All Forum Posts by: Arthur Garcia

Just a quick update, I mailed 3 letters:

1. To the next door neighbor. The package consisted of a note to the neighbor asking them to deliver the enclose letter to the homeowner.

2. To the neighbor across the street. The package consisted of a note to the neighbor asking them to deliver the enclose letter to the homeowner.

3. to the home address. The package contained the handwritten letter I wrote above.

All three letters were hand written (that took longer than I thought).

I'm going to send the homeowner a letter once a week. Until they call me and either sell me their house or yell at me.

I'll keep ya posted.

Thanks for the encouragement Dev Horn. It looks like I may have hit it right on the head from the get go.

Michael Quarles - Thanks for all the sample letters. I'll use them for the mailing campaign. BTW - Norma is great. I've enjoyed working with you guy so far.

Best,

AG

Welcome Trevor Fulkerson!

Good to see more So Cal peps on here! Drop me a line if you need anything.

AG

Hello BP,

Yesterday while I was doing a final walk-thru on one of my rentals. I noticed a property down the street was vacant. I knocked on all the doors in the area and one neighbor told me that the homeowner was put in a nursing home a few months back. I also found out that the property was recently vandalized and all the appliances were stolen. The grand daughter told the neighbor that she didn't think she had enough money to fix the house to list it on the market.

SO....here is where you come in. I crafted a quick letter below.

Can you please share your thoughts? Again, this is a working draft. Whatever comments I get today (before 4:30 pm PST) I will incorporate and send out with today's UPS mail.

Lastly, I got the neighbor to agree to personally hand delivery the letter to the grand daughter. I'm going to send the letter to the three surrounding houses (I found there names on the city records) and ask them to either forward the homeowner's contact information or pass along the below letter.

I figure if she doesn't collect the mail, at least one of the neighbors will complain to the grand daughter. I guess I'll find out.

Here is what I've come up with so far. Hopefully, Michael Quarles or Jerry Puckett will also share a few of their insights.

Here's what I got so far:

Hello XXXXX & family,

My name is Arthur Garcia. I’m a local home buyer in the North West (I just purchased a property right around the corner on Prospect Ave.)

I specialize in purchasing from homeowners who need to sell their properties quickly and who don’t want to deal with the hassle of repairing termite damage, paying for mold removal, replacing appliances or doing general home repairs.

I’ve noticed that your property on XXX ABC st, has been sitting vacant for some time.

As you probably know maintaining a vacant home can be very costly, not only do you have to worry about vandalism, but you also run the risk of city code violations.

As I mentioned earlier, I purchase homes in similar conditions to your property. I do not ask for any repairs to be made, nor do I ask for you pay any additional costs (closing costs, home warranty, etc.).

I will purchase your property “as-is” and I can close in aa quick as 10 days.

If you have any interest in selling your property and letting someone else deal with the repairs, and maintenance costs, call me: XXX-XXXX

I look forward to your call.

Joel Owens - Thanks for taking the time to both read my post and respond with details.

Here are my responses:

Red Handwritting - Funny thing, is my wife said the same thing. I am having someone else write the note on the next phase and we're going to simply scan it in. It won't looks as authentic, but writing "looking forward to your call" 1400 times gets tiresome.

Setting an impression: You're absolutely right about this point. I debated even using a "yellow post card". I'm going to try a few "tests" to see what works best. I'm trying to find that happy medium between professional and authentic.

Photo: I have Split tested this to see if I will make much of a difference either way. I figured having a photo makes the "touch" more personable. I'm not sure my sample's large enough to tell how much of an impact it has. Either way, my call to action probably needs to be more prominent, like you suggested.

Capital: Yeah, I agree with you. I've set aside a monthly marketing budget and I'm going to go back to the list and further refine it (equity, location, etc).

The difficulty is factoring in how long it will take for a deal to surface ( I've only put one deal under contract from my marketing efforts). All of my deals , prior to this, have been purchasing from the MLS or pocket listings. I've set aside $550 a month for direct marketing. I'm planning on stopping if I spend $5000 and have no deals to show for my efforts. Of course if I can lock up a deal or two, I plan on reinvesting 25-30% of the capital back into direct marketing.

Timeline: I'm shooting for a 10 month time-horizon. I will be mailing every 5 - 6 weeks.

From everything I've gathered regarding direct marketing, saturation is key. Most of the successful Realtors and Direct Markers I spoke with said "farming" an area yields the best results, but not the quickest.

Thanks again for your time.

AG

Travis McRitchie - if I were you. I would rent it out for at least a year. Then if you still want to sell, do it then or wait another year. All signs point to additional appreciation over the next 24 months here in CA. If you don't need the cash out of the property, you'll see a bigger return down the road, IMO.

From the numbers you've listed, you should have more than enough meat on the bone to cover repairs and vacancy costs.

Be sure to do more research regarding vacancy rates and market rent values. $3900 is a bit high and I would imagine it would take longer to fill than a small SFR (1100-1700 sq ft.).

Best,

AG

Timothy Aing - Yes. He still gets a discount and his wife is a license CA Realtor. Again the sellers are motivated enough to give a discount, but not SOO motivated that they just give the thing away. He keeps the RE commissions and moves to the next deal.

Again, percentages aren't as important as net earnings (depending on the investor). This investor likes to make at least 25K on each deal. He can hit that a couple of ways - buy at a huge discount, getting the seller to carry the note while rehabbing is being done (for the properties he can't just re-list), etc. Sometimes he buys at 70% other times it is 80%, it just depends on the costs and what he expects to net.

I have to admit I'm new to direct marketing (see today's BP Blog post). BUT I've made a few offers to sellers and one thing I like is that you can be very creative (more so than conventional offers).

For Example, this one seller called me Monday. I negotiated purchasing his property for $317 if he wanted CASH, $350 (5K earnest money) if he allowed me to assume the current mortgage while I rehabbed the property ($15-20K). He happened to be a Realtor so I offered to let him be the listing agent as well, with a bonus of 2k (handled outside of escrow) if I sold it for more than $420K (ARV is 425K and will be worth 4-7% more in 90 days)

Unfortunately, the deal feel through. He ended up pulling a HELOC on one of his rentals and decided to do the work himself, but he said if he didn't have access to credit, he would have done the second option I listed.

I'm not saying I'm an expert, but I would have walked away with a nice bit of change had that worked out. My goal, and yours should be too, make offers on every call. Keep a list and follow back up in a few weeks.

Also - be sure to present more than one offer, 2-3 is best, IMO.

I hope that helps.

Best,

AG

Timothy Aing - The 70% rule is a rule of thumb and not the end all be all.

Try thinking about it a little differently. For example, what is the minimum you are willing to take on a flip - 10K, 20K, 30K, etc? Then work backward - deduct your expenses (holding costs, repairs, Realtor commissions, etc.) If you plan to wholesale, make sure you factor your finder's fee in as well. It is going to get very difficult to get 70% (minus repairs) once you start getting over 300K, IMO.

In this market, I would also consider listing the property as a FSBO (Depending on your volume and schedule). You can save on the realtor fees and and still get full list price, especially here in SO CAL over the next 12 months. 6% of 100K isn't much, but 6% on $400K starts to add up.

Another idea is, buy the house at a discount your comfortable with and just re-list it (pending the condition is livable). I know an investor in my market who does this. He doesn't need to buy at as much of a discount because he doesn't have to invest his capital into the rehab.

Just my thoughts.

Hello BP,

After months of offering "highest and best" only to get beat out to hedge funds all too willing to offer full market value. I've decided to go strait to the source and I started mailing directly to Homeowners.

I'd love to get YOUR feedback and opinions. As someone who struggled to find a case study of someone's direct marketing journey from A-Z, I decided to post my progress via the BP Blog.

I've posted my strategy and more details on my latest post here:http://www.biggerpockets.com/renewsblog/2013/04/04/direct-mail-case-study/

Please head over and leave me your feedback in the comments sections on the post or leave them here.

Thank in advance!!

AG

Graham Glover - I've mentioned this in other posts, but if you want to be "mentored" or at least given some guidance, you have to add value.

First - of course, search, search and search some more here on BP. There are plenty of folks with knowledge to help you further your education. Try to commit 5 hours (at least) a week researching various topics of RE investing and spend that time combing through the past forum posts here on BP. Each time you come across something new, write down the phrase or topic and come back to it. Over time you'll start to see patterns and common phrases for things. This will help give you context when you speak to other investors.

Secondly -find a few local clubs in your market and ask questions. In my experience, the "deal makers" are usually the guys in the back of the room who seem to know each other. Find a way to add value, once you meet these guys.

A few ways to do this are:

Marketing - Drive for dollars - offer to drive certain markets (zip codes) for the investor and write down addresses for abandon houses. You can also offer to post bandit signs in those same areas. You can also offer to post door-hangers as well. Who doesn't want a free work-horse. In return, see if you can get a commission for any deals that come from your efforts $100-$500 for any deals they end up buying. You can also populate a list of For Sale Buy Owners (craigslist, etc.) and make cold calls looking for deals.

Over time you'll learn the business and potentially have a partner to work with.

**note this may take a while, but keep at it.

I hope that helps a bit.

AG