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Using Social Media to find Motivated Sellers....

Vacant and abandoned properties, that are in distress (foreclosure, divorce, etc) are the best properties to target because any 'emotional attachment' has already been removed.  But locating the owner and 'communicating' with the owner can be expensive. 

Direct mail is an extremely profitable marketing method for real estate investors... however, you have to plan to invest about $1,000 into a direct mail campaign, and possibly even have to sit on that $1,000 for up to 3 months...to get that one deal that will make you $5,000 or $10,000.  It could be sooner, but right now, who can afford to wait 3 months to get  $1,000 investment back?

Hiring skiptracers to locate owners of abandoned property is even more expensive, and again, even if they find the owner, there's no guarantee that the $25-$50 you spent on to locate the owner, will result in the owner making a deal with you....

That's why we started looking at social media as a means of communication... who doesn't have a FaceBook account these days?  If they don't, they might have a Linked In profile, or a Twitter account... 

Obviously, this, like anything else, is not guaranteed to find or open dialogue with any seller, but it's a free way to search, has free or really cheap means of communication, and is direct.... Friend someone, join their network, follow, express interest.... send a private message, open a dialogue.  

This is how we overcame the need for a marketing budget to find and communicate with motivated sellers. 

Marketing to find buyers is one of the easiest ways to get started making money, FAST....

Ten Years ago, a one day, 3 line classified ad in a large circulation paper cost about $15.00.... "Handyman Special, quick, cash, close." pulled calls from every investor in three counties.. who were all looking for property... wholesale properties go fast.  More often than not, by the time they call, the house advertised was put under contract... so you took name, number, email and fax info... asked what they were looking for, and put all this information into a database.

Next, you would actively seek out deals for these people, knowing they wanted to buy, and more importantly, 'what' they wanted to buy... so as soon as you could make a deal like that, you had a buyer...

And any house you did make a deal, which you didn't have a 'known buyer' for.... was 'broadcast,' out to your buyers emails, faxes, and sometimes you might even call all these 'buyers' on the phone to tell them about a deal....

As technology improved the systems for automating ALL of these processes became easier, cheaper, and much more effective.  

Now we can direct our ad readers to visit a website which hosts a form asking them what they want, and asks for email address and mobile phone number, that our autoresponder services collect, and store in a database, and then allows us to send broadcast emails, and broadcast text messages of new properties we have, in an instant, and for free...

These buyers can be other investors, as well as 'retail buyers' who are already pre-approved for a mortgage, or have cash, buyers with so-so or bad credit, looking for rent to own, lease option, or even, in some cases, people who own 'cash' businesses and claim less on their taxes for it, resulting in them getting qualified for less of a loan they actually can afford, so want owner financing, and have a sizable down payment they are willing to put down to get what they want. 

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Some of the same advertising channels are used here that are used in Marketing To Find Sellers... classified ads, bandit signs, craigslist, even business cards.

Marketing to find sellers is where the money is... you have to know where to find motivated sellers and wholesale price opportunities.

*Before we get into this... one thing to keep in mind is that before we even start marketing to find sellers, we want to market to find 'buyers,' so that we have a list of buyers, who have given us the criteria of what they want to buy and how much they want to pay... so that we can actively search for and negotiate to meet that criteria and have a 'buyer in hand,' ready to buy from us as soon as we sign our own deal to buy. 

There are several ways to find "Motivated Sellers..."

Read the classified ads in the paper, look for buzz words like 'Handyman Special," "Foreclosure," "Pre-Foreclosure," "Divorce" "Estate" "Job Forces Move" "Must Sell," "Motivated", "Owner Finance," "Creative Finance" "Rent To Own" "Lease Option," etc, etc, etc....

Search Craigslist-  look for the same 'buzz words,'
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Drive around looking for "For Sale By Owners," and other "Yard Signs," and vacant, ugly, abandoned houses...(get the addresses, and phone numbers if there is a sign,) and look up the owners at your local property records office.... where I live, the tax collector gives me the name of an owner with an address search, and I need the 'name' to go to the Clerk's Office to look up and see if that person has any liens n the property, how much the lien is, and if it's in default.

Search your records office, in my case, the Clerk's Office, for 'distress filings' like foreclosure filings, divorce filings, probate filings, etc...

Once you have information about the property, what's owed, etc, etc, you can 'call' the owners if there was a yard sign, and start making appointments and getting in to see the inside and talk with the owners...  

* If you don't have a phone number... you can send direct mail, or hire a skip tracer to locate an address and a phone number to get in touch with the owner.  In "Using Social Media To Find Deals," we'll look at some sneaky guerilla tactics for communicating directly with owners in distress, without spending a fortune on direct mail or skip tracers.
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Other ways to find Motivated Sellers....

"We Buy Houses" advertising... Bandit Signs, Classified Ads In Newspapers, Business Cards, and Door Hangers you can hang on doors of people that your records department has shown to be in distress, but haven't vacated the property, bus stop bencnes, billboards, even radio and tv.... not to mention Craigslist and referral...  

If you have one of the two biggest problems that all real estate investors have today... join us over at Guerilla Social for an online social experience that will blow your mind...

Substitution of Collateral....Guerilla Funding For Real Estate Investors...

It used to be that you either, had the credit and 20%-30% down payments that conventional lenders want to loan on 'rental properties,' had your own cash, got owner financing or other creative financing like subject-to or lease options, or had private lenders and deals that met their criteria.....

Since the crash of 07, no one has cash, even owners in distress are so desperate for cash to move that they want some kind of down payment, and even private lenders want down payments.

Not having cash is painful for real estate investors right now... that's why we focused on building the buyers list first, using free marketing via Craigslist, and social media to find property and doing small deals to build up cash...

The problem with small deals however, is that the $500-$2,000 we might make on a small deal, wasn't enough to pay us for our efforts, and fund a down payment on more property....

Substitution of Collateral has always been a 'Big Deal" concept... every advanced real estate course 'talks about' Substitution of Collateral, but there is no course 'entirely dedicated' to the subject, and no one had ever attempted to apply it to 'small deals....'

The way Substitution of Collateral is used in 'big deals' is often a scenario like the following:  I own 10 mortgages on 10 different properties.  Each mortgage gives me 'cashflow' of $800 every month, I could use those 'mortgages' as 'collateral,' for a 10% down payment on  loan for an $800,000 apartment complex.

*When the market crashed in 2007 and I lost everything, one thing I had was a car that was paid for.  I kept that car until the day it died. But the day it died, I was still cash poor and didn't have a down payment to even go to a Buy Here Pay Here car lot, but I needed a car. 

What I did have were a few 'assets' that produced a little bit of 'passive income' every month... 'intellectual property' assets.  One particular asset made about $30.00 per month 'net,' and in the brick and mortar world... that has a value of 36 months net revenue, so, $1,080. just about the amount of money that most Buy Here Pay Here car lots want for a down payment. 

Most 'business owners' understand the value of income producing assets, especially 'passive' income producing assets, so I decided to put an ad on Craigslist, in the dealers section, (to target business owners who already understood values)... the ad basically said: "I need a car, don't have cash to put down but have passive income producing assets willing to trade..."  Within TEN MINUTES... I had a call from a dealer... We went down there the next day, and instead of my asset, he took my 'skills' on trade, and we walked out with a car....

That's when I started thinking about applying this strategy to private lenders who want a down payment, and possibly even property  owners in distress... to get back into the real estate business. 

Creating intellectual property is easy and can be done very fast, I personally can create 3 pieces of intellectual property in a single day, and it takes about 3-4 months to get them to where they are making $30 a day....

So I started looking at buying intellectual property, that was in distress or underleveraged... and that's when it all finally started to come together. 

Retailing can be done in many ways... buying a rehab (fixer upper, handyman special, etc,), lease options, and owner finance on any house, pretty or ugly; and fully restoring it to 'Mint Condition' to get top dollar, market value. 

We'll go over this when we talk about 'Pretty Houses."

Exit Strategies...an exit strategy is basically, 'how you will profit from the house, and what you will do to get out of it if you can't profit from it.'

Your own circumstances will dictate necessary 'exit strategies' just as much as the 'deal evaluation' will. 

For example, you may want to keep properties as rentals, for long term passive income, in which case, that is your exit strategy.

In another case, you may not be yet fully prepared for life of a landlord and you don't want to 'hold' property, so you want your exit strategy to be to get the house with enough 'margin' to sell for a quick turn profit.

*ONE IMPORTANT NOTE HERE:  "Your" circumstances are not everyone else's circumstances... just because you don't want to be a landlord, that doesn't mean you don't have a deal if that's the 'only' exit strategy... you still have a deal, because there are landlords out there who are looking for rental properties... some may have 'cash', others may want 'subject to,' or other 'creative financing...'  You should have a list of buyers of all kinds, wholesale buyers, rehabbers, landlords, and even retail buyers, and we are going to go over how to do that in "Marketing To Find Buyers."

You'll also get a 'Deal Evaluation Sheet," that you can use to tell you what exit strategies and deal structures that are necessary to execute those strategies are. 

Wholesaling can be done in one of two ways.... 

* What is 'wholesale? A price of 65% below what the home would sell for in excellent condition, minus repairs, minus closing costs....This price, minus the lowest price you can negotiate, is your 'profit margin.'

1.) Put the house under contract and sell the contract, for a price within the margin.
2.) Buy the house and sell the house for a price within the margin

*Depending on the 'buyer' you might, sometimes, be able to command a price higher than margin. 

Private Money, sometimes also referred to as 'hard money,' is how we get our deals funded when we need to.  A private lender puts up his own cash to give us a 'mortgage' on a property we buy.  

The 'general rule' for getting hard money loans is the price.... 60% of the market value in 'excellent condition', minus repairs, minus the closing costs.

When you can get a property at this price, finding a hard money lender is not difficult... however, it must be noted that due to the current state of the market and the overall economy, that some lenders will still want a decent credit score and a down payment.  

We will go over how to find deals at these prices in "Marketing To Buy"

We will go over how to overcome the need for credit scores and down payments in "Guerilla Finance."
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