To start now or wait?

Question

I am a new investor in the SoCal (Palmdale/Antelope Valley) area I am torn between when I should start investing.

From talking to other somewhat experienced investors in my area, I've had some people tell me to wait for the market to cool because prices are too high and seem to be rising right now to get into either the buy-n-hold or flipping game. Others, have said there is always money to be made if the deal is right and start now.

I'm curious what some of the more experienced investors on BP think is the best way to go. Should I jump into buying my first property now or continue to build my cash reserve and wait for the market to cool back down?

Thanks for the help!

Claire Trammell · Answer

Account Closed I'm pretty sure both of us have a different suggestion for you. Haha!

Feel free to PM me if I can help.

Justin Silverio · Answer

Account Closed Do not let others' opinions dictate when you start investing.  Different market cycles will always have benefits and disadvantages.  Right now, deals are more difficult to find but they sell very quickly.  In down markets properties are easy to find but a bit more difficult to sell.

I have been doing direct mail since I started investing and it's the best way that I've found my deals.  While the investor market is very competitive in my area, as I'm sure it is in your market, I still have a lot of success finding deals.

Finding deals was much more difficult for me when starting out becuase I didn't know how to spot a deal and I was being too conservative on my numbers.  As you gain experience, deals will become easier to find becuase you will build experience and understand how to make deals.

Justin Silverio · Answer

Account Closed I use listsource as well, however, there are other ways to pull lists via your MLS, the public records, your city hall, driving for dollars, etc.  Regarding how many leads, there isn't a special rule.  Every market is different.  I would budget for 6 months and see how many leads you can comfortably afford.

Claire Trammell · Answer

Account Closed There really isn't any one right answer to that question. Sometimes 1,000 leads may produce 3+ deals and other times 1,000 leads will not produce any deals.

The important thing is for you to determine what you can mail to consistently every 3-5 weeks for 5-7 months. The best way to determine your number is to 1) calculate a monthly budget specifically for marketing, and 2) determine how many calls you can answer without becoming overwhelmed.

Claire Trammell · Answer

I agree with @Justin Silverio. Sending just a few times won't be an accurate representation of the possibilities from the list you choose to mail to. Consistency is key with direct mail.

We have seen that sending a different mail piece every 3-5 weeks for 5-7 months works well. Maybe a postcard, then yellow letter, then a greeting card, then zip letter, etc. Switching up the actual mail piece gives you the opportunity to appeal to a wider range of potential sellers since not everyone responds the the same type of marketing piece.

Though, as Justin said, "direct mail takes time to build momentum." So plan on sending consistently and have a budget planned so you can stay on the right track.

Justin Silverio · Answer

Account Closed conservative in the sense that I was overstating my rehab budget and undervaluing the ARV.  Thereby, creating a very low offer to a seller.

For direct mail, identify a budget that you're comfortable over a 6 month period.  From there, back into how many leads you can mail out per month.  It's important that you budget for 6 months becuase direct mail takes time to build momentum.  If you only mail out 1-3 letters to your prospects, you're likely just wasting money.  It's all about consistency.

I've had the best results mailing to various lead types.  Once you have all these lead types, further scrub them so you are focusing on the exact neighborhoods that you want and remove homes near train tracks/highways/etc.  From there, compare all the lists to find duplicate properties.  These duplicates are going to be your highest quality leads because they have a higher probability that they need/want to sell.

Richard Bradshaw · Answer

Account Closed Waiting for the market to "cool down" is going to be a waste of time. For all we know the market will keep going up and 2 years from now you'll be kicking yourself for not getting in. I met with an investor in the San Diego market who has 15 deal going right now! So being in So Cal shouldn't stop you, you just have to look harder for that deal than Kyle in Omaha.

Account Closed · Answer

@Justin Silverio @Claire Trammell Last question (hopefully) for you guys. Are there any companies/sites you'd recommend for direct mail services? I'm pretty sure I want to start off sending postcards with some contact info like my number and website.

Account Closed · Answer

@Claire Trammell Listsource is what I've been leaning toward using. Roughly how many leads do you need from listsource to yield a single deal for you?

Account Closed · Answer

@Justin Silverton @Claire Trammell Thanks for the great advice guys! Any suggestions on what services to use to find motivated sellers? Everyone seems to like listsource

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