @John Hyatt:
    Originally posted by @Robert Davidson:

    Two sources for foreclosure leads are RealtyTrac and Property Radar.  Both are subscription but IMO very reasonable.  You're wasting a lot of time with Zillow and checking tax records.

    It's irrelevant if the house in foreclosure is owner occupied or occupied by a renter (maybe not paying rent.)  You may have a couple of hoops to jump through on non-owner occupied but check your state foreclosure laws with an attorney.  Paying for an hour or two consultation with a real estate attorney will be well worth it.   In California if a tenant is occupying a foreclosure they have to be given 60 days notice to vacate.

    Thank you Robert! I agree, Zillow has been getting me on a lot of dead ends...also very time consuming!

     Great info!! Thank you Roy! I will check out those sites and set up alerts as well. 

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