All Forum Posts by: P.J. Bremner

@John Foster

I was listening to a Michael Quarles podcast recently and he mentions timing between mailings as being very important.  He said mailing too close together isn't cost effective and mailing too far apart will miss too many opportunities, so there is a sweet spot in there somewhere.  He didn't really specify what would be too short, but he did mention that he would recommend sending every 3 weeks and no longer than every 6 weeks.  He mentioned that he likes to stagger his mailings every week, but that means he is splitting his list up into groups of three (300 people, he will send the first 100 in one week, the 2nd 100 the second week, etc.) in order to regulate his call flow, but his any individual prospect is getting 1 piece of mail roughly every 3 weeks.  He recommends doing AT LEAST 6 TOUCHES before you move off of the list you created.

Personally, I send once per month for 6 months, but I'm also very new to direct marketing so I will be trying to find the sweet spot for my area as well.

As far as the list goes, I pulled absentee owner with at least 55% equity in 4 different zip codes and I purchased the list from ListSource.com  I have since then read that RealQuest Pro is the way to go, so I will be using them for the next set to send out.  You don't know who is motivated on a list until you talk to them yourself.  There is no fool-proof way of knowing that people are going to be motivated on the list, but more importantly is that you market to people that, if they are motivated, can actually sell to you (hence why I pull lists with enough equity).

I don't have much experience with FSBO's other than what I hear from all the agents (they say FSBO's are the hardest to get and generally they don't have good results, but most agents aren't good at their job so who knows). I like the Pre-forclosures idea, which will be my next campaign. I just decided to start out with absentee because it seemed the most logical for me (I am an absentee owner as well and can commiserate with the sellers).

Congrats on taking action, just make sure you see your campaign through to the finish.  Once you reach the finish line, reevaluate your efforts and adjust.  If you can do that, I have no doubt you will succeed : )

@Wendell De Guzman

Great post!  I wish I had read this years ago when I got started, would have saved me months of research :)

I would like to chime in on the BLOC & PLOC section: I was able to get a $90,000 BLOC from Wells Fargo with 0 upfront cost and an introduction rate of 3.99% for the first year and 2.75% + Prime (currently 3.25%) after that.  The annual maintenance fee is $150.  There is no cost on the cash advance for using this.  I also got a PLOC years ago from Wells Fargo for $25,000, $25 maintenance fee and 10.25% + Prime rate.  I have had a great experience with Wells for these types of products.  I don't generally recommend the big banks for mortgages or a lot of other things, but it seems like the Line of Credit products are decent there.

Can you recommend a couple companies to look at for getting a BLOC?  I would like to compare what they have to offer relative to what I currently have.  Thanks!

@Patrick Philip

Without going to the house and actually taking notes on EXACTLY what needs to be done, either by you, a partner or a contractor, it will be impossible to determine what an accurate rehab cost will be. As a wholesaler, you have a responsibility to your investors who will then flip the property after buying from you. If you screw them because you underestimate rehab numbers and they "take your word on the estimate" then you will probably not be in business for long. My personal opinion is that you need a process for getting accurate rehab numbers and accurate ARV values. If you cannot get those, then you may be able to sell a deal or two to a sucker, but you won't be in business in the long run. A general rule of thumb you can use is buying the house around 60% of ARV, but again this is ONLY to make sure that the seller is even in the same ballpark as you before you waste your time seeing what the property actually needs.

A couple options for you, since it sounds like you either don't want to see the homes yourself or are forward thinking (how to scale your wholesale business) then a couple alternatives might make sense for you:

• Bring on a partner that knows how to estimate rehab costs
• Bring on a foot soldier that can go into the house and take pictures of EVERYTHING (more is better)
• Get a list of contractors that are willing to estimate rehab projects for you (most likely you will have to pay them, or possibly waive the fee if the flipper you sell to uses the contractor for the deal)

Congrats on getting the phone to ring!  That's often the hardest part :)  

@Pratik P.

@James Syed

Sorry, I meant to tag you two as well in that.  I appreciate sharing your experiences and it's nice to hear I'm not the only one banging my head against a wall at times haha

@Craig Kleffman

I'll be happy to share a few of my responses so far as well, you're not alone here!  I sent a little over 2,500 mailers to absentee owners who had at least 50% equity in their properties.  This was my first mailing ever and had received 9 leads from it so far (about a month in) which is a 0.31% response rate.

Two of the responses were "Take me off your list", one of which was a fellow wholesaler (great opportunity to network, can co-wholesale between both parties) and the other a retired real estate veteran with 18 properties and no plans to sell any.  I am currently in the works to setting up a lunch meeting with this person to pick their brain and get good advice (you can't buy 18 rentals and be incompetent... unless you inherited them).  My point here is that even when there isn't a deal, you can still get something of substance from these kinds of leads.  Think outside the box.

One was a land deal and the guy wants waaaay too much money for it, but I'll keep him back-of-mind if I come across a developer who needs land in that area.

Three calls were currently listed with an agent.  I currently am licensed in California to sell real estate so I don't even come close to these deals and I explain to them why I can't.  It builds a level of honesty and trust with them so that if their house doesn't sell within the listing time period, they may be open at the end to selling to me directly.  I look up their listing contract and set a follow-up call for just before the listing will expire to remind them that I am interested once the contract expires.  I also ask them if they own any other properties anywhere else that I can possibly buy.  Out of state wholesale wouldn't be that hard to do with a network like BP, so you never know!

The rest of the calls were legit and offers were made.  I had one guy who inherited the property after parents passed, he was going to fix the property up himself and sell it himself, but his wife nagging him to just dump it convinced him to call.  Still working the negotiations on this.  Another property was a rental, tenants recently moved out and she wants to retire soon and not deal with tenants.  We offered a fair price, but ultimately we were off by about $100k so I asked if she would let me assume her loan and lend me seller carry-back for the difference.  I am currently in talks with her now on closing this deal.  She also owns the property next door free and clear.  The tenant in that house is expected to move out in December, so hopefully I can work something out for both properties with seller financing (allowing her to maintain an income without any hassle of managing a rental).

The final deal I have come across deals with a mixed use lot (mixed use is an understatement for this case LOL).  It's about 0.75 acres in a dense suburb where the average lot size is 6,000 sqft, currently zoned residential and light industrial.  He has a duplex on the lot, 3br/2ba each 1,200 sqft roughly.  He rents most of the land out to a local pallet business who uses the lot for extra pallet storage.  The west side of the lot has been land-leased out to a cell phone company to put a cell tower and equipment.  He also has a few trailers on site that he wants to sell with the land.  The cell tower contract is ~$2,500 per month with 3% escalator clause per year on the contract, which renews every 5 years.  The pallet business pays him $1,800 per month to use the land.  The duplex rents for about $2,600 total.  His net on the whole lot is $5,500 per month.  So... I got in touch with some BP people and local people that know how to negotiate the cell tower lease and either sell it to a company that holds these contracts (often they will pay hundreds of thousands of dollars for them) OR someone who will be willing to raise the cash to pay this guy off completely.  It's a very messy deal, but sounds like it will be the most fun to explore : )  Currently I am trying to gather all of his legal documents (cell tower lease, rental agreements, etc.) so that I can meet with investors to come up with an offer price.

While I can't say I am happy with the results thus far, I am waiting until the full 6-month campaign finishes up before I make any firm judgements as to the success or failure of the mailings.  I think it's very short sighted to base it off of a single mailing, or even a couple.  It's very easy to be results oriented (especially if your finances are tight) but my goal when I started this out was to focus on the EFFORT and not the RESULTS.  If I send the mailers consistently, handle the inbound calls effectively, then deals will happen.  If they don't, then I will look back at my data and find out where I need to improve.  It may cost me tens of thousands of dollars to figure out the right formula, but I am willing to lose that kind of money to get this operation going.  When you can easily make $30k+ on a single flip, it only takes 1 deal to pay for years of marketing.

Best of luck to you, it sounds like you are on the right track!

@Account Closed - I agree with you 100% on the due on sale clause part.  I had thought that part through and figured worst case scenario, I could pay everyone off cash and refi the equity out at 70% with a portfolio lender.  The problem is, I would lock up 30% of my own cash in the deal, which is exactly what I am trying to avoid here.  Do you have an personal or anecdotal evidence that lenders call loans due?  

I guess that's why we try to balance risk/reward and make a decision from there :)  I appreciate your feedback.  

@Michael Seeker

I'm not sure, I have not looked over her loan personally.  It was an investment loan, not owner occupied.  Let's assume the loan is NOT assumable, what are your thoughts about taking the property "subject to" and then she carries a 2nd above and beyond that?

I would be able to refinance the house with a commercial lender portfolio loan, but my preference would be to get more favorable financing through this lady, plus she can earn some extra return on her money.  She wants out of being an active investor and this may be a good fit for her if all works out well.

I came across a deal through my wholesale mailers and am trying to make chicken soup out of you know what.  She was way off on a wholesale price, but asked if I was interested in buying the property myself if she could carry back the mortgage.  Here are some of the highlights of the deal as it stands:

• Current mortgage on the property is $128,000
• Current home value is around $260,000 - $280,000
• She wants $325,000 as her minimum (who wouldn't, right? lol) but said she would think about $280k
• I can get the house rented out with about $15k - $20k out of pocket for rehab and furniture and still have great cash flow

My question is this: would it be possible to assume her current loan AND have her carry back the balance?  Would it be best if her current loan was paid off and she just carry back the whole thing?

Thanks in advance for your feedback.

@Benjamin Barredo

One thing I have learned in my years of sales is that you never know what the other person is thinking.  Don't let your thoughts be confused with what you think THEIR thoughts are.  I've been in many situations where I thought my offer was ridiculous (because I know what a deal should look like) only to find the buyer perfectly content with the offer OR they tire of the negotiations and they tell you their true bottom line.  We see deals every day so we know what should be a deal and what shouldn't, but most of our clients don't.  They may rationalize a deal differently.

Submit the offer confidently and don't be afraid to walk away.  There is a great poker quote that is true in business as well: "Scared money don't make money".

@Benjamin Barredo

Nice work so far!  Sounds like you got a nice deal in the works.  My best advice with negotiating: always be willing to walk away from the table.  If you they know you or the other party are desperate then you have very little leverage.

That being said, let's find out why the ARV is off by so much.

- How confident in your ARV are you?

- Did you find a comp with the similar situation? 

- Is the subject property adjacent to the dead end, or is it just ON the street?

- Did you get the data backing up the buyer's ARV of $60k?

I recently went through a similar situation. The seller comped her house at $380k - $399k if fully rehabbed, my ARV is $330k - $350k. Several streets over had comps in that range, but definitely a different part of town. They are within a mile of the subject property, have similar stats (sqft, br/ba, etc.) but they are NOT in the same type of neighborhood. Very similar to your situation, the property across the street is the back-side of a fire department and a car lot (used car dealer, holds inventory there). This negatively effects the resale value (most of the time). It's easy to get sucked into painting a rosey picture, but at the end of the day if your investor buys that property and loses money on the flip, WE are mostly to blame so we have to keep our investor's best interest in mind. Find out where your buyers numbers are coming from and tell him where yours are coming from, then substantiate them with data. You can't argue with data :)