Sent out my first Lead List

[Shaw Rivera]

Hi everyone, I took the courage to send my first batch of 295 absentee in and out of the state of Alaska. Equity: 41-100% The list will be used for wholesaling purposes. I plan to follow up on them every 2 weeks x4 and see the results. I bought my list from yellow letters complete. Any suggestions?

[Peter K.]

Hi Shaw

Congrats on the call.

My market is very different here in the SF Bay Area but generally speaking most any desirable and usable real estate will sell at the right price. On the flip side, $1 is too much to pay for a property that won't sell or rent at a profit.

Here are a few things to consider:

1 Call a couple of good local realtors and ask them their opinion. I wouldn't give much detail so as not to trigger them trying to go around you to get a listing. It can't hurt to network some local agents, anyway. Let them know you looking to buy fast for cash ( or whatever your strategy and criteria are). They may end up being good bird dogs for you.

2 If you can't find good comps or get an opinion of an agent you could look at what it would rent for. If it would rent for $700 per month for example, you can get an idea of value to you (or another buy and hold investor) based on what you'd be willing to make as a landlord. If you want $200 cash flow you can make an offer based on what numbers work for you.

3. If the sellers seem extremely motivated, I would ask them what is the lowest cash offer that they would accept. If it seems like a real deal, write up the offer with an inspection contingency. This will give you time to get a contractor to look at it and for you to determine if there is profit in the deal.

4. Once you tie it up ask your contractor what it would cost to add a couple of bedrooms and a bath. Also check with local city or county folks to see what it would take to get the permits. If the house is around 1,000 SF or more, you may be able simply move and add a couple of walls and plumbing to convert it. If you avoid changing the outside walls, it is usually much easier to get permitted.

It's a good idea to have multiple exit strategies, whenever possible. For example, If the comps say you can pay up to $100k and still resell at a profit but your rental numbers say that to cash flow you need to buy at $80k, don't go above $80k. That way if it sells, you make an extra $20k of profit and if it doesn't, you can rent it for cash flow. This is especially important in the beginning, since you are not so familiar with the market. You might lose a few potential deals but it's hard to argue with one of the greatest investors in history. Warren Buffet's first rule of investing is Don't Lose Money.

If you haven't already done so, I'd recommend reading the BP Ultimate Beginners Guide to Real Estate Investing.

Good luck!

Peter