Spinning my wheels acquiring my next rehab!

Rehabbing & House Flipping
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Spinning my wheels acquiring my next rehab!

Ryan Fatula
Real Estate Investor · Orlando, FL · Member since 2011 · 42 posts · 3 votes

Hi guys,

Over the past year I've successfully flipped 2 REO properties I picked up off MLS. I'm an agent and got them both relatively easily. I placed an aggresive offer on the first, and on the second I had the REO listing agent place the offer for me. (thanks BP for the tip!)

Anyways, I'm back in the market for my next rehab and Ive been pounding the pavement estimating rehabs, calculating ARV's, and placing max offers on properties. The Orlando REO market is INSANE right now. Inventory is low all around, and properties are FLYING off the shelf!

I've placed 10 offers in the past few days and all of them have been rejected, except 2 that I'm still waiting to hear back on. In fact while writing this I just got an email that another was rejected! I might have high expectations because my first 2 went under contract so easily, but I know that the market has also CLEARLY changed.

My first question is, how many offers do some of you place before you get one accepted? I know all markets are different and it depends on if you're going after a fair market sale, REO, or Short Sale, but I'm curious.

I'm scouring BP this evening and trying to learn as much as possible about buying actual foreclosures at auction. Interestingly enough my local county auction recently moved from the courthouse steps to an online format, which I would actually be more comfortable with. (Hey, I'm 28 and grew up online!)

I'm exploring all new ways to acquire rehabs now. I read that marketing to private sellers/owners would be a good idea. I was considering creating a " I buy ugly/old houses website" and SEO the hell out of it. What other marketing techniques could a rehabber consider? Direct mail? "I buy houses" signs?

Also, I have a couple wholesalers calling me, but I just have not had a great deal come across my desk from them. Mostly just junk off the MLS with a jacked up price. These guys add no value!!

I guess I'm just venting a little bit. I'm not going to give up, because I LOVE REHABBING!! I thoroughly enjoy RE in general.

In short:
1. How many offers do you place on MLS properties before you get something under contract?
2. Maybe its time to move onto the big bad foreclosure auction? After some due diligence of course. I'm most concerned about the actual process of doing my lien searches.
3. What are some good ways for a rehabber to market for new properties? "I buy houses" signs and SEO website? Direct Mail?
4. Keep looking for that AMAZING wholesaler who actually gets good deals?

Thanks everyone. I know this was long, and as I said. Kind of venting here :)

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Jennifer B.
Rental Property Investor · Marysville, WA · Member since 2010 · 46 posts · 40 votes
14y

Same issue in Seattle! I'm doing and/or working on doing a lot of what Monica mentioned.

The only thing I'm doing that has not been mentioned is talking to local banks and asking if they have any inventory or properties they need to sell. I build homes as an investment strategy as well so I have received more land deals than houses, but it may be an option worth trying.

You can also look up which local banks are operating under a cease and desist order from the FDIC, those ones are going to be the most motivated to get negative assets off their books.

Make sure you find out which branch is the main branch, and ask to speak to a special assets manager. If you can get an appointment, just ask if they have a list of properties currently owned by the bank that are not on the market yet, or if they are interested in selling any notes. It may take several conversations and/or closed doors before you get any information, but it has definitely paid off for me and I've had access to many properties that were not on the market.

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  • Monica Breckenridge
    Rental Property Investor · Colorado Springs, CO · Member since 2010 · 476 posts · 305 votes
    14y

    Nobody is getting squat on our MLS here as well. No inventory. We have to find deals off the MLS. There are so many ways to get deals off the mls for fix and flips. Here are some ways:

    1. Bandit Signs that say WE BUY HOUSES or AVOID FORECLOSURE
    2. Direct mail marketing to certain lists (Pre-foreclosure, probate, non owner occupied, Condemned house list, 30-60-90 late, ugly vacant houses)
    3. Website-I get lots of leads from my we buy houses website. My SEO sucks right now and I need to work on it, but somehow people still find me.
    4. I pay for leads online through cashhomebuyers.com and property leads.com (there are many lead generating sites to find leads from)
    5. Door-knocking the foreclosure list

    I don't do the auction either, very competitive there as well.

    0Reply
  • Patrick Snyder
    Real Estate Consultant · Lansing, MI · Member since 2011 · 356 posts · 306 votes
    14y

    It sounds like good news for your market, so that's positive. It might be time to start contacting homeowners directly (as Monica suggested)to see what you can find. I'm a big fan of driving through neighborhoods and looking for the vacant houses and the searching county/city records. I focus on houses where the owners address is different from the property address, as well as properties that are placed into trusts/estates.

    We have all been spoiled by the plethora of MLS proertiesand while I'm still having pretty goodluck, I look forward to the day that the Lansing area makes that seller-market shift!

    0Reply
  • Monica Breckenridge
    Rental Property Investor · Colorado Springs, CO · Member since 2010 · 476 posts · 305 votes
    14y

    Oh and Micheal Q just started a good thread on Direct Mail Marketing.

    0Reply
  • Steven M.
    Developer · Encino, CA · Member since 2009 · 65 posts · 15 votes
    14y

    Ryan,

    As a bit unseeming as it might be and capitalizing on a couple's personal misfortunes, you can search courthouse records for couples that have filed for separation or divorce (County Courthouse), as well as bankruptcy (US Fed. Courthouses).

    I might suggest traget direct mailing to homeowners that are adjacent/near to blue-collar and service type of job/employment centers (factories, light manufacturing, etc) where jobs are being more apt to be lost.

    I know someone with some success actually takes a booth/table at job fairs, and marketed his buisness that way to distressed homeowners in trouble. He also has a booth at a local weekly flea market/swap meet. Quite clever. He was able to track his success/response by having a seperate phone number just for these efforts (bought a Majic Jack phone line for $20) from his regular line.

    I am really reluctant to buy at bank auctions because you got no idea what you are buying. I know people who have done this only to find that the pissed-off homeowners (at the bank) last horrah was to destroy the house including pouring cement down drains, stealing stives, cutting up the trusses/joists with a power saw, stealing the copper from the electrical, dumping horse crap in the house, etc. Like Forrest Gump could have said, "Home auctions are like a box of chocolates...you don't what you are going to get..." I am personally not that much of a risk taker.

    Good luck!
    Steven

    0Reply
  • Eddie P.
    Real Estate Investor · South, FL · Member since 2011 · 66 posts · 16 votes
    14y

    If your market is anything like S.Fla, you'll really be spinning your wheels at auction. I average about 1 property for every 100-120 I research. Lately less than 10% of the properties are actually sold to 3rd parties. Many are cancelled last minute by the court due to bankruptcy or stall tactics. The majority are keep by the foreclosing bank by placing high reserves, usually the amount of final judgement. Down here we have lots of foreign money buying up anything they can get there hands on, driving up prices on everything.

    0Reply
  • Ryan Fatula
    OP
    Real Estate Investor · Orlando, FL · Member since 2011 · 42 posts · 3 votes
    14y

    Monica: Thank you for all your suggestions. It sounds like you've got a bunch of different ways you get your deals, and I need to take a break from scouring the MLS to begin implementing those!

    Patrick: You're right, it is actually good news that the market is turning and instead of ignoring what I see when driving around, I'm going to beging writing down FSBO's and vacant properties I see.

    Steven: I really like that " booth at a flea market " idea....

    Eddie: YES! So many buyers here are foreign and just buying up everything they can get their hands on right now, just like what you've described.

    From what I've gathered, because there is so much competition on the MLS right now, I need to concentrate more of my time and energy towards finding the sellers before they're actually sellers. Also due to foreign investment in my market, I need to do the things that they're not able to do since they are not local like I am.

    0Reply
  • Ryan Fatula
    OP
    Real Estate Investor · Orlando, FL · Member since 2011 · 42 posts · 3 votes
    14y

    Got our next rehab under contract this past week and was able to breathe a sigh of relief. Now I can focus some time and energy on getting our marketing up to where it needs to be so we can hopefully acquire properties with less competition. It would be nice if one of our other offers we have out right now gets accepted so we will have another project to work on. We just got approved through a hard money lender and we are looking to leverage our cash and go from 1 project at a time using our own cash, to multiple projects using HM. Super excited for the future!

    0Reply
  • Gary Parker
    Real Estate Professional · Salt Lake City, UT · Member since 2010 · 609 posts · 163 votes
    14y

    Monica Breckenridge do you advertise your web site on all your marketing or are you selective such as not promoting your site on a yellow letter for example. Also, would you post tthe link to your "we buy houses" web site? I didnt see it on your profile unless I am blind today.

    0Reply
  • Monica Breckenridge
    Rental Property Investor · Colorado Springs, CO · Member since 2010 · 476 posts · 305 votes
    14y

    Gary Parker yes, i put my website on all my marketing. My investor website is www.PinkRealEstate.com and my realty website is www.PinkRealty.com. I am re-building my websites right now to incorporate a word press so I can blog to generate more traffic. I love to blog. All my marketing is in PINK and my phone # end's in PINK. This way everything blends together. You should definitely have something similar for your marketing. For example another investor uses FAST, his number ends in fast, his website is the phone # and all his marketing is in yellow. You want to remain consistent to build recognition.

    0Reply
  • Gary Parker
    Real Estate Professional · Salt Lake City, UT · Member since 2010 · 609 posts · 163 votes
    14y

    Monica Breckenridge I loved the "pink" lined notebook paper on your investor web site. The "pink' to tie into your charity is awesome. you have done an excellent job of branding. I am also looking forward to reading your blogs.

    0Reply
  • Stephen Masek
    Investor · Mission Viejo, CA · Member since 2012 · 627 posts · 204 votes
    14y

    Pink - My wife works with me, and we are sometimes both at construction sites, so I just got her pink steel toe boots, a pink hard hat, a pink safety vest, and even a pink tool belt.

    0Reply
  • Monica Breckenridge
    Rental Property Investor · Colorado Springs, CO · Member since 2010 · 476 posts · 305 votes
    14y

    Stephen Masek That is sweet. I want a picture. LOL

    0Reply
  • Monica Breckenridge
    Rental Property Investor · Colorado Springs, CO · Member since 2010 · 476 posts · 305 votes
    14y

    Gary Parker Gary, you are so sweet. Thank u so much.

    0Reply
  • Jennifer B.
    Rental Property Investor · Marysville, WA · Member since 2010 · 46 posts · 40 votes
    14y

    Same issue in Seattle! I'm doing and/or working on doing a lot of what Monica mentioned.

    The only thing I'm doing that has not been mentioned is talking to local banks and asking if they have any inventory or properties they need to sell. I build homes as an investment strategy as well so I have received more land deals than houses, but it may be an option worth trying.

    You can also look up which local banks are operating under a cease and desist order from the FDIC, those ones are going to be the most motivated to get negative assets off their books.

    Make sure you find out which branch is the main branch, and ask to speak to a special assets manager. If you can get an appointment, just ask if they have a list of properties currently owned by the bank that are not on the market yet, or if they are interested in selling any notes. It may take several conversations and/or closed doors before you get any information, but it has definitely paid off for me and I've had access to many properties that were not on the market.

    1Reply
  • Jeremy BrandtPro Member
    Specialist · Dallas / Fort Worth, TX · Member since 2011 · 21 posts · 9 votes
    14y

    Depending on the area, MLS inventory is getting tight on deals. The best success we've had with the MLS is automating our offer system.

    1. Download the entire local MLS database (you will likely need to be licensed and sign an agreement to get a feed - partner with an agent if not lic.)

    2. Identify "bargain" listings by calculating a price per sqft that is below average for each zip code, keywords in the description (motivated, distressed, etc) You'll need some tech experience yourself, or find a teenager.

    3. Mail merge those results into automated heavily discounted offers emailed or faxed to the listing agent

    In this manner you can make offers on a lot of properties very quickly, this has worked very well for us in the Dallas / Fort Worth area.

    However - the MLS is where the competition is. By far the best source of distressed sellers is marketing directly to sellers BEFORE they are on the MLS. Direct mail, TV, billboards, post-its, Internet marketing (SEO, SEM, etc), and/or buying leads from companies that are experts in that type of marketing.

    My #1 mantra in business marketing is... Go where the competition isn't if you want to be successful and efficient with your time/money.

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