How to Purchase Real Estate With No (or Low) Money!
One of the biggest struggles that many new investors have is in coming up with the money to purchase their first real estate properties. Well, BiggerPockets can help with that too. The Book on Investing in Real Estate with No (and Low) Money Down can give you the tools you need to get started in real estate, even if you don’t have tons of cash lying around.
How Valuable is One Lead?
People often ask me what the average response rate is when mail marketing to homeowners in pre-foreclosure. There are two answers depending on what the content of the letter is. If the purpose of the letter is to see if the homeowner is willing to sell, then the average response rate is one half of one percent (.005%). If the letter is offering to allow the homeowner to remain in their house, then the average response rate jumps up between 1% and 4%.
So if 100 letters are sent, you could expect 1 call every other month. The point is, every response is extremely valuable and it is even more important to answer the call and not let it go to voice mail. My opinion is, if they took the time to call you… They will take the time to call the next person in line as well.
What extreme are you willing to take that to in order to get a deal?
I recall a phone call I got on Christmas Eve, 2001. My Fiancee at the time and I were all dressed up and were walking out the door on our way to her mothers house for dinner. She had just stepped outside and I was closing the door when the phone rang. She stopped dead in her tracks, her head swung downward and she said, “Whatever you do… Do not answer that phone.”
I answered it.
A homeowner had received my letter and wanted to see what I was offering. Since it was Christmas Eve, there wasn’t much I could do so, I got their information and we agreed that we would get together the day after Christmas. My Fiancee was relieved.
About halfway to her mothers house I stopped the car and she asked what I was doing. Not remembering my exact words, I said something like this… “That homeowner sounded pretty confused and I would be willing to bet that I am not the only person they called tonight and I guarantee you that no one else will actually go visit with them tonight.” I remember she shook her head and said with her teeth gritted together, “Fine! Let’s go! YOU get to call my mom and tell her why we are going to be late and you owe me BIG TIME for this!” I agreed and turned the car around. I called the homeowner back and told them I was on my way and would be there within an hour.
Was it worth it?
It turned out that they had called four other investors and had made appointments with all of them for the day after Christmas…And I had told them that I would call them on that day. Had I not turned around and met with them when I did, I would have been too late by the time I called on the 26th.
I was able to reinstate their mortgage and they signed a Warranty Deed just a few days after I went to meet with them. Less than 4 months after that I finished the rehab and sold the house. When I got home from the closing, I showed the cashiers check that was for more than $12,000 to my fiancée, I asked her, “Do I still owe you Big Time?”
She looked at the check, gave me a smile and said, “That’s okay, I really didn’t want to go to my mothers house on Christmas Eve anyway.”
I compare real estate investors to Doctors who are On-Call. When a call comes in… Drop what you are doing, take the call and go meet with them right then, if at all possible.