All Forum Posts by: Greg S.

Hello everyone. I am a beginning real estate investor from NJ and am currently mailing to probates and out of state owners. The area I live in was pretty heavily hit by Hurricane Sandy. I'm about 5 miles from Seaside, where the roller coaster still juts from the ocean (if you've seen it on the news).

Many of the houses I'm receiving calls on have flood damage. I have an appointment to see a house this Wednesday. It is an inherited house, currently vacant, and had about a foot of water in it during the storm. The owner is starting to feel motivation, since they do not plan on making any repairs, and know they will have to take a cash price for the home.

I plan on taking pictures and/or video of the home on Wednesday, so hopefully I can get some assistance with estimating the repair costs. If it is a deal that I plan on pursuing, I will bring in multiple general contractors to give me quotes on the work. I also am going to give my realtor a call so she can provide me with some comps .

To be proactive, I wanted to get everyone's insight as to what I should be aware of with flood damaged homes. Is there anything in particular I should look for as I'm inspecting the property? Also, I assume this property will require flood insurance, which from what I've read is pretty expensive. In your experience, how will this affect my ability to sell the property?

Thanks in advance for all of your help.

Thanks for the reply, Rick. I haven't really thought about filtering my list further, although it sounds like a good idea. Do you have any suggestions as to what I should be doing to appeal to the "triggers"?

My week in review:

12/31/12 - I filtered through a list of tax records for property owners in my township, narrowing it down to only Out of State Owners with a sale date prior to 2008, and an assessed value under $300k.

1/1/13 - I printed and compiled 50 yellow letters for out of state owners, which will go in the mail tomorrow. I also identified some quirks in my mail merge that I need to work out.

1/2/13 - Very light day. I printed about 12 letters that I had messed up envelopes for during my last mailing (November). I only had 8 stamps, so a few will need to wait to be mailed.

1/3/13 - Mailed the 8 letters I put together yesterday. I also put together a batch of 60 letters for a probate mailing I'll be sending out tomorrow. This is the 2nd mailing I'll be doing for the list.

1/4/13 - Calls started coing in today from my Jan 2nd mailing. I received 2 calls. The first one came around 2:00 and I called him back about a half hour later (I can't pick up my phone until the school day ends). It was a 2/1, 1500 sqft, damaged with about 2 feet of water from Hurricane Sandy. The property is gutted from 4 feet down and has a new roof with a transferrable warranty. The seller is asking way too much ($200k), but he doesn't live there so there might be some motivation in the coming months.
The second call was from a woman who left a message saying she wants $500k for a house that's worth about half that. I haven't called her back and figure it's not worth my time to do so.

1/5/13 - I drove to a nieghborhood that I plan on farming, which is about 20 minutes south of me. There were a mix of houses in the development, ranging from poor to fairly nice. It's definitely not a development I would be interested in living in, but that's probably what I should be looking for if I'm targeting entry-level buyers.
I also received a few more calls. One was from someone saying the house was sold. Another was someone with a home listed for $280k, which I told him I couldn't come close to. He pressed me for a number, which I resisted on giving him but eventually said $100k. He wasn't interested but said he had my number and would give me a call if anything changed.
The third was a bit more interesting. It's about 3 blocks from the home I received the call on yesterday. It was also damaged by Sandy, although the seller says it had less than 1 foot of water. It's 3/1, 1700 sqft, 1 block from the bay. They do not plan on making the repairs on the house, and are going to sell it as-is. They already had an offer for $60k, which they turned down. She told me they want to walk away with $100k. I'm having a hard time comping the property since values seem to be all over the place, but I think a conservative estimate is around $130k. I figure the $60k offer from the other investor is probably pretty close to where I'd be, but am going to give her a call tomorrow to schedule a time to see it. I'm going to make a list of needed repairs, and then try my best to come up with a repair estimate (I'll probably need some help with this).

1/6/13 - I called the seller of the house I mentioned above. She was unable to show it to me today, so I made an appointment to see it at 3:00 on Wednesday. I took a drive so I could look at it, along with the other two properties I received calls on yesterday, since they were all within a minute's drive of one another. The house needs work, especially with the landscaping. The roof seemed to be in decent shape. I also printed and assembled 50 out of state owner and 58 probate mailings. The OOSO will be mailed tomorrow, and the probates will be mailed on Wednesday.

Goals for next week:
Meet with the seller and come up with a repair estimate. Make her an offer.
Gather more probate data
Assemble another 50 OOSO and 60 probate listings for next week.

Current response rate from my mailings: around 4%

This is going to be my year. This is going to be the year when I finally finish talking and reading about making money with real estate, and actual begin making money in real estate.

I've spent a lot of time recently thinking about my financial situation. Let me start by saying my wife and I are very blessed. We both have stable jobs, very little debt, a nice house, and a great family. We were fortunate enough to be able to travel extensively when we were younger, which is something I'd like to continue in the coming years.

I currently work as a public school teacher...a profession I switched into after spending 2 years working as a computer engineer (which my degree is in). It was hard to leave the salary of an engineer behind, but I justified it by saying that teaching was better suited to find time to invest in real estate. The plan was that, in time, the smaller salary would be balanced out by income from rentals and house rehabs.

That was 7 years ago, and to date, my total income from real estate investments is...$0. It's not that I haven't been working towards my goals. For the past 7 years I've been reading as much as I can, and taking (sporadic) actions to be successful in the business.

At this point, it's do or die. This year is the proof of concept year. I need to show my wife, my family, and most importantly, myself, that I can actually be successful with this. If not, I need to leave teaching and go back to engineering, where I'll be trading my time for money, but a lot more money than I'm currently making.

I've talked my wife into putting $5000 towards a marketing budget for the year. I will be mailing to probates, out of state owners, and evictions (if I can figure out how to find the data at the county courthouse). I figure that budget should get me about 8000 or 9000 mailings. If I can't put a deal together from $5000 and 8000 mailings, it's time for me to move on.

I'm happy to say that I've hit the ground running. I will be successful at this. This is going to be my year.

Just a quick update. I've been continuing to send out 50 to 60 yellow letters a week to probate estates I've pulled from the county Surrogate's office. I've been averaging about 3 calls a week, which is a big improvement over what I had been receiving from my postcard mailings, but still a disappointing response rate. I should probably change the contents of my letter and see if that increases my number of calls.

I haven't been successful with any of the people who have contacted me, but I learn something from each new potential seller. I'm still working on getting more comfortable on the phone and asking the right questions. I haven't visited any properties (as I mentioned in the above post) so that's something I still need to focus on.

Tristan,
I'm a fellow newbie, and the some of the best advice I've received so far is this...just make the call. Don't think about it, don't fret over it, just dial the number. You know the basic concept of what you're trying to do...qualify their motivation, and find out what you can about the property. It won't go smoothly (in fact, you'll probably screw it up), but that's how you learn, and that's how you get better.

Good luck!

Greg

Hello everyone. I'm hoping to complete my first rehab in the next few months, and have been looking into how I will finance the deal. I have been in contact with the mortgage rep I used to purchase my current home, and she had this to say about financing rehabs...

"You must carry the mortgage for at least six months, unless you get a cash buyer. Banks requiring seasoning of a property for at least 6 months, and some banks require 12. This means that the person buying the home must use the seller's purchase price if the sale is taking place within 6 months (i.e. no profit for you)."

I was surprised to see this, since I've read a lot on this forum about the 90-day seasoning requirement. I asked specifically if this applied to FHA loans, and her response was...

"FHA buyers have to prove you invested the money to get to your sale price. You have to supply invoices and receipts, and you are capped at 10% profit for 6 months"

I will visit some other small local banks to get a second opinion, but wanted to see if anyone had run into anything like this.

Thanks in advance!

Talking with sellers...

As I mentioned above, I received a few calls recently. I will start off by saying that I feel I have made a lot of progress when it comes to speaking with sellers. It's still outside of my comfort zone, but I've grown a lot since I first began. One of the best pieces of advice I received (and I forgot where I heard it...sorry!) is this...When you have to call someone, just call them.

When I first started, I would receive a voicemail from a seller and get very anxious. I would lock myself in a room and try to plan out exactly what I was going to say, and then try to figure out what questions I would be asked. I'd spend 10 to 15 minutes just prepping to make the call. Now, when I have to make a call, I force myself to just dial the number without trying to plan out exactly what is going to happen. It's not that I don't have a basic "script" that I follow (I do), it's just that I want to be able to have a conversation with the seller, not read them a script off a paper.

Of course, there is still a lot of progress that I need to make. I occassionally trip over my words, especially when I'm asked questions I'm not prepared for. However, my biggest problem is that I tend to disqualify myself as an option for them. On my list of questions to ask, I have all of the typical "How much would it take if I offered you all cash with closing within the week", "...Is that the best you can do?", etc. However, I never even get to that point in the conversation, because I'm quick to convince myself that they're not motivated.

Before I even ask those questions, I end up saying something along the lines of "Let me be honest with you, if you can afford to list the house and wait for a sale, you'll make a lot more money than I'd be able to offer you." Now, I don't necessarily think that's a bad thing to say to them, since if they're motivated they won't have the option to wait for a sale. However, I find myself saying this MUCH too early, mostly because I'm afraid to ask them the "tough" questions or offend them with a low offer.

On a positive note, I did make 'ballpark' offers to many of the sellers I spoke with in order to guage their motivation. However, they were shoddy and done without completing the necessary research on the properties. It was a way for me to 'make an offer' without actually having to see the property or attempt to come up with a realistic repair estimate or set of comps. I would make a quick guess about the ARV, multiply it by 65%, and subtract $30k for rehab, which is a number I pulled out of mid-air.

I need to make a point to visit properties regardless of whether or not they are deals, just in order to get some practice. I want to be comfortable with the process so I don't choke when an actual deal comes along.

After reading some of the posts in this thread, I came to the conclusion that I need to make better use of my time. With my full-time job, 3-month old baby, and other responsibilities, the time I have available for real estate is very limited. That being said, I need to be making sure that all of this time is put towards things that have the best chance of making me money.

That being said, all of my actions are going to go towards researching new leads and creating mailings. Visiting open houses, visiting banks, etc are great, but they won't help me if I can't find a deal. I think I have enough of a grasp of the basics that I can put things together if I happen to come across something that is worth pursuing. I would also spend a lot of time making sure that my mailings were perfect, and the text perfectly lined up with the spacing on a yellow letter. In retrospect, that only gets noticed if they open the letter, which is the whole point, anyway. From now on, if it's readable, it gets mailed.

As for my recent progress, I had a few hiccups this month that slowed me down, but I did manage to send out some mailings. As I mentioned in a previous post, I decided to switch from postcards to yellow letters due to the fact that my postcards weren't getting me any calls. I made up a yellow letter template, and when I went to print them, I noticed that all of the zip codes were dropping the leading zero. I took a look at the mail merge file for my postcards, and noticed that many of the zip codes were also incorrect, although others were fine.

I'm not sure if that is the reason for not getting any calls on my postcards. I like to think I would have spotted the problem as I was putting on the labels, but it's possible I missed it. Additionally, all of the towns were correct so I'm not sure if having and address of "Brick, NJ 8724" instead of "Brick, NJ 08724" would cause the mail to be undelivered. Regardless, I transitioned to yellow letters but plan on incorporating postcards into the mailing schedule.

I started out with small batches...30 on 10/15 and 30 more on 10/22. From those letters, I received 6 calls, plus another 2 calls from people who had received a postcard (finally!). I sent out another 60 letters on 11/5, but haven't received any calls yet. The mail service has slowed down around here due to the hurricane, which fortunately for me caused minimal impact on my neighborhood despite being just a few miles from Seaside Heights.

I'm going to go into detail on the calls I received in my next post since this one is getting a bit long. There are definitely things I need to work on when talking to sellers.

Goals for this week:
Mail out 50 yellow letters
Gather more probate leads from the Surrogate's office

Goals for this month:
Mail a minimum of 200 yellow letters, along with sending a second mailing (postcard) to the people I contacted in October.
Develop a new "script" when talking with sellers
Obtain a list of out of state owners in the area I would like to purchase a rehab in

Thanks, everyone, for the comments.

Unfortunately, I don't have the budget to send out 1000 postcards a month at this point. Even sending out 100 a week puts me near my spending limit.

I agree with you both about working smarter and not harder. I feel that my current marketing strategy is not producing enough calls to justify the effort, so I need to reevaluate and try to figure out how to get my phone ringing.

Vikki, just as Andrew O. suggested, I am going to open houses in order to learn the market. I tell all of the realtors I meet what I'm looking to do, and they all offer to help and have been e-mailing me "fixer uppers." Most do not even come close to fitting my criteria, and I don't expect to find a property on the MLS at the discount I'd be looking for. My open house tours are really more about being able to accurately price the ARV of a home when running my calculations, and knowing what kinds of upgrades are necessary.