I am going to buy a house this month, here's how

[hassansr 0]

Ok, I'm back after a small mental break. So far I have decided what I want to look for and where I want it to be. I have identified and viewed several candidates from the MLS, craigslist, HUD and other investors property list. I also did the math to see how I want the costs to flow and have started looking for private money. I haven't made any offers yet and have a few more properties to look at before I do; a step I'll complete later this week.

 

In the mean time I have some additional work that I need to do, which is identifying the population of potential buyers that I'll be marketing these and the other houses that I hold as inventory to.

 

Normally when I sell houses to retail, owner occupant buyers, I use a combination of newspaper ads, a flat fee MLS listing, street signs, flyers, a website (see www.ourhomeiscalling.com ), a voicemail box system and postcards; this time will be no different.

 

For the newspaper ads I'll use the Atlanta Journal Constitution, which gives me the widest exposure possible to people that are seeking a new home to buy. The cost will be about $250 per month (weekend editions in print only, plus everyday online) and the properties will be exposed to a metro population of 2.5 million, plus people looking to relocated to the area. I do the weekends print version because the cost of paying for 30 day in print is ridiculous and much more than I'm willing to pay.

 

For the flat fee MLS listing I'll use a realtor that I know that charges $399 for 90 days. The reason I do this is to minimize realtor commissions and to give the properties the widest exposure to realtors and buyers online. If the eventual buyer is represented by a realtor, then I won't have an issue paying out 3%, but won't if I don't have to. I'll run the listing for 90 days at a time til sold at full retail market value.

 

I use a local sign making company to print and place my street signs in the market. The cost per sign is about $5, which includes printing and placement. I let them do it cause everytime I do it I get paranoid about getting caught and fined by the sign police ($500 that one time I got caught). Normally I'll put out between 15-20 signs per week til the property is sold with a message designed to drive buyers to my website or to call my voicemail box service. These signs will be placed within a 5 mile radius of each property; hopefully I'll have several homes in the same general area so I don't have to duplicate this or any of my other marketing efforts.

 

Flyers: I have a couple of templates from some of the courses that I purchased that all work pretty well. I'll have some in the info boxes attached to home for sale signs I'll have in front of each house as well as in them; I'll also pass out about 100 each month at shopping centers, barber and beauty shops, etc..

 

The website will be updated with the properties that I buy only after all of the repairs have been completed. It will list all of the homes' amenities, beds, baths, asking prices and neighborhood info. It will also have tons of photos, descriptions of how my owner financing and lease to own programs work, plus turn by turn directions to each house from several different major highways.

 

In addition to those marketing tools, I'll also be using direct mail in the form of post card from the US. post office. The post office website sells a great service where you can have custom postcards printed and delivered for only 31 cents each card. It allows you to create an account and upload your mailing list to be mail merged to each post card. I'll use their 4 inch black and white versions, which I'll schedule for twice a month for each area til all properties are sold.

 

Of course, to send post cards you have to have a list of recipients to mail them to. How does one do this? Well there are several ways; I'll give you two that I use.

 

First off, I'll use one of the online sales lead services to buy a list of all apartment renters in the area that I'll be having houses in. This will give me the names and mailing addresses of the occupants. The main thing I want from this however, is the mailing addresses for all of the apartment complexes and the sequences that they use. Some apartment complexes use sequences like Apartment c-1, c-2, c-3, or 803 Stone trail; so its good to know this as the post office will return incorrectly addressed postcards and still charge for the service. When I mail out my card I wont use the names as the addressee, I'll use "current occupant".

 

To make the lead list as effective as possible, I've got to know as much as I can about the people that I'll be sending these post cards to. The most important thing I need to know is if the people in these apartments can afford to pay the note for the houses that I'm selling. Now this isn't an exact science, but one of the things that I do is to get the apartment finder magazine that you can get for free at the local supermarket, and identify those apartment complexes where the monthly rent for 2 or 3 bedroom units are reasonably close to the mortgage on one of my retail properties. So if I know that my houses will sell for $120k and the note will be about $1,000 a month, I'll want to target apartments complexes where the rents are at least $700 per month. This step will also let me know the apartment complexes that I need to target for my Home for sale signs.

 

The other way that I'm using to find potential buyers is to target the renters of houses in the area by finding out who the landlords are and targeting their tenants (don't be shocked, you'll do it too). I can buy this list from a list broker as I do for apartments dwellers, or I can do this using a tax record service list reallist or realquest.

 

To get the list from the tax assessor database you have to do the following (for GA at least):

 

1. Go to the search function and do a general search

2. select your county and zip codes

3. Select the date ranges purchased

4. select purchase price ranges

5. select bed and baths

6. properties where the owners tax billing address is not the same as the property address.

 

So for the areas that I am interested in I performed the following searches:

 

State: GA

County: GWINNETT

Selected Zip: 30039, 30044, 30045, 30047, 30078

Record Date: 01/01/2005 to 07/31/2008

(I want properties where the landlords have held title over a year)

Sale Amt: 80000 to 150000

(Many of these will have rents in the range that the mortgages will be in)

Owner Occupied: no

 

AND

State: GA

County: DEKALB

Selected Zip: 30039, 30058, 30083, 30087, 30088

Record Date: 01/01/2005 to 07/31/2008

Sale Amt: 80000 to 130000

Bedrooms: 3 to 5

Bathroom: 2 to 5

Owner Occupied: no

 

The results of these searches were about 700 properties with potential buyers (renters) for me to send direct mail to. The next step will be to cut the lists down by reviewing and removing those properties that are currently owned by a bank or the government. You'll see names like these:

 

Federal National Mortgage Asso

Federal Natl Mtg Assn Fnma

Freeport Title & Guar Inc

Gmac Mortgage Corporation

Jp Morgan Chase Bank Na

Jp Morgan Mtg Acquisition Corp

Secretary Of Hsng & Urban Dev/

Secretary Of Hud

U S Bank Nat Asso As Trtee

U S Housing & Urban Dev

U S Veterans Affairs

Us Bank Na

Us Bk National Assn

 

Please note that if the property is owned by a company, LLC or trust, it's probably an investor, so keep it on the list.

 

Having done that step, I now have 600 houses that according to the latest data recorded and reported by the tax assessor, are privately held. I can use this info to create my mailing lists for post cards.

 

 

Now that I've done all this, i guess I can get back to the biz of finding houses, making offers and find private lenders. Also need to get back to football game (6.47 left in the 3rd quarter, pittsburg just intercepted san diego).

 

Have a goood week and stay tuned...

[hassansr 0]

Ok, I'm heading back out today to view houses and to meet with one of the private lenders that I have used in the past. I'll be looking at the remainder of the REO and investor held properties that was looking at last week as well as the following HUD homes (note the prices):

 

listing# address city Price bedxfbathxhbath

#605356 1752 MARIE WAY Lawrenceville, 30043 $61,600 4x2x0

#468390 2561 RAMBLING WAY Lithonia, 30058 $61,800 3x2x0

#620885 3423 CENTERSET COURT Snellville, 30039 $50,000 3x2x0

#598314 4497 FOWLER LANE Snellville, 30039 $58,000 3x2x0

#610379 4083 MASONWOOD COURT Snellville, 30039 $66,800 3x2x0

#548177 4425 CARRIAGE TRAIL Stn mountain, 30083 $39,000 3x2x0

#610634 5421 RIDGE FOREST DRIVE Stn mountain, 30083 $44,000 3x2x0

#617608 1292 MUIRFIELD DRIVE Stn mountain, 30088 $40,500 3x2x0

#543121 2107 SCARBROUGH ROAD Stn mountain, 30088 $48,800 4x2x0

 

If you want to see photo, just pick a house and do a google search

 

After viewing all of them I will formulate my offers and write up the contracts. For the HUD homes I'll have one of my realtor friends present the offers.

 

Later I'll be networking at the Georgia real estate investors association meeting to pass out flyers on my wholesale deals and on the mortgage loan products (guess I need to make some flyers) that I have available. I'll also be on the look out for potential private lenders.

 

It's going to be a great week. Let's all make a fun one too.

 

Please continue to give me your thoughts on this and thanks for the input

 

Hassan

[hassansr 0]

Ok, my lunch meeting with the private lender went well. Actually she was trying to find an investment property to own. After discussing her options, it was agreed that I would try to find a couple of potential deals that would fit her level of experience and the amount of money that she was willing to commit.

 

I'll probably have to find her a property that is owned free and clear by a private seller (not a bank). To make it work I'll have to structure the deal in such a way that the owner would take back a 30 year note with a 5 year balloon, at about 40%-50% of LTV. She'll put down several thousand for down payment, get title and make payments of about $400-$500 a month. After about 12 months she can refinance at about 60% LTV with a conventional lender or FHA loan, paying off the owner financing and getting title without having to put down the 20% that most lenders are requiring now.

 

She is also open to investing about $10-15k to partner in another deal with me as a private lender. That's not enough to go into a deal in market as a first position lender, but it is enough for a second position lender. If we partner up, I'll secure her money with a mortgage, title insurance, property insurance and promissary note; I'll also provide a certified appraisal showing the discount to after repair value that she'll be benefiting from.

 

I also took a look at several of the houses I mentioned earlier, still have a few more to look at and a networking event for tonight.

 

BTW, as soon as I get ready to make offers I'll go over the total math on a couple of the deals with you.

[MichaelC 160]

Hassan, what would you say the average cost of marketing is for a buyer when all is said and done? Seems awfully high based on all you plan on doing. Do you think newspaper advertising is still worth the cost these days? Prices are high, readership is down, and most folks these days are connected online. I think the newspaper industry is in a world of hurt. I expect to see it go the way of the public telephone booth in another decade.

[hassansr 0]

Hassan, what would you say the average cost of marketing is for a buyer when all is said and done? Seems awfully high based on all you plan on doing. Do you think newspaper advertising is still worth the cost these days? Prices are high, readership is down, and most folks these days are connected online. I think the newspaper industry is in a world of hurt. I expect to see it go the way of the public telephone booth in another decade.

 

 

it's always going to be high because for the most part they are fixed. Meaning that if you consistently advertise you'll pay them direct. If you don't consistently advertise your houses then you still pay for them via extended holing costs. People my age and above (40) still have a habit of reading newspapers for info so I don't see it going anywhere soon.

[hassansr 0]

Ok, I have finally completed the task of riding the east atlanta area looking at the rest of the houses to consider making offers on (yes that took a while). Some were private held, some held by investors, most were held by banks and just a few were owned by HUD. Normally I would have property locators (bird dogs) out looking for and at houses for me, but this time I wanted to get back out into the street again to see how things really are on the ground in my market.

 

I found these houses by doing searches on craigslist, MLS, HUD.gov and other wholesalers websites. I also did an email blast to people on my email list to solicit leads. As a result of the search I found about 50 potential candidates to review and personally visited and inspected about 30 of them. I looked at homes in Snellville, Lithonia, Stone Mountain, Norcross, Lawrenceville, and Lilburn, Georgia. Having looked at a bunch of them over the past two weeks, I finally got around to viewing the remainder today.

 

Except for 2 homes in Snellville, none of the HUD homes impressed me. Most needed too much work, were in badly depresses areas, or were properties that I would never touch. On the HUD.gov pages there were some decent property descriptions plus photos, which for some reason I didn't bother to look at prior to going out (I guess I got lazy). Normally I would look at photos to eliminate houses that don't look promising, but since the HUD homes were in the path of the other REO and investor held properties that I was going to be seeing, I just added them to my mapquest list and rode out to see them; boy was I surprised when I arrived at some of them. Do your self a favor and make sure that you see photos of what you're going to see prior to going out so that you dont waste time looking at houses you'll have issues moving.

 

 

Of the remaining bank held (non HUD), privately held and investor held properties, I identified 5 additional properties that appear to be promising. Here are the details (because I don't want anyone else making offers on these properties and giving the owners hope that there actually is demand for their ugly houses, I'll just give the street name and values):

 

1. Sunderland: 3 bed 2 bath, taxes $1,061. asking price $33,900, ARV in today's market about $90k, ARV in a normal market about $120k.

 

Repairs:

Interior paint

Carpet

Linoleum flooring

Appliances

Drywall repair

Pest control (bugs and rats, I think)

Minor roofing repairs

Landscape

Misc expense

 

2. Joel Court: 3 bed 2 bath, taxes $1,234, asking price 36,900, ARV in today's market about 90k, ARV in a normal market, about $105k

 

Repairs:

Interior paint

Carpet

Linoleum flooring

Appliances

Drywall repair

Pest control (bugs)

Minor roofing repairs

Landscape

Misc expense

HVAC

Cabinet repairs

Copper wire

Plumbing

 

3. Holland: 3 bed 2 bath, asking $48k, ARV in today's market about 80k, ARV in a normal market, about $100k

 

Repairs:

Interior paint

Carpet

Appliances

Drywall repair

Pest control (bugs)

Minor roofing repairs

Landscape

Misc expense

HVAC

 

4. Carole: 3 bed 2 bath, asking $53,900k, ARV in today's market about 100k, ARV in a normal market, about $110k

 

Repairs:

Interior paint

Carpet

Appliances

Drywall repair

Pest control (bugs)

Minor roofing repairs

Landscape

Misc expense

 

5. Exeter: 5 bed 4 bath, asking $54,900, ARV in today's market about 100k, ARV in a normal market, about $120k. This house was kinda turned into a duplex with two kitchens. Don't know if I would keep it as such or make it a single family home; would need to discuss with contractor.

 

Repairs:

Interior and exterior paint

Carpet

Bath flooring

Appliances, both kitchens

Drywall repair

Cabinet repair

Mold abatement

Pest control (bugs)

Minor roofing repairs

Landscape

Misc expense

HVAC repair

 

6. New Castle: 3 bed 2 bath, asking $55k, ARV in today's market about 80k, ARV in a normal market, about $100k. Has backed up sewage problem that flooded basement; will need deep cleaning. Cute house, but I'll probably pass on this one.

 

Repairs:

Interior and exterior paint

Carpet

Appliances

Drywall replacement

Pest control (bugs)

Mold abatement

Flooring needs leveling in kitchen

Landscape

Plumbing

Misc expense

 

7. Burnt Leaf: 3 bed 2.5 bath, asking $60k, ARV in today's market about 100k, ARV in a normal market, about $120k

 

Repairs:

Interior paint

Carpet

Appliances

Pest control (bugs)

Landscape

Misc expense

 

 

8. Cherie: 3 bed 2 bath, asking $59,900, ARV in today's market about 90k, ARV in a normal market, about $115k

 

Repairs:

Interior paint

Carpet

Appliances

Drywall repair

Pest control (bugs and termites)

Tilework

Landscape

Misc expense

 

9. Trenton: 3 bed 2 bath, asking $59,900k, ARV in today's market about 90k, ARV in a normal market, about $115k. I like this house, light rehab

 

Repairs:

Interior paint

Touch up exterior paint

Carpet

Appliances

Pest control (bugs)

Landscape

Misc expense

 

10. Downs: 4 bed 2 bath, asking $59k, ARV in today's market about 90k, ARV in a normal market, about $117k

 

Repairs:

Interior paint

Carpet

Appliances

Pest control (bugs)

Landscape

Misc expense

 

As you can see, property values have dropped a bit in the areas that I have targeted; this implies that I may have to lower my price expectations for selling them to retail buyers; which I will; lowering the current ARV range to $90k. That's ok, because I am taking a long term view at all these properties. If I can flip them in 6 to 12 months the prices will be lower than if I hold them for 13 to 24 months; I'm ok either way. It also means that I'll have to push my offering prices even lower to account for at least 6 - 12 more months of sliding values.

 

For most people that last part would be a major issue, however I see it as an opportunity. In my mind, the longer the recession goes on the better. To make things even better, the longer the period that the FHA, HUD and REO bank's make it hard for regular investors

to take the excess inventory off the market, the larger the pile of it will be; further reducing values and making it easier for cash buyers to make a killing.

 

 

In the next addition, I'll discuss how I formulate my offers, how I write the contracts and how I present them to the sellers / realtors/ HUD. I'll also show how the followup process works and the additional steps I'm taking to find private lenders. One last thing I'll do is upload some photos so you can see how they look.

 

Oh yeah, one more thing. as the result of me putting my thoughts out there and getting active again, I found several sources for bulk REO portfolios that I can get and wholesale (or rehab and flip) for much less than the prices listed on MLS and HUD.gov. 2009 is going to be a great year!

 

Thanks again for following this thread and your input. Please keep the questions and comments coming.

[MichaelC 160]

Hassan, regarding REO's, who and where are you finding to be your best sources? From the lenders themselves? From Realtors? Any of the various websites and services that charge a fee for a list? Etc.

[alexlocklear85 0]

Hassan,

 

I'm interested to know if you've ever retailed a deal on an option? Maybe something with a good bit of equity, but not enough to wholesale. Something that doesn't need any repairs at all.

 

Have you ever put something under option, marketed it heavily and found a buyer to flip to?

[hassansr 0]

Hassan, regarding REO's, who and where are you finding to be your best sources? From the lenders themselves? From Realtors? Any of the various websites and services that charge a fee for a list? Etc.

 

I have a couple of realtors that will send me info on what's available on the MLS. I also have access to several people that have purchased REO portfolios in bulk at prices lower than what's listed on MLS. You need to find a good realtor and cultivate a relationship.

[hassansr 0]

Hassan,

 

I'm interested to know if you've ever retailed a deal on an option? Maybe something with a good bit of equity, but not enough to wholesale. Something that doesn't need any repairs at all.

 

Have you ever put something under option, marketed it heavily and found a buyer to flip to?

 

 

Yes. Normally I start with the buyer first and then find the house. They way you described is correct in terms of equity.

[alexlocklear85 0]

Hassan,

 

I'm interested to know if you've ever retailed a deal on an option? Maybe something with a good bit of equity, but not enough to wholesale. Something that doesn't need any repairs at all.

 

Have you ever put something under option, marketed it heavily and found a buyer to flip to?

 

 

Yes. Normally I start with the buyer first and then find the house. They way you described is correct in terms of equity.

 

The buyer, is this usually an investor? Or do you market for owner occupied as well? If so, do you market for these buyers the same way you described the direct mail list (apartment renters)?

[hassansr 0]

Hassan,

 

I'm interested to know if you've ever retailed a deal on an option? Maybe something with a good bit of equity, but not enough to wholesale. Something that doesn't need any repairs at all.

 

Have you ever put something under option, marketed it heavily and found a buyer to flip to?

 

 

Yes. Normally I start with the buyer first and then find the house. They way you described is correct in terms of equity.

 

The buyer, is this usually an investor? Or do you market for owner occupied as well? If so, do you market for these buyers the same way you described the direct mail list (apartment renters)?

 

 

Both, However the buyers are normally found as the result of marketing OTHER properties.

[GetSmart 0]

are you close to purchasing that home for this month? maybe you should start some type of marketing campaign for the next month if you aren't able to buy this month.

[hassansr 0]

are you close to purchasing that home for this month? maybe you should start some type of marketing campaign for the next month if you aren't able to buy this month.

 

 

If I stay focused on these I'll get them either this month or next. Today I'll start doing the math and making offers

[MichaelC 160]

Hassan, there's been no follow up for a week. I'm curious as to what has transpired in the meantime? Did you make any offers?