All Forum Posts by: David Lee Hall, III

Joint venture with another wholesaler - split the profits (see this all the time). Send direct mail to cash buyers in the area. Go to REIA meetings. Post "listings" on Craigslist and capture the respondents.

This is not legal advice. These are pertinent clauses from my standard contract reviewed by lawyers in my state. Please consult a real estate attorney in your state - it will be worth the investment. (Sorry it didn’t copy perfectly)

Note this is all part of my “as-is” contract- there are numerous outs I can use if needed even though I have only used them once or twice. I think I have only had a seller question things once or twice. As part of the contract for the last yeah I have a plain English summary letter that explains every paragraph in 1 sentence. This has helped greatly reduce actually questioning of the contract verbiage.

6) PROPERTYINSPECTIONCONTINGENCY:RegardingtheHomeInspectionLaw(68Pa.C.S.A.§7501,etseq.) property inspection isa non-invasive,visualexamination ofsome combination ofthe mechanical,electrical or plumbing systems or the structural and essential components of a residential dwelling designed to identifymaterialdefectsinthosesystemsandcomponents,and performedforafeeinconnectionwithor preparation for a proposed or possible residential real estate transfer.The term also includes any consultation regarding the property that isrepresented to be an inspection or that isdescribed by any confusinglysimilarterm.Buyerreservestherighttoconductinspectionsand professionalevaluationswithin
30 daysofthesigned Agreementforany ofthefollowing:general propertyinspection,wood-destroying insects,underground tanksand wells,septicsystems,toxicchemicals,and environmental hazardsincluding but not limited to asbestos, mold,fungi,radon or lead-based paint, property boundaries,or deed and use restrictions.Buyer reservesthe rightto VOID thisAgreement based upon the resultsofany inspections, a) WATERANDSEWAGECLAUSE:IfPropertyhasnon-municipalwaterandsewagesystems(e.g.wellor
septic). Buyer reserves the right to have invasive testing of said systems to determine functional obsolescence or repair need.Seller understands that recommendations of professional services may impact Price.Should repair or replacement be warranted. Buyer agrees to give Seller one-thousand- dollar($1,000.00)credittowards needed servicesatSettlement.Additionalcostsabove and beyond thisamountforremedyoffaults,asdetermined byBuyerselectedthird-partyprofessional,shallbe deducted by Broker at time of Settlement from Paid From Seller's Funds unless agreed upon in writing bySellerand Buyer.

11) ASSIGNMENT: Buyer has the rightto transfer or assign allof itsrights under this Agreement without written
consent of Seller.
12)MARKETING:Buyermay marketthePropertyas"EorSalebyOwner"priortoSettlementDate.Upon
execution of this Agreement, Seller gives Buyer permission to market the property in the Multiple Listing
Service(MLS).
13)RECORDING: ThisAgreementmay berecordedintheOfficeofRecorderofDeedsoranyotherofficeor
placeofpublicrecord.Ifa noticeofthisAgreement isrecorded,the Buyer may record a Noticeof Termination of said Agreement ifthe Seller defaults in the performance of the Seller's obligations and responsibilities herein and such termination shall be effective ifno legal proceeding isinstituted and lis pendensisfiledbytheSellerwithinthirty(30)daysofthedatesuch NoticeofTerminationwasrecorded

Like many have said, I only use price per sqft if I haven’t seen the house. Usually I start around $50/sqft and go up if there are big ticket items. BUT I deal in a lot of $50k houses which you can just throw this model out the window for. I am in Appalachia so costs will be higher on your end of the state.

Why price per sqft tends to be so inaccurate is because finishing needs to match your comps and every dollar isn’t created equal. A $20,000 French drain may let you sell a house but isn’t going to draw in multiple offers like a putting that same amount to a master bath. Numerous books, including one of my favorites, uses the sqft method. I find it really only reliable when houses very similar and I know the price to get an accurate sqft rehab price for my market. That information doesn’t come from a book, rather experience (yours or a mentors). 

@Nathan Gesner thank you. Process server was what I was blanking on. 

I found a couple. $25 here for serving

@Jeremy Horton

In terms of lists a lot depends on what is available in your target area. Probate is popular but expensive - these lists are generally pulled manually. If you can get code violations those are usually strong. Unfortunately in my market code enforcement does not provide lists. Additionally, with probate, understand when someone dies the benefactors get dozens of messages - you are a vulture on the line here. A better route is to target attorneys. Send wedding style letters that say confidential to the attorneys- this gets it to their desk not their secretary. Once you close a deal or two through an attorney you end up in the pipeline for when they get distressed homes. One of the guys in REIA here just does this method (I don't personally).
My call rate on DMM campaigns (that are list, not driving for dollars based) are so low because I do not mail on motivation. I just blanket house configuration and location for my reliable buyers. It is a shotgun approach for about 25 zip codes as opposed to targeting distress. It has the lowest return rate because of this. For about every 1,000 postcards we send we get about 4 calls. Remember there is *no* distress here, it is simply location based. We close on about 1 in 12 of those. So to close 1 house a month on my non-distressed DMM campaign we are currently running I need to send out about 3,000 postcards. At 61c a postcard I know my budget needs to be $1,800. As my usual assignment fee would be $4,000-$6,000, I know for $1,800 I can profit $2,200-$4,200. Obviously if you aren't in rust belt America moving $125,000 ARV houses you may be getting 5x what I do on profit, but the nice thing is you can easily track lead and lag metrics. We get more leads on SEO and pay per click, but put in more money there as well. When breaking it out by lead source though, each lead is roughly (within $10-15 for all types) the same cost when we use better lists. For the non-motivated DMM list they usually come in about 2.5x more than web leads but that is because there is no motivation. Overall we usually run about $2,200 per closing on advertising spend across all methods. Billboards is something I would like to get back into as we 3x'ed our lead inflow with a limited campaign a few years ago during the 90 day run. I am curious if they would still be as effective.

All methods work. End of story. It is really what you are comfortable with and how much you want to spend.

1) Buying a list and cold calling: cheap but time intensive. Can be outsourced overseas. But in my area there is a lot of racism with older sellers and not being local or having and accent has almost killed many deals I had to save by coming in as the local yocal. You also have no idea of motivation usually.

2) SEO: You know you are getting a motivated seller because they sought you out. This can be pricey to maintain a high ranking on popular keywords and you never know when Google may change their algorithms. Easy to start getting into with sites like Lead Propeller or Carrot or Realeflow. But to be a star you need regular management and updates. 

3) Pay per click: Don’t sweat native SEO and pay for ad space at the top of native rankings. It seems (our experience) people don’t seem to care if it is an ad or native. Can be pricey but unlike DMM you know the person has some motivation.

4) Facebook: Can be cost effective and gives you tons of tools to target people specifically. We don’t do much here but I know wholesalers that only market this route. 

Side note: For all online intake you need a way to follow up QUICKLY. The chance of getting in touch with the person drops off ridiculously fast from when they fill out all your forms.

5) Direct Mail: Tried and true. Only as good as your copy and your list. Repetition works. We had someone get 52 letters from us once before calling (and selling). Average is 5-7. I know some people with good campaigns get 3-4% response rates (so 30-40 calls per letter). Ours is rather horrible at around 0.3%. So you can easily see the difference in targeting.

6) Bird dogs: Guys that get paid to tell you when they find homes that meet your criteria.

7) Networking: This is probably the all time king and covers so much. From going to your local REIA to telling your mailman you will give them a finders fee if they let you know about any vacant homes on their route and you buy it. The more people that know you buy homes the more opportunities just show up at no cost.

8) Driving for dollars: This one is great for finding those houses that obviously are ugly. Peeling paint? High grass? Shrubs not trimmed? Shingle missing? All have distress and lack of care. Now what you do with that house is the question. You can put a door hanger on their door or a flyer in their mailbox if you are non confrontational and then add them to a DMM campaign. Like to talk to people? Go knock on the door. Somewhere in the middle - skip trace the owner and hand off to a VA to cold call.

9) Awareness marketing: Billboards, TV, Radio - these can be great but you need to be careful because you can drive people to competition accidentally. How? Say you have a billboard that says “Sell Fast in San Antonio to Bob” - someone could just remember ““Sell Fast in San Antonio” and if you are not paying for pay per click or in the top 3 on SEO then you likely just sold the guys house to  a competitor.

@Nathan Gesner

Had my contractor look at it that is licensed to handle the sewer issue. Problem is this is rust belt territory. It is a $40-50k house on an alley on a 1/3 size lot. Damage is $60-80k for repairs. Either the neighbor is going to buy it or it will be turned over to the city for demo. Not worth a $450-500/mo rental to fix. I could talk to my insurance and see if they would accept a claim, but given the value/repair #, it might be considered a loss. That call will happen Wednesday. 

 Have you ever worked in corporate? 🤣

@Chris Seveney
For $400 in fines you could hire a mowing service for half the season! 

@Nathan Gesner
Not enough deposit for this $h!t! (literally) 

So I have a land contract in place (being cancelled due to terms violation) on a low-end cape cod. No big deal other than tenants like to not pay. It was a rental prior to the land contract. 

When it was a rental, the tenants had a history of flushing hygiene products and clogging the sewer. I had it thoroughly snaked by a pro who found multiple clogs and removed them. No problems in 3+ years since. 

Well evidently there was a backup. So instead of perhaps calling a plumber, land contract husband, who is a GC, decided he would tend to it. Now this might now have been an issue, except he went on vacation for 3 weeks leaving his dogs inside. So the neighbor called animal control. I gave permission to enter. Aside from the filth (they usually were organized but always had a stray soda can or Hi-C container laying around from the kids) they evidently fell off the wagon since last fall when I was last inside. Roaches and filth everywhere. But the kicker, husband decided to dig up the sewer?!?! 

So code enforcement was called (and me). So now the house is not inhabitable because there is no sewer. Lovely!