All Forum Posts by: Cornelius Garland

@Ray Lai I'm still learning, but I do think I can provide value by writing a book or blog post on BP. Great idea, and I may do that soon. We spent a good portion of the money from our deals back into marketing and just experimenting. A lot of what I do is unconventional and if I have an idea that I may think will work, I try it. Now, this hasn't always worked out well. I've bombed several times.lol. I may need to write a blog post on the time I sent out 5,000 letters to a mortgage-late list that had no equity filters and didn't get a single deal...that was an expensive lesson.

But I've made up for these "failures" by learning from them and making my next campaign better. I hope what I provided to Ryan will help him out because I've literally done what he's attempting to do. Except, I think he's closing on the properties himself; I'm flipping the contracts. The marketing process is the same, though.

@Ryan York I'm marketing to a neighborhood like this in my city; however, I would classify it more as a Class D neighborhood. I've been working this area for about a year and a half and have several suggestions to help you get started. Firstly, most of my deals have been wholesaled to one developer. We've moved about 50 parcels in 16 transactions since late-2015. Their plan is to build on the vacant lots and enter in agreements with the current homeowners who wish to stay in the neighborhood to renovate their homes. If they don't want to give up a significant amount of equity in their homes for the renovation, they at least want to update them on the outside to make the neighborhood more presentable. Their plan is grand and it's wild to think that homes are selling for $15k today but in a couple of years, there will be $200k+ homes. Nobody in my area except for a handful of people know this is happening and it's pretty nice because are buying already knowing that our investment will pay off. There's no speculation or significant risk involved unless we witness another recession on par with 2008.

Regarding the marketing; our first deal came by accident. Most investors avoided this area, but we were new to REI at the time so we unknowingly marketed to all of the bad zip codes. Once we noticed there was interest among a few investors in this area, we developed a comprehensive plan to acquire every vacant lot and home in the area. My first step was to pull a list from List Source of the entire neighborhood. There were roughly 600 parcels and 450 unique property owners. After this, I saturated the area with yellow letters. They worked really well and the older folks liked them. I also suggest skip tracing any returned letters and tracking down the property owners. Our first deal in the neighborhood was a 26-lot deal and all of my letters were returned because the mailing address went to a vacant lot, not the owner's house. So I found the owner's correct address and resent my letter. Also, I suggest using red handwritten font. @Ray Lai can help you out with the direct mail and give you a great rate on yellow letters. It was interesting because this seller stated in the voicemail that he "knew we meant business because red means hot." That was the first time I truly realized the importance in the nuances and psychology of marketing. It may seem small, but just that one detail likely got him to pick up the phone and call us.

My other suggestion is to present yourself as a small-time investor. The reason why we had success and the company wanted to leverage us is because my business partner and I weren't part of a huge corporation. The property owners just viewed us a couple of young men trying to get into real estate. However, they didn't realize we had huge funding partners. You don't want to present yourself as if you're doing a "land grab" and trying to gentrify, even if this is your end-goal. Word will quickly spread and the residents will not do business with you. 

Overtime, you may also may want to create a comprehensive database of all the homeowners and the status of their property. For instance, I have a spreadsheet that indicates which properties were bought as a tax deed and which ones need to go through probate. I also have the condition and status of every home in my spreadsheet. This allows me to quickly sort through the workable deals. If you find that you're running into issues where there are a lot of deceased homeowners or tax deeded properties, I highly suggest doing this. It will take some time to create, but it will also allow you to narrow your marketing. When I did this, it removed about a quarter of the properties, and this freed up a quarter of my marketing budget. At this point, I was able to increase my mailings to bi-weekly instead of monthly mailings.

What you're doing takes consistency but you will benefit greatly if you stick with this and acquire the properties at the right price. Please let me know if you'd like for me to clarify anything I stated!

@Ray Lai Thanks for the mention, Ray. @Hector Lozano myself and my business partner @Ethan Summers can answer any questions you have. Just shoot us a mention or DM us. I agree with you; a lot of the information on the forums regarding direct mail is outdated and sellers are becoming more savvy. So as investors, we need to update our marketing practices. Like Ray indicated, you can check out some of my posts because I talk about what's worked for me recently and what hasn't. Code violations list is probably your the best list to work off of at your stage.

@Kyle Lopez Anytime, Kyle! Please don't hesitate to mention me on this forum post if you run into any issues. Although, I think Rick H is much more knowledgable in probates than I am.

@Samuel Bavido I lived in Fayetteville for a year (2015-2016) and that was around the time when I started investing heavily. I knew a guy at the REIA that was doing a lot of lease option deals because there just wasn't enough equity in the homes to buy at a significant discount. Regarding the multi-units (and SFRs), I think the issue is too much inventory. It is so cheap to build property in Fayetteville and everybody has a VA Loan so most of these people would prefer new construction over an existing property. Once the military personnel get transferred, they rent their houses out. This causes there to be quite a few rentals on the market and not enough tenants. The ample inventory is also causing the rents to remain low due to competition. The sellers are likely trying to sell high because they overpaid for the property and need to cover the mortgage and their walk away money. This might also explain why you're seeing properties at such a high listing price.

From my understanding of the market, the prices have been consistent and didn't dip too much even during the recession. That's what the gentleman from the REIA explained to me back in 2015. It's a market that I, personally, wouldn't invest in though. You may want to try the Raleigh-Durham area, which isn't too far away from Fayetteville and will likely have more opportunity with less risk.

@Johnny Kang Absolutely! Just shoot me a message if you want to talk about direct mail, marketing, or just deals in general. Real estate is my life.

@Desmond Williams I agree with the person who said to hire a skip tracer. It shouldn't cost you more than $2.00 to get an updated address and phone number. I wouldn't get hung up on one deal, though. I made this mistake starting out and wasted a lot of time because I "fell in love" with the property even before I spoke to the seller. I would focus on volume and getting several of D4D properties in your database. 

Separately, make sure you check out when the property was bought. If it was between 2006-2009, there's likely no equity. Also, make note of when the last deed on file was. If it was before 1960, you're likely looking at a situation where the owner is deceased. This will save you valuable time if you take these preliminary steps before sending them a letter or cold calling them.

@Rick MacGills I think "war zones" get much more of a bad rap than they deserve. Think, these people need to sell property just like people in affluent areas. Oftentimes, this is their only asset. Unfortunately, more often than not, a Realtor isn't going to give the same attention to a seller with a $20k property as they would to a seller with a $300k property. That's a difference of a $600 commission and a $18,000 commission. Additionally, selling the $300k property will likely be a smoother process for the agent. Economically, it just doesn't make sense for the agent to direct considerable effort to the lower-priced property, and this is understandable. However, the seller is done a disservice because they aren't receiving the same treatment as the seller with the more expensive property. This is the perfect opportunity for a wholesaler to come in and provide value because a deal in this area will be worth your time.

The key is market diversification. I market to neighbohoods where the average property is worth $10k all the way up to $500k neighborhoods. As long as I can make my desired profit, I really could care less where the home is located. Once you have a system in place for screening your leads, each deal should require the same effort and you should know quickly if it's worth your time. A $500k home seller could be more of a headache to you if they aren't motivated to sell and you're trying to make the numbers work to close the deal.

There are cash buyers in your area that only focus on the problem neighborhoods; you just need to find them. I suggest conducting an in-depth analysis on these neighborhoods and seeing which LLCs have been purchasing the homes there. This will need to be done through your tax assessor's site online and cross referencing the records on the register of deeds site, if needed. I guarantee there are a handful of LLCs buying everything around the same price. I am in a similar situation. We have three buyers that purchase all of our war zone properties. They're looking to completely redesign the neighborhood in the next couple of years. I hope this insight helps you out. Best of luck in your marketing!

@Johnny Kang I just realized I have "mailing 1" listed on the spreadsheet so it's a bit confusing. The sheet actually includes two mailings: one was sent off on 8 SEP 2016 and the other was on 20 SEP 2016. For some reason, I didn't stager this on a monthly basis which I usually do. I think at this time I was also experimenting with bi-monthly mailings and entering a market about two hours away from me. I suggest just sticking with monthly mailings because your prospects will become numb to your message quicker. Additionally, this doesn't give them enough time for their situation to change drastically. I also developed my own way, which is probably inefficient, of tracking my response rate. I put how many leads I mailed in each row, even though I only sent out letters on one day. I apologize for the confusion. 

For this particular campaign, I sent out two unbranded yellow letters to this list. Shortly after, I found the phone numbers and solely cold called them. This was when I was transitioning from direct mail to skip tracing primarily. I stopped tracking the response rate after September, but I still received calls from this list all the way through February 2017 quite consistently. This was just from two mailings! Pretty wild. I guess my message resonated and the list was a good one. I highly recommend a seniors' list if you can find a list vendor that can get this data.

@Johnny Kang

@Ray Lai I made a gradual transition to primarily skip tracing and cold calling. I admit, I was skeptical at first because I was able to quit my job using direct mail to get deals! However, I learned over the past couple of years that you absolutely need to be more consistent and aggressive than direct mail. The reason being is that the seller doesn't have a physical reminder of your business. Therefore, you must followup more often so you stay in the sellers' mind. I've had people save my voicemails, but this doesn't compare to them sifting through their piled up mail and then seeing your letter. We stress followup heavily in our business model. 

I use yellowlettershop.com for my letters. They're only like .78 cents a piece, which is one of the best rates I've seen. Also, I FedEx my really specific lists if I've cold called it several times and can't get in touch with some owners on it. I'll cold call and attempt to make contact with a seller 12 times before I do this. Also, I have the most updated address so I'm 100% sure my FedEx letter is going to deliver. I have my own internal database for skip tracing right now. I reach out to a few different vendors to get my data and I have multi-millions of records in my database that are updated daily. It took a while to create, but I prefer dealing with the technical issues opposed to returned letters. I'm still receiving returned letters that I sent to a tax delinquent list last year...like really?? I'm sure these letters have circled the world twice before they got back to me.lol.

I agree with you about sending a post card first. I didn't learn this money-saving tip until a year after I began sending out direct mail. I learned that I needed to send off a first-class post card initially and see which ones were returned to me. After I received the returned post cards, I skip traced them and updated their addresses. The next month I'd send another post card first class to see how many returned mailings I received back. Then by my third mailing, I would just send the rest of my campaign via standard mail to save some money on the postage. By that time, I had a pretty good idea of which addresses were bad.