Being Competitive – Going Door To Door Versus Buying Lists

0 Comments
Topics: Investor Success

It always amazes me that people with buckets of diamonds at their feet want to hire someone to pick them up rather than doing it themselves.  How does this apply to Pre-Foreclosures?  Rather than going door to door to sniff out distress and Pre-Foreclosure situations,, or getting the names of late-payers from lender collection departments or independent collection agencies, then mailing those in default a solicitation to buy their home, so-called entrepreneurs want to buy lists of Pre-Foreclosures from others who have compiled them.  What’s wrong with this picture?

No matter how adroit you might be at negotiating with distressed owners, you’re always going to be a couple of days late to the rummage sale.  Who would get there first?  Think about it; if you knew the names of those in default on their payments, wouldn’t you contact them and only publish the names of those with whom you couldn’t make a deal?  If you printed such a list, wouldn’t you either pursue the names yourself, or sell the list to “favored” parties who might be willing to pay extra to get a copy prior to general publication?  If you want to be effective in this market, you’ve got to get there first with an offer that others can’t compete with.

I’ve found an interesting fact about distressed home owners; they value being able to remain in the premises even if it means giving up all their equity.  Most foreclosure buyers aren’t willing to take chances on current occupants, so they only offer them token amounts of cash even for larger equities.   Once I satisfy myself that the home owners are solid, respectable people who normally pay their bills, but who got caught in the recent housing crash, I like to work out with them a way for them to divide their equity with me.  Here’s an example:

I once approached the owner of a house that was schedule for sale within ten days or so.  I noticed that they were still watering the lawn and still took pride in the way the house was furnished.  He had lost his job, but hoped to be able to find another.  She was a stay at home Mom who seemed to be doing a good job.  They had about $45,000 of net retail equity in the house above all liens.  I offered to divide this equity with them in the following manner:

First we established that fair market rents for similar houses in the area were about $1500 per month; which was below their $1850 payment.  I offered to allow them to remain in the house with no rent payments until they “used up” their $22,500 in equity that I was letting them keep so long as they did all needed repairs and kept the place up to snuff.  This boiled down to just over 21 months.  Our agreement was that if he found work and moved out, all obligations between us would terminate and I could either rent or sell the house.

They deeded the house with the full $45,000 equity to me.  Nine months later they moved out.  I bought the house by giving them credit for $13,500 in rent payments.  Another way to state this is that I bought $45,000 in equity in a nice house in a good neighborhood with a 9-month series of $1850 payments, or $16,650.  Would that be good enough for you?

Learn more of Jack Miller’s “no competition” STEALTH INVESTING tricks at www.CashFlowDepot.com

Leave a Reply

Your email address will not be published. Required fields are marked *

Fill in your details below or click an icon to log in:

*

You Don't Have to Spend a Fortune to Learn How to Make One!

Join the CashFlowDepot Community today and learn how to make cash and cash flow with real estate.