I'm new to investing, I've been trying to snag my first wholesale for months now. No luck, did the direct mail campaign thing, a lot of responses, no deals. I'm racking my brain, to try and figure out if I'm spending too much time on due diligence. First off, is it really customary for a wholesaler to do deep due diligence work, such as liens and back taxes, mortgages, everything? Or is that something that is the end buyers responsibility? I feel like I should do some, but I also feel like I'm stressing out about it too much. I'm new and trying to streamline things so if anybody could tell me, in general, my responsibilities so I can streamline things that would be very helpful.
What was your direct mail strategy? How many mailers and how often? What group did you mail to?
@Douglas Rath , rather than spending all of your time on due diligence, I'd say your first order of business is to find out whether or not the property owner is willing to sell at the price you need.
Before you start doing any "homework", I think you'll find that it's VERY helpful to know whether or not you're actually talking to motivated seller.
If you want to get results as quickly as possible, be very honest and direct with everybody you talk to. One of your first questions should be, "Are you willing to sell your property for less than 50% of market value?"
If they say "No" (and many of them will), then get off the phone and move on. If they say "Yes" - then you know you're dealing with someone who warrants more of your time.
Due diligence is an important part of the process, but things need to happen in the right sequence. The last thing we want to do is waste time researching deals that we don't even have a shot at.
@Seth Williams, thanks for the info. I generally make sure they do want to sell below market value first. I don't know when to cut the deal off when I'm doing due diligence. For example: my one client practically wanted to do a quit claim with me, needed to sell asap! However, when I did a little research, I found out he had almost 10k dollars is back taxes and liens, and he want going to pay a dime. The house is only worth around 35k in my opinion. Should I have still put it under contract? It needed a good 15k dollars in repairs too. And that's what I'm a little fuzzy on. Would somebody still want to buy it?
@Gary Parker, I only got to do one round at this point. 120mailers, about 15 called, 3 were close deals but no actual deals. They were all to pre foreclosures. The house in my previous paragraph came from an ad I put on craigslist.
Hey Douglas, there are tons of articles on mail campaigns, and how they're supposed to work, how to get the most bang for your buck, etc. I would highly recommend one under the member blogs section by @Jerry Puckett. I'm writing thisfrom my phone so can't link at the moment...you'll have to search for it.
The jist of the idea is, its a series of mailings to the same people, ideally up to 7 times to get the best results.
As far as due diligence goes, I feel you're overthinking it a bit. Your first phone call should address anything owed/liens, etc. If they don't answer, or sound like they're hiding something, just thank them for their time and get off the phone. Move on.
As far as determining motivation goes...one simple question does the trick: do you have a property you NEED to sell FAST?
NEED is the #1 factor of motivation in these calls. If they answer anything other thsn yes, thank them and get off the phone. Move on.
Hope this helps!
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