All Forum Posts by: Dev Horn

This is an excellent question!  I'm eager to see if an expert comes in to answer.

I've assumed that your SDIRA must be used for the purchase of assets (property) rather than the purchase of advertising or other expenses. If that's true, you can use non-IRA funds for the marketing and use SDIRA funds for the purchase, then calculate the SDIRA's "share" of the deal based upon the total cost basis, including the marketing and other business expenses paid for with non-IRA money. My understanding is that you can BLEND IRA and non-IRA funds like that as long as the SDIRA gets paid back its fair share of the profits AND those funds are returned or added back to the SDIRA.

Look, let me be brutally honest here.  You're told that the way to buy real estate with NO MONEY and NO/BAD CREDIT is to "wholesale".  Sounds good - get other guys to bring the money to the table and I'll get my cut!  

Here's the PROBLEM:  Wholesaling is the FRONT END of the process, the one where we FIND the motivated sellers.  This is NOT a cheap part of the process.  This part of the process requires MARKETING which, other than the wasteland of Craigslist, is not free.

In some markets, it can easily cost $2K, $5K, and even higher in your marketing cost per deal. This is something that makes this business challenging. Acquiring prospects is not cheap for other small business people, and it is not for us in REI either.

So, do what can with what you have to get a deal or 2 - and then plow that money back into MARKETING...  this business takes money to make money!

HERE'S A FEW OPTIONS:
Most investors buy their mailing lists from a site such as Listsource.com, which is my favorite source for that.  Some direct mail providers such as Click2Mail also offer list services.   YellowLetters.com tailors their mailing services just for RE investors and they offer mailing lists as well.

I don't think it's a bad thing to pay for education, and let's be honest - BP is filled with helpful info and people, but it is not a structured REI "education". Some people really need and benefit from courses. The value of courses can be debated forever. Worth $5K? $20K?

Perhaps the "crime" here is more the sales techniques that many organizations use now, convincing students to max out CCs or get loans from their 401K because "You're going to make that back in the next 90 days!"  That, as @Jay Hinrichs points out, is unlikely and therefore deceitful. I've talked to people involved in some of those high dollar REI programs and they readily admit that "90% of our students never buy a house (for REI)".

All that said - I'm glad there are courses and knowledgeable people willing to train others.  I think what our industry needs is:
a) Reasonable prices for high quality REI education
b) Ethical sales techniques to sell those programs

One of our guys in Phoenix uses STICKY NOTES that say something like "Hi! We buy houses in as-is condition for CASH.  If you're interested in selling, give me a call!"

Even with that language, angry people call and say, "What makes you think my house is for sale?".

One woman said, "I'm afraid to stay here now because I think someone might show up looking through the windows!".

Uh, yeah.  It's marketing people.  No need for alarm.

This thread has me wondering a few things before we can be really helpful - such as:

You live in Iowa City and are studying for your license in Hawaii?  Are you hoping to "flip" houses in Hawaii?  What island?

Why are you getting your license?  Do you want to be an agent?  Work with buyers and sellers?  (I do encourage everyone to get licensed, just curious)

Have you looked for financial backers in Iowa?  Or Hawaii?

Do you have money for marketing?  What's your monthly budget?

The problem is not with your list (audience) which seems fine.  The problem may be your MESSAGE.  If you use letters, don't fall into the old "My wife and I love your house.... " trap.  That message - which does not explain an investor's offer of fast cash for those with distressed properties - usually generates what you got: tire kickers looking for retail... or BETTER (because your wife LOVES the house, remember)?

You can use letters with handwritten envelopes to get good open rates, but make sure you are telling people what you do and who you do it for.  With the right message, the right sellers (distressed property and/or situation) will self-select and contact you.  IF you've hit them enough times.

Love it @Michael Quarles !  I was just today looking at the ad holder in the child carrier section of the SHOPPING CART at the grocery store, thinking I'd like to see my ad there!  I've always wondered if that worked, and thought - if it did, all the Realtors and insurance agents would be doing it.  It seems like NO ONE does it.  Like the most UNUSED ad space there is!

That's right.  If she resists putting you in touch with the executor, ask if she is "representing" the seller.  As an RE pro, she should be clear about her relationship.

An RE agent that plans to list the property has no incentive to seek out an investor prior to listing - unless they are just doing a favor for a friend.  Why waste time seeking a transaction for which you will not be paid?

If you find that she will not connect you with the seller then she is not just helping but controlling the deal at the very least and, more likely, profiting from it.

I just made on offer thru an "agent FRIEND" where I could not talk to the home owner (absentee owned property in rough condition).  The agent called me directly from my marketing so I felt I should work with him.

Probably won't do that again.  I was only told that someone had given them a higher offer. Very frustrating.  You totally lose your ability to really negotiate.

And I couldn't help but wonde rif I was being played by the "FRIEND".