Underprepared to answer calls from people responding to my letter

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Underprepared to answer calls from people responding to my letter

James Dean-Howell
Member since 2018 · 40 posts · 1 vote

First I want to say that I appreciate all of your help and answers in advance! Thanks for your time!

I started writing letters to a list of people in my area. Off market properties. I'm a newbie and I asked one pro when I should start writing letters to look for my first deal and they said "TODAY!"

So I did. I started writing letters but now I'm actually getting calls and I have to talk to people and make offers for their houses since my letters asks them if they are looking to sell.

I am definitely not as prepared as I could be for this. I'm making mistakes but learning at the same time. Last night a caller hung up on me because I asked her for her address. Lesson learned.

So I guess I'll ask specific questions to help in my learning process.

I'm going to try letting all calls go directly to voice mail so I can at least get their name and address before I talk to them. Does that sound like a good idea? I work a full time job so It's not like I can pick up the phone every time it rings.

How do I get numbers on the typical downpayment amount and general loan terms of financing I'd potential use? I'd be buying my first house using financing and even though I've read a few books on Real estate investing including Brandon Turners' guide to real estate investing, I learned very quickly that I don't know much about loan terms, Downpayment amounts, etc.

What should I know about owner financing? Where can I learn more? What is the typical downpayment on owner financing? Where do I get these documents for owner financing? A title company?

How do I make offers to these home owners who could just sell their homes for higher on the MLS? What beneifit could I offer them as a person who called them attempting to buy their property off market that would make them want to avoid listing their property on the MLS? I'm only interested in win/win deals so I'm not looking for a deal where they could have just put it on the MLS. Especially since I'd probably offer lower than what they could get just listing it.

I know why that pro told me to start TODAY but I also wanted to wait until I was a bit more prepared. Still, now that I'm getting calls I'm in the thick of it so I need to learn fast.

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Jeff Robertson
Rental Property Investor · Kalamazoo, MI · Member since 2018 · 2 posts · 4 votes
7y

@Dave Hutson  Get in touch with @Ramon Huerta. He is involved in everything REI Related in Kalamazoo. Also, go to meetup.com and sign up for the Property Krawl, Kalamazoo REIA, and Kalamazoo Real Estate Meetup Groups. They will send you notifications on the meeting times. I just started going myself last month. The meetup is the first Tuesday of each month. The REIA meeting is the last Tuesday of the month I believe. The Property Krawl is a Saturday somewhere in the middle of the month.

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  • Jim Goebel
    Real Estate Investor · Des Moines, IA · Member since 2016 · 922 posts · 533 votes
    7y

    @James Dean-Howell

    Well, welcome to the deep end.

    So, one of the things it sounds like you've learned at this point in time (or should have) is that you need funds to actually buy the stuff.

    So, if you have any aptitude for this, you need to get funds.

    To get funds, you need to be credible.

    To be credible, you need experience.  (or at the least a plan)

    What are you planning on doing with the houses once you buy them?  Fix them?  Sell them on assignment?

    You're learning.  But pick one of those two and then figure out how to do it, and quickly.

    2Reply
  • James Dean-Howell
    OP
    Member since 2018 · 40 posts · 1 vote
    7y

    I actually plan on living in the house and renting out spare rooms. House hacking. I'm mailing letters mostly to find a house for myself and partially to get into wholesaling.

    I'd like to buy something that is a bit of a fixer upper so I can start learning first hand about the entire process of fixing up a house. I've been to a few events with contractors where they take you to different houses and talk to you about what different things generally costs. However I think I learn best actually doing it and have someone helping me while I'm actually doing it.

    Still I'm making sure to continue my education while I get all my ducks in a row.

    1Reply
  • Jim S.
    Flipper/Rehabber · Cleveland, OH · Member since 2018 · 80 posts · 51 votes
    7y

    @James Dean-Howell I know that a lot of people on this board & many other places recommend jumping right in to avoid analysis paralysis and for some folks that's good advice.  

    You can only read so many books, take so many courses, etc. before you kind of hit a wall. After all, you're never really going to get your REI career launched just sitting behind a computer all day. Many people have done it this way and been phenomenally successful. However since you are looking to house hack and not just trying to find a buyer to assign a contract to, you definitely want to have funding in place or otherwise you're just spinning your wheels so I would recommend getting that together right away.

    There's probably no way to avoid that initial feeling of "Oh crap- my phone is ringing, what do I do now?" so letting the calls go to voicemail to give you time to do a little research before you talk to them is probably a good idea.

    Best of luck in your investing career!

    0Reply
  • Scott Anderson
    Rental Property Investor · St. Louis, MO · Member since 2019 · 27 posts · 8 votes
    7y

    @Jim S.

    I really resonate with this chicken before the egg feeing - do you find a deal then pursue funding or the other way around? As a newbie it’s really tough to determine when you have enough information.

    It’s also becoming clear to me that no amount of reading can get you ready to start. I think having live conversations with people ‘in the know’ is going to be priceless

    0Reply
  • Bob Woelfel
    Investor/Agent · Kansas City, MO · Member since 2017 · 291 posts · 308 votes
    7y

    @James Dean-Howell...if you are looking to live in one of these properties then the first thing you should do before anything else is to go to a mortgage lender and get pre-approved for a mortgage.  Full Stop!  They will let you know how much house you are approved for and what the different options they have available for rates, terms and down payment.  You can do this today or tomorrow and have an answer within a day or two.

    When you get a first call from a seller you have to remember that it's just information gathering.  You aren't buying the house from them that day so don't put so much pressure on yourself.  Getting their name, address of the house, beds, baths, and any other additional information about the property is easy to get on the first call.  Why are they looking to sell?  Does the property need work?  What are they looking to get for the property?  Try to actually have a conversation with them about the house and why they are wanting to move.  Most "motivated" sellers are happy to share much of this info.  Once I have that I typically do one of two things.  Based on my experience there are times when I know exactly where the house is at and I know it has the potential to be a deal.  If that is the case then I will try to set an appointment to go see the house right away.  If I don't know then I tell them that I'm going to do some research and some work on this and I will call them back within 24 hours.  

    As an owner occupant your selling proposition to them is that you're just a guy who wants to find a house to live in.  You love the area and are looking for a house that has potential and one that needs some help to make it shine again.  

    As a wholesaler I think you've got to get a few more things in place before actually going to contract with someone.  I would not advise asking about or going into an owner finance deal with a seller when you yourself have questions about it.  Many sellers are depending on investors to perform and actually buy their house.  Sadly, this doesn't always work out well for them.  I wish you the best.

    1Reply
  • Jim S.
    Flipper/Rehabber · Cleveland, OH · Member since 2018 · 80 posts · 51 votes
    7y

    @Scott Anderson

    In the past I've funded some deals for others but now I'm striking out on my own so I'm a bit of a newbie too from this angle.  

    I'm looking for deals and then based on each individual situation deciding whether to fix & flip or wholesale to someone else.  My long range plan is to also do some buy and holds but right now I'm trying to get my feet wet and since my previous experiences were with fix & flips that seems to be the logical place to start on my own. 

    If I find something I want to fix & flip I'm either going to fund the deal myself or depending on the price tag, I have pre-approval for higher amounts.  If I find a deal that I would prefer to wholesale I'll either find a buyer and double close (no assigning of contracts) or if I can't find a buyer in time to meet the closing date I'll close on the deal myself and then work on finding a buyer.  I feel it's really important to not leave the seller holding the bag just because I can't find a buyer (that's also a nice quick way to trash your reputation) so one way or the other I'll make sure the home gets purchased.

    You're right about no amount of reading being enough to get you really ready to start but I know that in my case it definitely helped my confidence level when I started having conversations with those in the know to at least in theory (if not practicality) having a fairly thorough understanding of how this whole thing works.

    0Reply
  • Ana Coello
    Rental Property Investor · Rockville, MD · Member since 2018 · 56 posts · 28 votes
    7y

    @James Dean-Howell what a good problem to have! I’m actually trying to write the letter to send out in the first place. Any pointers there? 

    Also, how did you find the events where you go with the contractors around a house and they explain things to you?

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  • James Dean-Howell
    OP
    Member since 2018 · 40 posts · 1 vote
    7y

    @Ana Coello

    I actually watched a specific video for the letters and followed that pretty much step by step. The only thing they didn't explain is how to find the list. I used Listsource and a free trial of propstream for that. Let me see if I can find the youtube video. Here it is. https://www.youtube.com/watch?v=GFdY5WG_iOY

    As for the contractor showing us around houses. The head of my previous city's Real eastate association did that once a month. I'm in Lansing, Michigan now and they did it in Kalamazoo, Michigan. I even took a train back to Kalamazoo for the last meeting just so I could get the experience and ask more questions. 

    0Reply
  • Ana Coello
    Rental Property Investor · Rockville, MD · Member since 2018 · 56 posts · 28 votes
    7y

    @James Dean-Howell Thank you! Watching to it now!

    0Reply
  • Scott Anderson
    Rental Property Investor · St. Louis, MO · Member since 2019 · 27 posts · 8 votes
    7y

    @Jim S - thanks for the reply.  I've read a lot about getting your team in place and the consensus seems to be that you need a Real Estate Agent, a Banker, an attorney, a CPA, and a Contractor.  But that's a hard thing for someone starting out to line all those folks up.  I feel like the bare minimum a person could start with (and build from) would be an Agent and a Banker (or some other funding solution relatively locked down/pre-approved).  Any thoughts on how you got things started?      

    0Reply
  • Jeff C.
    Real Estate Broker · Bakersfield, CA · Member since 2018 · 269 posts · 597 votes
    7y
    Originally posted by @Scott Anderson:

    @Jim S - thanks for the reply.  I've read a lot about getting your team in place and the consensus seems to be that you need a Real Estate Agent, a Banker, an attorney, a CPA, and a Contractor.  But that's a hard thing for someone starting out to line all those folks up.  I feel like the bare minimum a person could start with (and build from) would be an Agent and a Banker (or some other funding solution relatively locked down/pre-approved).  Any thoughts on how you got things started?      

    What you need right now is funds. If you don't find a source for funds, the rest is irrelevant because you won't be buying anything. If you're in St Louis, a google of "St Louis mortgage" will no doubt produce more results than you could ever need.

    0Reply
  • Jim S.
    Flipper/Rehabber · Cleveland, OH · Member since 2018 · 80 posts · 51 votes
    7y

    @Scott Anderson My situation is a little different from yours.   I've previously funded some deals for other investors so I currently have the necessary capital to fund my own deals. Since branching out on my own, the areas I'm starting with are wholesaling and fix & flip so I'm really not working with an agent either but rather finding off-market deals on my own.  

    However, the best advice I can give you with regard to getting funds is to meet with 4 or 5 banks in your area.  I know that in this day and age you can do banking with someone anywhere in the country but I'm old school and still like to do business face-to-face.  Usually one or two of these will stand out as either having a slightly better rate or will just seem more of a "fit" for your situation.  They'll be able to provide you with pre-approval so that you can feel secure in putting in an offer.  By doing this, you'll also know what amount of loan you qualify for which will allow you to not make offers on properties that are out of your price range.

    Hope that helps you at least a little bit.

    0Reply
  • Scott Anderson
    Rental Property Investor · St. Louis, MO · Member since 2019 · 27 posts · 8 votes
    7y

    @Jim S. & Jeff Cagle - Thanks to both of you for your replies.  All really good advice.  I'm getting closer every day to having my ducks in a row and start investing.  

    0Reply
  • Ayne C.Pro Member
    Rental Property Investor · Tampa, FL · Member since 2018 · 251 posts · 124 votes
    7y

    @James Dean-Howell

    You'll always be a wreck at first but it's good to be a prepared wreck. One thing that helped me tons is watching pre-qualification videos on YouTube. Both the calls with sellers and other videos that go over what to say on that call. One if the videos went into great detail on 4 things to go over.... 1. Condition of house 2. Timeline to sell 3. Motivation to sell 4 Price. This was extremely helpful.

    0Reply
  • Ayne C.Pro Member
    Rental Property Investor · Tampa, FL · Member since 2018 · 251 posts · 124 votes
    7y

    And here is the video

    https://youtu.be/YRmPF2R08pg

    0Reply
  • Dave Hutson
    Rental Property Investor · Kalamazoo, MI · Member since 2017 · 19 posts · 11 votes
    7y

    @James Dean-Howell - do you have the contact information for the Real Estate Association you worked with while living in Kalamazoo, MI?

    0Reply
  • James Dean-Howell
    OP
    Member since 2018 · 40 posts · 1 vote
    7y
    Originally posted by @Dave Hutson:

    @James Dean-Howell - do you have the contact information for the Real Estate Association you worked with while living in Kalamazoo, MI?

     Yes I do. Why do you ask?

    0Reply
  • Dave Hutson
    Rental Property Investor · Kalamazoo, MI · Member since 2017 · 19 posts · 11 votes
    7y

    I'm in Kalamazoo and would like to check them out

    0Reply
  • James Dean-Howell
    OP
    Member since 2018 · 40 posts · 1 vote
    7y
    Originally posted by @Dave Hutson:

    I'm in Kalamazoo and would like to check them out

    Check out Kalamazoo REIA or KRIEA on facebook.

    Also something called "Property Krawl."

    0Reply
  • Jeff Robertson
    Rental Property Investor · Kalamazoo, MI · Member since 2018 · 2 posts · 4 votes
    7y

    @Dave Hutson  Get in touch with @Ramon Huerta. He is involved in everything REI Related in Kalamazoo. Also, go to meetup.com and sign up for the Property Krawl, Kalamazoo REIA, and Kalamazoo Real Estate Meetup Groups. They will send you notifications on the meeting times. I just started going myself last month. The meetup is the first Tuesday of each month. The REIA meeting is the last Tuesday of the month I believe. The Property Krawl is a Saturday somewhere in the middle of the month.

    3Reply
  • Ramon HuertaPro Member
    Real Estate Agent · Kalamazoo, MI · Member since 2016 · 223 posts · 26 votes
    7y

    @Jeff Robertson thank you for thinking of me. Dave please feel free to message me. And @James Dean-Howell you know you can always give me a call. I am very happy your taking action. What your experiencing is just part of the journey and process. Let me know if I can help you.

    0Reply
  • Tanner Marsey
    Rental Property Investor · San Diego, CA · Member since 2017 · 439 posts · 578 votes
    7y

    Gnarly strategy but good for you!

    I’d do your best to find a good property and tie it up. Maybe with a clause giving you 30, 60, 90 days to figure out funding. Make some sort of DP. 1,000 bucks.... whatever you can to show you are serious and to ensure it’s locked up. If it is a good enough deal you’ll be able to find someone to fund it or you can maybe get approved for a traditional mortgage since it’ll be your primary.

    Good luck. Awesome that you’re getting calls back. Where are you investing?

    0Reply
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