Investor · Vancouver, WA · Member since 2012 · 194 posts · 125 votes
Hi folks,
I am a successful lease option wholesaler, but I'm interested in branching out and expanding into buying and holding homes utilizing subject-to as my finance vehicle.
In doing so, I need help with effective marketing, that is also cost effective. I currently have a 3 part voice blast campaign to all expired listings within a 75 mile radius, but that isn't bringing enough deals. I am about to begin voiceblasting absentee owners very soon as well. And last but not least, I bought 100 bandit signs and will be placing them in vacant homeowner's yards in my zipcode very soon (a suggestion from Dwan Twyford)... and I will eventually put out 300-400 per month in vacant homeowner's yards if this first batch proves to be successful.
Can anyone else suggest any other forms of marketing specifically targeting no money down owner financing?
I've done direct mail before, and it's costly to do it right (ie: sending to the same list 3-8 times). The response rates on post cards are 2-3% at best, and letters are 5-8%. But for yellow letters they usually run $1.10 to $1.25 each including stamp, and for a list of 500, that can get costly very very quickly after 3-8 times.
For absentee owner phone numbers, I have a software dev that uses a scraping tool on the tax assessor's website to scrape absentee phone numbers. The scraper only grabs about 60-70% of the actual numbers, but who cares? That's 1,000% better than what I had before (since no one gives phone numbers to absentee anymore).
Casey asked how to target low equity owners? I remember some public records search tools like agentpro247.com allowed searching on LTV. Usleadsource.com allows picking LTV. Brian's tipped before that you need to target good school districts to make the sell/rent side easier. Target the price range to be middle class for each area.
How do you voice blast expireds? That is a trick. In GA in my counties tax assesors office sites don't list phone numbers... I am curious about your scraper tool. Self developed?
That's a killer postcard... love it! I already use listsource and I know how to filter the LTV, my question is what % LTV should I target for the most motivated sub2 sellers... 80% LTV? 85%? 90%? Or maybe 70%?
If your county doesn't provide phone numbers then you're unfortunately SOL. I tried scraping cowlitz county WA, but nothing. Clark county, however, worked well. For absentee, I actually use a tool developed by Joe Crump, http://sales.pushbuttonautomarketer.com/. I use this tool extensively. I own 7 automarketer accounts which collectively spit out 15,000 emails to FSBO listings in 9 different states (I use the email and text marketing specifically for lease options, but absentee will primarily be used for sub2 type stuff). My marketing costs per month for all email, text, voiceblasting, runs about $750, but my net profits range between $10k to $17k per month (keep in mind, the only reason I make this much flipping lease options, is because I agressively market in 9 different states and send out 15,000 emails per month to new FSBO).
Sorry I forgot you asked about expireds, not absentee. For expired, I subscribed to www.archagent.com. For $30 a month, they give me all expired within a 75 mile range, daily. Once a week I run a report, export the csv file to www.callfire.com, and set a campaign. The first campaign is a voiceblast meant specifically for first calls. I set a follow up 2 weeks later, with a different voice file saying "I called you two weeks ago..." then I set a third campaign for four weeks after the first call, with a different voice file. The voice blasts and follow ups are done for me, with just a 5 minute setup. But for a sub to archagent you technically have to be an agent and sign in with your mls credentials the first time you login. I have a friend who's an agent that typed in his info. It never asks for it again. I bought him dinner for his help, and his one time login gives me expireds every day now.
Hi all, coming back to this, it seems like bandit signs and direct mail are really the only two options here. For direct mail, post cards or yellow letter? And what % Equity should I be targeting specifically for the most motivated sub2 leads?
There's only a certain type of sub to I like....very low hanging fruit. The house must have at least a little equity (cannot be upside down) and must be livable as is. As a foundation for that list, there are a few factors to consider.
Absentee owned or not?
I usually go with absentee for sub 2 because there is a higher likelihood the property will be vacant. Vacancy not only adds to distress, but makes the deal easier to do. And on the other hand, you're going to want the mortgage covered until you can sell it or rent it yourself, and tenants are a great semi disposable way to do that.
Equity.
I could choose a high length of residence with a low amount of equity (and I generally shoot for right around 10%, which should generally suit the situation well. Or, consider this:
Last Market sale date: 2006 - 2008 (top of the market)
Current Total Assessed Value 100k to 135k (these are my numbers; choose numbers that make sense relative to your market)
Last Sale Price 135k +
Year Built 2000 +
What this should do is give you properties that were bought at the top of the market which were bought for more than they're currently worth. Being built post 2000, they should need little if any updating.
You do run the risk of some of these being upside down, which doesn't generally work well with sub 2, but you could always partner up with a Short Sale expert.
Oh, and @Casey Carroll , as far as expense goes, wouldn't you agree that in this business it's relative? The only way to truly measure is by your return. Marketing is cumulative, and the results of direct mail are exponential. Just sayin'
With an upside down house, I'm assuming short sales and loan mods are the only ways you can really do it... unless there are other junior lien holders you can negotiate the debt on. That's a lot of work tho.
With an upside down house, I'm assuming short sales and loan mods are the only ways you can really do it... unless there are other junior lien holders you can negotiate the debt on. That's a lot of work tho.
There are other ways. If the terms are decent you maybe able to cash flow while you wait out appreciation. If the terms are terrible and the loan is impossible or in default you can get a deed subject to the debt and work a discount with the lender. Not a short sale, not a loan mod. A discounted pay off as an owner. It's easier to negotiate with the borrower if their house debt was eliminated in BK. There's nothing in a short sale for such a borrower except paperwork so there's often no motivation. However, if there are liability issues with the property and the lender is not foreclosing the owners may be interested in deeding the property away.
With an upside down house, I'm assuming short sales and loan mods are the only ways you can really do it... unless there are other junior lien holders you can negotiate the debt on. That's a lot of work tho.
There are other ways. If the terms are decent you maybe able to cash flow while you wait out appreciation. If the terms are terrible and the loan is impossible or in default you can get a deed subject to the debt and work a discount with the lender. Not a short sale, not a loan mod. A discounted pay off as an owner. It's easier to negotiate with the borrower if their house debt was eliminated in BK. There's nothing in a short sale for such a borrower except paperwork so there's often no motivation. However, if there are liability issues with the property and the lender is not foreclosing the owners may be interested in deeding the property away.
Deed subject to the debt... exact same thing as taking the property subject to the existing financing. But the discounting of the debt with the lender... that's a new one. What's the motivation from the lender's perspective to discount the debt? And if you take the deed before you negotiate a discount with the lender for the UPB, can't you put yourself in "squirm worthy" amounts of liability, speculating and hoping that there is a discount? If the lender says no, then you are stuck with a home worth less than the loan, and either keep it as is and cry yourself to sleep every night, or give the property back to the owner (which isn't very ethically or morally right to do). I don't see where the reward here is really strong given the liability, so can you help me understand where the gold in a deal like this is?
Sorry guys, I'm new here... didn't mean to get off topic.
Any tips with bandit signs targeting sub2? 100 per week? Since I'm taking Dwan Tyford's advice and putting these signs in vacant home yards, I'm not violating any laws (since the signs will be located on private property).
With an upside down house, I'm assuming short sales and loan mods are the only ways you can really do it... unless there are other junior lien holders you can negotiate the debt on. That's a lot of work tho.
There are other ways. If the terms are decent you maybe able to cash flow while you wait out appreciation. If the terms are terrible and the loan is impossible or in default you can get a deed subject to the debt and work a discount with the lender. Not a short sale, not a loan mod. A discounted pay off as an owner. It's easier to negotiate with the borrower if their house debt was eliminated in BK. There's nothing in a short sale for such a borrower except paperwork so there's often no motivation. However, if there are liability issues with the property and the lender is not foreclosing the owners may be interested in deeding the property away.
Deed subject to the debt... exact same thing as taking the property subject to the existing financing. But the discounting of the debt with the lender... that's a new one. What's the motivation from the lender's perspective to discount the debt? And if you take the deed before you negotiate a discount with the lender for the UPB, can't you put yourself in "squirm worthy" amounts of liability, speculating and hoping that there is a discount? If the lender says no, then you are stuck with a home worth less than the loan, and either keep it as is and cry yourself to sleep every night, or give the property back to the owner (which isn't very ethically or morally right to do). I don't see where the reward here is really strong given the liability, so can you help me understand where the gold in a deal like this is?
I've written about this quite a bit here on BP. It mostly falls on deaf ears because almost everyone is so sure it 1) can't be done and 2) too great a risk. I've done it with little to no risk. It's just another strategy to control a property. There's no crying yourself to sleep, nor deeding it back to the owner. The motivation of the lender to discount a lien at any time, for any one is the same as if they were to discount it for a short sale. What's their motivation there? Hard to pin down lender motivation.
Back before short sale was a household word and an income stream for agents, it was not uncommon to negotiate discounts with a lender as a successor in interest and as someone with a controlling interest in the property (as opposed to the borrower).
As for liability, what liability are you referring to?
If you don't get a discount then you let them foreclose. That's in the agreement with the seller, the fact that you have no control over getting the lender to accept a payoff. That's why I prefer house debt that was eliminated in BK. The eventual foreclosure doesn't harm the post-BK credit.
I can tell you that the sellers I've worked these deals with so far weren't getting any other marketing from anyone. Not even from short sale agents.
One additional thought about marketing for possible sub2 deals. My experience is that sellers are intrigued by claims that you can buy from them with little or no equity. So they will call to see how it's done. They will want to make sure it's not a scam. They will ask a lot of questions about what happens if you don't pay their mortgage as agreed. They will ask a lot of questions about how and when you will pay the mortgage off in full. All reasonable concerns and requests. Do what you can to create a website for vetting and have references.
Hi There, I actually already have a website which explains this: [REMOVED].
Is that website working for you? IMO, it doesn't look like serious website owned by a real estate professional. I'd never suggest that my sellers are in "need" or have "greed". Not even as a joke. Doesn't matter what I think of course. Matters what sellers think. If they are responding to that site, then keep using it.
@Casey Carroll How well do you feel this site converts sellers? You can get unique IP statistics from the webserver vs actual calls you get.
It says what I've been struggling to say in person and bungling. I think the fact the seller can take time to digest it without the pressure of me being in the house makes perfect sense. It also is a filter for all the tire kickers. They must be motivated if they call/email after reading that site. :)
Most yellow card/letter experts say drive traffic through a automated call tree system and not your cell phone. Press #1 if you are low equity (explanation), Press #2 if you want market value (explanation) ... Press #9 to if you are ready to sell your house now... The call tree does what this site does in words. Only at a fraction of the cost.