Hello WREIA community!

If you tuned in to our February WREIA meeting, I mentioned trying to bond with your sellers and using common interests to seal the deal. This morning we came to a fair deal on the 1956 Chevrolet Bel Air. I talked about in the meeting Not bad… a house to renovate and a classic car to sell.

If you know anyone interested in making an offer on the car, be sure to reach out to me.

I have compiled a number of questions we talked about at our monthly meeting. Be sure to see the replay of the meeting below.

Do you have good books on marketing?
Marketing is the activity and processes for creating, communicating, delivering, and exchanging offerings that have value for customers and clients

Read Read, Read. Everything and anything on marketing. I would read articles, blogs, videos, books of people in your industry. Try to weed thru the hyperbole and pick-up solid action steps you can employ.

Book-1
Influence The Psychology of Persuasion by Robert Cialdini.

In the book he talks about….

Reciprocation: The internal pull to repay what another person has provided us.

Commitment & Consistency: Once we make a choice or take a stand, we work to behave consistently with that commitment in order to justify our decisions.

Social Proof: When we are unsure, we look to similar others to provide us with the correct actions to take. And the more people undertaking that action, the more we consider that action correct.

Liking: The propensity to agree with people we like and the propensity for others to agree with us (if we like them).

Authority: We are more likely to say “yes” to others who are authorities, who carry greater knowledge, experience, or expertise.

Scarcity: We want more of what is less available or dwindling in availability. In marketing, understanding human behavior and psychology are critical.

Book- 2
This is Marketing by Seth Godin
Marketing is figuring out exactly who your product is for and what need it fulfills and then crafting your messaging specifically for them. He also wrote a very good book called
Permission Marketing.

Online Magazines:
I am a subscriber to a number of publications but I like both of the following for good articles on general business and real estate.
Business Insider
Market Watch

Bigger Pockets – This a good source for articles written by current and active investors.

Go outside of industry and see what other entrepreneurs are doing to generate business.

How do I find lists of people in forbearance?
I have not found a list source yet of people in forbearance. I would check in with list sources to see if they can come up with one.

Price of a chimney /flue inspection
A chimney inspection should run you about $275. A company I use is called ACD Chimney Service 202-321-5075

I recently had a cracked sewer pipe at a rental house. Ho much does this cost and is there a way to protect us from this expense?
Cost of replacement of broken sewer pipe. This can run from 2500.00 to $15,000 Insurance on broken or cracked pipes. $12.00 per month

What is the best way to market for deals for non-tech savvy people?
Networking and database marketing.
Hiring people to perform tasks you are not comfortable doing.

Should I buy a property with a tenant already in place?
Purchasing a property with a tenant in place can be good and bad. You do not want o inherit problem tenants that can crush your deal. If you price the risk into the offer price can be an opportunity to create value. If tenant is vetted and has a good track record of paying rent on time can be a technique to save you time and money on locating a good tenant. Be careful and take your time to verify

Is now a good time to buy a property or should I wait for market to fall?
My belief is to get educated on value real estate and always be in the market to buy well located property at value-add prices that you feel will grow in value over time. If market adjust downward, be ready to deploy capital to pick up solid real estate still employing t=your knowledge of value. Understand the word and definition of FORCED APPRECIATION

How do I find a good tenant? (Have been hearing stories about non-paying tenants)
Use tenant software to generate credit report, application and criminal background. Take your time to verify income and take a close look at employment and state of economy. Can they replace income if they are fired or let go of their current position.

What avenues would you recommend for approaching landlords primarily in PG and Mont county for making offers on these assets that are near there balloons?

I would use multiple strategies to engage with owner.
Letter
Phone Call
E- Mail
Text
Possible visit to business or property
Give them options
You might want to team up with local commercial lender and offer a refinance of mortgage and then also explore possibility of selling. Offer them information of rents, state of market etc.
Use Permission marketing – Create a compelling report and offer to them. Try to trade something of value for right to speak with them.

How would you structure the LOI? Super informal or more legalistic?
Depends on where you are in process. I think a more informal approach as you begin conversation and then move to a more formal as you seal deal. Some of this depends on the owner and his/her personality.

What is a good weasel clause?
My favorite one is tried and true.
Contract is contingent on a structural inspection, paid by purchaser within five business days. If inspection is not satisfactory to purchaser at their sole discretion, contract is null/void.
You can also use HOA documents as a legal way to void contract.

Will Mom and Pop landlords survive in area? How many are deciding to sell their properties?
Great question but hard to answer. Survival depends on ability to get to other side of this mess. If landlord has sufficient savings and can get tenant back on track or evict, they can survive. If dependent on rent to make payments and other expenses, they could be in trouble. Hard to track their decisions but my guess is that a percentage will try to sell to protect equity and credit.

“How does one decide when it is time to sell a Real Estate Asset?”
I do not mean within the context of other pressures (such as Covid now or similar) when there potentially is pressure for cash & liquidity. I mean in isolation, specific to a single property – what’s the shelf life? I am looking to learn the kind of analysis you and peers in our group apply to a building to figure out “It is time to take the gain on value cause it won’t get any better or cause the income stream has hit a plateau or cause __ .”
I am not versed or wise on this topic, and would appreciate hearing experiences
and/or evaluation techniques.
Watch replay of video to hear my answer to this question.

Is there a formula you rely upon to determine the frequency of raising rents?

Most landlords have an increase in rents in their original lease. After lease expires, you can raise rents or it a good solid paying tenant, you can hold steady. Rent increase can be a function of current market, ability of tenant to pay, your goals of holding property, etc,
Most commercial lease have a built-in rent accelerator that is tied to CPI. I usually use 3.5 per year but that can change too.
I have found that the most important aspect of owning property is to keep it
occupied and rent flowing in verse having turnover be rampant.

What would be a realistic monthly off-market property marketing campaign budget that would include mailers, ringless voice mail, text messaging, cold calling. What would be the best mix of these marketing avenues?

Watch replay of meeting to hear my answer.

To Possibilities in 2021!!
John

Target-Mentoring Sessions Available:

I am offering targeted-mentoring sessions on many subjects in Real Estate

Investment:

Just Text “Target” to 301-943-5535 and we can set up time to talk

Marketing for Deals

Buying your First Rental Property

Using your Self- Directed IRA to Retire Early

How to Raise Capital with a Private Bank

Buying Performing and Non-Performing Debt

Executing a Renovation Project

If you need help in a specific area, reach out and we can talk to see if we can get
you started in reaching your goals today.