What do you think about this letter?

Question

Hey BP,

I have decided that I'm going to send a couple of letters out to small multifamily owners in a local city to see if I get any leads.  What I would ultimately be looking for is an owner finance deal so I wouldn't even have to go to a bank since I'm still a student and don't technically qualify for a traditional bank loan yet.  Anyway here is what I have so far.

Hello Mr. Smith

My name is Nick Keesee and I am a real estate investor looking to purchase multifamily properties in Monroe.  I noticed you own a property at 123 Monroe St and it peaked my interest.

Have you ever considered selling the property?  Have your tax benefits run out or are you tired of dealing with tenants?  If so I might be interested in purchasing your property and saving you money by not having to pay a high realtor commission.

If you are interested feel free to contact me at 123-456-7890 or email me at xxxx@yahoo.com

Thanks for your time and I look forward to hearing from you!
-Nick

What is your honest feedback on this?  Good bad or ugly...it doesn't matter to me.  I would like to hear :)  I know the letter doesn't really insinuate that I would like an owner finance deal but I don't know how I could possibly say that right off the bat and still have people call me.  That seems like more of a negotiation that would have to take place after I talk to them.

Any insight would be helpful!

Michael Quarles · Answer

Bill,

Keep in mind most of our prospects would have been considered successful students if they received a "C" grade.

Dumbing down a letter to mimic your prospect is extremely important as are embedded commands, calls of action and take away phrases.

They may not work for you however you're not within the majority.   The higher the education level the less likely that person will discount their property.   Just my opinion.

Michael Quarles · Answer

Nick,

I would reconsider your marketing.  IMHO it appears cold calling active for rents and negotiating LOs would be a better fit. Even a Sub2.   Save the money on mail until your resources are larger.

Bill Gulley · Answer

Okay, what would your english teacher say?

"looking to purchase".....no!

"I'm a real estate investor" oh, an "investor" wanting to use my money!

"noticed you owned.....and it peaked my interest" My ownership peaked your interest, was it something about me owning that motvated you?  No, you have an interest in the property, not my ownership.

"if interested please call me" IMHO, that gets letters to file 13, if I had been interested there would be a For Sale Sign on the property.
Your letter is to motivate action to do something, not ponder possibilities or my interest. All the junk mail I get says 'Call Now", "Call me today" the less forceful say "Please contact me" none give me the out of "If I'm interested".

Mr. Smith, I understand that you are the owner of record of 1234 Multifam, Ave. in Monroe. I would be very interested in speaking to you about purcahsing your property for our portfolio. I can tell you that I do purchase properties in their "as is" condition under favorable terms that can provide a tax savings to you with a residual income and at a fair market price. This is usually a better option for owners like yourself to be freed of the management burdens with real estate.

I am willing and able to close quickly, subject to an agreement. Please contact me at 123-456-7890, during normal business hours so that we can discuss this mutually beneficial opportunity.

Truly Yours, 
Mr. Powerbuyer

If you have a business e-mail you can include that, if your e-mail address is datwakydude@ xxxx.net, don't use it.

Now, I'm not a professional marketing type or writer, but...IMO

An introduction about you is a waste of time for the reader, I can see who the letter is from, I'm not asking for a date, I'm giving information and requesting action. Who I am and how to contact me is there.

I'm interested in adding your property to my PORTFOLIO. What does that say...? I have rentals, real property I own, therefore I am. Saying you are "an investor" has many negative aspects, investors have a bad reputation, they attempt to steal deals and low ball sellers. Obviously if I'm interested in your property and hold a portfolio, I'm in the business.

That third sentence says a lot, I buy "as is", I am considering your position in my offer, I can save you taxes (often a reason not to sell) and under terms at market value! I won't low ball you....

"residual income" means seller financing and it provides tax benefits. It sparks interest of how can that be ? If they do understand to expect seller financing, they are usually aware of the pluses, higher rates of interest and a check in the mail with no management requirement.

Telling them it's usually a better option and motivating them to consider the deal, they are well aware of manageing real estate entails.

Another point, never call a seller's property a "home" or "your apartments" that evokes emotional attachment to a building and dirt. It's a commodity, not something thier parents left to them or where they raised thier family.

I am a willing and able buyer who can act now, there is no waiting on me! Just waiting on you for us to find an agreement.

Lastly, please contact me....period, not begging and not asking you to consider anything or make a decission, just call me, that is what you really want, a phone call. Mentioning normal business hours says I'm a business type, let's keep this as a business deal and conduct this in that light.

And it is an opportunity for both parties that can be mutually beneficial, a win-win is being proposed, not me buying you out!

I've been to Monroe many times and lived near Lake Charles so I know this approach will work. Short, sweet, to the point, inticing with benefits, business like. Good luck!

PS. Your letter wasn't that bad for a newbie, your teacher would probably give you a C down there. :)

Dawn Anastasi · Answer

I am going to give a 3rd vote on "less is more". You could restructure your letter like this:

Hello Mr. Smith

My name is Nick Keesee and I am a real estate investor looking to purchase multifamily properties "as-is" in Monroe. I noticed you own a property at 123 Monroe St and it peaked my interest.

Contact me at 123-456-7890 or email me at xxxx@yahoo.com so we can discuss this further.

Thanks for your time and I look forward to hearing from you!
-Nick

Bruce May · Answer

Nick, I like your letter and I think I would add that you have money for a down payment and are looking for owner financing. That might appeal to the right owner and cut down on the tire kickers who want to know what you will offer. I've also seen the successfully done for self storage units.

Bruce

Joel Owens · Answer

The letter isn't too bad. I don't think the part about commission is really important or needed.

The problem with the owner finance deals Nick is that inexperience creates a ton of risk for the seller. I have done owner finance deals and also have seen others do owner finance for a buyer.

Typical problems is an inexperienced investor has no money so instead of making repairs on a fully performing property they suck out the cash. The occupancy starts falling and the building starts going down. The seller who financed everything now has to take it back over and bring it back up to performing again.

I just talked with a seller like that the other day. He took it back and it took form August of last year until now to get it at 95% like it was before for years. The buyer was not taking the rent and putting it back into the property to maintain it correctly. Owner finance deals are really more risky in states where it takes a long time to foreclose. In those places some owners like to use CFD (contract for deed) type arrangements.

You might land a smaller duplex to quad from an owner than no longer wants to manage. They are usually dumping an overpriced dog on you that needs a ton of repairs. You will find you do not make much money but you get your start and a little cash flow and a ton of experience going forward. You can do a wrap around an existing mortgage. Wraps are going to become less common in a few years as banks look for loan that are owner financed around their notes so the banks can call the loan due and relend at higher rates.

Even if you find a seller to owner finance 100% of the deal you will need money for inspections and closing costs etc. ( a few thousand usually) for a small 2-4 unit and hopefully reserves to get you started.

The larger apartment buildings the investors are usually very seasoned and unless you have a decent down payment they will not want to take a risk on you. The letter I would make it shorter and to the point and then talk about the other stuff over the phone. Being new I think you will have more sellers take a chance on you with the 2-4 unit buildings than the larger ones.

Hope it helps some.

Tiffany H. · Answer

With a 500 mailer per month budget, who are my best targets?  I have lists for Non Owner Occupied free and clear properties and Non Owner Occupied with loans up to 150k.  I was considering only mailing to those owners who live outside of the state of the prospective property for purchase.

Bill Gulley · Answer

Oh, it's MI, that's totally different.....  LOL

You seem intent on asking them to consider something....try it and see.

A business letter is not a TV commercial IMO.

Looks like the same stuff except you spelled "piqued" correctly and you're still impressed with my ownership......

Nothing about buying "as is" but I'm glad to see you left out being an investor.

Nick, when advice is requested, then given, then ignored and requested again from the same advisor, there is little incentive by that advisor to continue giving advice, don't ya think?

Spend some money, time, effort and try it your way, it may work and you may continue for a long time doing things your way. The only way to find the best way is to try other ways of doing something, otherwise you'll never know what works best. Good luck....   :)

Bill W. · Answer

Overall it is a pretty good letter although I agree with a few other comments that less is more.  You may want to reconsider calling yourself an "investor" or the recipient might see dollar signs.  I would just present yourself as someone feeling out the market and seller's interest.

Also if you include this sentence below, the word is "piqued."

Bill Gulley · Answer

While I don't have to be that person face to face, ignorance is bliss. Stupid is as stupid does...

With that, I see the old farmer in overalls, hands in his pockets, shuffeling his feet in the dirt say'n "ah, I'd think I'd better get this much for it" I can horse trade, but it always comes down to proving to them what to expect to get, being a numbers guy that is not a problem, it's how you solve the problems, even the problems they aren't aware of. You see the dumb as a fox types in my area all the time, I can snip tails. Being polite usually works :)

You can always switch gears and go down to another level, it's much harder to start out making first contact as being simple minded and later guide them into a more sophisticated transaction, pointing out tax benefits, interest alternatives and advising while you negotiate.

I guess you could do more research and find out who a seller is.....but I had no time for that.

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