All Forum Posts by: Aaron Norris

@Elliot Bonneville - I am going to send you a video of a few different ways to do that. I think the interesting trick here is to find the owner's name and home mailing address understanding that if you mail to a business location, you have to get through a gatekeeper. I know the real estate investor crew LOVES some entity work and there's a few different ways to do this without spending a fortune on skiptracing. 

I think many investors are going to be disappointed in foreclosures not being a strong strategy. I follow the preforeclosure stats and states just aren't allowing them to proceed. Most politicians are not interested in a mass wave of residential foreclosures. Expect more federal aid under the new administration.

When it comes to using any site like PropertyRadar, PropStream, or any service that helps you create marketing lists, if you don't have your niche down you will likely waste a lot of money. Example, if you take a zip code and you're just talking to owners with equity, it's very broad and very expensive. You can get that from your local title rep but chances are you'll blow your marketing dollar on one huge mailer and never have a budget for follow up. 

A better approach is starting smaller and getting far more granular. Find a niche! Then, really back into that niche with the data to connect to a highly defined target. Keep in mind, some of us are actively up against Wall Street companies like Opendoor investing a ton in direct mail and PPC. Other ibuyers like Zillow and Redfin already enjoy consumer traffic so their "buy now" option is less expensive from an acquisition standpoint. We investors have to get savvier moving forward as we compete with these new brands that are driving up costs. Direct mail they can't increase prices on! 

In my experience, people just don't know the different data sets available around people, property, and mortgages that can be layered. Some people call it "list stacking" when in actuality, it's just creating a great list from the start. Some examples of data sets you can layer:

Property:

• Property age - used to target older properties for heavier fixers
• Property types - SFR, MFR, 5+, all kinds of commercial
• Size - adding on to the existing structure to add value or accessory dwelling units 
• Location - highly desirable neighborhoods or locations of expertise around specific builds or neighborhood 
• Zoning
• Vacant properties
• Owner-occupied vs. nonowner occupied

People

• Age of owners
• Kids in home
• Sex of owner
• Income
• Net worth
• Interests

Mortgage

• Transfer dates
• Estimated equity
• Different transfer types
• Foreclosure activity (NODs, auction sale notices, etc)

Then, hopefully, you're taking out people who purchased recently since (probably a waste of marketing dollars), people in foreclosure (different strategy), sites that are listed as vacant. That will save you a few dollars. 

You know your style best. I know some investors that don't bother with websites, SEO, or even direct mail. They do nothing but direct calls. I know other investors who go hard on SEO and website lead generation. Others are direct mail marketing experts and do seven different styles of mailers. 

Bring you to the party. Find a niche you can be passionate about. Back into the data. That will be the fastest way to get success.  

@Erin O'Connor Smith, this is amazing. Do some homework on the number of projects you can fit on the site. I had an investor call with a similar project that decided to install three ADU units on an existing triplex project. But, he decided to build smaller units over new garages he built because the site was larger. He simultaneously created three more units and also three new parking garages going vertical. The units over the garages were smaller, and I believe the play was targeting someone that would maybe not have cars. Then again, he could charge separately for the garage and they could go with the units up top or the existing. If you've got an architect, definitely play. That is a nice-sized lot and you may have even more options than you realize.

Our city just our RHNA numbers adjusted. I sit on the housing task force to try to figure out a way to construct or create 13,000 here in my hometown. I don't think we'll even get close UNLESS we seriously consider ADUs. I pulled public records data on lots in the city that were over 10,000 square feet, then showed them how many were owned by investors. THEN, I showed them how many investors lived out of the county. Investors have the properties, the experience, access to financing, and know how to build. These would not be political like we see with bills like SB 50 where NIMBYS and out politicians continue to say they want affordable housing but not if it's in their backyard. 

I also really like ADUs post Covid because you've got he work-from-home angle. How many have magically seen co-workers relocate into the garage in the last month? Now that it's not hot outside, they just need some quiet to get things done. Working from home has som tax benefits. ADUs could be an office, income-producing unit on site, or a home for aging parents. Just don't be a cramlord. Design great products that people want to live in and don't screw up the values. 

@Eric McGilloway - have you explored modular? I was the emcee at an ADU event in San Diego where they had Senator Wieckowski out and it had some interesting vendors from out of the state in the modular and manufactured categories. I was just curious at that price point if you'd explored.

Investors should be watching SB 1120 in California. It would allow duplexes on SFR zoned lots and even allow for lot splits. Layering that on top of current guidelines around ADUs would be incredibly interesting and powerful for local investors who know what they're looking at. Legislators have learned that NIMBYs are some of the biggest culprits of smashing affordable housing projects and legislation built to facilitate density and adorable housing projects (See SB 50 that can't seem to pass). SB 1120 basically pushes right down passed local zoning and does away with the NIMBYs entirely. It's out of their hands and regulated by the state. Brutal for local control on city planning.

I will say, again, please don't be a cramlord. I think ADUs are such a cool opportunity but poor design could damage values and quality of life for tenants. I love a well designed ADU where the primary and ADU coexist in thoughtful ways. No one likes high turnover on tenants and no one wants lingering inventory if you do a terrible job on the design front.

Here's a story on SB1120 for reference: 
https://www.scpr.org/programs/airtalk/2020/08/26/65958/sb-1120-ca-bill-would-allow-for-duplexes-in-single/


 

@Jonathan Taylor - we've been funding ADUs as part of flips so I have some experience on this. Most ADUs are being held so comps continue to be a challenge. If there are enough duplexes close by, some will consider it as a comp. Most of the time in flips I've seen, the appraiser is creating an average cost per square foot which is not ideal since you're cramming the most expensive rooms into a small footprint. I think it will continue to get easier with more comparable sales but financing and appraisals continue to be a challenge. With Covid-19, I suspect lenders will only be more conservative. 

@Mike Franco - I hope you take a step back and really think about your lifestyle and how much stress you want in your life. In retirement, most people are looking for less stress and less risk. My idea of less stress is not a portfolio of rentals in Kern. Whatever you buy at this moment in time, be prepared to go long. California is hard to make cash flow unless you're looking in tertiary markets or strategies like vacation rentals which have a lot of political risks due to affordable housing. I have personally be upgrading to new properties on the east coast in strong markets. Easy to get financing on new homes, they cash flow out of the gate as long as you don't take on too much risk, they attract good tenants at higher rates, and I don't have issues with repairs for a while. If you go after fixer-uppers, keep in mind you'll have the outlay of repairs which is not just money, it's time. Because the market is hot, contractors have become an issue and prices for labor as well as materials are up. Just be careful. With your cash and credit, you certainly have options. One other suggestion, go to a local bank. PLEASE. If you select an area, speaking to a local bank, they are dedicated to an area and many investors are getting some sweet deals on lines of credit. Since you have cash, they will pay attention. 

Hi @Elber Funez, PropertyRadar is likely to be nationwide by the end of the year but right now it operates only in CA, WA, NV, OR, and AZ. When it does go national, it will track foreclosures but not in the details it does in the western states to start where all the phases and updates are tracked during the foreclosure process. 

Hi @Matthew T. - I have not. Especially right now, the market doesn't even make sense in areas we invest.