What to do with Leads

Question

I think this might be one of those it's-a-great-problem-to-have situations.

So my phone is finally ringing with seller leads the way I want it to. However, every time I get off the phone, unless it's a no-brainer slamming opportunity for wholesaling, I'm stumped as to what to do with the lead. Do I follow-up later, delete from system, outsource...

I'm curious if anyone has a system/rules of thumb for what to do with seller-leads.

The example that I can give from minutes ago is a seller who "needs" to sell because his daughter is going to college (I'm assuming next month). He owns free and clear and wants to cash out. He wants $99k for a home rented out for $730 and is flexible with price.  Lets say no work is needed, I get him down to $70k, & the comps in the area are $100k.

Is this a lead worth persuing if I'm trying to focus only on wholesaling for now?  In other words, do you guys always move on (get under contract) a home if the seller is motivated and there's equity and then figure out the exit strategy later?

Thanks for your words of wisdom.

Eddie Brown · Answer

I agree with Curt, You would need some more room in there.

Jason S. · Answer

It's all in the precision of your numbers. As Curt said, most homes need some work.

If not put the property under assignable contract and pitch it to your buyers.

It would be difficult to justify actually fronting the $70K yourself - but it all depends on your specific market.  The numbers are a little tight to put that much cash at risk unless all your numbers are uber conservative.

Your comps at $100K - for already fixed? Standard condition? Fully re-habbed?  If your comps are all REO's the how much is it worth if fully rehabbed to the top of the market?  How hot is the market? If you put a FSBO sign out front after buying will it sell to save on commissions?

If it's in SoCal I can give it a look and maybe take it - depends on what I determine from all of the above.

Curt Davis · Answer

I think you would be paying too much for the home even at $70k with no work needed.  If the home needs nothing ( which they all need work )at the value is $100k, you should be offering around $55k so you can have some room for repairs.  You probably wont get $90-$100k so you need to be ready for less.  Give yourself some room to negotiate. Good luck

Nemi W. · Answer

Well Rich,

As a 1-man biz, they're enough to keep me going but not too many for me to handle.  So 2 to 3 calls a day allows me to make 1 decent offer a day, which has been my goal. I'm not sure if that qualifies as so many great leads for you.

I basically send emails daily to sellers on craigslist, backpage, etc. and the FSBO sites. Also, I BUY posts on those sites as well as bandits.  When I was struggling, I focused on making this a daily/wkly habit and it seems to finally be paying off...for me.

Hope this helps.

Rich Hupper · Answer

May I ask how you have so many great leads coming in? I am struggling to get them.

Nemi W. · Answer

@Stinson, I guess with this example and assuming I would close on it (which so far, I haven't needed to or wanted to because I flip paper to investors), you're right.  Do you typically get a house under contract no matter what as long as there's equity and seller is motivated?

@Rusty, no this lead came from a different city. I have a decent buyer's list for my city.

I gave a specific example, but I'd like to know if you use some rule of thumb to help a little with focusing.

Thx for responding guys!

Rusty Thompson · Answer

Do you have a buyers list? Does it contain the criteria that each buyer is looking for? It would make it a lot easier to work hard on building a extensive buyers list, so that when good opportunities don't pass you buy.

Stinson Bland · Answer

Why wouldn't you buy the house and resale it if it's worth $100K and you can get it for $70K with no work needed?

If those numbers are correct, that seems like an easy $5K to $10K for just listing the house under market value.

Are houses in the area selling fast?

Buy the house, list it 10% under market ($90K), sell it to an owner occupant, and you should make an easy profit. You'll have closing cost and holding cost but you should at least make $5K.