Realtor · Rocklin · Member since 2016 · 128 posts · 67 votes
I was wondering if someone could answer a question that I have about direct mail marketing. I'm definitely a newbie trying to figure out how I can get started in the competitive market of Northern California. Forgive me if I sound naive or uneducated... I'm spending all my free time learning as much as I can. It sounds like most investors who use DM state in their letters/postcards that they can pay in cash. Is this required for finding deals with DM? I have some cash, but not enough to pay for a property outright (esp. in my market). Can you finance a deal that you find using DM?
Investor · Twinsburg, OH · Member since 2014 · 111 posts · 41 votes
10y
Kimberly Stofan
Whoever is going to buy your contract from you will pay cash for the property.
Or, if you are going to flip the property yourself, you can find the deal with hard money lenders(professional), or with private lenders(every day folks you may know who have money to invest)
There is also transactional funding which is basically a loan that you get at closing to purchase the house yourself, and then immediately sell it to your buyer. This is called a double close. Wholesalers often use this method when dealing with sellers will take issue with the fact that they are making money on the deal.
I was wondering if someone could answer a question that I have about direct mail marketing. I'm definitely a newbie trying to figure out how I can get started in the competitive market of Northern California. Forgive me if I sound naive or uneducated... I'm spending all my free time learning as much as I can. It sounds like most investors who use DM state in their letters/postcards that they can pay in cash. Is this required for finding deals with DM? I have some cash, but not enough to pay for a property outright (esp. in my market). Can you finance a deal that you find using DM?
Hello! There are a TON of posts dealing with your question. I'm a small, part-time investor and don't currently do direct marketing, but I feel like I could answer your question fairly well from all the posts I've read on here. BP is a great resource.
That being said, many wholesalers get a property under contract and immediately put it out to their buyers list. Some have cash, lines of credit, etc. and they'll either pay for it themselves off the bat, or if they can't sell it fast enough to their buyers, and some will flat out cancel the contract... A lot depends on what you want to do with the property. I imagine most wholesalers that have been at it awhile don't go into a property without multiple exit options available from the beginning.
Investor · The Colony, TX · Member since 2014 · 192 posts · 66 votes
10y
Oh, and the podcasts are outstanding. A recent one with Tom Krol (sp.?) focused on wholesaling. I'm guessing you're talking about DM for wholesaling, especially since you mention that you don't have much cash on hand...
And then there's Brandon's book about investing with low and no money down - or something like that. There's a ton of good resources on here, just look around a bit before your ask questions. After you've been here for a little while you'll feel embarrassed over asking the same question for the ten millionth time... Best of luck!
Investor · Twinsburg, OH · Member since 2014 · 111 posts · 41 votes
10y
Kimberly Stofan
Whoever is going to buy your contract from you will pay cash for the property.
Or, if you are going to flip the property yourself, you can find the deal with hard money lenders(professional), or with private lenders(every day folks you may know who have money to invest)
There is also transactional funding which is basically a loan that you get at closing to purchase the house yourself, and then immediately sell it to your buyer. This is called a double close. Wholesalers often use this method when dealing with sellers will take issue with the fact that they are making money on the deal.
Realtor · Rocklin · Member since 2016 · 128 posts · 67 votes
10y
I really appreciate you taking the time to respond to my question. I was not planning on wholesaling. I'm interested in buy and hold. So it sounds like you need to have the cash to buy the property outright or find hard money or private investors to fund it. You can't find a deal through DM and get a loan from a bank to finance it...
Again, please excuse my lack of knowledge... I'm spending every bit of my free time learning (listening to podcasts, watching webinars, reading books.) This is just a question that I haven't found a straight answer to.
I really appreciate you taking the time to respond to my question. I was not planning on wholesaling. I'm interested in buy and hold. So it sounds like you need to have the cash to buy the property outright or find hard money or private investors to fund it. You can't find a deal through DM and get a loan from a bank to finance it...
Again, please excuse my lack of knowledge... I'm spending every bit of my free time learning (listening to podcasts, watching webinars, reading books.) This is just a question that I haven't found a straight answer to.
Then that's going to be a bit different, doing buy and hold. You need money - or access to it. If you don't own a house you can get the first one as an owner occupant which gives you access to loans with lower down payments (since cash seems to be an issue). After that you can get a few through a 'regular' lender, like a bank, with about 20% down. Hard money is usually not your first, second or third choice for something like this, and you would need pretty good cash flow on a deal you could not fund any other way before a long term hard money loan seems like a good idea. Hard money has its merits and you need to look carefully at the cost of money versus the speed and ease of access... Somewhere in there is what works best for you. Private lenders and portfolio loans would probably be the next way to go, buy that's all in the distance.
Focus on your short term plan, talk to a few banks and save up your down payment... If it's possible, you should maybe focus on moving ever few years to keep adding them that way...
Realtor · Rocklin · Member since 2016 · 128 posts · 67 votes
10y
We own a home and have some equity. I'm currently working on getting a HELOC which would provide me enough money for a down payment. I am also considering taking a loan from my 401 K for the down payment. I have been searching the MLS but the deals are very hard to find. I would have to offer an average of 50-60 K below asking price to have any decent cash flow. I'm starting to feel like the only other way I'll be able to find my first deal would be from DM.
Investor · The Colony, TX · Member since 2014 · 192 posts · 66 votes
10y
Go to your local REIA meetings and hookup with some wholesalers and Realtors that specialize in investor deals ... The wholesalers already spend a lot of time and money marketing for properties. I don't think it's economical for you to do it to just get yourself one or two deals at the moment. That's the kind of thing you commit to long term if you're going to be doing some wholesaling, and of course cherry picking the properties you want to keep...
Developer · Andover, MA · Member since 2008 · 1k+ posts · 489 votes
10y
@Kim Stofan cash is a very loose term when it comes to contracts. At the very basic level, cash just means that you don't have a financing contingency. I say that my offers are cash deals even though I may use bank financing.
St. Petersburg, FL · Member since 2011 · 45 posts · 5 votes
10y
@ Kimberly Stofan I would say first and foremost as stated in an earlier commenters post check out your most accessible options first like going to your local REIA or finding some investor's that are in your area here on bigger pockets. Second I would get Brandon Turner's book or audiobook on low or no money down. This book can really give you some other options other then putting a down payment. All in all even if you can't find the money, analyze deals with the calculators here on the site and I'm sure if it's a great deal with potential you will find someone willing to give you the money.