Experiment: If you could only pick 100 leads. . .

10 Replies

Here's a question - doing a little experiment. In this scenario, let's say you are aiming to do a flip or BRRR strategy, and you just aren't finding any good deals on the MLS. You've have in front of you a list of all the properties in your county, containing all available information about each one from public record. In your list, there are hundreds of thousands of addresses, and you have the option to choose any 100 properties to be put in direct contact with the owner. You don't know for sure that they will sell or can sell, but you can pick any 100 and be guaranteed to at least reach the actual owner and inquire more.

The question is: how would you select your top 100 "leads" and why? Below is a list of the types of information you have about each property. . .

Address, owner name, owner's mailing address if different from property, years owned, zoning, violations, tax assessed vale, last sale price, tax balance, condition (i.e. "new construction", "good", "poor", "structurally compromised"), etc. etc. 

      For example, would you just pick the 100 with the highest tax balance? The 100 in a particular zip code with the lowest condition ratings? etc. etc. You can combine different bits of information to customize your list (you can add more than what I listed above if it's something usually found on public record), BUT you can only pick 100 properties to contact. 

      What's your approach and why? Interested to see what people think. Thanks!!!

      My answer would be "0", nada, zero, none...etc.

      Why?  It's a waste of my time.  You said it yourself, "You don't know for sure that they will sell or can sell...".

      I'm not interested in quantity.  I'm interested in quality...and not by the process of elimination of a quantity.

      Throwing SH%% against the wall and hoping something sticks isn't a time efficient strategy.

      The answer is to learn specifically where your potential sellers are, and camp out there.  The "who and where" is based on the strategy you plan on using.

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      @Joe Villeneuve 2 follow up questions: 1) When you say "camp out there" - what exactly do you mean? and 2) If I said I had a list of 1,000 properties in your neighborhood of interest, and I happen to know all of the owners want to sell, how might you pare down the list from there if you could only pick 100?

      I wouldn't limit myself to a list of just a 100. I would max it out because this is a numbers game. But I would get every distress and semi-distress list that I could possibly get from the county and cities in the surrounding area or desired location. Then stack every list together in a database and use that output list to target homeowners. Sort it base on criteria if needed. Pretty technical but that's what I would do.

      Originally posted by @Samantha Miller :

      @Joe Villeneuve 2 follow up questions: 1) When you say "camp out there" - what exactly do you mean? and 2) If I said I had a list of 1,000 properties in your neighborhood of interest, and I happen to know all of the owners want to sell, how might you pare down the list from there if you could only pick 100?

       2 answers:

      1 - "Camp out", as in continue to analyze/research/search the areas I mentioned.

      2 - First, if you had 1000 names of people in an area of my interest you know for sure that wanted to sell, I would be quickly looking in a different area.  If 1000 people all want to sell at the same time, there's something wrong with that area...and I don't want to buy there.

      I know where you're heading with this question, but in order for me to answer it, I would need the question to be based on a real world assumption...not a number that you might come up with a large number that would make the list sound better than what it is.

      Now if you said you had a list of 10 people in my area that you knew were interested in selling, it would peek my interest.  My first reply would be to ask you how you came to know this list of names, and how you knew they were selling?...and why they were selling?

      @Joe Villeneuve 1) Got it! That makes sense. 2) What types of answers might you be looking for, regarding those 10 people and how I knew them/ why they're selling. Would you say you're looking for signs of "motivated" sellers? Or perhaps trying to detect any potential problems with the property? etc. etc. 

      @Samantha Miller

      If your experiment is proving the thesis that the real estate investor is literal and will refuse to answer a hypothetical question I like your chances for success.

      I'd look at sales price from low to high. You'd get either the most distraught property or the longest tenured homeowner as long as you could exclude non-arm's length quitclaims.

      Originally posted by @Samantha Miller :

      @Joe Villeneuve 1) Got it! That makes sense. 2) What types of answers might you be looking for, regarding those 10 people and how I knew them/ why they're selling. Would you say you're looking for signs of "motivated" sellers? Or perhaps trying to detect any potential problems with the property? etc. etc. 

      To start with, I don't look for motivated sellers. There are reasons why most of them are motivated, and I'm not interested in taking on their problems. Besides, most REI are focused on that same small group...which ends up developing a large group of competitors...all bidding against eachother, which in the end means they are all bidding against themselves.

      I start with the market to find the micro-markets where there is a collection of current buyers, past sellers, and current rentals that establish a common ground of value for flipping and/or holding properties of common type and size.  I also base the criteria that these markets must match on a combination of financial goals and strategies that I can do to accomplish the financial goals as they apply to the profiles within these markets.

      So to answer the question of "what types of answers..." I'm looking for, depends on the specifics at any given time as laid out in the paragraph just before this one.

      Simple.  ;-)

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