All Forum Posts by: Brian Stieler

Thanks Michael Quarles I've listened to both your podcasts many times, and have your incoming caller script mostly memorized. I've also adjusted my list to only include owners with at least 50% equity, and I pull that every 6 months. Your tips have caused the biggest improvements so far, so thank you! I do believe negotiating can be my biggest area of improvement, especially on that initial call. Instead of wasting my time on non-qualified leads I should try negotiating with them sooner and see if there's room to make the deal work. However, I've been under the impression that my leverage comes from the list of necessary repairs, and their ease in taking my all cash offer. Not sure if it's just the state of the market, but no one has sounded even remotely interested in either of those things.

I've been steadily mailing my yellow letters, and have actually had a dozen phone calls (woot!). With these leads I'll do by due diligence by going through the following steps:

1. Get the sellers desired price and gauge motivation to sell (Michael Quarles, podcast 77)
2. Do a walkthrough of the house and calculate my estimated rehab costs
3. Look at comps in the area and determine my ARV

Now I have all my numbers, but they just don't seem to work. For example, a guy called me with a house he would really like to get rid of. He would be happy getting $40k, the rehab would cost me ~$25k, and the ARV is $59k. This means I would have to go back and offer $20k max. Here's how those calls have typically been playing out:

1. Explain to the seller the pro's of selling to me ("no need to do repairs, all cash offer, close on the day of your choice")
2. Try to get them to lower their asking price, otherwise tell them my highest and best offer
3. Get rejected, but thank them for their time, and to consider me if they're more motivated in the future.
4. Start over

Other deal examples:

Asking $140k, rehab $65k, ARV $185k. Offer price $70k (turned down)

Asking $120k, rehab $40k, ARV $140k. Offer price $58k (turned down)

I understand it takes time and effort to find deals that work. However, I just want to make sure I'm not missing something. For those flipping houses, how many of these calls do you go through before finding something that lines up? Other BRRRR strategists, are there any tricks you can share that would improve my process?

What an awesome write-up. Congrats Ryan and keep it up!

Thanks Susan. I'm still looking for a couple more people if anyone's interested.

After reading “Think and Grow Rich” I became very interested in the potential of a mastermind group. I believe that by combining our minds, energies, and determination, we can accomplish way more than going it alone. With that in mind, I would like to put a group together here in Los Angeles so we can start combining our strengths towards financial freedom.

I’m looking for Three investors with the following traits:

   •  Currently has 2-5 buy/hold properties in your portfolio

   •   Actively trying to grow by 2+ properties per year

   •   Los Angeles resident

   •   Focused on low or no money down deals

   •   Able to contribute ~2hrs/week for the meetings

   •   Investing in out-of-state properties (preferred, but optional)

Areas we’ll focus on:

   •   Understanding each other's goals

   •   Brainstorming on challenges

   •   Motivating and holding each other accountable

We’ll meet once a week thru google hangouts, and monthly or bi-monthly in person. We can figure out more details once the group has been put together.

If this sounds like something you would like to be a part of, please complete this survey that'll help us find out if we'll be a good fit:

https://goo.gl/forms/KHeBYRDlYCEi01vD3

Thanks Gary Baker and Johnny Kang for the advice. I'll keep sending them.

I took the advice of the forums and dove right in to sending yellow letters. I have a list of ~500 absentee owners, and everyone has now received at least 1-2 mailings. At the beginning, I was using a handwriting font that looked kind of fake and I was printing them on regular yellow computer paper. They looked cheap, and my response rate reflected that. I received 6 calls out of 750 letters (only 1 with potential). 

I decided to the time to completely re-do my design and now have very authentic looking letters and handwritten envelopes. I'm proud of these ones.

My question is:

Can I continue mailing to the same list, or did my first letters ruin my credibility? Should I stay the course, or buy a new list? 

Congrats @Rob Ringlehan ! Good luck with the responses. Keep us updated on how the bandit signs go.

I started my mailings back in January, and I've had a handful of calls come through. They call for a whole range of reasons, and each one is a good learning experience. The advice I use the most is to try to understand their problem and figure out how you can help them. Every call I've received hasn't been "buy my house for a deep discount!", it's been more of a puzzle I have to solve to make it work for both of us.

Thanks, @Christopher Phillips @John Leavelle. Looking back at my formula, I have to agree that I've made things more complicated than they need to be. I wanted to have a detailed view of all costs necessary to come out ahead with the BRRR strategy.

Your breakdown @John Leavelle makes complete sense. Thanks for writing that up.

I'm educating myself on how to properly analyze a BRRR property, and think I have the correct formula put together. Would you mind reviewing and let me know if I'm correct?

To Determine Purchase Price:

([After Repair Value] x .7) - [Repair Costs] - [Hard Money Costs] - [Estimated Purchase Price Closing Costs] - [Refinance Closing Costs] - ([Monthly Taxes & Insurance] x [Months loan held]) ≥ Purchase Price

Variables:

• [Hard Money Costs] = (((([Percentage] x [ARV]) / 12) x Months Held) + [Early Repayment Penalty*]) + ((([ARV] x [LTV Percentage]) + [Repair Costs**]) x [Points])
• [ Estimated Purchase Price Closing Costs] = [Estimated Purchase Price] x [Closing Cost Percentage {Usually 6-8%}]
• [Refinance Closing Costs] = [ARV] x [Closing Cost Percentage {Usually 6-8%}]
• [Monthly Taxes & Insurance] = Typically ~$100

Example:

• [Months Held] = 6mo
• [Hard Money Costs] = (((([12%] x [$100,000]) / 12mo) x 6mo) + [$500*]) + ((([$100,000] x [70%]) + [$20,000**]) x [3%]) = $9200
• [Purchase Price Closing Costs] = [$70,000] x [8%] = $5600
• [Refinance Closing Costs] = [$100,000] x [8%] = $8000

([$100,000] x .7) - $20,000 - $9200 - $5600 - $8000 - ($100 x 6mo) ≥ $26,600

Purchase Price = $26,600

Results:

I'll need to find a house that has an ARV of $100,000, but only pay $26,600. To help lower my overall expenses, I could look to reduce my hard money costs, shorten my hold time, and/or reduce my closing costs.

Does my math check out?