Rehabber, Landlord, Marketing, Wholesaling

[Ryan D.]

I currently drop over 3,500 pieces of direct mail a month. I wholesale, own rentals, flip, network with private lenders, and I'm in the process of getting my Real Estate License.

Ask me anything you want.

 

Dislike ads? Remove them and support the forum: Subscribe to Fastlane Insiders.

[GSF]

Hi Ryan
How did you get started in RE? Do you focus on a particular area/ niche of RE? How do you find these properties? Can you expand on how you use direct mail? I assume it's to contact owners of distressed properties to convince them to sell? How do you finance/ find private lenders?

 

[Bila]

What's your ROI on the 3,500 direct mail ?

 

[Ryan D.]

Hi Ryan
How did you get started in RE? Do you focus on a particular area/ niche of RE? How do you find these properties? Can you expand on how you use direct mail? I assume it's to contact owners of distressed properties to convince them to sell? How do you finance/ find private lenders?

A coworker actually convinced a buddy and I to "partner" with him. At the time I was working in a call center. This 3rd guy tried going around my back because I was 19 and he didn't think I was serious. I had already committed to purchasing direct mail and wasn't going to go back on my word. So I told my buddy he could hop on board or I would do it myself. The two of us have been business partners ever since. I spent $600 I didn't have (as a broke newlywed) on a credit card that I couldn't have paid off..... In our first two weeks we got our first deal and wholesaled it for a profit of $10,000.00.

So the direct mail is the BEST way to get Real Estate leads. I have a website as well. The problem with the websites is if someone is going to sell their home they will google "buy homes st louis" and fill out 5 forms. With direct mail typically I'm not competing with anyone else. So I can take my time and often get a much better deal. Same reason why I prefer mail over the MLS.

Distressed properties, other landlords who get burnt out, inherited homes, and folks wanting to require. I typically target two lists. High equity absentee owned properties and decent equity over the age of 65. (trying to get the people who want to head south.)

I have decent credit (760 or so) but I had literally 0 personal resources. I found a portfolio lender (a lender who carries their paper in house) who would loan to my LLC. These guys are typically a local bank or CU who loan based off of the property not your personal situation.

Private money was on other forums/referrals. If you treat people right they talk. If you treat them wrong they REALLY talk.

 

Dislike ads? Remove them and support the forum: Subscribe to Fastlane Insiders.

[Ryan D.]

What's your ROI on the 3,500 direct mail ?

Great question. It all comes down to how good you are. Really.... I watched a guy drop over 65k on marketing and he only made like 98k back. That is HORRIBLE. I would not waste my time. Typically my ROI is double to triple my amount invested. However that value can vary. It depends if I keep the home as a rental, wholesale it, or flip it myself. It also depends on the time factor. I have made 10k in 45 minutes and 1 phone call. I have also spent 30 hours marketing, networking, and showing a deal to make $3,500. It really all depends on what your exit strategy with the deal really is.

I know people that are happy if they make a few grand on a deal. My average profit per deal is over $8,300. But that's not including the deals that are an actual rehab/flip where 20k+ is on the table.

 

[Metabaron]

Is there certain areas you avoid investing in like low income? I have several properties near me that are in a low income, homes can be picked up under 10k here. However, the quality of tenants scares me a bit. Thanks for your time.

 

[Ryan D.]

I personally don't mess with homes that are that cheap. It all depends where you are located at. I invest in St. Louis and Indianapolis. Just because I can pick up a house for 7k in Ferguson doesn't mean that I should. At the same time I know people who have entire portfolios of sub 30k houses who cashflow 20k a month.

Your goal should be cashflow AND appreciation. Try to buy rentals in places where you could live. The nicer the home you get the lower your maintenance costs, the more you appreciate, and the less of a hassle it can be.

I also know people in the country where property is just dirt cheap who have had good luck with cheap rentals. Remember you need to make your money when you buy. Don't go and pay retail for a home because you think you're going to make a few hundred bucks a month. You need to remember to set aside funds for maintenance, vacancy, taxes, insurance, mortgage (if applicable), etc. A quick "litmus test" is the 50% rule. If your rent is 1k and you set aside 50% for expenses that leaves you with 500 a month. You then subtract your debt service and the remaining balance is a rough cash flow estimate. If you're buying nicer/newer homes many people use 65% as the rule as they run into less issues.

The IDEAL property will meet that rule as well as rent for 2% of your total all in cost. So a 75k home should rent for $1,500.00 in a perfect world. However that is MUCH harder to do in nicer areas.

 

Dislike ads? Remove them and support the forum: Subscribe to Fastlane Insiders.

[Ryan D.]

Is there certain areas you avoid investing in like low income? I have several properties near me that are in a low income, homes can be picked up under 10k here. However, the quality of tenants scares me a bit. Thanks for your time.

You really should look into safe leveraging as opposed to dropping 10k in a dangerous area.

 

[TaylorB]

Great progress! Thank you for this thread!

I'm just finishing my first rehab project here in Canada. What are some things you consider when deciding the list price for a flip in a stable market?

Currently the comps in my area don't have much recent sale data for the type of home everything is around 6 months old. I'm definitely the nicest of all the active listings in the area.

Thanks,
Taylor

 

[eliquid]

Ryan -

Glad I caught this thread. I posted in the other active thread about rentals the other day and now I see this one too. Awesome timing.

I am in a market very very close to St. Louis and Indy actually, so I am not far away from you ( about 2 hours drive prob. )

I am looking to get into RE but I am also very interested in your direct mail approach ( not specifically for RE, but because I am a marketer and haven't done direct mail ).

Just so I got this right, you're doing direct mail to get people who might be interested in selling their home, right?

If this is correct, are you also doing this for people who might be wanting to buy as well?

 

Dislike ads? Remove them and support the forum: Subscribe to Fastlane Insiders.

[eliquid]

Gonna ask another -

This math you are throwing around in the posts, like the 50% litmus.... where do you learn these things?

Is there a RE book(s) or course you can take to get someone up to speed? Let me rephrase that, I know there are tons of books and course on RE, but do you recommend any? Digging around posts on different forums gets a bit hectic when trying to learn from others.

 

[jon.a]

Gonna ask another -

This math you are throwing around in the posts, like the 50% litmus.... where do you learn these things?

Is there a RE book(s) or course you can take to get someone up to speed? Let me rephrase that, I know there are tons of books and course on RE, but do you recommend any? Digging around posts on different forums gets a bit hectic when trying to learn from others.

https://www.biggerpockets.com/forums
No big news so far.

 

[Ryan D.]

Great progress! Thank you for this thread!

I'm just finishing my first rehab project here in Canada. What are some things you consider when deciding the list price for a flip in a stable market?

Currently the comps in my area don't have much recent sale data for the type of home everything is around 6 months old. I'm definitely the nicest of all the active listings in the area.

Thanks,
Taylor

So when you say "active listings" is yours listed so far? What was your plan when you started the rehab? Target % of ROI or did you have an ARV in mind? I would look at homes that are similar in the level of quality even if they are a smaller size. You can average out the sqft. and multiply up by yours. How fast you want to sell is also a determining factor. I would look at homes that are same bed/bath/size and target the high end of those values. For instance one of my rehabs right now has granite, ss appliances, new hvac, plumbing, and a roof. I'm going to list it at a price that reflects the condition. Don't get greedy. But don't sell yourself short.

 

Dislike ads? Remove them and support the forum: Subscribe to Fastlane Insiders.

[Ryan D.]

https://www.biggerpockets.com/forums
No big news so far.

Nope. There is nothing new under the sun. Unfortunately. However I'm more then open to answering questions if it helps someone. I'm highly active on biggerpockets.com as well. Anyone on here can feel free to add me on there.

 

[Ryan D.]

Gonna ask another -

This math you are throwing around in the posts, like the 50% litmus.... where do you learn these things?

Is there a RE book(s) or course you can take to get someone up to speed? Let me rephrase that, I know there are tons of books and course on RE, but do you recommend any? Digging around posts on different forums gets a bit hectic when trying to learn from others.

Direct mail I basically target properties that I want. size, lay out, age, equity, loan to value, etc. If an owner is motivated they call. If an owner is not they call to tell me where to stick it. Pretty much how any marketing goes. I do not market for buyers. That would most likely be cost prohibitive/harder to target. Postlets.com / Craigslist / MLS / Facebook bring those people to me. Unless you're targeting other investors to flip properties to. While I know some who have done it I haven't needed to. I find that if you give someone a deal with solid return left on the table they come back to you.

Biggerpockets.com is a great resource. I am on there all the time. Their podcasts are great. I'm not sure if I'm allowed to link to my personal site so Mods feel free to remove my link if it violates any TOS. My personal blog/free mentoring is DiyReiGuy.com

 

[Ryan D.]

Ryan -

Glad I caught this thread. I posted in the other active thread about rentals the other day and now I see this one too. Awesome timing.

I am in a market very very close to St. Louis and Indy actually, so I am not far away from you ( about 2 hours drive prob. )

I am looking to get into RE but I am also very interested in your direct mail approach ( not specifically for RE, but because I am a marketer and haven't done direct mail ).

Just so I got this right, you're doing direct mail to get people who might be interested in selling their home, right?

If this is correct, are you also doing this for people who might be wanting to buy as well?

Don't waste your money on "coaching". I've seen folks drop tens of thousands of dollars to get told what can be found for free. Now mentoring actually walking through a deal has value. But only to an extent!

 

Dislike ads? Remove them and support the forum: Subscribe to Fastlane Insiders.

[TaylorB]

So when you say "active listings" is yours listed so far? What was your plan when you started the rehab? Target % of ROI or did you have an ARV in mind? I would look at homes that are similar in the level of quality even if they are a smaller size. You can average out the sqft. and multiply up by yours. How fast you want to sell is also a determining factor. I would look at homes that are same bed/bath/size and target the high end of those values. For instance one of my rehabs right now has granite, ss appliances, new hvac, plumbing, and a roof. I'm going to list it at a price that reflects the condition. Don't get greedy. But don't sell yourself short.

Thank you for your reply. Currently it is not listed as we are still finishing the basement and landscaping. Original plan was I needed a place to live and I figured the ARV would be around 380K, purchased at 305K and have about 32K into it. Realtor is suggesting to list at 440K and given the demographics typically homes in this area sell for 15K under list. I think i've decided I will go with the realtor recommendation of high end list price and if we don't have some action right away we'll do a 20K or 30K price cut. Planning to be on the market at month end!

To find the level of quality we offer in this home you end up going into much newer homes. This home is a 1983 and to get a comparable value you'd have to be looking at early 2000's built homes.

Does home age seem to reflect your selling price that much or is it just the value you can provide with the home? To me a newer home seems worth more as it'll have newer HVAC, Plumbing, Electrical etc.

 

[Chazmania]

Your goal should be cashflow AND appreciation. Try to buy rentals in places where you could live. The nicer the home you get the lower your maintenance costs, the more you appreciate, and the less of a hassle it can be.

After being a landlord for a while now and owning in decent areas and 'not so decent' areas, i will say that the large cap rates that come with slumming come with quite a bit of bullshit too. Although I love the cashflow from the low-end stuff, going forward i'd prefer to own only in areas that are quick to rise in value and don't have the Jerry Springer tenants. Less headaches for sure.

 

[SteveO]

I definitely think that the "value add" approach makes more money. It takes more skills as well.

Are you at the level where you could do larger deals?

 

Dislike ads? Remove them and support the forum: Subscribe to Fastlane Insiders.

[Ryan D.]

Thank you for your reply. Currently it is not listed as we are still finishing the basement and landscaping. Original plan was I needed a place to live and I figured the ARV would be around 380K, purchased at 305K and have about 32K into it. Realtor is suggesting to list at 440K and given the demographics typically homes in this area sell for 15K under list. I think i've decided I will go with the realtor recommendation of high end list price and if we don't have some action right away we'll do a 20K or 30K price cut. Planning to be on the market at month end!

To find the level of quality we offer in this home you end up going into much newer homes. This home is a 1983 and to get a comparable value you'd have to be looking at early 2000's built homes.

Does home age seem to reflect your selling price that much or is it just the value you can provide with the home? To me a newer home seems worth more as it'll have newer HVAC, Plumbing, Electrical etc.

I don't typically find a LARGE correlation in age vs price. Unless you're taking about a new home. I have a home I'm rehabbing right now that is from the 1920's. We kept all of the original doors, hardwood, and some trim/stain glass. But we gutted the bathroom, new vinyl windows, new kitchen with granite/ss appliances, new roof, new hvac, and new water heater. The house is more "solid" than a newer home now. If you want to PM me the address I'll give you my opinion on it. I've got a buddy in Canada who is EXTREMELY active I can chat with. If you're not in a rush to sell the higher list price may be worth the added time to close.

 

[Ryan D.]

After being a landlord for a while now and owning in decent areas and 'not so decent' areas, i will say that the large cap rates that come with slumming come with quite a bit of bullshit too. Although I love the cashflow from the low-end stuff, going forward i'd prefer to own only in areas that are quick to rise in value and don't have the Jerry Springer tenants. Less headaches for sure.

AMEN. Just because you can buy a home for 10k does not mean that you should. While I have a few lower end rentals we did all of the preventive maintenance and screen the tenants extremely well. That seems to eliminate a good portion of the drama. Love the Jerry Springer reference.

 

[Ryan D.]

I definitely think that the "value add" approach makes more money. It takes more skills as well.

Are you at the level where you could do larger deals?

Yes we are. One of the nice things with Multifamily is the forced appreciation you can bring in.

 

Dislike ads? Remove them and support the forum: Subscribe to Fastlane Insiders.

[SteveO]

Yes we are. One of the nice things with Multifamily is the forced appreciation you can bring in.

Forced appreciation has been the model that has worked best for me and has made the most money. Keep kicking a$$!

 

[biggeemac]

I am actually looking into doing this.....have been for a while but family crisis has delayed my taking action. With that being said, I dont live in a large metro area. I am in a smaller city (50,000 ish) with two larger cities about 30 minutes drive to the north and south of me with maybe a population of 250k in each city. Do you think that there are enough deals to be had to get somewhere in the city that I live in, or perhaps in the cities that I DONT live in? I am just wondering if I am at a disadvantage not being in a large metro area like you are.

 

[Ryan D.]

Forced appreciation has been the model that has worked best for me and has made the most money. Keep kicking a$$!

It's something we're just starting in. But will do!

The added benefit with Multi is you don't have the emotional attachment people develop with SFR.

 

Dislike ads? Remove them and support the forum: Subscribe to Fastlane Insiders.

[Ryan D.]

I am actually looking into doing this.....have been for a while but family crisis has delayed my taking action. With that being said, I dont live in a large metro area. I am in a smaller city (50,000 ish) with two larger cities about 30 minutes drive to the north and south of me with maybe a population of 250k in each city. Do you think that there are enough deals to be had to get somewhere in the city that I live in, or perhaps in the cities that I DONT live in? I am just wondering if I am at a disadvantage not being in a large metro area like you are.

Where are you located at? You can make it work in any city. There are people doing this out in the sticks. It's just harder. At the same time... I'm so thankful I'm not in NY or Cali. I got a call from a younger girl wanting my advice on how to get started. The cheapest property in her zipcode was a condemned REO asking over 400k.....

 

[biggeemac]

Where are you located at? You can make it work in any city. There are people doing this out in the sticks. It's just harder. At the same time... I'm so thankful I'm not in NY or Cali. I got a call from a younger girl wanting my advice on how to get started. The cheapest property in her zipcode was a condemned REO asking over 400k.....

Well, I'm not exactly in the sticks, just not in an overpopulated area. Yeah, I used to live in cali. Overpriced, too much competition, almost impossible. The properties in the pacific NW where I live are more expensive than many areas, but not ridiculous......yet. As far as competition, there just aren't a lot of people out here with a lot of extra money, and more importantly, the will to take the time and market to potential sellers. I have a little bit of money that Im sitting on, and the will to make things happen. Not enough money to buy something outright, but enough to fund a rehab if i wanted to.

 

[Ryan D.]

Well, I'm not exactly in the sticks, just not in an overpopulated area. Yeah, I used to live in cali. Overpriced, too much competition, almost impossible. The properties in the pacific NW where I live are more expensive than many areas, but not ridiculous......yet. As far as competition, there just aren't a lot of people out here with a lot of extra money, and more importantly, the will to take the time and market to potential sellers. I have a little bit of money that Im sitting on, and the will to make things happen. Not enough money to buy something outright, but enough to fund a rehab if i wanted to.

Feel free to PM me if you prefer. Not looking to get anything out of it. Just help if I can.

 

Dislike ads? Remove them and support the forum: Subscribe to Fastlane Insiders.

[MKHB]

I currently drop over 3,500 pieces of direct mail a month. I wholesale, own rentals, flip, network with private lenders, and I'm in the process of getting my Real Estate License.

Ask me anything you want.

I like the getting a license part; there comes a time when it makes more sense to shell the picks and shovels.

This may be that time.

 

[Ryan D.]

I like the getting a license part; there comes a time when it makes more sense to shell the picks and shovels.

This may be that time.

Well I HATE my 9-5. So I would rather be working in the field I enjoy while investing as opposed to not wanting to get up in the morning. Have you seen this clip from We're The Millers?