01-19-2013 10:20 AM - edited 01-19-2013 10:22 AM
I am looking for a sub $1M duplex/triplex/4plex to owner occupy. For the last year especially there has been absolutely nothing appealing listed on MLS/Redfin in the area I am looking. (You buyers that are complaining of lack of inventory for a SFH - heck, the multi-unit market is so much worse. Weeks go by without a new listing. )
A disconcerting fact is I've seen some sales i would have been interested in lately that were never listed (or were listed for one day) - must be insider deals, pocket listings, etc.
I am curious if a letter writing campaign would work to "shake loose" potential sellers from the tree?
My plan would be to get a list of owners in specified zip codes with properties meeting my criteria. I would hand-write and address a letter to them asking them if they would like to sell, explain that I am a private buyer, not an investor, and that I desire to purchase my first owner-occupied property. Perhaps I could include brief personal details of my life (GF and I want to start a family, blah, blah..)
I've used such a tactic to find what I wanted in the past (cars, exotic motorcycles, musical instruments, etc.) by putting "wanted to buy" ads on Craigs and in newspapers. Obviously, RE is quite a different animal but, I wonder, could it work....?
If I were to write such a letter, what could I mention to entice a seller to contact me? I could suggest not using real estate agents, thus saving commission on the sale. What other things would I include in such a letter?
Curious to hear the opinions of the RE experts/investors on this board? Waste of time or could it work? Thanks.
01-19-2013 11:01 AM
You are late, I have been getting those letters the past 3-4 months. Tons of them. They detailed which properties sold for how much above asking and how many offers they got and promises to buy at or above markets only for multifamily properties. Some of apt owners close by called me directly (he must have got my number from my property management companies?) and offered me 20-30% than the prices I paid in 2009-10-11. With climbing rents, 0 vacancies, property appreciations and super low rate, who really wants to sell now? Furthermore inventories are super super low for multifamily (up to 4 plex) once an owner sells he wont be able to get back in the game
01-19-2013 11:19 AM
01-19-2013 11:33 AM
It could work but don't expect a bargain. In order to motivate someone to sell a higher than market value might be needed. I would suggest doing homework prior to starting your campaign. Research homes in the areas and figure out which might be motivated. Neighbors talk and handwritten letters would not hide the fact that you are sending them to everyone at the same time.
My sister lives in a neighborhood within the boundries of the most sought after elementary school in a top district. Every spring brings letters and people knocking on the door asking to buy so their child can attend that school.
Every year several homes sells at a premium in the nieghborhood. My sister says when its time to sell she will wait for someone to come to her. Those who come door to door seem more motivated.
If there are any homes for sale in these neighborhoods walk around Saturday morning and talk about how much you like the neighborhood and hope to buy a home in the future. Ask questions and you might meet someone who might sell. Hand out business cards.
01-19-2013 12:06 PM
prop. 30 makes it even less likely to find sellers. Nobody wants to sell and pay cap gains tax. And now that it is back to 20% fed cap rate, there will be even less sellers. If you want to convince an owner to sell find him an exchange property with a higher cap rate...most likely out of the area.
01-19-2013 08:16 PM - edited 01-19-2013 08:17 PM
Thanks for your input, everyone. Definitely some valid points made here. Though, I should probably be clear I am looking for a multi so my campaign would be aimed at mom/pop landlords or owner occupied multis - not interested in SFH.
I am going try it. I have a title company getting this info for me. Obviously I would not target anything bought after 2008. I would aim for underwater owners, 2003-2006, and older purchases.
I like to throw a bunch of sheet at the wall and see what sticks. This has served me well in business so why not in this situation?
Does anyone have suggestions about what I could include in such a letter? Or what have you seen (those who are receiving such letters)? I would think that more info besides just an offer would be beneficial.
Anyone have any thoughts on this?
01-19-2013 08:57 PM
01-19-2013 09:13 PM
01-19-2013 10:29 PM
Can you rephrase? Not sure I get your meaning. Thanks.
What you're trying to do has been done one and a thousand times. Ask me about it. Imagine going door to door trying to get customers for "short sales" when the easy way was to join Realtytrac or others? The only way you can get some result is going through one of those rascals, well known, know it all about any town "Realtor" or a well known Loan Officer. They might know somebody that is willing to sell, probably not, but if you pretend to go door to door or target a town or zone with flyers, chances are you will get tired, waste a couple of shoes and set of tires and flyers will end up in the trash can because the intended target won't live in that area.
I don't think anybody holding rental properties will be willing to sell one to you right now, they are making tons of money. If they do, it would be so hard for you to make a profit. You're buying on the pick of the market, when the know it all investor "knows" that you better wait because there's a lot of competition or because they know they won't get the right amount of income to cover their investment. Basically, you missed the deals. Believe me, I saw some duplexes a year and a half ago very cheap for about $300K, but it was for investors not a first time home buyer like us.
Hard to predict a crash in the RE market, there's a lot of investors, mostly Chinese buying properties here, even in some towns in Mexico they are buying everything, everything!