All Forum Posts by: Dale Peterson

Well, the standard tactic is to use a skip tracing service to find a property owner's phone number. That's not anything special. I don't know if there are privacy protection laws preventing this in Canada though. In the US, there are a thousand companies that batch search various public records for a small fee, like the telephone book or voter records, to match names & addresses with phone numbers. The accuracy rate is usually around 65-75%. You could manually do all this for free, but that's time consuming.

But again, that's for "regular" residential property prospecting. It doesn't hurt to try and call first, but you need a multi-channel and persistent marketing approach. After all, you're targeting a specific, high value commercial niche that's usually dominated by well connected professional brokers. 

Now, there's no reason you can't dominate this niche. I admire your ambition, but if you want extraordinary results, I'd recommend putting in extraordinary effort. If you have a property you feel is distressed, then dive deep into the local courthouse records to learn more (assuming that's public info in Montreal), then go out to the place yourself. Chat with the property manager. Get a feel for their stress level and/or professionalism, ask to speak with the owner face to face, etc. All the standard hustle a broker would do. ;)

Good old fashioned calling someone up, sparking a conversation and finding out their motivation/pain points is definitely more effective than mailers. It's also more cost-effective, if you have a good lead screening program in place. If you're going with direct mailings, you'll need to shell out for single page flat mailers. Those large, flat envelopes used for business purposes get the most engagement. Everyone is doing postcards, so you won't stand out, and regular folded letters just get tossed in the junk pile by default.

Of course, this is all a moot point since you're operating in an incredibly specific (but high demand) niche. In many areas of the US, anything more than 5 units is considered commercial property. You're targeting that highly coveted group of 6-12 unit, independent (not a company) property owners. This is a niche that's not going to yield many leads, so you need to court each one with finesse. Roll out the red carpet.

I don't know how it works up in Canada (although I'm fascinated to learn), but if you're not using a well-connected broker, then I would skip the skip tracing. For these elusive big fish, I'd drive out to the property and talk to whoever's managing it. Try to arrange a face to face meeting with the owner.

Of course, none of this tells you how distressed/motivated the seller is. Are you researching these properties to find those with abnormally high eviction levels, involuntary liens, various government code violations or what? 

 

First off, you're already ahead of the game. You have the back-end infrastructure that most investors lack already set up, so you just need to solve the "simple" problem of acquisitions. ;) So I'd recommend one (or more) of the following:

1) Find a local wholesaler. I'm assuming you're searching on-market properties at the moment, but Connecticut is a judicial foreclosure state. So there must be a thriving off-market community of wholesalers locking down discounted properties from early foreclosures. Any reliable wholesaler will follow a "first come, first served" model and won't raise the price after you've dropped a deposit.

2) Depending on your budget and patience, build up your own off-market acquisitions team to feed your pipeline. This might cost a few grand to set up and take three months or so to start paying off on a consistent basis, but the long-term gains dwarf the startup costs.

3) Change up your market. It's a big country, after all. It doesn't hurt to look at investing out of state in hot, but not so super heated, housing markets. Especially in markets where you can find all the data you need easily from the local court records. For example, like most of Florida. ;)

Also ask yourself if it's even necessary to purchase under an LLC name. If you're running a high-volume business, then of course. But if you're doing infrequent investments, consider the downsides of using an LLC. For example, you can't represent yourself as an entity, so responding to frivolous lawsuits or even filing routine legal paperwork will require shelling out much more for an attorney to do it for you.

And then there are the hidden expenses that everyone's mentioned. Everything from financing to insurance tends to get more expensive when the client has that "LLC" after their name. Not to mention the costs of setting up and maintaining multiple LLCs in Delaware or whatever safe harbor to get you real liability protection. The cons might outweigh the pros until you are closing deals in high volume.

Thanks for the advice, everyone. I asked my title attorney about this and he said it's the textbook definition of illegal rent skimming. So I feel foolish for even bringing it up. ;)

Hey, everyone. I'm a long-time lurker but new poster. I recently came across a real estate guru called Liran Koren (lirankoren.com). He seems legit, but I wanted a second opinion before I pull the trigger.

His strategy seems like utter simplicity, even better than a subject-to deal, but in the back of my mind I wonder if it's too good to be true. His strategy is to cruise the foreclosure lists to find junior lien holders, specifically HOA/COA foreclosures before the senior lien holder has filed for foreclosure (only works in judicial foreclosure states). Then you contact the homeowner, work out a quick cash payment for a QCD deal, pay off the HOA to stop foreclosure, and then you can rent out the property for years for pure profit without ever having to pay the original mortgage. Something about you are now a party with indispensable interest, since the bank doesn't have a promissory note with your signature. It all seems so simple, but before I buy his course I'd feel more comfortable if I could get a second opinion. Am I missing any risk factors?