Just can't get started! - Posted by beck4353

Posted by Rick (MD) on July 21, 2003 at 23:34:26:

try his site. http://www.all-foreclosure.com/

Just can’t get started! - Posted by beck4353

Posted by beck4353 on July 21, 2003 at 09:02:43:

I am having what I consider to be a common problem. I have done all kinds of research and I know my startegy for investing.

I am interested in rehabbing. I have driven the neighborhoods, read the papers, perused the websites all to no avail.

I just can’t seem to find a deal. Every property I look at looks too slim to make any real profit. Maybe I am scared to make lowball offers?

For example, I see a house in a decent neighborhood that has been forclosed on and has been vacant for 6 months. They are asking MAYBE 10k less than normal house sales around it. I know that I need to offer somewhere around 70% ARV - repairs etc. I just think that I will be laughed at for an offer like that.

Am I thinking wrong? should I just dive in and make some offers and hope one goes through?

Thanks for any advice!

Write an Offer - Posted by Dell-ohio

Posted by Dell-ohio on July 21, 2003 at 21:21:16:

Finding Deals! This is one of the most fun parts of this business to me. I do most of it sitting at the coffee shop. Sometimes I feel guilty trying to convince myself that what I am doing is work. More on my strategy later…

Some people become very good at advertising to have potentail sellers call them with deals. This works if you become good at it. We have never advertised and I can FIND more deals in short order than we can rehab.

You have to pick a strategy and become good at it. You can become GOOD at advertising and man the phones to narrow down the potential good deals or you can become GOOD at FINDING deals quickly and not spend any money on advertising. But you have to become good at whatever method you use…

I also propose that that the gurus who suggest that you have to write 100 offers to have one accepted cant be very good at finding deals. At one hundred offers per deal you are wasting an awful lot of time, you need to be much better at selecting distressed sellers/properties.

I have probably written 25 maybe 30 offers since Janurary of this year and purchased twelve rehab properties.

The ESSENTIAL component is that you have to write and present offers.

I have read and reread all of Robert Shemins books. The most important line in the books to me was this line … THE PERSON WHO WRITES THE MOST OFFERS MAKES THE MOST DEALS.

My method of FINDING more good deals then we can handle. Anytime I want a deal I can FIND one by sitting at a coffee shop, order a steaming mocha, spend an hour looking through a “HOMES” magazine. I pick out the six “best” properties , call my realtor for a listing sheet on each, I then do a drive by.

The ones I am still interested in I have my realtor pull sold comps for. I set up an appointment with the realtor to look at the properties. I drive by the comps before looking at the target properties, then we look at the properties. We go back to the coffee shop, buy the realtor a cappuccino and I write an offer on two of them.

I give the seller 48 hours to accept, if he does, good, if not I write an offer on the other ones. I have yet to not have an offer accepted with this method.

This is how we began, now the good deals pop up so fast I dont do this anymore, but if we get a dry spell, it is the method I will use again. It worked for me extremely well and I presonally prefer looking at properties this way to fielding calls from potential sellers.

We have purchased twelve properties since we started in January. Our strategy is to buy two rehabs a month, some we sell, the multi-unit cash cows we keep.

Today we had apprasials come back on four of them after rehab. The best one is a fifteen unit abandoned apartment complex with 12,500 sq feet of retail space, in a decent part of town. We purchased it for 180,000 owner carried the down payment. We are putting 90,000(borrowed money) into renovation and it appraised for 525,000. GOD THIS TOO MUCH FUN!!

If you need some help with the first one, let me know I will be glad to run the numbers for you, tell you what I would offer. Give you words of encouragement or a push in the seat of the pants.

I encourage you to write offer, make them low enough, but keep writing and presenting them it gets much easier after you have presented a few. Especially after you have had your first one accepted.

MY Viewpoints


Re: Just can’t get started! - Posted by Tom-FL

Posted by Tom-FL on July 21, 2003 at 18:32:13:

>> has been forclosed on and has been vacant for 6 months. They are asking MAYBE 10k less than normal house sales around it.

Well, banks are doing that these days. They finally figured out that “there’s a sucker born every minute”. Considering that, they are not going to list the place at 60% or 70%. They are going to list at full value and if some fool comes along and pays it, they take the money and run, laughing all the way. Offer ARV (After Repaired Value) X 70% - repairs. No one else is offering more unless they want to live in the place, and those, you can’t compete against anyway. If you stick with the fourmula, you are competing against other investors, so the winner is the one who thinks he can sell for the most and/or complete the repairs most economically. Just keep throwing them out there. Most will be rejected, but one will fall out once in a while. If you nail two a year, that pays more than most jobs and twice the US average wage. As Ron LeGrand says, “If you throw enough spaghetti at the wall, some of it is bound to stick”.

Re: Just can’t get started! - Posted by Sean

Posted by Sean on July 21, 2003 at 14:16:43:

You need to find distressed properties, not merely foreclosed, or vacant properties. Foreclosures and institutional properties are a great source for rehabbing… but they have to need rehabilitation.

6 months vacant on a foreclosure is nothing, in my state it can be that long between the bank foreclosure and the property listing. If its in perfect shape, or close to it, the bank isn’t going to discount much… or if they do its only going to be if they can’t seem to unload it. Remember banks have TIME… if they have a nice property in a nice neighborhood, what motivation is there to sell it quickly fo 60% of what its worth? They don’t have any mortgage payment to make… they can sit on it for a year and get full price if the property is in a nice neighborhood and doesn’t need a lot of work.

You want the deals? FIND THE UGLY Properties, and look in more modest nieghborhoods, upper lower to lower middle! These are the neighborhoods you are going to find the best deals on institutional properties. You just aren’t going to get “killer” deals on pretty properties in nice neighborhoods, at least not consistently… remember if you want to run a business you have to have a repeatable process, not a lucky one off.

You get KILLER deals on REALLY UGLY Properties in nice neighborhoods, and/or moderately ugly properties in lower middle and upper lower, and you can virtually be given ugly properties in ultra low end neighborhoods… though I would not go there as a rehabber myself.

Second, as for asking price… WHO CARES!! Asking price means NOTHING, particularly when you are talking about an institutional sale on a property needing lots of fix up. Do your analysis and then offer what you think you can afford… don’t worry about what the bank or seller is asking. I buy routinely properties for 50-60% of their asking prices, and I am rarely into a property after fix up for more than 50-60% of its value.

Now, I don’t get every property I bid on, but who cares? You want to acquire… I have found it to be very very easy… just evaluate anything you think remotely has potential and put in an offer that is financially acceptable to you. If you do that, and do it consistently you will acquire properties.

As to being laughed at, frankly who cares? You know whos going to do the most laughing? People who just don’t get it. Realtor’s in particular… even some that have been selling rehabs for years will tell you you can’t do this… I am telling you from experience you can. If you find a realtor who lists rehabs who always shoots down your offers, just avoid his listings… there is one like that in my town, he even told me I had to make my offers more realistic… he’s been selling institutional properties for years etc… I just don’t deal with his listings anymore, because I know my offers are going nowhere with him… SO WHAT?? My other offers go pleanty far, and they are the exact same ones he calls unrealistic… So my unrealistic offers make me 20-25k per property at least and I lock up about 1-2 per month part time… so I’ll just keep being unrealistic, at least in his eyes, thank you very much.

The most I have ever paid relative to asking price for a rehab was 80%, and that was one that was listed very modestly to begin with. The least I have ever paid was ~40% of asking price. In fact just last week I put one under agreement at 60% of asking price and it really wasn’t that ugly.

Here’s a quick, honest example:

Banks got a house worth 55-60k in perfect condition, and the house isn’t really that bad, in fact its pretty much move in, except for two major issues:

  1. unfortunately though the roof has sprung a leak, the carpet in the 2nd floor room below the leak is now saturated, and I mean saturated… so much so that it hasn’t rained in a week, and its still wet as can be and a steady stream of water is flowing freely from the fixtures in the room below… and the second is that there does seem to be evidence of possible termites… Now this house sold in 1999 for 62k… so the mortgage on this property is likely not more than 3 years old and is probably for around 55-60k

The Banks is asking 24k… My offer is 12k all cash, 30 day close. Bank countered me at 23… I said look, this is a house worth 50s tops in perfect shape, the roof is shot, and we live in a temperate rain forest, the roof needs replaced an effectively 1/3 of this house needs ripped down to joists and studs, dried out, any mold killed and completely rebuilt… and it appears there is termite activity in the thing… personally I feel I am being very generous to even be offering 12k… T

Now this bank can tell me to take a hike, but if they do, then every time it rains, and it rains here A LOT, the less and less this house will be worth, and the hard and harder it will be to sell. So the way I see it the bank has 2 realistic choices, one deal with me and get this dog off their books quickly… or hold out and end up selling it for likely not much more than I am asking 6-12 months down the road.

Now of course there is a 3rd option, they could get a rookie rehabber to pay too much, or a competitor could come along that has a lower requirement of profit and offer them more, . However, I am here today, I can get that dog out of their lives forever in 30 days or less… or they can take their chances.

Now I haven’t heard back from the bank since stating excatly the condition of the property (which more often than not these guys don’t even know) but I would say my experience thus far, is I have a 50/50 shot at getting this thing for my offer price.

Now that ones still in the works, my last acquisition was for 27.5k, on an asking price of 44! Bank negotiated down to 37 over a few rounds of offers, when I said, look its 27.5k and its off your books in 30 days, or its nothing… 24 hours later, they called back saying its yours for 27.5k.

Don’t worry about ASKING PRICE, only worry about the realistically financially feasible price you can pay, and never offer more than that, period.

Re: Just can’t get started! - Posted by Jim FL

Posted by Jim FL on July 21, 2003 at 13:02:08:

I see your problem already.
You said:
“I just can’t seem to find a deal. Every property I look at looks too slim to make any real profit. Maybe I am scared to make lowball offers?”

STOP! looking for deals.
MARKETING will make your phone ring, and when sellers call you, a deal is much easier to “find”.

See, looking for houses is something that many of us tried, and some still do.
I don’t like rejection myself, so I quit that.
Instead, get your message out there so people can see it and respond.
You are looking for rehab houses, good.
What do you do anyway? You buy houses, right?
How do people get ahold of you if/when they NEED to sell? Your phone number?

There is your marketing message:

Get this info in front of as many people as you can, consistently, and sellers will call.
Deals are made, created, and worked, not found.

JS below offered some GREAT reference material links, check that out, and proceed accordingly.


Good luck, and don’t be afraid to make low ball offers.
As long as the offer “works for you”, there is nothing to be ashamed of.
If your offer is not high enough, it won’t be accepted.
Just keep your offers in line with your business plan, and you’ll be fine.

Keep in mind, you NEED to make your money when you buy!

Good luck,
Jim FL

Re: Just can’t get started! - Posted by Robin(AZ)

Posted by Robin(AZ) on July 21, 2003 at 12:04:07:

Took me a long time to get started in Lonnie deals (mobile homes). Once I did, things just cruised right along.

I am now interested in flipping properties. I have picked up some courses and am trying to decide what area to concentrate my marketing efforts in. I have been advised that focusing in on an area (a farm) is a good step in getting over the “too overwhelmed to start” feeling, and that it is really critical to learning real property values when you are new.

As for the actual getting started, why dont you pick an area, get a list from your tax office of the homeowners in that area that get their tax bills sent out of town, and draft a letter to send to them asking if they would be interested in selling? Generate some motivated sellers before freaking out about making offers.

As for just making offers, I have heard you have to make 100 offers on average to get one yes–using the discounted formula you are using. Ask yourself, can you take 99 no’s?? That’s the real question. That IS this business so you have to be ok with that.

Just my two cents :slight_smile:


Re: Just can’t get started! - Posted by js-Indianapolis

Posted by js-Indianapolis on July 21, 2003 at 11:52:10:

You said, “They are asking MAYBE 10k less than normal”

Well, quit looking at those house then. Quit looking at anything with an asking price. Find the people that have not yet listed, but have a problem. Here’s a couple articles you might have missed.

"Why You Should Quit Looking for Properties"
by Joe Kaiser

33 Ways to Find Motivated Sellers
by Jim Kennedy, Houston, TX

Hope this helps get you looking in the right direction.

Re: Just can’t get started! - Posted by Eric_Tx

Posted by Eric_Tx on July 21, 2003 at 10:32:03:

Now first off, I am still a newbie myself. With that said its a numbers game the more you make offers on the more likely you will find a deal. YOU WILL GET ALOT OF NO’s. Just keep going. I might also point out that if your interested in rehabbing you might call the other investors in your area and see if they have any homes they are wanting to flip. Make sure that they work with your numbers… We got a really nice deal that a wholesaler brought to us.


Re: Just can’t get started! - Posted by GL - ON

Posted by GL - ON on July 21, 2003 at 09:35:27:

I’ll tell you what hurts. Making GOOD offers and having them rejected.

Make ridiculous offers and it won’t hurt when they get rejected. And, once in a while you will get one. Think of it as like buying lottery tickets only they are free.

If you get turned down you won’t get the place but if you don’t try you won’t get it either. What’s to lose?

Re: Write an Offer - Posted by Doug

Posted by Doug on July 22, 2003 at 20:14:24:

How do you finance your deals to be able to buy 2 rehabs a month? Do you work with investors that fund your deals? Do the sellers carry the notes? L/O’s and then reassign? I would be interested to know. Good work.

Re: Write an Offer - Posted by jorge

Posted by jorge on July 21, 2003 at 22:45:12:

How did you find your REALTOR that actually LIKES writing offers for you when they seem too low to most… All of the ones I have talked to have a problem with making an offer that sounds too low… or terms too good (for me of course)… I have not yet found a realtor that was not skeptical…SO now I am forced to write my own offers…and submit them myself.

Also, YOu say the owner carried the down payment… the bank had no problem with you not having any of your own money in the deal? Is your credit score that good?



Finding REO properties - Posted by Bryan-SactoCA

Posted by Bryan-SactoCA on July 21, 2003 at 21:17:55:

How does one go about finding bank owned foreclosed properties (REO’s)? Who do I ask for at the bank? And keep in mind they may be managing their loans from afar (my bank’s residential loan office is in Los Angeles) so how do you get past the low level guy to get to whoever handles foreclosures?

Nice Post Sean - very detailed - thanks - Posted by matt in mich

Posted by matt in mich on July 21, 2003 at 16:33:16:

Nice post Sean. Very detailed. Thanks.
I learned from this!

Matt in Mich

Re: Write an Offer - Posted by Sean

Posted by Sean on July 22, 2003 at 14:58:32:

You want to find a realtor with some background in Commercial real estate if you can. They will still be somewhat skeptical of what you are trying to do at first, but they will be familar with creative financing and business motivations etc.

I got lucky, took a lot of searching but found one like this, and if I am working on a property listed with a realtor, she gets 100% of my business. She’s more than worth it, and keeps me free to be looking at houses, not making follow up calls to listing agents etc.

Re: Finding REO properties - Posted by Jeffery (La)

Posted by Jeffery (La) on July 22, 2003 at 14:30:57:

Try www.realtytrac.com they offer 7 day trial membership or $20 per month and have lists nation wide

Re: Finding REO properties - Posted by Sean

Posted by Sean on July 22, 2003 at 11:41:37:

Foreclosures are generally listed for sale with realtors when they are being sold… just cruise around and make calls and if you are looking for em, it won’t take you long to find out which agents in your town are listing the REOs. I would say 90% of REOs in my town are listed with maybe 5-10 realtors.