All Forum Posts by: P.J. Bremner

@Christopher Rodriguez

Yes I do consider age, I forgot to include it because all of the homes in the comp list were within 10 years if each other.  Good point, thank you for reminding me!

I will typically look at the whole list of comps and find out which homes are closest in similarity.  For example, in this specific comp list I came up with, the backyard butts up to an electric utility field.  Other examples would be a major street, freeway or commercial property on the border of the property.  I found one house that was two streets over, backyard was the same electrical field, had fewer sqft, was a flipped property that was bought fixed and sold in less than 6 months.  I valued this comp over the comp 3 blocks south that didn't share the border with the utility field and was +$15,000 more.  I prefer to err on the side of caution when in doubt.

I saw a deal recently from a wholesaler on BP and I wanted to run something by some of the more experienced investors. I'm well aware that most wholesalers tend to "dress up" their ARV numbers and "dress down" their rehab costs. In this case, I felt the rehab costs were very reasonable, if not spot on. The CMA he provided was really disturbing though... (or am I just ignorant? Help!)

Here is the search criteria he used to pull his ARV comps value:

- 12 months of sales

- Living area of +1,400 sqft of subject property or below (Subject is 1,200)

- 1.21 Mile radius from subject property

- Price range of $250,000 or above

WOW, I have a real problem with 3 of the 4 bullet points here.  Here is what I was taught a good comp should be:

- 6 months of sales

-  +/-200 sqft of subject property (1,000 - 1,400 in this case)

- 0.5 miles from the subject property

- same ba/br or close to it and adjust

- do not cross major boundaries such as a different city, freeway, major road, etc. because local markets vary significantly

I'm not happy with this person using 12 months of sales data, but okay I get it. He tried to fudge a little. It's the other two that #%$@ing piss me off. That radius is VERY SPECIFIC, almost like the seller was trying to include VERY SPECIFIC COMPS to help his ARV values. Also, who in their right mind would EVER include a sale price range limit when finding comps?! If you have really high or really low numbers, you look at the pictures and geography and justify why. You see one for 30% less? Okay, it's probably a dump and NOT A COMPARABLE. You see one for 20% more than all the others? That doesn't mean you use THAT listing as your comp and boost up the "ROI" you are offering... Maybe the house has a huge lot, golden toilets, etc.

Can someone weigh in on this please?  I would love to hear what you use for running your comps and if you encounter this crap often as well. 

Hey BP,

This is somewhat of an obscure topic, but I am confident that someone out there has come across this before and can shed some light:

Subject property has a duplex, cell phone antenna tower AND utility company poles on the lot.  Duplex is straight forward to calculate value, Cell phone tower has some data online for how to compute a value, BUT banks do not lend against this value and the utility company poles paying for the land use is a little confusing to me.

My question is this: Would it be easier to wholesale the property WITHOUT including the two side incomes?  I know the cell tower lease is a fairly complex business transaction and not many buyers will be savvy enough to understand it's valuation, nor will there be banks to lend on its value.  The utility company lease is something I have not been able to find any information on, so any insight into how that would work as part of the deal (how do I compute a value), or how to handle it separate would be helpful.

Thanks in advance!

@Albert Bui

That's an excellent point about the lien and deed of trust, I had not considered that.  At the very least, going conventional would save me a few bucks on a couple more properties, but at some point I will hit that fanny/freddy limit and will have to use portfolio loans regardless, so at least I'll have a backup plan ready either way.  Thank you for your insight!

@Benjamin Barredo

I used yellowletters.com so they selected the materials.  I sent a mailer to one of my rentals as well to track when they would drop and to spot check the work.  It looks like standard card stock (like 3x5 cards thickness, yellow color).  My personal opinion is to get the laser printer for your mailers and use it exclusively for black and white stuff.  I sent my mailer in black and white.  Think of it like this... If you're fighting a war, do you give your foot soldiers each a $10 millions dollar cruise missile?  No, you give them a rifle ($1,000) and some 5.56 ammo ($1 per round or whatever).  There is a time and a place to "go all out" but mass mailer marketing is probably not the place in my opinion.  My gut says that 99% of the people that get them, toss them immediately without looking at it, so all that money would be wasted.  You just want a quick message in front of the widest audience and fishing for that low-hanging fruit so go cost effective.  I may be wrong on this because I don't have tons of experience in real estate marketing, but I have tons of experience in other business types of marketing and it's a similar idea.

Get a separate printer that can do high quality color stuff for the wifey.

**UPDATE** Got 4 calls so far, 2 are looking for $1M+ for the tiny home on a huge lot, 1 asked to be removed from the mailer list because she is a wholesaler that markets as well lol and the last one is a great lead.  Inherited property, owner tried to fix it up but gave up halfway through and just wants out.  Appointment set real soon, hopefully it works out :)  Hang in there man, yours is coming soon too!

@Benjamin Barredo

I run an Amazon store that sells about 4,000 items per month and I do 100% of my printing for that business on a crappy $55 printer I bought online lol  So I have to print item labels for each item, shipping labels for the boxes sent, packing lists, etc. so I go through a lot each month.  The reason I use a laser printer is that they are meant for high-volume usage and print WAY faster.  The toner (ink cartridge equivalent for the other kind of printer) is much cheaper from what I remember.  I'll send you a link for what I bought:

https://www.amazon.com/Brother-HL-L2300D-Monochrom...

$54.99 for the laser printer lol Can't beat that!

https://www.amazon.com/Speedy-Inks-DCP-L2520DW-DCP...

$17.99 for 2 toner that handle 2,600 pages each (full document size, probably closer to 5,000 postcard sized print jobs)

Paper will just depend on what you are sending out.  If you don't buy most of your business supplies on Amazon, you are throwing money away (unless you have a local supplier that is cheaper, but highly doubtful).

@Benjamin Barredo

I misunderstood what you said about the budgeting.  I think your best bet might be doing very targeted mailings then, because from my experience with pricing out mailers is that if you can't send 1,000 at a time (ideally actually you want to be at 2,500) then you get no economy of scale.  For example:  I priced a mailer out for 500 mailers, 1,000 and 2,500.  The price difference total between 500 and 1,000 was literally like $40... it was ridiculous.  Then the price difference between 1,000 and 2,500 was about 1/3 more expensive.  So I got 1.5x MORE mailers for only 0.33x more cost.  Above that point it didn't make much difference.  If you're doing everything yourself, then perhaps you can get the costs down.  If you don't already have it, I would recommend going on Amazon and getting a laser printer that isn't too expensive, get some paper and an extra ink cartridge or two.  You can set everything up yourself, go to the post office near you and ask them mailing pricing if you do X amount of postcards, X amount of letters in envelop, etc. and see if they have different pricing at different volumes.  Find that sweet spot and hit em every month hard :)

Like I mentioned before, be more focused on your efforts (how many you send, phone calls you make, doors you knocked on) and less focused on the results (how many deals you make).  Once you have enough data under your belt and experience with everything, then you can make adjustments to your process and find out what works, what doesn't and adjust.  You got this man, keep it up!

@Benjamin Barredo

$10,000 over a 6 month period is $1,666.67 per month, not far off from your budget.  I used some of my budget to buy the list ($450 for 2,557 leads) and my first mailer was about $1,300 to mail each lead with a post card.  You only buy the list once, so that expense isn't there the following month.  My plan is to postcard 3 - 4 times, yellow let once (much more expensive) and then post card for the 6th.  Since I run several other businesses at the same time, I paid a premium to yellowletters.com to print and ship them, but if I was on more of a budget, I could get them printed for less than half + whatever the postage is.  You can buy a laser printer, extra ink cartridges and paper for less than $150 all in.  You can print them yourself and buy bulk mail rates from the post office if you go over a certain amount.  I suspect if I did everything myself for this round, I would have shaved off $300 - $400 for the job.  That would put you well within your $1,200 budget and mail to way more than 1,000 people.

Driving for dollars is great if you have the time to do it.  It's also smart to think more long-term and look at what you can do to SCALE so that when you have success and have more money than time, you can still grow.  Driving or dollars has no ability to scale unless you are paying others to do it for you.

I've been in many sales jobs before I went into real estate investing.  Cold calling SUCKS. lol Just make sure you have the mental fortitude to handle all the pissed off people yelling at you and hanging up.  Very low success rates, BUT there is still some success there to be had I have no doubt.  It just makes me wonder about the opportunity cost of your time in making the calls.  Could you do something else that has much more value for your time?  Probably, but maybe you're amazing on the phone and can woo those disgruntled folks into your corner!  If you go that route, I would set a goal for calls to make each day and stick it out for a couple of months before you make any judgements on it.  Ignore all results (other than how many calls you make each day) until you have enough data to substantiate your gut feelings on success or failure of this method.  

Also, there are services that will dial these numbers for you, even calling multiple numbers at a time, and then they call you immediately when someone answers and transfers it to you.  Something to think about.

@Benjamin Barredo

I think it's better to look at direct marketing as a 6-month campaign rather than 6 sets of 1-month mailers.  You can't look at any 1 set of mailers and determine if it's a success.  I personally would not judge and results until you get to the finish line (end of the 6 months).

I just sent my first mailer last week, 2,557 mailers and have received one phone call so far over the weekend from it.  I'm not hitting the alarm button until I have hit the 6-month mark and spend my budget of $10k on the whole thing.  We have to be willing to fail, lose money, etc.  Part of the game :)  Best of luck and keep me posted on your progress, I'll do the same.

@Faisal Farnas

I don't think everyone is trying to argue that pot should be legalized, or that it is or is not a gateway drug.  I don't want to speak on other's behalf, but I know for myself, it becomes a business issue to deal with situations like this.  There is a "Legal" way to do things and there is the "Right" way to do things.  Sure, it's illegal to smoke pot in most places.  However, it's also illegal to turn lanes in a car without using a turn signal, yet most people do it and rarely get pulled over for it.  It comes down to what is best for your business given the risks associated with allowing it to continue.  

If you disallow smoking pot at your place of business due to it being an illegal activity, what are the risks?  Perhaps they don't listen and keep doing it.  Then what?  Evict?  How much would that cost you?  Or, you look the other way.  Then what?  If you have tenants that complain about it, then what are the risks to doing something or not?  Just like the big businesses, risk management looks at every possible scenario and calculates an expected outcome.  I think the point people are trying to make is that smoking weed at your rental has a near zero risk to your business, even though it is technically illegal, but they would not make this same decision with any other form of drug usage.  From my point of view, that is the takeaway here.  It reminds me of a quote my old boss used to tell me:

"Managers do things right, leaders do the right thing."

A manager would call the police.  A leader would ask for a hit. LOL jk (sort of)