I’ve had a decent chance over the last few days to drive my town of 20k population for potential deals, etc. Is this effective?
Sure is. You’ll be surprised on what you find when you drive around the neighborhood.
I bought 2 out of my last 3 properties simply by driving by, noting that they looked distressed, and sending the owners a letter offering to buy. In my opinion, these are some of the BEST opportunities out there…unwanted or unappreciated by the owners and no competition from other buyers. The trick is finding the one that the owner NEEDS to sell.
jmd_forest
If you are a fresh newbie with motivation coming out your pores, it won’t hurt to do this. Once you start to learn the ropes, and see that your time is best spent making offers. In the mean time go for it.
While you are out there, take you a couple of bandit signs with you and post them in areas that you see potential in. Get a feel for what sellers are doing in these areas. I honestly hate to drive around looking for homes to wholesale. Hire someone else to do it. :lol
…and it NEVER hurts to ALWAYS keep your eyes open!
Keith
idhomebuter, something that I suggest, is to take different routes each time that you drive through town. Study the neighborhoods as you go, keep track of for sale signs and for rent signs. Note where the signs are and note whether or not they are still there the next time you drive through.
Let it all flow through your consciousness and you will develop a very good feel for your area and what’s going on. If you see what might be a good deal, you won’t even have to go to look to know what the neighborhood is like, how many rentals in the area, how things are selling.
There is always something you need to drive through town for: go to the bank, go shopping, hit the hardware store, check your rentals. Just take a different route. Travel side streets instead of the main road. It costs you nothing to do so, if you are driving on errands, anyway.
My question is the following…
When I do come across a property that appears to be distressed, what are ways to make contact with the owner of the property?
I heard of hand written letters by mail and hand written notes on the door, but can anyone also share some kind of successful scripts to write on the letters and notes that worked for you? Thank you.
The best ways to make contact (and that I personally use all the time) are:
- Talk to the neighbors and find out if they know anything about where the owner is
[li]Send a letter - printed is better (why handwritten? I never thought that was better – it is not like you personally know the owner, right? :biggrin) with written on it for the post office “Do Not Forward - Address Correction Requested” so you know where the owner lives and then you can send a letter there or better yet
- Look up directory assistance for a phone number and call
- Go to the tax assessor’s office for name and address
- Check court records for pending lawsuits - most distressed homeowners have collections and lawsuits from credit card companies, who have the last address on file - they do the skip tracing for you
And if the bank owns the property … easy. Call the REO department at the bank, find out if they will sell it or have an agent already and try to buy the note off of them!
I have a very good success rate with these techniques.
Good Luck!
Driving for dollars definitely works. It’s one of my main strategies. lauraalamery made some excellent suggestions and that’s mainly how I find information about owners. Letters are very effective. Also, don’t underestimate the power of social networking. I’ve found so many owners on Facebook!
As for the scripts, I have some letters, but unfortunately they’re saved on another computer. 
I found them by doing a Google search, though.
The following are ideas I cam across so far as to what to write in the letters. Please tell me what you think.
Idea #1
http://www.cheapyellowletters.com/resources/Invitation+Style+Letter+Front+Cropped.jpg
(Source: http://www.cheapyellowletters.com/example.html)
Idea #2
"Dear (Homeowner’s Name),
Hi. My name is (Your Name Goes Here) and I would like to
$ BUY $
your house located at (Property Address Goes Here).
Please call me if you’re interested in selling.
Thanks
(Sign Your Name)
(Your Phone Number)"
Idea #3
http://www.strugglinginvestor.com/wp-content/uploads/2009/08/pic11.png
(source: http://www.strugglinginvestor.com)
Idea #4
While searching for images in google like what I have been doing for above… I came across this very good post in reiclub.com:
http://www.reiclub.com/forums/index.php?topic=45782.0
Idea #5
http://www.matthewsmithonline.com/wp-content/uploads/2009/12/yellowletter.jpg
(source: http://www.matthewsmithonline.com)
Idea #5
http://yellowletterscomplete.com/wp-content/themes/wpremix3/images/ExtendedLetter.jpeg
(source: http://yellowletterscomplete.com)
Well those are some samples… please let me know what you all think works best. Searching in google images for “yellow letters” you can come across ideas.
[size=10pt][size=10pt][b]PS For Site Admin:
Im sorry about the size of the last picture… if you know how to resize them, please help, thanks.[/b]
[/size][/size]
driving around helps you understand your area and the types of properties that are there.
while riding around, do this for each house of interest to you
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Write down the address. then go home and:
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Do a Google search to get as much info as possible for free on it
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Find out the county that the property is in by doing a Google search for the zip code and the word county.
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Based on the county that the property is in do another Google search for this term, “(name of county) tax assessor”. So if the house is in fulton county, It will be “fulton county tax assessor.”
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Go to the tax assessor website and do a real estate tax records property search. This search will be based on the street address and city.
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Print out the tax record and compare the property data to what you found on the tax assessor site. Expect slight differences due to changes that the owner may have forgotten to mention to the county, like room additions.
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Take note of the following:
a. Bed rooms
b. Bath rooms
c. Square feet
d. Zoning.
e. Tax assessed value. Use this as the minimum estimated value
f. Annual taxes. Divide this by 12 to get the monthly tax bill
g. The price the current owner purchased it for.
h. The current owners name and mailing address.
i. The amount of the mortgage recorded against it and the recording date. -
Go to www.realtor.com and find the section in the middle of the home page labeled “WHAT’S YOUR HOME WORTH”. Plug in the property address to see what houses in the area (within ½ mile and the last sold within the last 12 months) are selling for. Sort the list by most recent sales. This will assist you in estimating property values. Don’t forget to print out the page.
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Select the five most recently sold properties within ½ mile of the house you selected for comparisons. If the prices seem really low when compared to the rest of the list, ignore them as they probably were bank foreclosures, and select some higher valued ones (confirm this by looking at sellers name on tax assessor site).
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Go back to the home page of www.realtor.com and plug in the address again in to the Find Homes block. The results will list the asking prices of all homes in the area that are listed for sale. when the results come up filter them by showing only single family homes (if that’s what you ‘re comparing) and the minimum number of bedrooms and bath rooms desired by the assumed investor. Select 3 of the best looking houses (must all be in move in ready condition) for comparison and print out the listings.
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For steps 9 and 10 above make sure that the square footage is within 25% of the square footage of the property and has the same number of bedrooms and baths. Also confirm that the houses are of the same style and construction as the one selected for research (if the one selected is a two story brick house, then it must be compared against brick houses). You’ll also need to confirm that the houses were built within 7 years of each other and have tax assessed values that no more than 25% higher or lower than the selected house, by using the tax assessor’s site for data on the compared houses.
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Record as much of the information that you can about the house you selected on a property inspection form or note pad. Enter the following in the form for the seller:
a. Seller’s name – John Smith
b. Phone 770-555-3333
c. Total Mortgage balance $20,000
d. Total Monthly mortgage payment - $450
e. Why selling? – Moving out of state
f. No dead line to sell, nor is it going to foreclosure
g. Number to Realtor
h. Estimated After repair value - do the following:
i. Add up the sales prices of the houses you saw listed as recently sold on Realtor.com, the asking prices of the homes currently for sale on Realtor.com and the tax-assessed value of the property.
ii. Divide the sum by the number of houses to get an average estimated after repair value. Enter this number as the estimated value.
i. Multiply the estimated after repair value by 70%
j. make a note to self that recent sales as the method used to determine ARV
k. Enter the sellers estimated repair cost as zero
l. For your repair estimate use the results of your inspection, so leave blank until you actually go out to see it.
m. Enter the sellers asking price as the price listed on the site
n. For what would you offer enter the MAO formula results after you have inspected the property.
o. note the type of property
p. note the property condition only after you see it totally in person
q. note if it’s vacant or occupied
r. From the tax records or the wholesaler website enter the number of bedrooms, baths, square footage and stories.
From here you have the rough basis for finding a deal. You have selected a property, have recorded the basic info on it, found some other properties to compare it against and know many of the numbers needed to determine if it is a deal. Confirm your numbers with other sources of data and go forward.
The next step is to schedule about an hour to go see it.
Personally, I don’t believe in handwritten letters. I think it is not being fare and professional with an homeowner. You are running a business, they don’t know you personally. I think they prefer dealing with a professiona in a distressed situation than an amateur.
Here is the printed letter I use:
September 27, 2010
Dear «Owner1» «Owner2»:
I am an investor buying in the area where your property at «Street_Address_Distressed_Property» is located.
Please keep in mind that even if the property needs work or you think you don’t have equity (your mortgage is higher than the current value of the house,) I am still interested in buying it and I will compensate you regardless.
If you would consider selling the house, please call me any time at 314.xxx.xxxx or email to me at xxxxxx .
Sincerely
Laura Al-Amery
I have a spreadsheet set up with the data for those fields in the letter, and I do an email merge. I have used this letter several times, and my average response rate is about 2-3 replies every 25 mailouts.
the point of using a handwritten letter is to stand out from the junk mail that we all get. if it looks too professional, the mind sees it as either junk or worse a letter from the bank trying to foreclose or some other bill collector.
Laura with all do respect the last thing a stressed out seller needs especially if they are being hounded by everyone’s uncle is a letter from a business. It’s best to be as personal as possible in fact this business we are in is a personal business. You need to get intimate with motivated sellers to make them feel at ease.
Driving for dollars is a great way to get potential deals. I personally go for drives around my city to find properties. And let me tell you, this new app that I’m currently using has proved to be so much better than any other driving for dollars apps that I’ve used. It’s so much more user-friendly. Whenever I have free time which is during the weekends I go out and drive for dollars. You can try it out but it needs a lot of patience waiting for the perfect deal. I highly recommend you go out and try it out yourself.
Too be honest, I think its just something that gurus like to say because it sounds catchy. I have never felt that it was worth my time honestly.
I dont do it as much as I used to but, my 2 best deals have come from D4$
Well i just started moving forward on wholesaling driving for dollars two weeks ago and I’m very happy about my results found 16 off market properties.Just got over my fears on getting started.Already got direct mail sent out and I’m doing youtube videos.Driving for dollars really works.Im using an app that has helped me a lot and taken away a lot of my fears on getting started you will be surprised how easy it is finding properties and having direct mail and contact info.
A driving for dollars app?
Back in the old days we just drove slowly thru older neighborhoods.
At first I wud pull over and write down addresses. But then I started using the record on my phone and as I slowly drove by I wud speak the address and street and cud do many more and cover more blocks, and it was faster and no stress copying them down later to run the addresses. I wud get names and more info thru my Title company and send out a letter or post card.
But I’m curious, tell us more about this app, where do we find it? How much does it cost, what all does it do?
Rando
Absolutely- find places that look rough, knock on the door or leave a note, be genuine and straightforward about what you do and that you’d like to buy their house. Takes a lot of persistence and grinding, and be ready for a lot of rejection, but it definitely works if you can stick with it and stay positive.