All Forum Posts by: Zachary A.

Hi Pavan, determining value is exactly my problem. I'm not sure how to do this for a mobile home in a neighborhood of stick homes, on an owned lot. I'm not sure how to comp it.

Hi! I'm talking to a motivated seller about a mobile home on an owned lot. It has an a-frame shingled roof, and is surrounded by traditional site-built homes. I'm pretty confident valuing purchases for standard flips, but I'm not sure how to value a home like this. How do I adjust compared to site-built comps? I could really use some help, especially from any local Sacramento area investors who might be interested in a deal like this!

Thanks @James Kojo! Many of the areas I look at are on the outskirts of Sacramento (that house I mentioned as an example is in Placerville), but I think those areas usually have good chances for appreciation since the city is always growing outwards.

@Derek Daun, that house I mentioned is in Placerville. I'm not sure yet about the condition and required repairs, I should be going out to see it this weekend. It's possible the repairs will be less, and market rent may be more ($1300 according to Zillow) than I quoted. PM me if you think it's something you would be interested in. 

@Derek Daun it sounds like you are exactly the sort of buyer I'd like to add to my list. I run into a lot of these "tweeter" properties, and usually I just pass I them. What kind of rent ratio have you been able to find on the MLS?

@Thomas S. yes, I have to agree about the suckers. One of the reason for my question is that I'm hoping to understand how the professional landlords in the area make buying decisions. I know there are a lot of accidental landlords (I'm often talking to them because they are in trouble and trying to sell) but on the selling end of my own business, I don't no think I can rely on these sorts of landlords as buyers. 

@Stephen Riggs thanks for your insights! Are you currently looking for nicer rentals to purchase? 

Hi! I'm a newish wholesaler (I've completed a couple deals) in the Sacramento area, and I frequently run across houses that are too nice (and expensive) for the typical flipper on my buyers list. I'd like to figure out how to sell wholesale leads like this to landlords, but I don't understand how to analyze rental property in high price markets. 

The thing is, I've read the Bigger Pockets Book on Rental Property Investing, and listened to enough podcast to know that the general wisdom around here is that you don't invest in properties that don't cash-flow. Most of the houses you can buy around here, even at a discount, don't cash flow if you include all of the oft-forgotten expenses such as cap-x, property management, and maintenance. So, when I try to analyze based on cash flow, every property looks bad, but I know there are investors out here, even professionals, that own SFR rentals.

Here's an example deal. I'm talking to someone right now who wants to sell a property for 168k, and it probably needs 20k in work, so let's call acquisition about 188k. Market rent is $1200. ARV is only about 210k, so the margins aren't great enough to flip it. With 20% down, PMI and taxes would be around $870/mo, so setting aside $100 for maintenance, $100 for cap-x, $100 for property management and 10% for vacancies, we're pretty close to breaking even, but not really positive cashflow.

So my question, especially directed at professional landlords in high price markets, is this: what do you base your purchase decisions on? If not cash flow, maybe cap rate? Who's buying rental property that doesn't appear to cashflow? And how do I find these people? I'd also be interested in talking to any local landlords who are actively looking for more properties.

Hi @Spencer Scott! I love that you have a solid plan to get started. I sent my own mail for a while as well. Don't let it burn you out though...it's a lot of work. It will take many hours to stuff that many envelopes, and in my market, I would only expect about 7-8 calls and no deals from the effort (I expect to get a deal out of maybe 20 leads). This can be very disheartening when you have spent so much time. For almost the exact same price, you could send the same number of professional letters through yellowletterHQ.com for $0.55 each. You are already going to spend $0.49 for postage, probably $0.01 for a sheet of paper, and a few more cents for the envelope...so you really aren't saving money. I would let a mailing hosue do it all for you as soon as possible so you can focus on the important stuff.

If you are doing everything else right, your budget is very likely to produce at least one deal. And the good news is, you will know it is working even before you actually have a deal. If your phone is ringing, and you are talking to people who actually have a house to sell, then it's really only a matter of time before you get one, as long as you aren't throwing your leads away by failing to follow up or giving up too soon. Early on, don't try to filter out unmotivated leads, make all the appointments you can, and if nothing else you will get much needed practice talking to sellers. 

As for the list, in addition to @Claire Trammell's filters, I would filter out houses less than 20 years old, since they are less likely to be in distress. 

Also, @Claire Trammell, I'm curious why you filter out properties held in a trust. 

I'm a beginner, and started with wholesaling in February. I found my first deal in April, and closed it in July (it was delayed due to title issues) for $20,000. I found and closed my second deal in July as well. As for money, I had probably spent around $1500 by the time I found my first deal, if you don't include the $3500 I spent on coaching. I wouldn't have accomplished what I did without coaching, but that's just me and my personality. I really liked the confidence boost from following a small group of people I knew and trusted (the coaches and those active in the program's Facebook page), and I liked the focus, organization, and consistency of the educational materials.

Sooo, yes, you can do it. But it's going to be harder than you think it will be, and you'll have to step out of your comfort zone early and often. 

If you don't have much money to spend, I would start out by working for another wholesaler. Offer to answer the phones and/or go to sales calls for them. If you offered to do this for me, I would give you access to all the training materials I used, take you along on several appointments, and then I'd offer you 10% of the wholesale fees from any deals you close on your own once I trusted you to go out by yourself. This is an outside sales rep or aquisitions manager position, and would be a good way to get started. 

I don't think it's available in Texas yet, but Property Radar is amazing where it is available, and should be going nation-wide within a year. Keep an eye out for them. 

Congrats on your first deal! Just getting it closed is an accomplishment, and sometimes you just want to make sure you  fullfill your commitment to the seller even if you aren't going to make any money. 

Hi Nick,

The others are right, this repsonse sounds fine, even pretty good. For comparison, here are my numbers from postcards sent last month to targeted and filtered absentee owners in the Sacramento market: 

Postcards sent: 3713

Total calls: 23

Leads (defined as anyone with a house they want to sell): 20

Lead rate: 0.54%

Cost/lead: $72.40

Now, most of those leads aren't much good. Most of them have no motivation, but several do, and 1 or 2 of them have descent potential to turn into a deal.

So your response rate is pretty good, but I'm going to challenge you a little bit when you say that none of the 40 callers were motivated. Are you certain they weren't motivated, or is it possible that you missed some of the signs? This is really critical, because you could pass up most motivated sellers if you take them at their word. 

How quickly you discount a lead as unmotivated can be a huge factor in your success. It would be entirely possible to miss the subtle signs of motivation and never do a deal, if you are expecting it to be obvious. It's possible to get 40 calls without a single motivated seller, but that seems a little unusual to me. 

In my admitedly limited experience (I've done 2 wholesale deals), motivation isn't always obvious when you first hear it. Even motivated sellers won't usually sound extremely eager, since they are smart enough to know they should hold back. You kind of have to infer, by asking the right questions, that they have a reason to sell. Any reason is a good sign of motivation. I guess what I'm saying is that you might need to move forward on some of these leads, and press for an appointment (and chance to build more rapport) after getting even the faintest whiff of motivation. For example, even a motivated seller is likely to tell you they "aren't in a hurry", "don't really need to sell", or "only want to know what you might offer", etc, but if they also tell you "it needs a lot of work", that's an indicator to me that I want to get out there and see the property, and we have a good chance of doing the deal. 

Send me a PM and I will send you a recording of my first conversation with a caller I eventually did a deal with. He doesn't sound that motivated, but the signs are there. It would have been very easy to decide he "wasn't motivated", but I went ahead and met him, and he became my second wholesale deal.