Postcards Bring Big Profits

by: William Tingle

This is why “soon to expires” are some of my favorite lists to mail to.

Last week, I had 21 postcards mailed out to a small list gathered from the MLS in one of my markets. They all had my criteria of listed more than 90 days, a recent price reduction, seller motivation in the notes and they were vacant. All except this one but it did mention that it would be vacant by the end of May.

This weekend, I got a call from the owner asking about my card. I told him that we buy houses in that neighborhood and had noticed his had been on the market for a while without selling. I asked if his listing had expired because we couldn’t make him an offer as long as it was listed without him being liable to pay his agent a commission. He said it was still listed but that he was ready to fire his agent, anyway. I told him to give me a call when he was free of the listing.

So he calls me again the next day saying he had a canceled agreement and was ready to talk. We got both he and his wife on a conference call and discussed the deal.

His story is that he had been given a promotion with a job transfer and had moved 4 states away. He was living in a corporate apartment until school gets out at the end of May when his family will join him. They have already bought another house in their new town and are scheduled to close on June 1st. While the deal on the new house is not contingent on the sale of their existing house, there is no way they can afford both payments and were sweating it out as the house has been on the market since February without an acceptable offer. They had received offers but they were contingent on the buyers selling their houses and they had not agreed to do so. They needed certainty that the house was going to be sold.

I said, “Well, we have a program for folks who need to sell quickly where we take over your payments and make them for you until we can find a buyer who qualifies for a new loan. Does that sound like something that might work for you?” He said sure so I said, “OK. Tell me more about the house.” So he did.

This 4/3/2 is worth around 215k and is in a super neighborhood where we have already bought and sold a couple of other properties. It is in great shape with a 4.2% loan, an $880 per month payment and a 162k loan balance. The seller was adamant that he get at least 30k for his equity. I told him I simply could not pay that and it looked like the deal was dead. We continued to talk and as he became more comfortable speaking to me his attitude seemed to change. He finally said, “Well, what can you give me?”

Remember, he had already shown his hand in needing to sell. He had told me there was no way he could make both payments. He had told me they already had another house bought that was not contingent on this house selling so I knew he did not need the cash for his new house.

I said, “Bob, you know I am in business to make a profit, right?” He said, sure. I said, “With all of the costs associated with selling and having to cover the payments for an unknown period of time like we guarantee, about the best I can give you is 10k. Now if you can wait on the money, I might be able to do 12 or 13 but that would be it.” He was silent for a minute and said, “No, I want the cash now. How quickly can we close? Will we have to make another payment?” I told him we could have it closed by the end of the month and as payments are made in arrears, sellers usually make the payment at the end of the month. He said if he only got 10k, there was no way he was making another payment. I agreed to his terms.

I sent he and his wife a copy of the agreement and supporting paperwork. They signed it and got it back to me along with a copy of their listing release. I got one of the guys I use in that market to get over there today to put a sign in the yard and some directionals out in the neighborhood. He also took photos and shot a video and sent them to me. I sent the property information over to the title company and ordered a title report. I sent an email out to my buyers list for that area and expect to be hearing something back from at least a few of them within a couple of days. I also sent an email out to my broker and agents in the area letting them know about a new house we will have ready to go the first week in June in Stonefield Subdivision. It will go fast.

I expect to have a 5k deposit from a buyer within 2 weeks and close with my buyer within a couple of days of my sellers moving out. We priced this one at 229k and getting 15k down should be no problem. This house will easily cash flow over $500 a month. The backend on this will be a monster. It makes me smile just sitting here thinking about it.

The total cost to mail the postcards that brought me this deal was less than $12.00. $12.00. That is a pretty low cost per deal.

Deals like this seem to happen more and more frequently. I don’t know if I am becoming a better investor or I am just lucky. Maybe a little of both?

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