All Forum Posts by: Blair Halver

The traditional yellow letter copy, from Ron LeGrand, is:

Dear Mr. Seller,

My name is John. My wife is Sue. We'd like to buy your house at 123 Main St.

Please call me at 404-555-1234.

Thanks,

John

Your letter copy, in my opinion, sounds too much like a salesman. Make sure it's actually handwritten.

(Full disclosure, I run a couple direct mail companies for REI, including a Yellow Letter service in development.)

No prob! Thanks man.
Blair

Hi Jason,
My understanding of this situation is that the owner wants to sell you a stream of pre-determined payments. I can only assume that this is an actual, legally binding note, secured by the real estate. If it's anything other than that, the risk factor goes up, and along with it the difficulty in making money with it.

So when you want to buy a stream of payments, you need to determine the present value of those future payments. This can be done with a financial calculator, or an app on your iphone.

If the present value of the payments is say, $100k, then you could offer the seller less than $100k and you'd be getting a more advantageous return on your money than the 8% the installment payments represent.

So if you bought the note at $90k, your return might be 10%.

If you have some cash on hand you want to put somewhere to get it working for you, this could be a good opportunity (depending on numerous other risk factors).

If you don't have cash on hand, you could "flip" this contract to a larger note-buyer. So you'd contract to buy the note at $80k or whatever, and then flip it to a note-buyer for $90k and keep the spread there. Just like wholesaling the actual property.

Now, the problem with the "contract for deed" situation is that it is likely not an actual note secured by real estate, but rather simply a contract that says the occupant is paying $X/mo and at the end of the contract he receives the deed.

This type of contract would likely not interest a note-buyer because, obviously, it is not a note. But I guess it would just depend. It may be worth looking into.

So basically, the owner you're talking to owns the house, but he has an occupant who is in the process of purchasing it. I'm not sure there is a way to do anything with the property. To do so, you'd have to involve the occupant. What you'd be doing is trying to work a deal with the owner regarding the "paper", not the property.

Note-buying is a whole other world, similar and related to REI, but still different from the typical REI strategies.

@Dev Horn - thank you for bringing up this point here. It is often overlooked by investors seeking seller leads.

I heard Rob Swanson (http://reieducationproducts.com/) speak one time regarding his business model. He has 4 separate businesses - wholesaling, rehabbing, rental management, retailing - because he wants to be paid for each part of the investing process. (I'm going to try to remember the details as best I can here.)

His wholesaling business finds the deals and sells them to his rehabbing business.

His rehabbing business sells the finished houses to either the rental mgt business or the retailing business.

I thought it was pretty ingenious - create different companies who all sell to each other. Large corporations do this all the time.

I was most impressed with his talk that day, moreso than any other speaker's content. He seemed like the real deal.

BTW, I'm not affiliated with Rob at all. I think I purchased one of his info products one time, but that was about it.

Hi Beverly,
There are a few good direct mail service providers for real estate investors. It depends on the level of service you're looking for, though. Do you want a completely hands-off service? Or do you just need a printing company who will mail your pieces for you?

Also, what types of mail pieces are you looking to send? Postcards? Yellow Letters?

I'm sure this info will help the BP community make more appropriate recommendations.

I will refrain because I'm biased. :-)

I'm with Ned Carey. Most likely a waste of time. Sorry!

Hi Strat,
Definitely do what you say you're going to do. Or if you're not going to be able to do it, then follow up with them to let them know what's going on. Don't just leave them hanging. This is just part of being a responsible and professional adult. :-)

Why can't you give them an offer? Just because it's too low or you know that it will not work for them, does not mean you should not make an offer.

A wise investor once told me, the key to this business is making offers. Just make offers. Make offers. Make offers. You never know, they just might surprise you and take the offer.

My two cents.

We mail to absentee property owners who have owned the property at least 10 years (not 15), and have seen success with that. It can expand your target market a bit.

We never do a mass mail to a geographic area - it defeats the purpose of "direct marketing", which is to market directly to your intended prospect with laser focus.

I suppose there is value in a mass market, or "shotgun" approach to marketing, but you'd better have a big budget for it! :-)

Eddy Martinez , I commend you for wanting to invest your newfound sum instead of just spending it. Not many young people would be so wise with their money. Good job!

But PLEASE, whatever you do, get educated about money/finances/investing FIRST.

Be careful of who you are talking to when you say something like "I have $100k, what should I do with it?" There are too many people out there who may have good intentions, but will recommend you do something that is not in YOUR 100% best interest.

Only YOU can make decisions that are 100% in YOUR best interest. And because of this, it is imperative that you get educated on this stuff so that you can make your own decisions. Have all the advisors and mentors that you want, but in the end, YOU make the decision.

Without financial education, it would probably be safer for you to put your money in a managed asset like a mutual fund, municipal bond, or some other low-risk/low-yield investment until you get educated, especially in real estate.

If you haven't read it yet, I would recommend, and probably a lot of people on this forum would recommend Rich Dad Poor Dad by Robert Kiyosaki. It is a GREAT place to start.