“The money you make is a symbol of the value you create.” Idowu Koyenikan
Now that we had 4 properties rented and cash flowing, we were ready for our first direct mail campaign. Throughout your real estate education, you will come across many ways to find deals off market (i.e. NOT on the MLS). This can be anything from word of mouth (like the local meet up we found from another investor leading to deals #1 & #2), driving for dollars (literally getting in a car and driving around your preferred marking and noting addresses of properties you want to look up to contact and buy (there are even specific apps for this you can download)), pocket deals from agents and brokers (sellers are still using an agent so commission fees are paid, but the general public never hears about these deals (a reason why broker relationships are so important)), bandit signs (those are the signs you see hung on telephone poles at intersections saying “We Buy Houses!” w/a phone #), direct mail campaigns (my personal favorite to date and how we have gotten numerous deals) and many others.
We have gotten our best deals through direct mail. We use propfinderonline.com (though there are so many others (we’ve also used listsource.com)). We pay for access to anything you want to know about a property. You can filter results (our latest just 2 months ago was very specific to multifamily 5+ units, non-owner occupied (rented), owned 15+ years (mom & pop type owners who tend to not be running it as an actual business) in a personal name (meaning they didn’t place it in an LLC (limited liability company – big no-no, you want asset protection) and 80%-100% equity (meaning little to no mortgage so better chance of seller financing).
I’m starting to digress. We did a direct mail campaign and had an out of state owner contacted us about a distressed 4 unit building in Ashley, PA. We negotiated this down, only saw it from walking around the outside, and bought it for $21k. We got the keys and entered to find literal grass growing in the first apartment’s living room. Walls falling in, traces of prior squatters (at least no living people this time), mold, water damage, missing ceilings (see below BEFORE pics). Good news; it was in a good area; it was a HUGE building with room for 12 bedrooms and I could see potential. We hired a new contractor team (this guy had previously finished our primary home’s basement) and got to work on rehab for units #5-8.
Tomorrow's post: Pitfalls, lessons, AFTER pics from complete gut job rehab and current refinance info we are in the process of doing on this property (remember the 3rd "R" in BRRRR)! $$$
Lesson of the day: We have tested out multiple different type of direct mail campaigns and have found our best response rates when we make it personal and make it simple. I always handwrite the seller’s name and address (half the battle is getting the seller to open it and not just throw it in the trash to begin with). Don’t be demanding, don’t be cocky, but let them know you’re serious and can close.