Slowly but surely, real estate investors are finding out how stupid inefficient “driving for dollars” really is and how efficient sending blind offers to owners has always been when buying undervalue property is the goal.
In a two-hour timeframe you can get in your car drive around and find a few houses that “appear” to be run down relative the neighborhood; then find the owners name and address and “inquire” about the asset’s sell-ability. On a great day you may find ten of these opportunities and with luck, spark interest in one.
You’ve wasted time, money and fostered your own frustration to the point where you most likely get turned off by the whole concept of real estate investment (the real tragedy of “Driving for Dollars”)
This may have worked in 1954 but it’s the 21st century. We have computers now.
In the twenty years I have been buying and selling real property (since before computers), I’ve learned that the property itself does not spark the owner’s decision to sell; the owners “life circumstances” do. Death, divorce, aging in place, hording, deferred maintenance, family emergency and just plain money issues, are why people sell property below market value. Sometimes it’s as simple as “thanks for buying my house like this, I really don’t want to clean out the garage to get ready for all those Sunday open Houses”
Driving for dollars will not smoke out owners “life circumstance.” Sending offers to owners will.
In the same two-hour period above, you could have sent 10,000 offers in a simple mailer campaign though the magic of a mail merge (worth a YouTube lookup).
Ten prospects or ten thousand in the same amount of time?
Done correctly, you will purchase about one house for every 1,500 – 2,500 offers sent. Our numbers are closer to an acquisition per $1,000 (we’ve sent millions of offers over the years and made just about every mistake).
Myths of sending offers to owners:
I have to stuff envelopes. Nope.
I need a printer. Nope.
I have to price every property individually. Nope.
Its expensive. Nope. Way cheaper than ANY other acquisition plan. You will spend 10x more on a realtor’s commission buying a single house. Most Realtors aren’t smart enough to do anything else.
I have to be smart. Yep. You have to be efficient and insightful and patient with computers.
I have to a have a license. Nope.
I don’t have any money to buy property. Not needed. The home renovators in the area have tons of money. They will pay you will for your property sourcing.
I like driving for dollars on the weekend because I don’t have to spend time with my husband/wife. Yes, this is true. But so is fishing.
I would never take advantage of someone when they are down and out. The truth is that nearly every person we have purchased property from (15,000+ properties to date), have thanked us. Comments range from “Now I don’t have to clean out the garage” to this: I received a hand written note from a women several months after I bought a large acreage property in Northern Arizona that said “because of you, I was able to take my terminally ill mother to Hawaii and spend the last month of her life telling her how much I loved her.
There is nothing bad about sending blind unsolicited offers to owners. Why doesn’t everyone do it? What’s the catch?
Here’s the full and real-world truth about direct mail acquisition campaigns:
It’s a lot of work but will make you rich. Its better than working for someone else (for most people).
Here’s the math. You buy 1 house per month and make $10,000 ($120,000/year). 1 per week is $520,000/year). 10 per month is $1.2M/year. In Southern CA we make much more per year and per deal.
You will get tons of calls in response to your mailer. Too many to manage on your own with a real job. Keep your day job until you get the hang of it (usually about 2 years). Hire a call service.
You will get signed offers in the mail sent back to you and you will panic because you don’t know what to do next. Align yourself with a house renovator in the area. They will help (and pay) you.
Some of the calls will be from people who think your offer is too low. Very angry people. You need to put your thick skin on during those days. To this day, my favorite hate caller said “Who raised you?”
You need to spend a lot of time learning about assessor data and how it works (months of learning). If you don’t like math, excel, computers, basic linear planning and you generally don’t like being a responsible grownup at work, this is not for you.
If you like immediate gratification, this is not for you.
Its not free. Data costs about 10 cents per owner and the cost to get the offer to the owner’s door step costs about 50 cents. So 60 cents per 1,000 offers costs about $600. You need to come to the table with some money. $600 to make $10,000?
We always have a buyer lined up before we send out mail. He goes and looks at the asset and decides and then pays us through escrow.
Years will go by and a homeowner will pass away. The kids will find your letter during the estate settlement and call you and ask if the offer is “Still good?” Your answer is “yes, but I need to see the asset to make it final.” The price may go down at that point and it does go down. Millions of offers have been sent. People call us daily and beg us to buy their property to this day.
Whether you are a seasoned acquisition professional or brand new, you now have all the information on how to make bank as a real estate investor. Wishing you the best, Jack.