Your Prospect Demographic and Geographic is hugely Important
Your prospects and the list that makes up those prospects and where to find them, how to put them together, what to do with them; those kinds of things. And when I look at prospects and the lists that we have, I look at two groups. I am looking at the primary list, and then I am looking at all the sub-lists. So let us talk about the primary list for a second, and I am a flipper, so what I am doing is buying a piece of property. I am offering or accepting an offer from a seller at $0.60 or $0.70 below the assessed value. I am then reselling that property to a hundred percent of value, so I need a property that has, at least, thirty percent equity in it in order to market to it. So I want to look at from a primary list perspective. I am looking for an equity owner — someone that has, at least, thirty percent equity in their property, all the way up to a hundred percent, so it could be free and clear. I want someone that has owned their home for at least four years of longer. So I do not want to market to people who just bought a house two years ago or three years ago. Four years seems to be a nice trend when people start thinking about and actually start selling property. So I want four year ownership or longer. I want to make sure that everybody or all the property on the list are single family residences. So I do not want duplexes, I do not want triplexes, I do not want fourplexes, I do not want apartment complexes, I do not want condos, town houses, mobile homes or vacant lots. So I am only wanting to concern myself with single family residences. Now, if I was another type of investor, like a buy and hold person, maybe the duplex, the triplex, the fourplex would be fine or multi-family apartment complexes are fine. For my investment strategy of massive investing, I want single families.
The other characteristic that I want is — I want between one and three bedrooms. Now, in some areas the assessor does not report that data, so I won’t be able to have a bedroom filter. The reason I want between one and three bedrooms is because I had found that is where my buyer buys. So we are not selling four bedrooms and five bedroom properties when we are out there flipping property. We are typically taking that one bedroom, that two-bedroom, that three-bedroom, that low end home, doing something to it. In some people’s case the rehabbers, in my case all I do is I buy it a discount and I sell it a full value, so I am not doing anything to it. But I still am probably going to sell my property to another investor who is going to pay cash for the house and decide that they want to rehab it, they may adopt point average rehab, decide to resell it or they may keep it as a rental. And either one of those things is fine because all I am doing is I am buying on sixty cents on the dollar, I am selling it a hundred cents on the dollar, if someone wants to turn the property into more value because of a rehab, that is great. I am not going to go to home depot and be at home depot at 6:30 every morning getting paint and paint brushes and toilets and sinks and 2 x 4’s. Done that, been there, done that, don’t want to do that anymore.
The other component that makes up my list are home values that are less than the median sales price in area. So we know when we look at values, we have listed prices and we have — so we have the average listed price, the median listed price, the average sales price, and the median sales price. The median sales price is the most always going to be your lowest of your four. So median over average, median is how many house — so if I have a 1,000 houses, 500 of them were below median and 500 of them were above median. So what is that one or two houses right in the middle; what was that house? And instead of averages — we are just on average because if you had, let us say ten houses and four of them were$2 million houses and six of them were $50,000 houses, your average would be way off the kilt and wouldn’t give back what you need to get back. So always use your median. So I like single families, four year ownership, thirty percent equity or greater, one to three bedrooms, under median.
The other two characteristics I like is I want to exclude corporations and trusts. So properties that are held in trust or properties that are held in an LLC or a corporation — an entity other than mom and pop. And the reason that I like to do that, and I have found much success doing that, is that I want to talk to mom and pop. I do not want to talk to corporate America. Corporate America is a little bit harder to deal with, a little bit more sophisticated, a little bit — I am not going to get as good a deal dealing with a corporation as I am — and I am talking typically, I am not talking always but on average, as I would with mom and pop that has a need to sell a property. So now, if I look at that group, and then inside of that group are two groups, so I have my primary market of equity owners, and inside of that group, we have two groups. One is our absentee owner, which is an owner who does not live in the property, and the other one is an occupied owner so that means that is someone that does live in the property. So we have the equity property, we have either an absentee owner or owner occupant.
When we look at absentee owners, there are three types of those as we start building our list and who we are going to market to. There are out- of-state owners, so if I have a property in California and my owner lives in Texas, they are an absentee, out-of-state owner. Probably, the farthest away from the property that someone lives who has motivation, the higher their motivation level is because they are going expenses associated to coming back to that area either fixing that hole up that just was vacant or selling that home and all those costs of travel and time and energy. And so, they will mitigate that with a lower sales price and cause it to get sold. So your first group is your out-of-state.
Your second group is (Continued)