Let’s just say I settled into a buy and hold strategy and never thought twice about taking another route until now.
My husband recently hopped on my REI train after helping me prep and fill a vacancy. We decided to find a project to work on together for the summer. We found five houses that would need work. We could see ourselves living in them short term to save some money. Then leasing when we’ve recouped.
Well, my letters went out Saturday and 4 of the 5 called back this evening. The owners just didn’t want the property.
They didn’t know what to do with the places. They were happy to dump it on me because they were tired of paying taxes and getting fined by the city for random stuff. (Plus a lot of personal issues that are completely irrelevant to me.)
We settled on me paying the liens on two of the places (all less than $1,700 total). I’ll do the leg work, and upon closing day I’ll hand them $1000 cash.
All of the taxes are paid for the year on all of them.
All of the properties would bring in about $4800 a month, not including the commercial space. (I’ve never rented a commercial space before so I honestly couldn’t tell you what it would yield.)
The problem is that there is no way we could renovate all four of these properties at once. I got a little too excited, I know. We’re not looking for another loan as we took that route with another property and need to pay that off.
This brought me to the conclusion to sell them off. It’s technically wholesaling right? Except I don’t have a buyers list! I had no intention of wholesaling, but now that I have the places it seems like a good opportunity to learn something new.
I know it’s going to take time to close these deals, but now what do I do? I’ve been scouring through this forum but I haven’t quite found which way to go. It seems I might be following the rules of wholesaling backwards.
Can you tell us where these properties are? Seems you could find a partner on this deal who has the cash to help you renovate instead of selling. Although also sounds like could be a good wholesale deal and you could probably find out by putting this on craigslist. I'm also figuring you are trying to get around the BP sale posting rules by asking your question this way??? : }
I'm in Davenport, IA. I'm just looking for information not a sale :-)
I'm having a "duh" moment reading Craigslist. That should have been my first thought. I might be over thinking this one. Thanks @Ethan Atkinson
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@Marie S. Sounds like your letters were quite a hit! I'm interested, since you did so well, on what your letters said and how they looked. I have about 10 addresses that I gathered today that I'd like to mail letters to. I had planned on a pretty typical yellow letter, but just curious what worked for you.
I do not believe in the "yellow letter" concept. I'll tell you why in second. To answer your question:
I saw a few houses I wanted. I did a walk around the house an noted some things that was wrong on the outside and what I liked about it. I looked up the owner's information at the county. I pulled out a steno pad with flowers at the top that I bought from the dollar store. I honestly think the pad is supposed to be used as a grocery list. I HAND WROTE my letter. I introduced myself. I let them know:
1.) How I got their information.
2.) I noticed their house was unoccupied.
3.) I wanted to buy it.
4.) I wanted to buy it.
4.) Despite my findings, I was still willing to buy it because...
5.) I wouldn't be able to offer much.
I gave them my Google number and email address. I put the letter in an envelop. I put a stamp on it and dropped it in the mailbox. A few days later, I got replies.
Screw the "yellow letter" stuff. I think it's bologna. Everyone is using it; not just in the Real Estate Investment industry. When I get them, I don't even read them. I throw them in the trash. I definitely wasn't looking to build an inventory. My intentions were sincere so my letters were sincere.
There is no cookie cutter letter that works. People see through it because it's impersonal. Since this incident, I wasn't able to personally close every deal, but I was able to match a couple people with the owners.
-I makes me want to get my license so I can collect on the deal ;-)
I've sent three more letters and received three replies. Am I just lucky? I don't know. I didn't look into wholesaling until I posted my original post. There's no real secret sauce.
You have 10 letters not 500 so just hunker down and write to the owner like they were standing in front of you. Don't write it like you were speaking in general to the group of owners you found.
@Marie S. Amazing advice, I was about to mail three letters to homes that were close by and in distress-- I'm going to trash them and start over with your approach. I really appriciate you sharing your expirience.
Do you have the money to buy these properties? If you do, then buy them and immediately turn around and list them with a realtor and just-below-market prices. This is not wholesaling...this is actual flipping. Also, to hedge your bets, talk to a realtor before you purchase them and find out what they would list for. If you're upside down on them then you're going to be in the same position as your sellers in a few months begging people to buy them from you.
If you don't have the money to buy them, start looking up people who own multiple properties in that neighborhood. That is a great place to start to find buyers. I might also run an ad in the paper as if you are selling them by owner. Signs in the yard work, too.
Good Call @Thomas Mitchell
I can buy them but at the cost of my original goal of involving my husband and spending a little quality time on a shared interest. I can play with the idea.
After viewing the inside, a few of them need a lot of work and I'm sure it would sit on the market for a while. Hince I found people that were willing to help the owners. (It wasn't hard. The people serious about it are on this forum or in my local landlords' association.)
@Marie S. If you're buying these properties for more than what they would sell on the open market as is, then I question if they are really worth what you are paying for them. If I get a property under contract I can usually list it with a realtor before I close for 10-15K more than what I'm paying for them. If these properties will sit on the market as is, then why even buy them?
@Thomas Mitchell I'm purchasing these properties based on After repair value. My original intentions were not to quickly buy and sale at a profit. I honestly didn't think people would intially respond to my letter. I was prepared to write several.
My initial intentions were to find a house I could afford to buy and fix without breaking the bank. Then show my husband how I determine what work I can do on my own and what I need to hire out. Show him the process I go through to find contractors and how I negotiate. When everything was complete, stay in it and recoup my savings. Then rent the place out.
I was thinking long-term passive income not quick profit. I never imagined being in this position. Now that I am, I realize that the stategy has to change.
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