How do I determine what area to focus my marketing?

Question

Hello BP Community!
I live in South Florida and want to get started Wholesaling properties.  I have researched and came up with a plan of attach to get started, the only thing I feel I am missing is where to market?  Shall I go state wide, stay in my county, or target specific neighborhoods and area codes?

South Florida has a mixture of real estate spanning the spectrum from low income area to multi-million dollar estates; Condos and Townhomes along with single family homes.

I wanted to hear some insights from veterans (and others:)...is there a certain profile of an area or neighborhood that is more beneficial for Wholesaling?  What shall I be looking for and how can I evaluate and analyze the best target market?

I want to work smart, especially if I am going to spend money on direct mail.

Thanks for helping!

Aaron Mazzrillo · Answer

I don't want to give away trade secrets because a lot of my competitors use this site as well. I went to a recent seminar that was put on by a local educator. There were, probably 500 people there and I would say a majority of them came from right here in SoCal. One of the chapters of the manual was mailing to absentee owners. I had been mailing to them the last few years with zero competition and doing quite well. After that seminar, I would talk to a seller and learn that he/she had 5, 7, 10 other letters and was going to call all of them looking for the highest price. I don't much like bidding on properties. As with oil drilling, you can pack up the drill and move to a new site and start all over, or you can stay put and drill deeper. I look for ways to drill deeper in the farm I am already working. Get creative. Think about your market and what opportunities exist. Then, market to those opportunities.

Aaron Mazzrillo · Answer

If everyone is picking apples up off the ground, wouldn't it make more sense to reach up into the tree? I prefer not to do 'what everyone else is doing.' You might make some money, but you probably won't make much and you will definitely have a lot of competition squeezing your profits.

Cash buyers will buy almost anywhere a property can be picked up at a discount. That includes very rough neighborhoods. If you don't believe that, just take a drive through any one of those neighborhoods and look at how old the properties are. If they are more than 1 year old, that means somebody at some point in history must have owned them and someone out there is looking to buy one. I wholesaled a house to a guy 2 years ago that was on a busy intersection with a liquor store on the opposite corner. I made a $30K wholesale fee, he rehabbed and flipped it and made around $30K.

Lafi S. · Answer

Zach Bechard a good way to answer that question is have a local realtor do an MLS search for you. I would start by county, checking the last 3 months of non-financed closings (aka cash sales). Then you can start narrowing down by zip code to where most of the investors are buying for cash, select a few of the prime locations and neighborhoods you are comfortable working  and go for it!
Good luck...

Renee Carter · Answer

For me I'm starting in my backyard. I live in Chicago il and I got a list for my county. (Cook) its a very large county with 3000 absentee owners. When it comes down to it...it really depends on who you will be wholesaling to (cash buyers) and where they like to buy. Do you have a buyers list? Have you done market research? Knowing where your buyers are buying and at what percentage - repairs can really give you insight as to what you should be offering the seller if its a deal.

Tj Hines · Answer

Hey Zach,

If you want to start off working smart, I would highly suggest staying local in your own backyard and conquer your own market first before moving to another market you may not be sure about.

My best advice for you would be to start networking with Realtors so you can find out what areas all the cash transactions are happening in. This is the area that you mainly want to focus on.

These areas you should be able to find motivated sellers by driving for dollars. Look for all vacant houses, locate the owner and send them a yellow letter inquiring if they want to sell or not.

80-90% of these properties are usually owned free and clear by the owner. No mortgages present whatsoever. This makes the deal even more attractive.

Hope this helps!

Zach Bechard · Answer

Completely understand Aaron.  SoCal Market must be very competitive!

Zach Bechard · Answer

Aaron Mazzrillo Great insight.  Tell us how you pick the apples from the tree!  
What are you doing that is different than everyone else?
How are you finding the houses to Wholesale and getting those leads?

Lafi S. · Answer

Zach Bechard That depends on your MLS. I believe most of them have an option where the buyer's name can be provided after the closing. But most realtors wouldn't want to give up that info so it's not usually filled out.

The long way to do it would be to check the tax records on each individual sale and try to see which names come up more then once.

Zach Bechard · Answer

Thanks Lafi S.  Thats a great tip to find the areas where all cash deals are being made.  Do you have any way of identifying the Cash Buyers and Investors that are buying these homes?  
There must be an insider technique for finding the big players in my area....

Dave Slaughter · Answer

Zach,
I'm brand new to this as well. I started looking at neighborhoods within a mile or two from my residence "driving for dollars." I'm using realtor.com and zillow to get a foundational feel for market values in these neighborhoods before engaging a realtor to run comps which I anticipate doing very shortly.

So far I have identified about 30 possible properties using this method. Next steps are to practice what I've learned here on BP and direct market to them and get an appointment with someone motivated.

I'm also going to my REIA meeting tomorrow and plan to network with a couple of investors in hopes to discover areas in my city that they buy in.

So to answer your question, practice with an area near you and ask the "buyers" later when you have some road time logged with determining values in areas.

Hope that helps.

How do I determine what area to focus my marketing?

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