I'm taking steps but need guidance

10 Replies

Hello BP friends!

I am hoping you guys can give me some guidance as I am pushing past analysis paralysis and starting to take steps and "learn as I go"

Background:

I have spent the better part of two years learning as I much as I can, reading, watching webinars, listening to podcasts, analyzing fake deals.... you get the idea. 

Over and over I again I heard on podcast people telling me that I just needed to be brave and actually start taking steps because if I waited until I knew it all I would never actually start.... so I started. 

Two weeks ago, I purchased an absentee owner list of multifamily properties in specific zip codes in Omaha, NE (where I live).  I spent a considerable amount of time drafting a letter (not a postcard, not a yellow letter) that I was proud to send these people. This letter didn't promise anything along the lines that could "pay cash" or "close fast", I just simply stated that I was interested in their property and if they were interested in selling I would like to start a conversation.

I printed them all out myself and hand signed them, stuffed envelopes myself, and used real stamps, and took all 149 letters to the post office (next month's letter will be outsourced for less money and time that I spent).

I immediately received one call letting me know they just sold that property the week before. And I received another call that I have started a conversation with the owner on a duplex but right now cannot come together on the numbers.

What I need guidance with:

I received an email response to one of my letters. The owner stated that he didn't want to sell the property that I mailed him on but he had 4 other properties that he would like to sell.  He gave me the addresses to all 4 and simply asked me to make him an offer. 

I was excited and quickly left home to drive by all 4 properties.  Two out of the four are in area's that I do not want to invest in and in what I would consider "C" neighborhoods. The other two are properties I might consider. 

I sent the owner back an email asking him for more information specifically asking about vacancy rates, expense reports and an APOD (annual property operating data) for each property.  

He replied back telling me that they are all well maintained (just driving by them I would argue with that) they have had good vacancy rates but recently had to evict one tenant, and he also sent me what he called a rent roll that only had the monthly rents listed for each unit.  

I am interested in making an offer on all four units as right now my main plan is to try to wholesale a few deals to build capital and then after I have some reserves built up start buying my own properties for buy and hold rentals. 

How do I go about making offers with such limited information with the idea of wholesaling them? 

Felllow Omahan, congrats on getting started! Don’t be afraid to push for more details. If they’re truly motivated to sell, and see you as a real buyer in good faith, they should be able to provide you the documents you need. Keep in mind, without that info you are not only buying blind, but then also less able to market the opportunities to others via your wholesaling strategies. Plenty of the education materials you’ve reviewed lay out what documents to look for. Also good idea to include those documents he provides within your official offer, lest they turn out to be anything less than above board down the road. -licensed agent, Redfin.

I think you are biting off more than you can chew at the moment. 4 properties is a lot to start with if you have never done it before. I would start with one. You are heading in the right direction. You cannot buy or sell anything until you know exactly what you are buying or selling and that requires reliable information. A legitimate seller will give you all the information you need. If the information (especially the numbers) check out, arrange to inspect the property. Since you are inexperienced, I would advise taking a general contractor or engineer with you. They will quickly identify any issues that you might overlook. Once you have inspected the property, and discovered no major issues, then you are in a position to make an offer. 

Dakotah, do you have a suggestion on a different way of going about asking for more information.  He replied to my letter via email saying he wanted to sell and to "make them an offer" I responded back asking for specific information and he only sent me how much they get in rates and what units they pay specific utilities on but not how much those expenses are.  I asked him if he meant to send more info as the info he did send came in a spreadsheet with three sheets but two out of the three were blank, he responded back "nope, just sent one sheet" Why would a seller respond that he does indeed want to sell but then be so cagey with giving more information. Is he hiding something? Has he not tracked his expenses the way he should be so he simply does not know??

Dennis, I have felt like I'm biting off more than I can chew since I started this process of actually taking steps, lol. I feel like that is the point, I need to take steps and learn as I go.  As I mentioned my #1 intention initially is to wholesale a few properties to build capital and a reserve fund while at the same time gain experience and a few good connections along the way.  Do you think I'm biting off too much by simply following up with my leads to see if there is a deal I could wholesale? Seem low risk to me even with multiple properties at a time.   

UPDATE :  I have been very fortunate to have had a local veteran Investor reach out to me directly and he has given me advice on how to proceed with one of these properties.  I gave an informal offer on the property yesterday morning but have not heard back. 

My question is, how should someone handle a lead like this that the only contact I have for the person is an email address?  This is very frustrating as it limits the "salesmanship" opportunities if you will... I can't get a "read" on the seller because there has been no person to person interaction.   The seller responded to my letter via email asking me to make an offer on a different property than what I inquired on, and I have been given very little information about the property even when have asked directly for it.  I gave what I feel was a fair offer with the limited information I had.  

My concern is that the seller has been very prompt in responding to my emails up until I actually gave my offer. Now it has been a day and a half and nothing, even after a follow-up email today. 

I should expect more time for a response? 

Are they not really motivated?

Did I insult them with a low ball offer?

They did. They are still not answering all my questions and said that they will only “negotiate” with someone giving serious offers... no counter offer no further info.  I responded back reminding them that they have refused to give the information needed for a better offer and I was more than happy to reevaluate my offer when I have more info. I told them that I wanted to find a price that could work for both of us but I needed more info. I have not heard back. That was four days ago. 

@Dave Arbaugh yea that is frustrating. I have noticed a lot of the responses I get from my direct mail is “we want to sell, make me an offer” but are unwilling to set up a showing, unwilling to provide appropriate financials, etc.

Just doesn’t sound like these folks are real motivated to sell.

Keep pressing on, good things will come.

Yeah that is exactly how this experience has been. Perplexing and frustrating.  But I’m grateful for it. I have learned a ton through this one experience and I’m sure that the gained knowledge will prove just as valuable as if I actually acquired the property.