Case studies are one of my favorite ways to learn in real estate, they provide not only invaluable information but real world examples.
For this reason I would like to share one of my past closings, from lead generation to closing, with the BP community. I feel it would be a great way to give back and help others along on their journey.
The Dallas-Fort Worth market is notoriously competitive right now, but with the right strategies you can still find deals out there believe it or not. This particular case study will revolve around a lead that I generated through direct mail.
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.
Let’s begin where every potential deal first originates. In my business I send out a large volume of postcards every month. To help target and filter the list as much as possible I select properties that have a deed date of 15+ years as a rough approximation of equity. In addition, you should look for certain number of bed baths garage (preferably 3/2/2) and a square footage range you are after.
Once you are confident the houses have equity its time to look for some “red flags”. Red flags in this case refer to situations where there may be some degree of motivation, or reason for the homeowner(s) to sell the property at a discount. Common categories that may have red flags include absentee owners, probates and code violations and many others. This particular lead came from my absentee owners list. Looking back over my records, they had already received mail from me FOUR TIMES before they decided to give me a call.
The Marketing Piece
I will go ahead and share my super secret magic bullet that brought me this lead, my special unique lead generating postcard…
Just kidding, there are no magic bullets in this business.
In this case the daughter of the home owners decided to contact me late at night via the contact form on my website. It is important to have conveniences such as this in place and allow multiple avenues for people to contact you. Obviously she didn’t want to call me at 10:30 PM on a Saturday (nor would I want to take this call); however, sending a mail through a contact form she had no problems with. Some sellers prefer to maintain communication solely through email.
At one time this house had been beautiful, but it was still in a very desirable subdivision. The house was a 3/2/2 brick exterior and over 2,000 sq ft. The daughter of the parents who owned the house had contacted me. However, the only living parent left had dementia and had to live in an assisted living center. These problems had been ongoing and it had only been recently the home owner had left to a facility. As a result, during the many years when the owners health declined, the house had not been taken care of resulting in multiple repair issues.
When I go on an appointment the property itself is the last thing on my mind. I make it a point to build a relationship as best as possible. I talk to them about anything, what it was like living at the house as a kid, pets etc. I very rarely bring up the house itself.
Contract & Closing:
As you will discover once you do this enough, not everything goes as planned during closing. Several title issues sprung up unexpectedly. It turns out the other parent who had since passed was still on title. As a result there was no will to go through the probate process. When there is no probated will you must complete heirship affidavits (people who have an interest in the property) AND disinterested parties (people who have no interest in the property but knew the home owners for example a family friend, neighbor etc.)
We ended up having to amend the contract to push closing further out as a result but everything ended up working out just fine. I suggest setting the closing date further out than you anticipate. Explain to the seller its always easy to close earlier (if this allowed and stipulated in the contract), rather than pushing the closing date back.
Let me know if you have any questions or anything you would like to see in particular for future blog posts. If you only leave with one thing remember the key with advertising is being consistent.