First and foremost i would like to thank you all for your positive and very informative posts, i am new to wholesaling, and and eager to get started, i am from socal, and had a couple of questions. my goal is to target absentee owners with letters, and i also plan on using bandit signs, can anyone recommend a letter that i can use as a format? also where can i find a list of absentee owners, i have many questions but this seems to be a good place to start, i look forward to you answers, thanks for the help.
Before spending money on marketing, I recommend you spend your time (and/or money) education yourself on direct response marketing. You can then understand how to match your message (what you are going to say) to your target market (absentee owners) using the proper media (ex. letter/postcard). Also, you need to know your monthly budget because it will probably be a waste only mailing to a person once. In my experience with the absentee list, people start response to my marketing after the third mailing.
To get an absentee owner list you can get it from your county courthouse, MLS (public records), or a list broker (ex. Melissa Data).
Thank you for your response, i agree with you about educating myself, and i will certainly check out the county court house, what would a good budget be to start off with? i have some funds that i can allocate towards my marketing, also can you recommend other ways of marketing that i can research?
I began wholesaling way after I began buying rentals, and I tell you it’s one of the funnest ways to buy/sell real estate.
I would say a budget of $1000 to $2000 per month in advertising, would be a good start
Letters and/or postcards & a website are a good starting point. Secondarily, Google Ad Words or the Bing equivalent (cheap & easy online advertising), classified ads online and in print newspapers, bandit signs and billboards are also effective. Small guys starting out tend to do postcards as when targeted you get a good response rate. However bigger guys (Homevestors, for example) tend to use billboards in lower-income parts of town where there is a high population density and a lot of older houses, AND they also run newspaper & TV ads.
Make sure you have your paperwork together, and have a title company lined up to do your deals; actually email it or take it to them and make sure its OK. Also make sure you understand how to do the paperwork without question (e.g. in Texas you have different paperwork if youre buying a vacant piece of land, a 1-4 unit house or a condominium…for example). Don’t forget you’ll have paperwork to put the property under contract AND also also to assign the contract to someone else
I would get a website first & foremost. Make it appeal to both sellers and buyers (investors) – here is a good example of that - http://www.dannybuyshouses.com/ - note that is NOT my website but someone else here in Texas
Building your buyers email list is very important, as you mentioned. I would signup with an email list service, like MailChimp.com or ConstantContact.com, and integrate their signup pages into your website. In time, with networking and advertising on places like Craigslist, your buyers list will grow.
After you get your first wholesale deal, you can also advertise it on Craigslist too, … and Meetup, LinkedIn & Facebook real estate groups.
After you find a deal…
Be smart when you fill out the contracts. In Texas its very easy to setup the contract so its risk free for you the buyer (e.g. an extended option period), but it must be done right. You just don’t want to get yourself in a position where you can get sued because you have the house under contract and you can’t find a buyer…you always want a way to legally cancel the contract.
Don’t forget to use Youtube and high quality pictures when putting together your package / email that describes the property well
Research the comps & property tax data prior to making an offer on the house, and try to buy in the 55-65% ARV range (you’ll want to sell it in the 70-75% ARV range to move it fast)
I would be sure to brush up on your sales skills if you’re not already a good salesperson. Go to Amazon.com and lookup books by Joe Girard - he’s the worlds greatest salesperson and can teach anyone how to sell (an important skill if you want to get ahead of the competition)
Here is a sample wholesaling letter that should work for you:
Dear (Owner’s Name):
I was driving around in your area and noticed your house and was wondering if you might be interested in discussing selling your house. One of the areas I work in is buying houses that need some repair and rehabbing the property to improve its appearance and value.
I am local real estate investor that buys properties in (name your area) area. I am able to buy properties quickly for cash and usually can close within 30 days or less.
The typical process is a preliminary discussion over the phone to obtain some basic information. If that conversation is mutually agreeable then we can arrange for me to come by and take a look at your home to get a better understanding of its condition and what repairs may be needed. Then, we can work toward a fair selling price for your home.
If you are interested you can either provide me with a phone number where you can be reached or if you prefer you can call me at (your phone number) or via email at (your email address)
You are very welcome. As a new wholesaler, just make sure you do your due diligence first. Get the assessor’s property card to get an idea as to the square footage. Become familiar with the comps in the area so you know what is going to be a fair asking price.
Here is a formula that a lot of active wholesalers are using to compute whether a house will be a good deal or not. The formula is solving for the After Repair Value (ARV) or what would be known as the market value if in good condition.
Hey you are on the right track. Being inquisitive is always good! You can start by generally driving for dollars instead of trying to purchase an absentee owners list first. Driving for dollars is a good way to get your feet wet and the leads are free. Once you start doing some deals and making money then you can set a budget aside to allocate some of your profits for different mediums of marketing.
Sample of good letter could be this:
My name is (John Doe) and I’m currently looking to buy homes in your neighborhood!
I came across your property located at XYZ address and wanted. I will BUY your home cash
with a quick closing. You pay no commission fees and I pay all the closing costs. If you are interested
in selling please call me at XXX-XXX-XXXX
I agree with mrflippahouse about driving for dollars. Good way to get to know your area and find absentee owner leads for free. You must know that there are two kinds of absentee-owners, there’s those that still live in the same area or state and those that are out-of-state. Chances are, the latter have a tendency to be more motivated. For a free list, you can look up your county appraisal district’s website and pull up records one at a time. You can see their mailing address if it’s out of the state. You can also request for a spreadsheet from them but this will cost, maybe from a few tens to some hundreds of dollars. But expect that a lot of the leads addresses can be no good. You can also try calling list brokers if they have absentee-owners lists available, this will of course still cost you something. I haven’t really tried it myself.
mrflippahouse, Mike Nelson, thank you both for the info, this forum and the people involved are all very heedful, the good thing about my situation is that i have lived in the area i choose to invest in for some time now, so driving for dollars would be great and i have started doing so, could either of you recommend a book or maybe some insight on how to get a good understanding on of the rehab costs, in order to determine what my wholesale price would be?
Books and websites are only going to give you national figures. My advice would be to link up with a licensed contractor. Have him come with you on a few inspections (you may have to pay for his time). First, his on the spot estimates will most likely have greater market relevance than non-local references. Second, if he is willing to give you a written estimate (perhaps on work that you are not skilled to complete etc) then you will get an idea on how to price out costs and labor.
Working with local contacts is going to build a good strong business relationship and give you hands on experience.