Getting started. Where do I spend my money?

Question

I'm finally getting everything worked out to begin wholesaling.  I have a few courses that I've purchased, and I've been combing through this and another forum.

I plan to set up an LLC, and I think that will run me around 300.

I have a total of about 1000 to spend at the moment, but will have another 500 or so by the end of the month.

What is going to be the most important thing/s to spend money on?

My plans were:
Business cards 40-50
car magnet 50-60
Greensheet/Pennysaver 120 for 3 months
Direct mail campaign for absentee owners 500?
Direct mail campaign for divorce filings  500?
LLC 300
Craigslist free

I will soon have my RE license again, and I'm pretty sure I can get absentee owners from the mls.  Divorce filings I will get from the county record.

Any suggestions, ideas, etc?  I'm all ears and very appreciative.

Additionally, I'm feeling a little overwhelmed in the sense that I don't know how to organize everything including campaign results, contact info, etc.
Lee

Brian Haskins · Answer

My advice is to scrap all of the things on your list except direct mail to absentee owners. I have been wholesaling for 6 years full time. I donâ€™t use business cards hardly at all anymore. I would maybe get 250 free cards online and send those to everyone you know and let them know what your doing and then keep a few to give to people when you go on an appointment to build some creditability. A car magnet won't work, save your money on that, penny-saver you can try later for now its just not targeted enough and most people don't read them anymore. Direct mail is good but divorce isn't a good place to start on a limited budget the response rate and the amount of deals you will get isn't worth it if your on a budget. Also the absentee owners budget needs some serious work. Absentee owners are different than other leads you market to. Its all about timing. You can't just send them one post card and think you will get a deal. You will have to consistently mail the same absentee owners 5-7 postcards a year to really see results. I would say to start with some bandit signs they will really get some calls coming in much more than the other things you are planning on. Also I would target probates they are by far my best lead source. I make hundreds of thousands of dollars a year just off probate leads alone. I send them letters and spend about $500 - 700 a month on them and then about 100 bandit signs will cost you $100 from www.dirtcheapbanditsigns.com. keep in mind you won't be able to just send out a few post cards and start to see deals. You will have to be consistent and send many over a period to see results.

Brian Haskins

Scot Hunter · Answer

Sounds like you are getting your ducks in a row.

Can I make a suggestion that was told to me by my Legal/CPA mentor about setting up your LLC just yet?  He said don't worry about setting up the LLC until you have generated about $40k in profit from your business because, depending on what state you live, the minimum tax won't be worth it yet.  Now from a liability standpoint, you should protect yourself as quick as possible, if you have stuff to lose.  In other words, if you don't really own anything of substantial value yet, what are you protecting?

My wife calls what you are doing is getting ready to get ready.  I am completely guilty of the same thing.  Get my office set, get my business name and logo, cards, .....  My best advice to you is go find a great property to wholesale first and worry about those details later.  Until you have a great deal to sell someone, all the rest, just makes you forget to focus on the main objective.  Find a great deal, get it under contract, find someone who wants to buy it, sell it, and get paid.

Focus on finding great properties.

Lee Pedrazas · Answer

What I mean by value is the sold price of the comps.  Sold data is only availabe in the mls here.

What other sources could I use to value properties?  I mean specifically for rehab buyers since valuations for rentals would be different.  Most of the buyers on my list are rehabbers vs landlords, although that could change as I add more buyers.

Lee Pedrazas · Answer

In texas, the only way for me to value a property is to have an agent do it for me or get my license and do it myself.  It's not public record here.

As far as liability is concerned, I think I'll be fine as long as I use proper disclosure.

Scot Hunter · Answer

E.Jacobs, thanks for the comment.  If I were starting off again, I would concentrate all of my attention and efforts to marketing for properties.  But, Lee needs to sit down and figure out what his strategy, resources, and personality traits are to see what type of real estate and marketing fits him.

I always suggest to people that their first step is to start telling everyone they come across, on a daily basis, that they buy real estate.  No matter what condition, location, color, or smell.  If you don't start telling everyone you buy real estate, how is anyone going to know?

A $1,000.00 can go a long way in marketing, once you are focused in what you want the outcome to be.

Tod R. · Answer

Lee, congratulations on getting going.
          
          I would agree with Scot about not forming an entity just yet, unless you have significant cash or assets of  value that you need to protect from the beginning.  Wait until you start getting income, then set up your entity.

Lee Pedrazas · Answer

Thanks Brian.  That's exactly the advice I was looking for.

As far as probates go, is that info part of the public record?  If so, which county office will I need to contact?

Thanks everyone for the responses!

Scot Hunter · Answer

What's the need for the RE license?  Think about liability, you are an investor, not an agent.

Lee Pedrazas · Answer

Thanks for the repsonses.

I want to have done my first wholesale deal within three months of beginning marketing, and I want do do at least 1 house per month for 6 months after that.

As far as what I will do to make that happen, I plan to visit the county twice per week to get divorce filings.  I will also collect adsentee owner addresses from the mls once per week.  Direct mail campaigns will go out either once every two weeks or every month (haven't decided yet).  Greensheet ads will run daily for 3 months then I will evaluate.  Craigslist ads will be placed weekly.

I will pass out business cards and network at the local RE investment club meetings, as well as pass out business cards everywhere I go (restaurants, events, etc).  I will create a website to gather info and leads from sellers AND buyers.

Also, I plan to make REO offers once I get my license again, and I'll be able to make a LOT of those.

This is the plan.  I just don't know what is most important for success.

E. Jacobs · Answer

I meant sites like zillow, city-data, and the like. These will offer you (usually pretty inaccurate) value estimates of homes as well as provide a list of comps that have sold in the area. These are retail values, so you would want to probably multiply these by .60 or so to see what a wholesaler might offer. Either way, you still need to figure the amount of repairs required and determine how the subject property measures up against the comps that you have found. Good luck!

Getting started. Where do I spend my money?

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