Would like some feedback on productive work

Question

I've been focusing on wholesaling to build cash reserves and I wanted some feedback on what I'm doing as well as ideas from others on ways that they have found success.

My basic strategy goes as follows. I drive neighborhoods looking for vacant houses that are not listed with an agent (no sign in the yard); I do take note of FSBO houses as well and call them to identify go/no-go sellers. After gathering 20 or so potential properties, I head back to the house, hop onto the online county tax rolls and start finding out who the owners are and where they live. If the owner is an absentee owner, I mail them a yellow letter. If the owner shows to live in the house (which we know not to be true) than I go ahead and mail them a letter in case a forwarding address is on file. While waiting on results from the letter I go to the online official public records to research property documents for other clues as to the owners' whereabouts. If that search comes up dry and the letter comes back as "undeliverable / no forwarding address", I send everything I know to my skip tracer and have them work on it. If I haven't heard from the seller within a month of sending a letter and the letter hasn't been returned, I send them another one.

With all that being said, is there something else I should do or could do in addition? I choose not to use bandit signs as they are against ordinance here and I made the decision to do everything by the books. I have used mass post card mailings in the past but the response is pathetic and really only serve to locate vacant houses for you when they bounce back as undeliverable. I've picked up a couple of houses from flyering parking lots but after being chased off enough lots, I've come to the conclusion that this is not a stable way to market as it again is not "legal" and I don't feel right doing it.

My biggest concern is that I'm not doing enough and I wonder if I should be dropping by absentee owners' residence, trying to call them, or just letting the motivated ones call me. I have just re-launched my yellow letter service so that's eating some hours but I still feel like I could be doing more to be successful. Any thoughts and/or feedback would be appreciated.

Steven J. · Answer

Bryan Davis, May I suggest you try to do something with those empty lots you're receiving calls on? I'm not saying go ahead and figure out how to develop, but talk to a few developers and see what they look for. You may come across one that with a zone change may reap plenty of rewards to a developer and you can wholesale to them.

From a big developer here in town I've talked to, I believe he said you want to get the land for 20% of what the ARV of the finished building is, whatever that may be. I may be completely wrong on that percentage, but check with developers in your area. You might not know the exit strategy as well with vacant land, but you might find someone who does!

Jerry Puckett · Answer

Hi Bryan, 
That is a very valid concern considering the Market you're working in. I know we've all heard this a billion times, but here it is again: this is a numbers game. 160 letters is not going to cut it here. Not if you're looking for reliable income.

There are more wholesalers per capita here than just about anywhere else. The majority of them are new and end up dropping out after a few months, only to be replaced by yet another crop of well intentioned folk who heard this was a good way to make money without having any to start with.

I see you doing all of the low budget things....but if you want to step up and be a serious player in DFW, you're going to have to get a bit more aggressive, and a whole lot more consistent in your marketing. One off letters won't cut it. I call that Powerball marketing because it's about the same as using the lottery as your retirement plan.

And you're right. My experience agrees with you that mass post card mailings are pathetic. Try pumping up the volume on your yellows. If you sent 1000 a month with that 10% response, you would certainly talk to enough people to get a deal or two.

Also, learn how to monetize more leads through referral to help boost your marketing budget.

Karen Margrave · Answer

Bryan Davis The question is, if you aren't finding vacant homes, but are finding vacant lots, why not push those? If your market is a healthy market, where things on houses are tightening up, and prices are beginning to appreciate, that's a perfect market for selling lots to builders!

Here in Orange County, CA lots are extremely hard to find. I've had the title company pull records from their data base of vacant lots, but it includes every vacant parcel of land, including medians in the street! I do look up owners of land that I run across, and in fact just opened escrow on a lot where we will build a spec. The point is, there might be builders wanting lots, and money for you to make wholesaling them. As for the 20%, of the completed project value, that may be a good rule of thumb there. Here we can go up to 30% because the end price will justify it (of course we'd like less).

Bryan Davis · Answer

Jerry Puckett: I love the idea of monitizing leads as I hate to see a dollar spent that doesn't make a return. I've had quite a few callers with empty lots (some at DEEP discounts) and a few with duplexes as well that I haven't had anything good to do with. Granted, all but a few seem more like they won't take less than market so there probably was no value there anyway but if I could find a buyer that has a need for their information, I could certainly use a bigger marketing budget. Do you sell leads yourself and if so, how have you found buyers for your unwanted leads? I spoke at a lead selling conference in Florida a few years ago about the yellow letter but I've slept since then and don't remember how it was suggested that leads be monitized. Would you mind sharing your insights? Thanks.

Bryan Davis · Answer

Yes, I use our yellow letters for mailing. I did mail to a list of 160 free and clear properties last week and have so far gotten almost a 10% response although most have been to inform me that the property is an empty lot. I will continue to follow up on the non-response letters. I've just started the driving for dollars routine over the weekend.

Terry Royce · Answer

Bryan, I am confused. Do you use your own yellow letters to do mailings?

Why are you not getting lists (either purchasing, or compiling from public records), and then using your yellow letter service to touch those leads?

How long have you been doing what you are doing, and what have your results been?

Would like some feedback on productive work

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