All Forum Posts by: John Hyatt

I think there are several factors to consider in answering your question. Is there a reason there are several pre foreclosures in your area? For example large corporation moving locations? Government changes that cause business or people to leave (I.e. Property Taxes, rental laws)? If there are no problems that you can see, just a result of market crash, then I don't see a problem. I would steal clear of war zones though, if you don't feel safe in the neighborhood I would stay away.

Hi Petra,

I think it depends on a few factors. What are you looking to do with the property that has the appliances? If you are looking to sell it sometimes people already have appliances so you may be wasting money. Usually people who rent don’t have those items, but if they do then again you could be wasting money. Let’s say you are looking to rent and the tenants don’t have the appliances, then again it will depend on the neighborhood. If it’s a nice neighborhood above median prices then maybe upgrade appliances, but if it’s a low income neighborhood I would wait until the appliances go bad and I wouldn’t get “new” appliances I would get them from Craigslist or discount center. I one time bought a complete set of appliances (fridge, washer/dryer, dish washer, microwave) from a maintenance man at a large apartment complex for $500. Most recently I got like new washer/dryer for $230 and Fridge with ice maker for $150 on craigslist and those both included delivery and install. All that being said it depends on the situation, but I personally wait and if anyone says anything then I would get it or if it breaks then get it. I also have a home warranty on all the houses and the tenant is responsible to call them and pay the first $60 to see if they can fix it first.

In regards to your question about roof, A/C, and Water Heater…same thing. Those are all covered in my home warranty and I pass that cost on to the renter.

Roof’s usually it depends on materials, but on average they last in AZ about 15-20 years

A/C’s in Arizona usually last 10-15 years

Water heater in AZ about 10 years

I know people who have had A/C’s break in 6 months and others who have had them last 30 plus years. So these are all just estimates.

Roofs and A/C’s are expensive to replace around $6k each is what I usually budget.

-John

Hi Josiah,

 I would need more detail because every state and city has different laws. For example, some cities have rent control etc. Also, that depends on market rents in the area. If you are $100 under everyone else then I would say yes raise it! Regardless, I think most people expect at least a 2-3% increase each year to account for inflation (Not enough to make someone move). I used to work for Equity Residential (Sam Zell’s company) and it was a 316 unit apartment complex and we would raise rents every year based on a software program. If the tenant said anything we would usually waive the rent increase to keep them loyal. Funny thing is if you raise rents and someone complains and you offer to keep theirs the same they will be more loyal then before and if they don’t say anything then follow through and raise rents. I remember I went to a management meeting and if they had a property at 98% occupancy they said that was too high and they needed to raise rents to get it down to 95% so it all depends on your business model. In short, I would say YES, raise rents. Again, though you should research your city/state restrictions before doing so.

-John

Hi Lekisha,

The seller can ask for whatever they want and so can you, that’s the cool thing about real estate. I don’t know all the details, but you could always counter and explain why they should use you and how you should be charging them. It is all a matter of perspective, I will never forget the day my mind was opened up to another level of thinking. I processed short sales for several agents in Arizona and one in particular was the top 1% of short sale agents he had nearly 30-50 short sales at any given time going on. Most agents would explain why the client should use them and try and sell them on why they should use them. This guy the top 1% agent instead charged the sellers $500 just to even take their listing!! A little off topic, but the point I am trying to make is you never know if you don’t ask. You are a professional wholesaler who gets deals done quick, they shouldn’t be charging you! You should be charging them or at least they should be thanking God that he sent someone like you to help them sell their property quickly!

My suggestion: it may be too late on this deal, but take a binder with testimonies and keep track of all your stats and deals and make it to where the seller is essentially begging you to work with them. You only have so much time and you can only take so many deals, make sure the client is someone you want to work with. I would explain to the seller what you can do for them, why they shouldn’t be charging you (you are offering to help them for free – you are marketing their property for free), and if they insist on charging you I personally would just walk away. Usually, if they are a problem up front they are a problem throughout and even after it closes.

-John

Hi Tyrone,

I believe what they are referring to is people who can make a living buying investments. Believe it or not there are people out there on the other end of the spectrum and they have billions of dollars that need to be placed, to them a 5% return on a very safe apartment complex is a great deal. To a real estate investor 5% is nothing, you wouldn’t tie up $1m or more to get a 5% or 6% return if that is all you had, but if you had $1b then there are only so many investments out there that you can make money on. Would you rather have $1b in the bank making less than 1% or several massive apartment complexes making 5% or 6%? To them it is a great deal, but to us real estate investors it’s a rip off. We are looking for the deal that provides 10-20% + where we can put sweat equity (negotiating, sorting through the 99 not so great deals, fixing up, managing, etc). Wise investors know that inflation is 2% a year on average and if they do nothing with their money it starts to decline. So they buy deals not only to make money, but also to beat inflation.

-John

Hi Rebecca,

Nice job! looks really nice! You will sell it :)!

-John

I am not doing it, but that sounds like a genius idea! Do you know how much she charges? Does she make her money as a one time service fee? Or is that the incentive to get them to stay on her land and pay daily/weekly rates?

Originally posted by @Bryan L.:

Try saying, "My partners and I are looking to buy some houses in this area/neighborhood.  Who do you know that might want to sell?"

 Thank you Bryan! I will try that next weekend and report back my success! 

Originally posted by @Steven J.:

You might have better luck checking the legals in the classifieds of your paper. I've been finding probate leads there but I also see foreclosures occasionally there as well.

You'll have to be very careful when you do get a foreclosure lead. I get some really huffy and puffy leads with probate because they want to know how I found their information, their address, and how I knew a family member passed away. I'm still working on the proper strategies there. 

I think @Bryan L. is right on with how you should approach a cold lead, maybe even your foreclosure leads. If you approach them all just inquiring about homes for sale they won't feel as threatened hopefully. Also, if you're going to start drilling questions make sure you ask to do that first. This allows them to feel in control of the situation but allows you to start your pitch/speech/whatever it may be. I'll follow this thread here as I want to know how your future door knockings go.

 Hi Steven, I tried searching online for classifieds. Are the probates something that is only published in the newspapers classifieds? Do I need to purchase the Sunday newspaper?

Great advice thank you! 

My goal is to get 50 units via Subject to and then sell them on a Rent to Own in Arizona to create a passive income of $5,000/month. This is just the beginning and then I will take that money and invest in Mobile Home Parks and so forth. What I am doing:

1) Door Knocking on FSBO, Pre-Foreclosures, and Rentals. I look for properties in my area on Zillow and then check the tax records to see if they are owner occupied. If so, then I Knock on their door.

Here are My results this week I went with a friend who worked for Merrill Lynch and built a large portfolio door knocking:

Knocked on 12 doors and only 3 people answered, the other 9 I left my note card and business card.

The houses that did answer here is what happened:

House #1: Woke the lady up and she said she wasn't interested.

House #2: House sitter answered the door and said the owners wouldn't be interested, but he will give them my card (not holding my breath lol).

House #3: Homeowner said they weren't interested, we asked three times (of course added info each time) and she was still not interested.

Things I learned this week:

1) Door knock later in the day like 4pm - 7pm when people are home.
2) Have better flyer to hand out and business card.
3) Always ask three times - never going to see them again anyways.

Next steps:

1) Create a flyer or Postcard that we can hand out
2) Create a more professional business card (currently have my ASU email)
3) Knock on moor doors
4) We are going to pick two neighborhoods and test a different marketing plan in each and whichever wins we take the winner and then a new idea and repeat.

Questions:

 1) A lot of the people that I have been door knocking don't seem like they are in pre-foreclosure. Is Zillow Pre-foreclosures accurate? or am I just not saying the right thing? I currently say "I want to buy your house" or "Do you want to sell your house?"

2) Any tips or advice?

Thank you in advance!

-John