If you are in the real estate profession, you woke up this morning with one thing on your mind: finding under valued real estate. From agent to owner to Donald Trump, it’s a universal goal and promises wealth.
What’s the best way to do this? How can you best use your time and resources to get good solid consistent deal flow? I mean the kind of deals where you can’t believe what you are seeing. You check and check the deal for any mistakes you made. Did the seller leave a zero out of the purchase price? Nope. The deal is that good.
Here is a real example from our acquisition pile this week. Then I’ll tell you all the secrets: We purchased four 1.25 properties 30 miles from the Grand Canyon in Northern Arizona for $200 each.
Here’s how to do that. Compose and execute a well staged direct mail campaign.
Right now, this very moment, there are hundreds of thousands of property owners who simply want to get rid of their property (land, houses, strip centers). For whatever reason, they want out. Maybe they need the money, maybe a tenant has pushed them over the edge, maybe they passed away and the heir to the property has no interest in it at all.
Our job is to let them know we will solve that problem for them quickly and with a little money.
The owner has three choices:
There are three places you can buy a gallon of milk. The price of the milk depends on how fast you want it: Walmart, Grocery Store and Convenience Store (cheapest to most expensive as well as most time consuming to easiest).
Similarly, there are a few ways an owner can sell their property. List it with an Agent (takes the longest but might get a better price), post it online themselves (might be faster but it’s way more work and the price is unknown) or call you because you sent them a letter that says “if you want to sell this property by Friday, I will pay you $X and then you have a pile of cash and your problem has been solved”.
Here is how to reach that person most efficiently:
- Identify a market where you think there are motivated sellers (Hint: it’s ANY market where there are properties without associated mortgages).
- Send those owners offers in the mail for less than half of what the property is worth. (Hint: don’t send post cards or colored letters – send an offer with specific instructions and a call to action like “on Friday, I’ll buy your house for $34,000”).
- Manage the flood of calls you will receive and make sure you can make good on your offers. Pick the best one if you are just starting out. Make sure it’s a homerun.
- Know who is going to buy the property from you, before you close the deal. Said another way; sell it to someone you have a relationship with. (Hint: find this person before you send out the offers. He/she will already have a lot of similar property in the area). If you are buying houses, find the best flipper in the area. If you are buying land (like us), find the most logical investor or reseller in the area before the mail goes out.
In any given 8 hour day, you are able to make thousands and thousands of offers. In the same period, the most talented “Driver for Dollars” can make a few offers at best.
The real estate itself is less important than the transaction associated with it.
If all the houses in a given area are selling for about $125,000 and you get a signed offer back in the mail for $60,000. Does it really matter what condition the house is in? If there is no agent, no lender and no fees except title/escrow, do you think you can sell it for $72,000 the next day and clear $10K profit on Craigslist to a rehabber?
We do it weekly. By the way, you only need to do 10 deals like this to make $100K. You can do that in two Sundays. You don’t need an office, a staff, a virtual assistant, a real estate license, or any fixed costs. You need some ambition, a phone, organization skills and some discipline to complete certain tasks on Sundays.
How many letters do you need to send out to buy one house? If you do it properly, I recommend sending 1,000 out per one acquisition.
We get calls on letters sent out as far back as 2003. So I mean “send 1,000 letters out and buy a house that week” when I say 1,000.
For land, the numbers are way better. It’s closer to 100 per one or two acquisitions. We usually mark the property up about $2 to $5K and complete several thousand deals per year or sell it on terms (monthly payments) to the end user.
Keep the keys to your car in your pocket this week. Send out some offers from your kitchen table. Smile at your bank teller when you deposit the check.