Investor · Indianapolis, IN · Member since 2013 · 647 posts · 196 votes
I have been told by a few respected individuals in the community that I am over analyzing the criteria for my list and that I just need to get started. I do agree that analysis paralysis is preventing me from pulling the trigger. However, when I plan on shelling out $5,000 towards my overall campaign (multiple letters to absentee owners) I want to be somewhat confident that I'm targeting the right absentee owners.
Anyone who uses wholesaling as a strategy, and has had success with direct mail in the past if you could share the criteria you have used for building your list it would be greatly appreciated. I really want to make this $5,000 work for me. I plan on sending 500-1000 mailers per month depending on the # of absentee owners I have access to based on my criteria.
The struggle I'm finding is that some successful wholesalers are saying that 10+ years for length of residence is important because it's hard for ListSource to ultimately determine equity in a home and there's a good chance someone with 10+ years in residence has enough equity. However, what if they have recently refinanced?
Is LTV or Equity % important. What if someone owns the home outright, and therefore there wouldn't be any LTV. How are these list providers determining equity?
I guess I would like to hear what success you have had with direct mail if any, and if so what did your list look like? From there, I am sure I will have the confidence to settle on my list and pull the trigger with my $5,000 marketing budget.
My question is what are you selling? I do admit that you do make a lot of sense, but really you're that much more luckier than everyone else that you're able to confidently say just gamble and go for it?
What am I selling? Directly, not a dang thing. Indirectly, maybe just an idea. The idea that you will never know the outcome if you don't take a chance. I don't buy 100% of the houses I don't make an offer on. All the houses I drive by every day that I don't own don't do a thing for me. I get no benefit from them. Of course, I can't buy any of them if I don't let those owners know I might be interested in buying them.
Now, the ones I do own and rent out pay my mortgage, buy my groceries, pay my health care, cover the vet bills, pay for my automobile insurance, the visits to the dentist, chiropractor, and yearly medical check ups. The houses I own pay my airplane tickets and hotel rooms when I take vacations or attend seminars, cover my utilities costs, buy my clothes, pay my internet bill, cover my phone bill, and buy the gas for my car. I'm a pretty low lifestyle kind of person, but there's not much I can't go buy today if I really want it. Luckily, I don't want much so it works out quite well.
Of course, I never would have purchased that first house if I didn't decide that the money sitting in my bank was really not doing anything for me. That it was more of a liability than a parachute or safety net. See, the fear of losing that $5,000 has you so paralyzed, you can't do anything. It's just $5,000. My visa bills (personal & corporate) every month are more than that. When times are slow, I spend more money. Because I know, without a doubt in my mind, that investing money into my business will produce a good return. It will come back and bring more with it. If I don't spend that money every month, whether I get a deal or not, if I let the fear of losing money keep me from doing business, I might as well just sell all my houses, put the proceeds into government securities, and go get a cushy job working 9-5, 5 days a week, with good health benefits, a soft chair to sit in, and hopefully some kind of pension at the end of it all.
If I had $5,000 sitting around and the fear of losing it was keeping me from doing anything, I'd just spend that ****. I'd get it out of my life as fast as I could. Cuz once it's gone, I've got nothing to be afraid of any more. I will also then realize that when I wake up in the morning, I still have my arms, legs, hands, feet, I have my wits, I have my knowledge, I have the ability to go out and get some more money and spend it all again. Money isn't a security blanket. It won't work as a parachute. If you think losing $5K is going to end your life, I think you ought not to get into this business cuz I've lost so much more than that I can only laugh about it. $5K is a pittance. I can't even take a decent vacation with $5K. Airline tickets alone cost me almost that every year when the wife and I fly over to Asia.
Only when you realize what money truly is will you have the internal power to easily dispose of it. I know for every dollar I spend on marketing, I get back more than $2. I never fret about spending money on marketing. Just spend that ****. Get it out of your life so you can stop worrying about it.
Rental Property Investor · Atlanta, GA · Member since 2012 · 256 posts · 64 votes
13y
Aaron Mazzrillo is my hero, LOL
Awesome stuff...sometimes I forget my mind, ability and hustle is more valuable
Than any amount of money!
Nothing beats determination and drive, some degree of losing $ is part of the overall success sometimes, and your mental toughness will be even stronger.
Great post!!!!!!!
Just don't market to the same address at the same time for sellers and buyers.
I guess this is where I am not sure what to do.
I have a list of absentee owners and I want to find both buyers and sellers. Is there some advice on how to guess which is which or you just split it in half and send one half the "I want to buy your house" letter and the other half the "I want to sell you more houses" letter?
What about follow up? If you did something like the above and don't send the other letter to the other part of the list how do you ever figure out if you got are just sending them the wrong type of letter? If you want to hit them with 5, 6, 7+ touches seems like you could be missing some leads if you have the wrong message.
I suppose you wouldn't try to "touch" the sellers as many times. I know if I got a letter like that I would likely get in touch and let the person know that even if I wasn't buying right then that I would want to see stuff in the future. So I'd no long need to be mailed to (Except I guess for the occasional "Hey how ya doing?" type) and would obviously not be a likely candidate for the seller campaign.
Even if you do something like cut the buyer campaign short with only a couple mailers before going over seems like you would have to wait like a year at least before switching the other side over.
Flipper/Rehabber · Bakersfield, CA · Member since 2008 · 3k+ posts · 3k+ votes
13y
I wouldn't send to the same address a tenant letter and seller letter within 2 weeks of each other.
As for finding buyers you can also do what is called a six-pac and using a six-pac you are most likely going to find buyers.
Here are the questions and script for this mini-interview: Keep in mind this is a pre appointment survey of the property around your subject property.
Hi, my name is <your name>. I’m thinking of buying the house <next door/two doors down/across the street> and was wondering if you could answer a few questions for me.
1. What is the neighborhood like?
This will tell you if they love living there or hate living there, and either response is okay. If they say they hate living there, ask them if they are renting or are the owners. IF THEY ARE THE OWNERS AND HATE LIVING THERE, TALK TO THEM ABOUT SELLING YOU THEIR HOUSE!
2. Is there anything about the owners of the house that I may need to know before I buy it?
They will spill the beans if they don’t like the neighbors and won’t say a word if they love them. It is worth asking. You are looking for the reason they are selling: divorce, job transfer, money problems, whatever it is. Out of the six-pack, chances are at least one “can” will be full of gossip. The more you can know about the seller, the better prepared you will be when dealing with him and negotiating.
3. What kind of repairs do you think ought to be done to that house?
You might be surprised at how much the neighbors know about the house, and their opinions of it. You will probably hear more than you could possibly find out by visual inspection from things like what’s buried in the backyard to the fence being propped up by sticks.
4. Have the sellers lived there long?
You will already have this information from your property profile, but you are setting the neighbor up for your next question. Plus, you may find out information the profile doesn’t show. Maybe the family has lived there for years, but the profile shows a sale a year ago. Turns out it was a sale from one son to another and they both still live there. You can bet the sale price for that house isn’t a good one to base a Worth Value on.
5. Do you have any intention of selling soon? (or moving soon, if they are renters)
When you are ready to sell the subject property, after you buy it, you want to know if there will be another house right next door also for sale. If there will be, you probably want to be selling that one as well. Also, if the neighbor will be selling soon, that gives you some ammunition when making your offer on the subject property – it’s not like his is the only house you could buy.
Flipper/Rehabber · Bakersfield, CA · Member since 2008 · 3k+ posts · 3k+ votes
13y
okay this is way off topic however I thought I would post the just sold and active questions as well.
Here are the questions to ask just solds in the neighborhood.
1. Is this a safe neighborhood for young families, children and older people?
You want to get a feel for how secure the neighborhood is. Always remember that just because you don’t feel it’s safe doesn’t mean the people who live there feel the same way. Never assume anything in real estate, and don’t let your personal biases affect your decisions.
2. Have you found anything negative about the neighborhood that you weren’t aware of before you moved in?
You want to find out what isn’t being talked about by your real estate agent or by the seller of your subject property. Are there noisy neighbors a bully on the block or drug dealers hanging out on the corner...? Do they now think they paid too much?
3. Was there a lot of work done by the seller on the house, which was included in the sale price?
This will tell you who financed any needed repairs, which will directly affect your estimate of Worth Value. If the $185,000 they paid for the house included $35,000 of repairs done by the seller, the actual Worth Value of the comp is $150,000, which changes the calculation of the Worth Value of your subject house.
4. What about this house made you buy it?
You want to know this because it will tell you what buyers are looking for and why this house stood out. Maybe your subject property has some of the same features, and you can push those when you turn it around and want to sell it. You may want to up your Worth Value a bit on your subject property if it includes these desirable features.
5. Do you know of anyone looking to sell their house now?
This will give you free leads to call on. Don’t assume that because they are new to the neighborhood they haven’t had a chance to meet people. You can only gain from asking this question.
Here are the questions to ask actives.
1. Is this a safe neighborhood for young families, children and older people?
You want to get a feel for how secure the neighborhood is. Always remember that just because you don’t feel it’s safe doesn’t mean the people who live there feel the same way. Never assume anything in real estate, and don’t let your personal biases affect your decisions.
2. Has the neighborhood changed recently?
You want to find out what isn’t being talked about by your real estate agent or by the seller of your subject property. Are there noisy neighbors, a bully on the block or drug dealers hanging out on the corner...? Do they now think they paid too much?
3. Will you be offering any concessions to the buyer?
This will tell you who is going to finance any needed repairs, which as we mentioned earlier will directly affect your estimate of Worth Value. Or maybe they are willing to help the buyer with their closing cost. You are looking for anything that reduces the Worth Value.
4. How did you set this sales price and are you offering any special terms?
You want to know this because it will tell you how motivated the seller is and whether or not this house is something you may have the opportunity to purchase. Realizing the motivation of the seller is crucial in determining Worth Value. Some sellers just put a price on a house and hope they win the lottery. You will want to know if the competition is in fantasy land or reality land.
5. Why are you selling?
If during the last four questions this question wasn’t answered by the seller, it will be important to ask so you have a clear picture of the motivation. I ask it last because by then I have built enough rapport with the seller that they tend to be freer with the truth.
Lender · Greater LA/Orange County area, CA · Member since 2012 · 3k+ posts · 3k+ votes
13y
@Aaron Mazzrillo - Nice post. Kind of a rant and I'm good with a cathartic rant.
The poster with the 'deer in the headlight' issues with their remaining cash in the mailing budget can always split the budget into (5) $1,000 or (2) $2,500 tests.
However, the issue probably runs deeper, much deeper. I would advise to explore those issues, uncover their sources, name them and deal with them in a straightforward manner.
Often, the problem with reluctance to execute relates to issues over abundance and perfectionism. That's ok. There's much written on these topics
I've never sent the perfect mailing. There are better copywriters everywhere. My timing is frequently off. However, I do execute. I make up for less-than-perfect marketing by persistence and a compelling message. And my secret weapon...
My objective is to spend MORE per lead, not less! In the years when I chased pre-probates aggressively, I frequently spent $1,000 per lead by hiring P.I.'s to track down heirs on each potential $100,000 profit deal. I converted and closed 20%, so I knew that I was going to spend $5,000 average per deal. Who cares that $4,000 was 'wasted' on the deals that didn't convert?
If pulling the trigger on a $5,000 mailing budget is difficult, consider marketing to bird dogs - lead generators who brings deals that you establish your buying criteria up front. That way you don't spend the money until you see the deal.
La Mesa, CA · Member since 2013 · 116 posts · 26 votes
13y
@Aaron Mazzrillo spoken like a True Reader someone who has obviously taken the Napolian Hill Think and Grow Rich model and used it to its fullest. I love Think and Grow Rich it was a foundational book in my life. Great advise. What you cast out will return. The tighter you hold onto the cash the less the flow. The principle of supply is the one of the hardest life principles to live.
Investor · Riverside, CA · Member since 2011 · 2k+ posts · 3k+ votes
13y
Money is always moving. It is in a constant state of flux. It can be attracted just as easily as it can be repelled or spent. When I truly grasped this concept, things changed for me.
So I started this thread about a month ago...and I'm glad I did. Your post made a lot of sense and inspired me to just pull the trigger and go for it instead of dwelling on my list day after day.
A month later and I'm going to look at 3 houses this week, all have motivation, and all three properties have equity.
Any advice for killing it when visiting the house? Negotiation tactics that work best for you?
@Aaron Mazzrillo
Any advice for killing it when visiting the house? Negotiation tactics that work best for you?
Even if the house reeks of cat urine and is wall-to-wall garbage, never put down another person's house. I always say "I'm not here to look at your stuff, just the condition of the structure." They know the house is bad, you don't need to throw it in their face. A lot of times these sellers are really embarrassed about the condition of the property and turn to us investors. They don't want to be judged. They just want to be dealt with fairly and get on with their life. For some, it is a huge emotional decision to sell and they put a lot of trust in you to come out and be polite and professional. Just keep that all in mind.
I've purchased some horrible property, but I've also purchased turn-key houses. One in particular was from an elderly woman who owned it for 50 years. It was her first house. She raised her kids there. She moved out and let one of her kids live in it. When the kid moved on, she rented it. Selling was a big deal for her because the house had a lot of history so when she decided to sell, she wanted it done quickly. I could tell it was really emotional for her to be selling so I said a lot things about how I was going to get it ready for a new family to live in and enjoy. Small things like that go a long way with people. After all, this is a people business and as one of my mentors likes to say, "you don't dance with the house, you dance with the people."
For us, a house is just inventory, product, the means to an ends (a check). A lot of people don't look at it that way. I've heard more than one person say how much they love their house. I don't get that at all. To me, a house is just sticks and mud and in California, that statement is more true than you would think! (2x4s and stucco). When I see a house, I see a pay check now or a pay check later. There isn't one house I own that I wouldn't happily trade for a check (in the appropriate amount) and then miss later on including the one I'm in right now. Actually, I'm very much looking forward to the day when I can sell all or most of the properties I own now and trade them for other properties! But, I don't convey that to my sellers. Just do what you have to do. Try to get them talking (ask simple questions, but not 'yes' or 'no' questions), then shut up and listen. They'll tell you everything you need to know to put together a great deal for both of you.
I really like your feedback about listening and trying to cover their internal problem. Great advice regarding asking permission to do things and being silent so that the seller talks.
I've spent the past few hour preparing for tomorrows meeting at the house. I'll keep everyone updated.
Investor · Indianapolis, IN · Member since 2013 · 647 posts · 196 votes
13y
Wow, what an experience after viewing the house. The whole place smelled like cat urine. It was a total rehab from top to bottom and with a floor sagging that could mean structural issues. I asked a lot of questions and he did most of the talking. He owes 18k the house is vacant and he lives 100 miles away. The ARV is around 60k, but after you factor in the total rehab, that leaves no room for a wholesale fee. So I would say the deal is dead. Onto the next one.
Investor · DMV Maryland · Member since 2013 · 867 posts · 370 votes
13y
@Ben G. - are you looking exclusively to wholesale or to fix and flip? After listening to @Aaron Mazzrillo podcast for the 5th time in 2 days, what about getting seller financing on the 18K with no interest, principal payments only, first payment not due for 6 months, fix it yourself and sell it/pay the owner off OR market it to a flipper with the seller financing as an added-value?
Mind you, I have not done a deal yet but I'm coming up with this based on what I'm reading and listening to here on BP. Hopefully this is not too waaay off base!
Investor · Riverside, CA · Member since 2011 · 2k+ posts · 3k+ votes
13y
I've done similar deals many times. I figure out what I would be paying my hard money lender in points and fees, then I add it to what I could pay the seller if I were to use hard money. I give them the first offer with the hard money factored in. Then I tell them I can pay more later if they act like my lender during the rehab and explain how I have to borrow the money and what it costs. I can give it to my lender or to them, makes no difference to me. I prefer to give it to the seller because I don't have a monthly payment (pain of the payment) every month and I don't have to make up the difference in the points spread with cash.
I've also done this deal utilizing an option many times.
Huntington Beach, CA · Member since 2012 · 73 posts · 57 votes
13y
I, too, recently listened to Aaron Mazzrillo's podcast. It was great!
I wonder, however, if picking one strategy--such as subject-to--wouldn't be the way to go. I've been a landlord [hated it] and rehabbed a couple of properties--which I consider as just buying yourself a project manager job.
I, too, recently listened to Aaron Mazzrillo's podcast. It was great!
I wonder, however, if picking one strategy--such as subject-to--wouldn't be the way to go. I've been a landlord [hated it] and rehabbed a couple of properties--which I consider as just buying yourself a project manager job.
Aaron, what do you think?
In my market, you couldn't make a living only doing subject to deals. You'd run out money before you ran out of month. I'm sure there are markets where that opportunity exists, but not here, not now. I prefer to have more than one tool when I consider a deal. Even a plumber needs more than a pipe wrench to fix a leak.
Investor · Smithville, MO · Member since 2014 · 160 posts · 19 votes
12y
@Ben G. , I know I'm coming into the conversation late, but I'm curious about the estimated repair costs. By my math, a flipper would have roughly $20k to rehab the property ($60k x .7 = $42k - $18k for what he owes - $3-5k for the assignment fee leaves $19-21k for rehab).
On a $60k property, I assume granite counter tops and custom cabinets are not on the menu. Would you mind working through the the estimated costs?
Investor · Indianapolis, IN · Member since 2013 · 647 posts · 196 votes
12y
@Rob Scarborough yes you are coming in new, but no worries. It's funny to look back on that post and see how far I've come since then. My lack of knowledge back then caused an inflation of ARV to 60k. This is more like a 40k house ARV and therefore leaves no room for repairs.