Archive for October, 2013

Abandoned Properties – One Of The Best Kept Money-Making Secrets

Reggie BrooksWhen I began my career as a real estate investor in 1985, I stumbled across a little known area of real estate that had the potential to make us a ton of money. This was an area of the market that went unnoticed by most people. This was the area of abandoned properties.

How To Profit From Abandoned Properties

You might pass these properties on a daily basis, but just never paid much attention to them. You could be passing up hundreds of thousands of dollars in profits! These are properties that the owner has walked away from for whatever reason. It could be a divorce situation, an illness, a death in the family, a job relocation, or any number of other reasons. Do we care why? Absolutely not! Don’t waste your energy trying to figure out why sellers do what sellers do.

A $58,000 Profit Right Across The Street

I remember a young lady in one of my 2 day classes. In the first day of class, we taught a whole day of unconventional ways to find profitable deals. One of those methods was how to find and profit from abandoned properties. The next day, the young lady came to class and told us an interesting story about an abandoned house right across the street from her house. She said that when she got home from the first day of class, she put her key in her front door to go inside. Suddenly, for no apparent reason, she stopped and immediately turned around. Across the street was an abandoned house. She had unconsciously seen the abandoned house every time she walked out of her front door, but until now she just never paid any attention to it. The windows were broken out, the grass was high, there was trash in the yard, and on and on.

After the class was over, the young lady stayed in touch with me. I had asked her to keep me informed as to the progress of her deal. It took her around three months, but in those 3 months she successfully purchased the property, fixed up the property, marketed the property, and made a profit of $58,000! By the way, she had no money, no credit, and no job, but she was still able to make this kind of profit.

Why Abandoned Properties?

When you work with abandons, you have an excellent opportunity to use the best financing in the world – seller financing. There are several reasons why we prefer seller financing over conventional financing. Rarely will a seller ask to see your credit report. If you have credit problems, it usually will not become an issue. Many times the seller is completely open to many creative strategies that will help to eliminate their abandoned property problem. After all, what does the seller have to lose? His abandoned property is just sitting there not making any money.

The seller may have a mortgage to pay on the property every month, because he wants to keep his credit clean. More than likely, he’d like to rent it or sell it but he feels that he’d have to spend a lot of money to fix the property up before he could market the property. In the meantime, another month goes by and another mortgage has to be paid. The taxes and insurance will also have to be paid. Money will still have to be spent on maintenance and upkeep. The repairs might become extensive, since the property is vacant and subject to vandalism. The neighbors are probably complaining about the eye sore. The Department of Building and Safety might have become involved. This can all add up to the seller having to spend a sizable chunk of cash every month, which can also represent a sizable headache for the seller. You guessed it. The seller is probably very motivated!

How Do We Find Abandoned Properties?

Here’s one of the easiest ways to find abandoned properties. The first thing to understand is that the more affluent the area is, the fewer the abandons you’ll find. The less affluent the area, usually the more abandons you’ll find. I encourage you to find an area somewhere in between the two extremes. If you keep your eyes open, you’ll find properties that might have the windows broken out, they might be boarded up, you might see the grass and shrubs overgrown, you might see trash, handbills, newspapers and other signs that this property might be a good candidate for a profitable abandoned property.

Keep a pen and a pad of paper with you at all times. I teach my students to take different routes to and from their normal destinations and write down the addresses of any properties that might be abandon property prospects. This might require that you leave home a little earlier than usual, but it is certainly worth it if it brings you just one abandoned property deal.

Using A Little Known Government Program With An Abandoned Property

Several years ago, I was taking my aunt to an appointment at a dialysis center when I came across an abandoned four unit building. This property showed all the classic signs of abandonment: boarded up windows, tall grass, trash, etc… I wrote the address down and called my title company as soon as I got a chance. I gave them the address, and they gave me the owner of the property and the mailing address. I wrote an offer and bought the property for $82,000. We fixed the property up using a little known government program called the Rental Rehab Program to maximize our profits. This program provided a 3 to 5% loan when the prevailing interest rates were 12%. The program also allowed any qualifying tenants to drastically reduce the amount of their out of pocket monthly rent by going on the Section 8 Government Subsidy Program after the rehab was complete. The average wait for the Section 8 Program at the time was 6 to 8 years. This was truly a win-win deal for everyone involved. We kept the property for a number of years, putting a positive cash flow in our pockets every month. We eventually sold the property and made a lot of money.

The Best Financing In The World

With the property needing as much work as it did, it would have been almost impossible to get a conventional bank loan to finance it and, at the time I was in no position to pay all cash. So, what is the solution? As I mentioned before, seller financing is the best financing in the world. The seller of the property financed the entire deal for us.

Here’s the point: Abandoned properties are one of the best kept money-making secrets in our industry. They are very good candidates for many of the government loans and grants that can super charge your profits. Tap into this area of real estate and watch your profits soar.

Five Marketing Musts

When it comes to 800 Pound Guerilla Marketing, I have learned that the number of motivated buyer and seller leads I am able to generate only seem to be limited by the time, effort and creativity I put into the marketing process, rather than how much money I spend.

When I put in the time, effort and creativity needed to successfully market my real estate investing business, the leads come pouring in on a steady and predictable basis. When I slack up, the leads often start to dry up rather quickly.

Over the years, as I came to this realization, I created a few personal marketing rules or “marketing musts” to help keep me and my marketing efforts on track so I can consistently generate a steady stream of incoming buyer and seller leads.

I wanted to share these “Five Marketing Musts” with you in hopes they might positively influence your future marketing efforts and real estate investing success…

  1. Market Your Business Consistently. Pick at least five ways to market your business online and offline and do them consistently, over and over again, to generate all the leads you need to succeed.

    Even though there are hundreds of things you can do to generate leads and drive prospects to your 24hr voice mail system and website, you should choose at least five ways to consistently market your business and generate all the leads you need to buy, sell or lease as many homes as you want to achieve your financial goals.

    Over time, as you discover which marketing techniques work best, you can certainly change or add to these five ways, but be sure to consistently use your favorite top five ways to promote your business on a regular basis.

  2. Marketing StrategyDress to Impress. Always look your best no matter where you’re going or what you’re doing, especially if you’re on the job.

    You never know who you’re going to meet or when you’ll meet them. You know the old saying… “you never get a second chance to make a first impression”… so get it right the first time.

    If you always dress to impress, you won’t have to worry about missing a money making opportunity when it presents itself because you’re nervous or embarrassed to speak to someone because of the way you’re dressed. Remember, every time you open your mouth or make an appearance, you’re marketing yourself and your business, so do it well.

  3. Carry Your Business Cards. No serious investor should ever leave home or office without a stack of business cards in his/her pocket and a box of cards in his/her car at all times… EVER!

    How many times have you been out and met someone important and wished you had remembered to bring your business cards with you? More than once I am sure. Instead of handing them a nice business card, maybe you had to scribble down your number on a cocktail napkin or text your contact information to them. Did you ever hear from them again? Maybe or maybe not.

    Many investors don’t realize how important business cards can be if used properly. Business cards are not only for giving people the ability to contact you in the future, but perhaps more importantly, business cards are often the first marketing piece your prospects receive from you and are your first opportunity to make a strong first impression upon them… positive or negative.

    Remember, your image, reputation and credibility are everything in this business! So again, make a great first impression by carrying your professional business cards with you at all times and giving them out frequently.

  4. Create a Marketing Toolbox. You should create and keep a Marketing Toolbox in your vehicle at all times and use its contents to promote your real estate investing business whenever you get a chance.

    Your toolbox should contain marketing items such as business cards, flyers, signs, postcards, magnets, sticky notes, etc. that you can use to market your business when you’re out driving for dollars or just cruising around town.

    Your toolbox should also contain other important items such as contracts, black and blue ink pens, tools, a hammer and nails, a stapler and staples, tape, a flashlights and batteries, a camera, bug spray, lock boxes and other items you frequently use in your real estate investing business.

    By having your Marketing Toolbox with you at all times, you will avoid missing many marketing opportunities when you’re out driving for dollars and looking for opportunities.

  5. Keep a Swipe File. Start a “Swipe File” which is a collection of marketing material that you gather from other companies and keep for future reference when you need inspiration for creating new marketing campaigns for your real estate investing business.

    Swipe files are a great starting point for anybody who needs to come up with new marketing ideas by seeing what other businesses have done with their own marketing material.

    Remember, you can get some good marketing material from the home owners of houses you visit or buy, since they have often been approached by many other investors, real estate agents and other companies seeking their business.

Thoughts to Ponder About Your Marketing Efforts

  1. What are 5 ways you will consistently use to market your real estate investing business each and every week?
  2. How will you dress to impress when working your real estate investing business? What will you wear? Will you wear your brand or marketing message on your clothing?
  3. Do your business cards make a good first impression with your prospects? Who will you give cards to? How often will you hand your cards out?
  4. What items will you keep in your Marketing Toolbox so that you will always be ready to promote your business when an opportunity presents itself?
  5. Where can you gather good marketing items for your swipe file? What kind of items do you currently have in your swipe file?

Challenge: Implement these “5 Marketing Musts” ASAP and strive to generate all the motivated buyer and seller leads you need to run a successful real estate investing business so you can meet your financial goals.

Dustin GriffinDustin Griffin is the Executive Director of the Atlanta Real Estate Investors Alliance (Atlanta REIA) and the Tampa Real Estate Investors Alliance (Tampa REIA) and is also an entrepreneur, real estate investor, website developer, internet marketing enthusiast and a husband and proud father of two.

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