Pre-Foreclosures deals------- Do they work? - Posted by Ed(NY)

Real Estate Investing
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Posted by randyOH on November 28, 2004 at 19:00:03:

Someone else could probably answer this better than me, but I will make a few points.

  1. I think you do pretty much what you would do where you live. You have to get familiar with the market.

  2. Maybe start with the local newspaper. In fact, I would just subscribe to the paper and read it daily.

  3. Take a look at the listings on realtor.com.

  4. Spend some time there. I would pick an area where I would not mind spending some time.

  5. Go to open houses. Find a good realtor to work with. You will probably want to target certain neighborhoods. A good realtor can give you a lot of information about neighborhoods.

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Pre-Foreclosures deals------- Do they work? - Posted by Ed(NY)

Posted by Ed(NY) on November 27, 2004 at 11:04:20:

I have read a lot on real estate investing. about 8months ago I began sending post cards to “about to be Foreclosed” property owners. I use to mail about 125 post cards every week to this group whos properties were going to be foreclosed with in the month. I did this for about four months and got no call, not even an inquiry. I did quit that and began to send my mailing to pre-foreclosures and I am doing this for the last foutr months. I have founf that most people don’t want to sell their property and those who did show some interest selling the propert, thewy want full market price.

What I am doing wrong. I have read in RE books and courses that these people are in financial trouble and you can help them and they will be very happy to hear from you. This group would appreciate doing business with you because you have the solution of their problem.

Could someone here through some light on it, please. I am in NYC. property values have gone through the roof over here.

Thanks
ED(NY)

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Re: Pre-Foreclosures deals------- Do they work? - Posted by Darrell Bullock

Posted by Darrell Bullock on April 06, 2006 at 22:28:44:

Hello,
I am an investor interested in pre-foreclosures. I formulated a news letter to send to people in pre-foreclosure but I havent gotten a response back yet. I’m starting to think that maybe I’m not doing so well because my letter is getting mixed up with a bunch of other letters from other investors who are trying to work the pre-foreclosure lead. I need to find another way to get to the potential sellers before they get to the pre-foreclosure faze. You’re advice would be greatly appreciated.

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Re: Pre-Foreclosures deals------- Do they work? - Posted by Ed(NY)

Posted by Ed(NY) on November 29, 2004 at 12:56:22:

aA fellow investir picked up a single family 3/ 1 1/2 house in brooklyn, NY in the forclousure auction in january,2004. She paid 205k plus 17k in other costs. Homeowner was living in the property at the time of sale and was not willing to move out. This invester evicted him out through a court action but it took approximately six months for the eviction process in NYC. When the homeowner finally moved out, he trashed the property.

After gaining control of the property she spent 35k to fix it up. It took three month to renovate the property and she was paying mortgage duing all this time. Upon renovation, she put it up for sale and sold it for 330k.

These are umbers

Purchase price: 205K
Other Closing costs: 17K
Mortgage: 2500 x 9 = 22500
Sale price: 330K.

IS it a good deal for the effort?

Ed(NY)

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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.

Brian (NY)

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Get face-to-face - Posted by Mark (AK)

Posted by Mark (AK) on November 27, 2004 at 14:53:45:

My experience has been that very few people will respond to a card or letter when they’re in a pre-foreclosure situation. They’re scared, they’re frustrated, they’re angry, and they’re being inundated with direct mail.

I send out a brief handwritten note as soon as their NOD is filed (we use trust deeds in Alaska), simply introducing myself and indicating that I’ll stop by in the next few days to see if there’s a way I can help. When I go to the house, I give them helpful information about the process & timeline, and I ask them if they have ordered a reinstatement quote yet (tells them the total amount that they owe). If they haven’t, I get them on the phone to order it while I’m there. Once we’ve done that, we just sit and chat for a bit to find out what they want to do. Normally, they talk, I listen. Afterwards, I follow up about every 2nd day by phone.

I get doors slammed in my face, screamed at, threatened, lied to, and everything else. I also get to meet a lot of nice people that I’m able to help.

You need pretty thick skin in this business, and you have to keep focused on the goal. Don’t get discouraged because deals don’t seem to be coming your way. Go out and find them, and adjust your methods until you find a good fit. Good luck in your investing!

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Re: Pre-Foreclosures deals------- Do they work? - Posted by Jason L.

Posted by Jason L. on November 27, 2004 at 14:18:31:

I know somewhere in NYC there’s got to be motivated sellers. That’s your target. Find the motivated sellers, and you’ll find your deals. The guy in that last reply don’t know what he’s talking about.

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Re: Pre-Foreclosures deals------- Do they work? - Posted by Richard

Posted by Richard on November 27, 2004 at 14:07:51:

Hey

I’ve done the same here in Central California - I have farmed an area of over 2000 homes using the same method as you and had probably one reply.

Apart from being pretty soul destroying, its expensive too. I don’t do that anymore. Now I just talk to everyone and give them a card. I close on one property onext week and I am talking to someone else re an option.

Hope this helps

R

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Re: Pre-Foreclosures deals------- Do they work? - Posted by Jason L.

Posted by Jason L. on November 27, 2004 at 14:06:48:

Forget what the last reply was. CRE works in ANY market. I used to do what you’re doing now. You have to send at least 1000 post cards to get a small fraction of positive replys, and it’s very time consuming. I gave that up, thank god. Now I just run ads in my local paper, and I have a web site. People in pre-foreclosure status call me. Now, I spend time making deals instead of sending post cards.

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Re: Pre-Foreclosures deals------- Do they work? - Posted by GaryB

Posted by GaryB on November 27, 2004 at 12:41:24:

Your problem is that you are doing this in NYC. As someone said somwhere. There are no low-hanging fruits in NYC. They have all been picked, or the trees have wisened up and dont grow low-hanging fruit anymore, or rarely do. To pick fruit in NYC, you have to climb to the highest point of the tree, and that aint easy. And when you fall, you break something.

What I am saying is creative REI (in NYC) only works with a disproportionate amount of effort and resources expended. So it may not be worth it. You may get lucky here and there, but this aint no place for CRE!. Perhaps you should expend your energy in another market.

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Re: Pre-Foreclosures deals------- Do they work? - Posted by Steve (CA)

Posted by Steve (CA) on December 27, 2004 at 11:42:51:

I am about to do a forclosure or say im looking in to it and wondering how it really works. Can somebody please explain it to me barney style. Thanks!

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Re: Get face-to-face - Posted by Jeff S

Posted by Jeff S on November 27, 2004 at 21:07:01:

Im a bit concerend due to the fact, that I’m not a very good communicator, and I am worried that I would have trouble talking to these sellers. I am a very good listener, but I dont do well in marketing myself

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Re: Pre-Foreclosures deals------- Do they work? - Posted by GaryB

Posted by GaryB on November 27, 2004 at 15:10:43:

Jason L:

Do you live in NYC?

Or do you simply assume that what they tell you in Carlton Sheets seminars and what you read from your $5K courses work in every market? Jason L, you will find that the universal truths, that are told to you in your seminars and courses are not always the truth in every market at every time and in every place. They may have their motivational value, but reality, my friend, is a different animal. The reality of NYC RE market (as it is today) is not the same as the reality in Montgomery Alabama (as an example).

I know that at this juncture you will scream “There are motivated sellers in every market!” That, my friend is true, but the question is

  1. What percentage of the sellers in NYC are motivated, as compared to the percentage of motivated sellers in Montgomery Alabama (as an example).

  2. What is the investor to motivated seller ratio in NYC as opposed to Montgomery? WHat is the competition?

  3. There is so much cash chasing so few deals here that creative approaches are basically regarded as jokes.

I have done what he is trying to do many times over, and my conclusion is its a waste of my precious time. That was after I discovered another market 3 hours away. With that market I do 100 mailings and people are throwing their houses at me.It did not take long for me to figure out where it is best for me to spend my time and resources.

Jason L. I live here in NYC. I know what I am talking about. That motivational crap about CRE works every where is a “fallacious truth”. It is “half-truth”. It is true, but it could also be false at the same time. Yes you may finally get one or two houses in under contract (in NYC) in a whole year, that is after spending the whole year and all your resources. But if you moved 2 or 3 or 4 hours away you can get 5 or more deals a month, including cashflow and modest appreciation. So what do you think a wise man would do? Its your time and your resources. Your choice. You can take my advise and implement it rightaway, and get paid as I am, or you can keep hustling in NYC. So long as the market is as it is in NYC, you will be running around in circles.

If the market changes (as it will eventually), that will be a different story. I, for one, will be back here in NYC sorting through motivated sellers and picking up properties before they go up again (as they surely will). It happened in the late 80’s, and with the way things are going now in NYC, its going to happen again. You can hear the rumbling of the storm coming. A lot of folks are going to take a bath. And I’ll be there to pick up their properties for nothing. But until then, think 2,3, 4,hours away. You will find as many motivated sellers as you want. And you can be as creative as you want. And you will get paid.

Good luck!

GaryB

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Re: Pre-Foreclosures deals------- Do they work? - Posted by Jeff S

Posted by Jeff S on November 27, 2004 at 19:52:26:

Wish I knew where to start

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Re: Pre-Foreclosures deals------- Do they work? - Posted by Tom-FL

Posted by Tom-FL on November 27, 2004 at 17:39:58:

Where do you live (deal)?

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Re: Pre-Foreclosures deals------- Do they work? - Posted by Barbara (NY)

Posted by Barbara (NY) on November 28, 2004 at 15:49:06:

I’m not interested in pre-forclosures but looking to do L/O’s and maybe get a few rentals to hold onto. Have had some sucess in Brooklyn and looking there and in certain parts of Queens.
I’m curious about where you’re looking that’s 3 hours from the city, if you’d be willing to share that information.
Thanks,
Barbara

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Re: Pre-Foreclosures deals------- Do they work? - Posted by Jeff S

Posted by Jeff S on November 27, 2004 at 19:50:47:

I live in Norther New Jersey, I am wondering how do you find these areas? Being 3-4 hours away how do you know if they are good area.

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Re: Pre-Foreclosures deals------- Do they work? - Posted by Chyna

Posted by Chyna on November 28, 2004 at 05:30:58:

I’ve heard that there’s a good REI club in Jersey…I think it may be in the Newark area. I’m in Westchester which makes it really too far for me but a few people have told me that it’s a big club which sponsors interesting workshops. Might be a good place to start…
Chyna

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Two possibilites for you… - Posted by randyOH

Posted by randyOH on November 27, 2004 at 21:53:47:

Two of the most undervalued markets in the country are in NY state according to SMART MONEY magazine:

  1. Syracuse is undervalued by 13%. Median price = $126,800.

  2. Rochester is undervalued by 16%. Median price = $135,400.

Might be worth a look.

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Re: Pre-Foreclosures deals------- Do they work? - Posted by Tom-FL

Posted by Tom-FL on November 27, 2004 at 21:00:58:

Do your research. Read the messages on here. If a guy says he gets good deals in Bumpkinville, PA and others say the same, then it might be worth investigating.

There is a guy on here who lives around Los Angeles and buys and sells houses in Ohio.