Need some ideas - Posted by Michael(KCMO)

import · April 22, 2006, 6:47pm

Posted by Michael(KCMO) on April 22, 2006 at 20:23:12:

Todd,

First, let me say it was good “talking” w/ you in the chatroom the other night.

You’ve been butting you’re head up against this problem of higher prices and not many motivated sellers for quite a while, haven’t you? I remember you posting about it back when you first started. I still don’t have any new suggestions on that other than the “listing” idea. Perhaps I’m like the carpenter who only has a hammer, so sees only nails but I just think this model overcomes so many risks.

If I understood your post above correctly you’re saying you don’t want to list other’s homes b/c that keeps you from committing to a purchase? Here’s something to keep in mind: When the seller won’t come down far enough to get into your “strike zone,” go for the listing. This keeps your foot in the door. For instance, you’re looking at a home you don’t want to have more than $4,000 in if you were to buy it (in real life we’d have to figure in holding costs but to keep things simple let’s just ignore that for now). So you don’t want more than $4K in it but they won’t come off $5,500, $6,000, or whatever. So if they want $5,500 for it you just have to find a buyer w/ $1,500-2,000 downpayment. Subtract that from the purchase price and you only have to come out of pocket about $4,000 - and you really DON’T have holding costs!

And here’s the cool thing, if you CAN’T find a buyer w/ that much down even though you’ve made a good faith effort to help the seller find a buyer, at some point the seller is going to get more motivated and drop the price. When that happens who do you think they are going to come to? You.

You may worry about the buyer & seller getting together and undercutting you. Remember, though, the buyer barely has enough down payment. They don’t have enough to pay cash for it like you are. That only happens when you get a killer deal lined up where you’re buying it for the same (or less) than you’re getting as a downpayment.

I’m beginning to ramble. I guess my point is that you might reconsider the idea. If you’d like to call sometime I’m as interested in you in tweaking ideas.

Regards,
Michael(KCMO)
816-665-5408

import · April 22, 2006, 6:47pm

Need some ideas - Posted by Michael(KCMO)

Posted by Michael(KCMO) on April 22, 2006 at 18:47:03:

Hi,

I need some ideas for a pamphlet I’m trying to create and my brain is stalling out on me. I’m hoping for some input from all the brighter minds that hang out on this forum. First, let me give you a general overview of what I want to accomplish, then I’ll tell you the specific ideas I’m looking for.

What I’m wanting to do is develop a business model based primarily on “listing” seller’s homes - and to be able to do so in a large enough and consistent enough volume to be able to quit my job SOON. A general overview of the way it will work is that I meet/talk with sellers, come to a general agreement on price and that I will buy it from them when I find a buyer for it. To that end I advertise, market & show the home. When a buyer is found I get their deposit, pay the pre-agreed cash to seller, and finance it to my buyer w/ a decent spread. Simple enough. I’ve done it several times and know for a fact that a lot of you have too. It’s a great model.

What I’m wanting to do is “systemize” it - make it so it’s not such a hit-n-miss, luck-of-the-draw scenario. Part of the “program” I have in mind is a pamphlet I can leave with a seller who I’m not able to come to an agreement with during our initial meeting. Something along the lines of “10 Tips for Selling Your Mobile Home.”

I see this as something I can leave in the seller’s hands and come across as helpful rather than just trying to weasel them down to a low-ball number (in their minds). It gives me a warm lead to follow-up on later as their situation changes. It also keeps ME in THEIR minds as an “if-all-else-fails” way out. After all, we want our sellers to “call us last” - AFTER they’ve become motivated. I think this pamphlet is one way to do that.

The part I need help with is the “10 ways . . . .” Ha! Imagine that, I come up w/ a snappy title but can’t come up w/ the 10 tips to put under it! Ok, ok . . I’ve come up w/ a couple.

Advertise - run ads, tell your neighbors, send out fliers, tell the PM, etc.
Network with some banks to find available financing for their buyer. (I don’t see most sellers as willing to go to that much trouble. If they do, great. I now have another resource for MY buyers on other homes to CASH ME OUT! Also, under this idea I can elaborate how hard it is to find bank financing for older homes in parks . . blah, blah . . you guys know the speil. By including this in the flier it is a non-confrontational way to re-align some of their expectations with reality.)
Offer owner-financing (I’m not afraid to tell them this b/c most aren’t going to want to do that anyway. They just want cash. If they DO finance it, great. It just gives me a lead on a note to buy later!)

Ok, that’s where my brain is getting stuck tonight. I’m sure I’ll come up w/ more, but I just had this whole idea 10 minutes ago while I was in the shower and I know you guys will have some great input. I’m looking forward to it.

Regards,
Michael(KCMO)
816-665-5408

P.S.
Those of you who are already operating under a business model like this - SPEAK UP! I’d really appreciate your input.

import · April 23, 2006, 5:09pm

Re: Need some ideas - Posted by Lin (NC)

Posted by Lin (NC) on April 23, 2006 at 17:09:17:

Just a quick response. My brain is still working on it, but break down your advertising into categories -

put a “for sale” sign in the yard
run ads in the paper
talk to people - neighbors, PM, friends
put fliers up (grocery store, laundromat…)

The point here is to offer offer solid but not necessarily unique advice, and the reality is that most of them won’t do those simple and tedious things that will help their home sell - Karl Kleiner’s infamous point.

Here’s another thought, as long as you’re suggesting they create a note. A fellow I met at Tony and Scott’s boot camp was doing the paperwork for notes for a fee of $250. Certainly that would give you a jump on the purchase of the note down the road, too. Obviously there’s some DD involved if you choose to offer this service, but it seemed reasonable to me when I heard it.

HTH,
Lin

import · April 22, 2006, 8:46pm

Re: Need some ideas - Posted by Steve-WA

Posted by Steve-WA on April 22, 2006 at 20:46:55:

1a) Run your ad in the local free ad paper (pennysaver, little nickel, et al). Often, the newspaper is more expensive, and people read the newspaper for dozens of reasons: sports, local news, comics, maybe some read the ads. The only people that read the free ad paper are people looking for ads - we believe this is a broader reach to a narrower market.

1b) if still for sale after 2 weeks of advertising, change your ad copy. People cruising the ad listings get used to seeing the same one, and in their mind, there is a reason it isnt selling - - - so they dont even call. Freshen the ad.

Spruce it up. Sometimes the easiest (and cheapest!)things to do are the most powerful marketing tools: GET RID OF outside clutter, throw some bark and plants in the beds, or make bark and flower beds in front of the trailer.
Pressure wash that thing!
Throw away the inside clutter - clean your closets, dust, make those donations to the thrift store . . .

from the top of my head, these are some of the things that I tell sellers to help them sell - and as an added benefit (4, 5, &6), its less for me to deal with if I end up with the place

import · April 22, 2006, 7:57pm

Re: Need some ideas - Posted by Todd (AZ)

Posted by Todd (AZ) on April 22, 2006 at 19:57:05:

Hi Michael,

I’ve had these same thoughts before, especially in the beginning when I was hesitant about buying a home and not being able to sell it and just wanted to show other’s homes. In fact, early on I came up with nice signs that read “Need a loan for this home? (xxx) xxx-xxxx We buy, sell, and finance mobile homes”. My thinking was that I was already at the homes, talking to the owner, and if I wouldn’t make the move to buy the home, I didn’t want to walk away without at least having one of my signs put up with my number on it for the financing (I put them up, with permission, before I left. They all let me). All I can say is that in MY market (Hispanic), its very difficult to arrange both buyers and sellers to show up for appointments at the correct times. I quickly found that I need to just bite the bullet and BUY the home and get busy selling it. It was just too frustrating trying to get everyone together and then hope they don’t talk to each other after I’m gone so I don’t do those signs anymore. Now, another idea I have toyed with was to have a monthly ad running constantly, one of those vertically long, thin ads with “WE FINANCE” at the top. Then list the homes of those folks I’ve spoken with prior, maybe even with a monthly payment next to each home. Then, just send em all out there. The buyers and sellers get together at their leisure. If buyers and sellers get together without me and make a deal, so be it. If they need financing, they will call me. I don’t have to show any of these homes. If only 1 works as financing, it is worth the price of the ad and then some. I have not done this though because, again, it kinda holds me back from BUYING and COMMITING to a purchase. I haven’t ruled this idea out though yet. P.S: My personal problem here is that I’ve kinda locked on to the “2,000-$3,000” purchase price and it just aint happening very frequently. I’ve since, in my mind, CONSIDERED going as high as $5,000 if I’m to work more deals. I’ve run the numbers and don’t see how its worth doing any Lonnie deals here at a price higher than $5,000. Even at that, to get a minimum 80% yield, it would have to sell at $14,900 which is the most these will sell for. Any comments from anyone on any of this? Good, bad, or indifferent, I’m open to suggestions at anytime. Todd (AZ)