All Forum Posts by: Andy More

Thanks for the replies so far, keep em coming!

Vikram, makes sense, look at the whole picture and make sure the return of the whole project justies all the risk.

Sam, your point makes sense also, seperate the risk of each aspect of the investment. Maybe if i'm very confident that I could get 4k in rental income while owning the property I should only pay an extra 3k in purchase price thereby providing me with added return on my added risk. I guess the extra amount I would be willing to pay for a property would be dependent on likelihood of my actually getting that extra income. Maybe if I was only moderately sure I would get the extra 4k I would only pay an extra 1-2k for the property to account for the extra risk.

Jon, let me clarify a couple things about what my plans are.
1. I will be paying cash for these properties so will not be using any high cost short term loans.
2. I am only looking at multifamily rental property which will likely have tenants in the property when I buy it and the end buyer will expect to put tenants in the property into the property after they buy if there are not quality tenants in the property.

My goal would be to sell quickly(few months) but I would be completely willing to sit on the property for years and rent if I had too.

With this being said does this change your opinion?

Thanks!

I've never purchased a property with the intention of flipping. Always with the plan of buy and hold. I know many flippers look for property that they can buy at 70% of ARV minus the cost of repairs. I assume this equation applies primarily to property that they dont plan on generating any income from while owning the property.

My question is, if I you plan on generating some rental income during the time that you own the property would that change how much you would be willing to pay for the property?

For example:
If the ARV of a property was 100k and repairs were 10k and there is no possibility of rental income I assume most people would be willing to pay 70k-10k=60k max purchase price.

What if you could realistically expect to generate 4k in rental income with the same scenario. Would you then be willing to pay 70k-10k(repairs) +4k(rental income)=64k?

Seems like if i'm buying based on the first equation and my competition is buying based on the second equation then I might be pricing myself out of many deals and getting beat by my competition.

Thanks Bryan. I'll definately let everyone know what kind of response I get.

Sharon, how do you send out your letters? Do you have a service that sends them for you? Do you prepare them yourself using the MailMerge functions in MS Office? Or some other way? Thanks

I am getting ready send out my 2nd ever mailer to property owners that own multifamily property in my town and who also have atleast 30% equity. I did a mailer about 4 years ago and it was a slam dunk. Sent out 80 letters, got 8 calls bought 1 property and made 68k. The contents of this letter is similar to the last but just wanted to get the opinion of others before sending it out. I feel its direct and to the point. Not doing any handwritten yellow letters. Just printing the envelopes and letters on my home printer like I did last time. Heres what I have so far for the letter. Anything I should add or delete???

Dear Mr. Smith,

My name is Andy XXXX and I am sending you this letter because I am interested in purchasing your rental property on 123 Main Street. I have obtained your contact information from the Boone County Assessors office. If your interested in selling this or other property you own I can guarantee a quick and simple closing.

I am not a Realtor and am purchasing rental property for my own personal investment..

Give me a call or email and I will likely make you an offer.

You can reach me on my cell phone at (XXX) XXX-XXXX. Leave a message if I'm unable to answer. Or, feel free to send me an email at [email protected]. Please put the phrase RENTAL PROPERTY in the subject line.

Thank You,

Andy More

Hi Sharon,

Do you have any other criteria when mailing to absentee owners? Do you know if these people have equity or not?

Getting ready to do my first mailer to absentee owners. Thanks

David, where did you get your list?

Thanks for the reply Jesse!

I've searched about 200 properties on my list and so far atleast 24% have atleast 30% equity. The majority of the 24% are paid off which to be honest suprised me.

Once I get a list of 50 property owners who own paid of multifamily property I plan on sending out a test mailer to see what type of response I get. I will adjust according if needed.

Anyone have any advice?

I'm getting ready to do my second mailer in attempt to find a DEAL on a rental.

I've got a list of property from the assessor that meets certain criteria. The list is currently 2,000 long and I plan on whittling that down to properties who I estimate to have atleast 30%+ equity. My next step is to head to the recorders office and get mortgage information on each of these properties.

My question is...

What percentage of rental property do you think has atleast 30% equity based on current market value. I know the answer to this question will vary based on alot of differnt factors(location in US etc....) but whats your best guess? I'm just curious how long my final mailing list might be. I'll be the first to guess and say that 10-20% of multiunits between 50-500k have atleast 30% equity.

Whats your guess???

Thanks for the replies so far!

Jon, what kind of database program could I use?

Also, have others marketed to a list with this same type of data? What kind of success did you have?

The first list I bought was 4 years ago. I got a list of all property owners that owned property that was 5+ units and less than 300k appraised value with the assessor. I sent out 80 letters, got 8 calls, bought the last one which was a 7 unit and made 68k after 1 year with no fixup. And this was in a decling market. I would consider the last one a slam dunk and hope to do it again.

This new list I think will be better as all these people should have equity as they have not taken out a mortgage in the last 12 years. I may increase it to 15 years. Also, on this list i'm not focusing my search on 5+ unit property. So this list will likely be much larger.

Thoughts?