By S.Jack Butala
There is a very specific tool set and data scrubbing process required to make this work effectively and consistently.
Here is what has worked for us after refinement since 1999:
1) DATA: Get the data from Real Quest Pro. Its the most comprehensive data-set available and costs about 8 cents per downloaded record. Every county is in the same format so you only need to learn once.
2) OFFERS: Complete a Mail Merge and mail an offer with a specific price and time to respond. Sign the offer and ask that the owner sign and return the offer.
3) PRICING: Scrub the data for property type and remove any and all properties with liens including mortgages (at any LTV). For land, use assessed value and APN scheme to create an equation to price each property individually. For SFRs, use an APN scheme based price per square foot.
This stuff helps also:
4) ORGANIZATION: Get organized before you send out your first campaign. It is imperative to have a functioning website with professionally shot pictures of yourself on the front page to make yourself “human”. Hire an established, U.S. based service to answer the phone, live 24/7, with a script. Return every call personally. Sellers research you before they pick up the phone.
5) CASH BUYER: Make it clear in the offer that you are a cash buyer and will close within 30 days and will waive all contingencies. Leave yourself “an out” in the agreement. Send the message that seller gets a check for X in Y days, with no funny business and make good on the promise if the asset fits your criteria. If it does not, be respectful of the seller and let them know very quickly. Loans, agents, inspectors, contingencies, access, lawyers, and disrespect for a sellers, all kill deals. It should be you (buyer), title agent/notary, and seller closing the deal; three parties total who are on the same page.
6) YOUR BUYER: Know who will buy the asset from you before you purchase. For houses, find a reputable flipper. For land, find a retailer. For commercial, find an Acquisition VP for a REIT or equity group. All three of these groups live and die by the pricing of their acquisitions and desperately want to hear from you. Make them say some version of this sentence; “If I had 4 houses in 85258 for less than $80 per square foot before renovation, I could clear $100K.” Then send well planned, well executed offers $10K below that flipper’s $80/foot price.
7) MARGIN: Always make way less than your buyer and fully disclose how much you are making. On SFRs cap your take at $10K. On land, double your money, no more.
Commercial is less consistent. You will have buyers for life after the first set of deals.
8) DON’T BE an IDIOT: Be an intelligent, fun, and consistent person to work with. When your sellers/buyers hear your name or know you are calling them, make them want to speak with you.
THE FOLLOWING KILLS MAILER YIELD:
Postcards, yellow letters, letters of interest, hand written letters, mailing without using a bulk mail service, sending less than 1,500 units at a time, sending mail to specific groups of owners; absentee owners, back tax properties, foreclosure properties, probate properties, and general lack of respect for a seller like “this is your final warning, we will foreclose.”
All these antics generate exactly what senders are looking for: problematic sellers with problematic real estate and tire kickers. Get signed offers back in the mail instead.
Forget the property itself, you are looking for a situation. A perfectly good slice of real property where the seller, for one of many reasons, wants to sell that day.
Every morning, let them come to you, don’t go out looking for them. It’s inefficient and after two weeks, really good “would-be” real estate investors get discouraged.