All Forum Posts by: Charlie John

Thanks @Corey Melkonian and @Crystal Aasir. I will add to that...

Reduce the 70% down to 65 or 60% even if the property is "weird" or will be hard to sell. Or if the place is an absolute disaster!! It ultimately increase your profit margin and accounts for increased risk of something going wrong or costing more.

On the other side, it means you could go up to .75% if the property just needs basic basic updating. You reduce your profit down to 15% of list, but you know it might only take you a few weeks to fix and flip it! Volume!

Recently, I bought a house for 100k direct from homeowners.

The place was an absolutely mess. Hoarder mentality going on. Along with animal pee, feces and even snakes in the basement. No not the kind you see Mitch from Road Trip eating. Wild snakes living in their "stuff".

I wholesaled the property to another investor for 132k and made that for about 15 hours work. He then cleaned up the hoarding junk left behind, had the place professionally cleaned, took professional pictures and put it right back on the MLS. Classic whole-tail deal. He then sold it as-is as well to a guy who "flips houses" for 182k. Now that guy is fixing and renovating and hoping to sell at 340k.

I fulfilled all of my promises to the homeowner and made sure they were in good hands. They were elderly and their health was more important to them at the time of sale. I even paid for a professional moving company to pack up what they wanted to take with them to the new house! I wanted to help them in a turn key way. Every time I saw the sellers, he shook my hand firmly with a smile and seemed greatly appreciated. She gave me a hug after closing and said "You have been so good to us!"

I felt very good about the whole process. I really did help this couple sell their house and live the rest of their remaining years where they wanted to be and not worrying about how to clean up the mess at their house!

But, there were huge profits made on this deal. I made a 32k wholesale fee. My buyer wholetailed it for a 50k gross profit. And now some guy is fixing it up finally.

I wonder what the homeowners think as they see how this transistioned, How would you feel? 

I think it's pretty solid man. It gets the point across clearly. I would add in that you can buy on the date of their choice. Not everyone wants to sell fast but they are intrigued if you can be there for them next year when they know they will be ready to sell. 

Also I would have a girl record your message. It always sounds better. 

Thanks! @Brad Chandler

I have a private lender in place for a potential deal, but his wealth advisor is telling him that he needs to get at least 20% return because thats what he would be loosing if he took it out of the "markets." 20% is higher than hard money right!?

Thanks!! @Aaron Wyssmann.

My county's website has this data available. I can see when the last recorded sale date was and even permit information, which definitely helps. For instance, one house that looks a little dingy from the outside just had a 40,000 remodel permit pulled two years ago. I will not mail to that one. Clearly, someone is trying to improve the property.

I won't mail to someone who bought after year 2000. I dont know for sure if they have equity this way because they could have refinanced, but at least its a way to filter out the people who bought in 2004-2006 at higher prices.

I sent out 3 letters (same one) every 3 months to each address. The letters were "professional" and explained how I can help add value to their home sales process by buying as is, for cash, close on the date of their choice, etc. I hand wrote my signature at the bottom of every letter and then hand addressed each envelope. 

All of this took a lot of time, trust me. But hey, I am investing my time into this business because I want it to be a real business that will grow over the years right?! Isn't that what we all want to happen? I feel like the yellow letter type marketing is such a fly by night operation. At least thats what it probably feels like to people who get similar pieces from different investors. 

I had my new postcard design on 99designs and it looks extremely custom and local to my area since the image on the front is a picture of a landmark in our town. Many people have told me that they called me because my letter seemed very genuine and real unlike some of the others. 

I think a lot of people on BP take for granted this aspect of marketing. Sure, it ultimately comes down to sending out the mail, getting motivated sellers to call in and then close deals. But if you put some care into your marketing campaigns, a lot of homeowners will remember yours over everyone elses and probably give you first shot when they are finally ready to sell. 

If you are considering starting a direct mail campaign in order to find leads and create deals then hopefully this will help you.

You need to drive for neighborhoods that you want to buy in and look for properties that will be tough for the owner to sell if they ever need to sell. You are there as an investor to help them sell their house as is and take the stress and uncertainty away by offering to buy.

Look for houses with deferred maintenance such as bad roofs, peeling paint, an old driveway, original 1950s windows are great targets. This tells you from the outside that there is opportunity to add value in updating the property, but also, the inside may match the outside (original cabinets, pink tile in bathroom etc.)

Aside from deferred maintenance, look for properties that are on busy streets, next to a gas station, or has any challenges to them. It just means you buy them cheaper perhaps, but there will always be a margin on the resale. If you can help someone make it super easy to sell their house, you can create an opportunity. Obviously you have to do your due diligence and offer the correct amount in order to make money on it.

My frustration comes when people saying that you need to buy a generic (absentee for example) list first. That is the easy way and I am sure everyone else is buying that same list (and sending the same stupid yellow letter). Create your own and you will be unique in the marketplace (and create a unique letter or postcard!!). A lot of times when you buy a list, you are filtering out a lot of potential leads.

For example, when I drive for dollars, I will hit up every single street in my farm area. Honestly, every time I drive down a street that seems "expensive" where all the houses are impeccable and maintained, there is always one at the end of the street that has something going on with it! You could buy it, fix it and increase the value to match the neighbors. Your purchased list would probably have filtered out that price range and thats what I am talking about.

Your list should contain ALL properties where there is an opportunity to buy a property that needs work. Whats the point of mailing to a higher equity owner when a lot of those houses have granite and new windows, siding and roofing. Wasting time sending those mail pieces and on the phone when they call you. 

After you gather your list, try to niche it down to 15+ years of ownership, then you can bank on it having equity. 

I started in November 2014 driving every street in my local area and have continued to expand my farm outwards. I now market to around 1700 addresses. They all have equity and all are considered fixer upper/opportunities to me where I can improve the value. 

That list is worth a lot to me! I am getting leads and deals from it. Every time my phone rings, I know its a house that I would buy and could make money. If you are getting started, don't buy some big list on listsource, create your own! Over time as you continue to mail to these people, more leads will convert to deals. It's whats currently happening to me so I thought I would share what I did! Hope it adds value to the BP community. 

Hey Crystal, the 70 percent rule works so well for doing quick analysis!! In your example, lets say 60,000 ARV. With 20k in repairs to get the value up from 15k to 60k.

60,000 x .70 = 42,000 - 20,000 in repairs = 22,000 is the most you can pay in order to make decent money. Decent money is considered 20% of the ARV or list price. That equation subtracts 30% off the top to account for your profit (20%) and costs (10% -- realtor is 6%, holding is around 2% roughly, closing costs are around 2% roughly).

I think with a house listed at 25 percent of value, I would definitely be concerned that your estimate of 20k in repairs is not enough. Hope this helps. Use the 70 percent rule, it is very quick and easy!

You probably are wasting your agents time. I know that because I used to do the same thing when I first wanted to get into the business. They are trying to make a living too and only have so much time in the day.

You need to generate income from real estate activity first and then think about the rental thing. 

Become an agent, become a bird dog, become an assistant to someone already in the business, etc. If you go hard at it, you will start to learn really fast.

You can absolutely do it you just have to believe in your heart that you can. 

Any ideas on how to finance a $500,000 purchase price and a $200,000 rehab budget?

Property is worth at least 1-1.1 million fixed up. 

This lead came in from my direct mail campaign. I drove for dollars and found this property in a highly desirable location. The property has not seen a dime in about 20 years and the sellers just want to be done with it and move on. Unfortunately, they are not able to finance any of the purchase price for me since they will be needing the money from this sale to buy their next house.

What do you guys do when the purchase price is large?

I am thinking private money - but how much of an interest rate am I looking at paying when it comes to a "higher dollar/risk" project like this?