Couple of issues - Posted by B.L.Renfrow
Posted by B.L.Renfrow on November 27, 2004 at 22:19:08:
While I’m not in or near NYC, I’ve talked with enough investors from there, both experienced and new, and without exception, they all say NYC is unlike any other area in the country, in regard to creative real estate investing. While I don’t like to come across as a naysayer, I do believe Gary B. has summarized it nicely: “There is so much cash chasing so few deals here that creative approaches are basically regarded as jokes.”
NYC is, without a doubt, a whole different market than everywhere else. While you might find a preforeclosure deal, I’d sure hate to bet the farm.
Now, Frank Chin is a successful investor in the city who posts here from time to time. Look through the archives and read all his posts. However, if I’m not mistaken, Frank acquired most, if not all, his properties back in the 80s and 90s by buying conventionally at significant discounts, and has benefitted from years of appreciation.
I’m not going to say it’s impossible to do a creative deal in NYC, but I will say I’ve never heard of a new investor, without boatloads of cash, pulling one off in the last five or so years. I think the advice to look outside the city is sound.
Having said that, sending postcards to preforeclosures is a pretty low-yield activity. As you’ve discovered – and this is true everywhere – the vast majority of those folks are swimming in that river in Egypt, otherwise known as denial.
Are you mailing right after the lis pendens is filed? Or not until the notice of foreclosure sale appears? If you are mailing early, most of them will expect to win the lottery or have Ed McMahon show up at their door with one of those giant checks.
If you wait until the foreclosure sale is looming, many of them are 9-12 months in arrears by then, and reinstatement doesn’t make financial sense because of the amount of cash required.
The trick is to get them calling you, hopefully early in the process. If you read through the archives here, you’ll see plenty of discussion about how to do that. While mailing to preforeclosures may be a part of your strategy, it shouldn’t be the only part, or you’ll go nuts waiting for a call, even in areas outside of NYC.