Finding Flip Deals

8 Replies

Hello all,

So I read "The Book on Flipping Houses" book by J. Scott. It was a great read, learned a lot of good information. My question is its still increasingly difficult to find  deals. I have send out yellow notes (handwritten) to over 1000 homeowners, and done 2-3 runs on each with different notes. Nothing has worked yet. I have had a few discussion, but from my experience everyone thinks their property is worth a lot more than it really is. I know 1000 may not be a lot. I should probably buy and send out to many more homeowers, and I also read that you should send out letters to each person about 5 times. Any other advise? I have also tried to put out signs on the road.

Have I just given up too early with the yellow notes?

You may be doing this already but make sure you are sending letters to people that would have a reason to sell under market. In other word don't send them to the first 1000 addresses in the phone book, buy a list of absentee owners, properties behind on property taxes, or people that have had the same address for a long time (like 20+ year and thus have a lot of equity in their home).

Most everyone thinks their house is worth more than it is. It is your job to explain why it isn't worth what they think it is. If they say their house is worth 200K then show them the comps that support a 150K value. Ask them if they were purchasing a house in their neighborhood would they buy the one for 200K or the similar one down the street for 150K? Let them work through the logic in their head.  Explain that those homes are recently remolded and in better condition than theirs too. Point out issues with the home that would affect value. Negotiate! This is easier said than done of course but start working on it and learning more about it.

Originally posted by @Ted Faust :

You may be doing this already but make sure you are sending letters to people that would have a reason to sell under market. In other word don't send them to the first 1000 addresses in the phone book, buy a list of absentee owners, properties behind on property taxes, or people that have had the same address for a long time (like 20+ year and thus have a lot of equity in their home).

Most everyone thinks their house is worth more than it is. It is your job to explain why it isn't worth what they think it is. If they say their house is worth 200K then show them the comps that support a 150K value. Ask them if they were purchasing a house in their neighborhood would they buy the one for 200K or the similar one down the street for 150K? Let them work through the logic in their head.  Explain that those homes are recently remolded and in better condition than theirs too. Point out issues with the home that would affect value. Negotiate! This is easier said than done of course but start working on it and learning more about it.

Actually, the list I had was home purchases between 2005-2008, was mainly targeting upside down owners who purchased right before the market crash.

Where do I get a list of people that have had the same address for a long time?

Thanks!

I'm curious as to how you plan to make money on upside down homeowners?  If the property is worth $100K and they owe $125K, you might get the bank to short sale it for $100K, but that doesn't leave you anything to work with for a flip.  Of course you might be able to fix it up and add some value to it, but your numbers are going to  be tight. Plus you may have a very long wait for the short sale to close. 

Most people look to send their yellow letters to homeowners with positive equity in their property.  

@Cal C.   this is probably a great explanation as to why I haven't gotten a deal yet. I am going to refocus my list to the following. Tell me what you think:

1) Probate

2) Evictions

3) 2 or more years late on taxes

4) 60, 90 days late on mortgage

5) Notice of default

6) discharged/dismissed bankruptcy

7) Tax lien sale

8) Divorce

9) 25+ Years owned with equity

10) Code Violations

11) Vacant Properties

12) Absentee owners 3-5 years

13) Inherited properties

14) Expired listings

@Zamir Kazi  I've never sent out yellow letters and I'm far from an expert as to what works or doesn't work.  But that seems to be a good list, though I'd try to concentrate on just 1-2 most promising types of leads.  You might want to repost that list to another thread asking for a critique from successful yellow letter senders.  I know there are more than a few who post on here.  

@Cal C. How have you gotten the majority of your flips if you don't mind me asking?

Mostly through Hudhomestore and the like.  I did buy a few straight from the bank, but two of those have been sitting for a long long time unsold. 

@Zamir Kazi  I'll second what @Cal C.  says about positive equity.

I've never done a short sale but I do know that they are generally a long drawn out process.

That is a great list of potential groups to target. Check out listsource.com/, you can get addresses to mail to by filtering to your specific criteria. Also you can try calling your local City/County clerk to ask if they can provide a list of homes with back property taxes too. Good luck!