Q&A Post

Q&AI’ve had a lot going on over the last few weeks trying to wrap up some rehabs, creating procedures for the Virtual Assistant that I just hired, and fine tuning my marketing campaigns.  I’ll be catching you all up to date over the next few weeks.

I’ve really enjoyed writing this blog but I also want to make sure that you enjoy reading it!  Please feel free to leave your comments or send me an email with feedback, questions, or if there is anything you would like me to specifically discuss in the blog.  I do my best to respond to every email because I’m happy to help people get started and/or take their business to the next level.

In the meantime, I wanted to share some of the questions I’ve received so far because I think they may benefit others as well.

Reader questions with my responses are below:

  • How many letters (“touches”) are you sending to your target list? 
    • I never stop mailing to my list unless I buy the house or they sell it to someone else.  You’ll learn that the more touches you send, the better the response rate and deal rate.
  • Did you set a goal for the amount of time to get your first deal, or were you going to market regardless of how long it would take?
    • I didn’t really learn about marketing to motivated sellers until after I did my first deal.  If you have the capital and desire to make it work, I would say to keep mailing.  Just make sure you have a good list – I would exclude corporations and make sure you’re only mailing to properties that are within your investment criteria (ie. sq.ft., house style, # of beds, # of baths, etc.).  Regardless of your capital, you should always continue to market your business.  Some methods are free and just take some time and legwork.  For example: driving for dollars, door knocking, networking, forming relationships with real estate agents to get pocket listings, etc.
  • I have built an Excel spreadsheet that calculates my MAO based on: ARV – rehab – acquisition cost – carrying cost – selling cost – profit.  However my offers are coming in very low.  I’m not sure if I’m being overly conservative or just need to make more offers.  Would you be willing to send me your spreadsheet? 
    • That’s quite common.  It’s very difficult to find good deals on the MLS because there are many investors and lots of newbies who are paying too much for properties.  Stick with your formula if you know it works.  If you subscribe to my blog, you’ll receive an email response with my rehab analysis.
  • On average, how many properties do you see before you make an offer?  And how many offers do you make before acquiring a property?  
    • Most of the properties that I look at now are either off market or are brought to me by a real estate agent that I’ve built a relationship with.  I don’t go out to see a property unless I know there is a very high chance that I will get the property under contract.  That being said, before I began my marketing I was throwing out offers to MLS properties like it was my job… Because I was a newbie and very conservative, my offers were very low and were hardly ever considered.  It was frustrating to say the least. 
  • People say there just aren’t that many deals out there.  I think the deals are out there it’s just more challenging to find them, so any information you can provide would be greatly appreciated. 
    • Keep marketing!!  There are still deals out there, you just need to find them.  Think about it this way, there will always be situations that people go through which will require them to sell their home quickly (ie, divorce, inherited property, bankruptcy, etc.) so there will never be a shortage of deals.  Also, if you find that many investors in your area are marketing to absentee owners, then market to other types (ie., tax lien, probate, etc).  Some other ideas are to cold cal and door knock.  I don’t know anyone who does this so 
  • What are your thoughts on the idea of flipping a house before investing in buy and holds? 
    • This is really your call.  I would recommend that even though you may want to flip a house first, you’ll want to make sure you understand the risks, general process and your market well.  You can mitigate a lot of the risk if you spend time researching upfront so please don’t over look this.  Another option is to partner with a reputable investor on a deal.  Yes, you won’t make as much doing it yourself but you also don’t have to worry about making costly mistakes.
  • I’m not sure if there is enough volume/activity in order to flip a house profitably in my area. Obviously holding costs are killer, and if you need to hold a flip for 4-6 months, then it may cause the math not to work. How would you analyze this type of situation? 
    • think rehabbing can work in any market but you may have to make some market specific adjustments.  For instance, if you are seeing low buying activity in your market, you’ll want to account for a longer hold time when you analyze the deal.  My typical hold time is about 4 months but I budget for a 6 month hold time.  In any market, just understand what buyers look for and make sure your property is always in better condition than the other houses for the price.
  • How do you analyze the areas that you do flip properties? Is there a certain criteria that you are looking for? 
    • I look at both qualitative and quantitative factors when analyzing my farm area.  Here is a list of some of the items I focus on:
      • Business growth
      • Projected population growth
      • Renters to owners ratio (I want it to be low)
      • Crime rates
      • Median household income (I project this to see what the typical mortgage would be so I know what types of properties I should look at)
      • Community development (It’s great to find a distressed area that’s planning something big which will drive population growth.  i.e. public transit addition, new business, etc)
      • School system
      • Median home sale price (I want my ARV to be within +/- 30% of this value as this is where most home buyers lie)
      • Days on market for sold homes, under agreement, and inventory levels (Ideal situation = low DOM, high UA, low Inventory)
      • Neighborhood
      • Popular home styles, number of beds and baths, and layout
    • You can find these items online by googling, [The Town] statistics and by talking to local real estate agents.  If you find an active agent, they can tell you what buyers are looking for and what areas are most desirable.  Again, this information is subjective and based on your own interpretation.  Some people go after specific niches while others generalize their search.


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