Is California a different animal?

General Real Estate Investing
1

I’ll be quick to introduce myself. I live in Northern California (3-4 hours north of San Francisco). Our REIA consists of 3 people and they don’t do deals. Craigslist has ZERO investor activity: no wholesalers, a couple of rehabbers that flip properties by paying 85% of value and spend 9 months rehabbing, no real players. I spent 9 months in an attempt to start a real estate investing business in 2009 and generated approximately 500 leads. I put 6 under contract, but didn’t close any of them. I would estimate 30-40 had equity, and I could say that pretty much all of them were free and clear. Fast forward to today. I began marketing again 30 days ago and am determined to make it work. Out of the 40 or so leads I have gotten this month, 3 have equity. The other 37 are $20k-$190k over leveraged.

I’m looking to wholesale, rehab with private money, buy subject to or sandwich lease option. I’m not looking to get a bank a loan, buy with my own cash, or have rental properties. Everything I’ve ever done in the business world, I’ve been the best at it. This is the only exception, and it’s the most frustrating thing I’ve ever dealt with. Am I going crazy, or is there some validity to these frustrations and I need to focus my attention elsewhere? I’ve read hundreds of books, blogs and forum posts, but I may not be asking the right questions. Any advice from those of you DOING deals?

2

It’s a double-edged sword you’ve got going for you…

Stay where you are; less/no competition, but also fewer deals / opportunities.

Or go where the deals are; more (lots of) competition, but also more deals/opportunities to choose from (with the same amount of prospecting).

40 leads does not a quick, profitable deal make all things being equal.

Check out flippingjunkie.com and see what’s actually involved in finding deals. He’s in a more densely populated area, and even then, he’s got to wade through a lot of trash to get to the deals that work, despite any competition (which he eliminates a lot of by doing his own marketing, as you’ve been doing it appears).

That all said… there’s going to be a profitable niche where you’re at that nobody else is, or could easily take advantage of. Only you can figure it out, and evidently haven’t yet.

I was going to suggest finding the niche of deal-types that practically only exist where you’re at; mobile homes, resort properties, etc.

However, rather than recommend that, I would recommend focusing on a specific niche of investing, and then drill like there’s no depth limit. For example, find out what the most popular home size, type, location is in your “farm” (prospecting area). What sells the fastest and most often (you need both ingredients)?

In my area, the fastest selling homes are ones under $250k with 3-4 beds and 2-3 baths. What doesn’t sell fast? Land. Manufactured houses on an acre in the too-lees, or rural property away from shopping (or just away).

So, I don’t focus at all on properties that don’t fit the size and shape of my marketing funnel. Only 3 bed, 2bath homes fit into it, ideally speaking.

In the end, once you’ve discovered what people mostly want to buy, start focusing on marketing to sellers/buyers in that niche ONLY. Don’t veer off into mobiles, resort property, or upscale “whatevers.”

The same thing goes for any other niche you decide to mine. Reduce your focus to a specific profile, and then start sucking in leads from that profile niche.

Don’t forget to use your title company to help you develop a mailing list of properties that very precisely match the niche you want to prospect for.

CORELOGIC.com is an effective, if not slightly pricey property data service that can help you build/sift highly defined mailing lists, if not help you accurately analyze comps and the market itself.

So, my only real advice here is, either find what sells fast and easy in your neck of the woods, or move to a different forest with more trees. Meantime, focus on one niche, or buying/financing strategy, in order to build a reputation as the ‘go to’ guy who is better and faster at what you do than anyone else around.

I love seeing people getting after it like you’re doing!

Have fun!

3

I appreciate your advice. Focusing on one niche makes a lot of sense. It’s funny how something that seems so complicated has such an simple answer. Thank you for taking the time to explain everything in detail. I am a big fan of Danny @ flippingjunkie, and everything you’ve explained makes a lot of sense because he passes on every great subject to possibility, and focuses only on rehabs (with some minor wholesaling). I will definitely check out corelogic as well. Thank you for providing some clarity! I’ll let you know how everything progresses. Good luck to you as well!