Making Big $$$ In Pre-Foreclosure Using Direct Mail
by Scott Rister
Making big $$$ in pre-foreclosure properties is just simply one of the most
profitable ways to consistently make money in real estate today. The popularity
in recent years of investors taking over payments of mortgages on “pretty
houses” has grown exponentially as well as other services and individuals keying
into those opportunities. Now more than ever we have more pre-foreclosures
services right at the fingertips of investors to take advantage of. If a company
or individual has not already set up shop at your local tax assessor’s office
selling pre-foreclosure information, then it’s probably not far away. The fact
of the matter is that information in real estate, and especially
pre-foreclosures, is the key that makes it so profitable for more real estate
investors each day. Accessing that pre-foreclosure information correctly and
then implementing your marketing plan to reach those pre-foreclosure leads in
simplicity is one technique that many investors literally live off of
daily…..and quite well I might add!
Before we go much further it’s almost an insult in one paragraph to describe why
taking over properties “Subject-To” existing financing is so profitable. Just on
the front end it is worth mentioning that structured correctly you as an
investor can make yourself almost “bulletproof” from a liability prospective.
With mortgages in recent years there are just some absolutely fabulous interest
rates that are obscenely low from a “traditional” investor financing
perspective. I mean who can’t make properties cash-flow with 6-8% interest
rates? After locating the deals, then it’s mostly a matter of then evaluating
how much cash (if any) it will take to:
- Pay off owner’s equity making it worth their while - note that sometimes no
money is required and a matter of offering debt relief.
- Repairs needed if any to get property in A-1 shape for owner financing specials
on tenant/buyer prospects.
Catch Up the Mortgage Payments to Be Current
The great aspect of taking over properties “Subject-To” existing financing is
that the three items listed above does NOT mean you must have a large cash
reserve to make these deals profitable for you. The standard rule in real estate
of “using other people’s money” is so applicable here. That money may come from
your future tenant/buyers, partners, or yes even your cash reserves for the time
being. Even if you have to float the deal with your own cash reserves, if the
deal is negotiated correctly then all your money can be recouped once the right
tenant/buyer is realized for the property. There are simply a number of ways to
get your pre-foreclosure leads by either developing your own personal leads or
simply just buying the information that is readily available in your area. My
emphasis here lies in this one question I want to ask you:
“Once you get a pre-foreclosure lead, how are you going to turn that into big
money?”
If you had to hesitate even a moment or you just don’t have a clue what to do
with that lead once you get it, then hopefully by the end of reading this you
will be more equipped. This is not only to have a game-plan of where you are
going with your real estate business, but to develop the vehicle of how to get
your message effectively to your target marketing turning the "potential" into
"profitable"!
Moving on, now let’s say you have an address and name on a property in
foreclosure, so what now? What is your plan to talk to that seller or rather how
are you going to get that phone ringing off the hook getting them to talk to
you? Well, that is the question to answer and this is exactly what this article
is entirely about. Call it what you want: Attack Plan, Method of Operation,
Game-Plan, Standard Operating Procedure, Plan of Operation, etc. The end result
is the same as you must know how to get that seller talking to you as soon as
possible because time is of the essence in dealing in pre-foreclosures.
From this point on let’s just call it your "game-plan" but let’s define this one
technique that will work for you: Direct Mail! I don’t know how to emphasize it
more because direct mail in pre-foreclosure is an absolute lethal weapon to
have. Sure there are many ways to get into direct contact with the seller and
some are more effective than others and I’ve tried many:
Going Directly to Properties and Knocking on the Door to Talk to Sellers
Accessing the seller’s phone numbers by reverse CD directories of property
address….at this point in pre-foreclosure a seller may have changed phone number
or implemented other features to block calls because they are probably getting
bombarded by creditors to pay up.
Leaving Flyers on Doors, Cars, or Mailbox
Playing detective a bit here finding out their work place or work phone number
to contact them directly there.
Do you know what has been my experience contacting individuals in
pre-foreclosure with the above listed approaches? You’re harassing them! You can
lead a horse to water, but you simply can’t make it drink. What I mean is that
until the individual in foreclosure is receptive to deal with their problem then
you will have a hard time progressing on that property turning it into a
profitable deal. Sure, I’ve been able to finally track down an individual to
make a deal happen but it can all too often be just exhaustive and
time-consuming.
Direct mail is my most preferable approach to getting those pre-foreclosure
leads calling me! I assimilate my pre-foreclosure information personally and do
buy from other sources also. When I get that information all I’m really
concerned about is the name and address of owner. Sure you’ll get all sorts of
information about the property being in foreclosure like outstanding mortgage
balance, payments behind, lender on mortgage, etc. I just don’t need all that
information because until that seller is contacting me, then they are not in the
motivated category making it worth my while.
My approach is to use direct mail to get the individual in foreclosure talking
to me. The foreclosure information if you’re buying it from a foreclosure source
is obviously available to others. So yes there is some competition out there and
to distinguish yourself from others and getting the individual to contact you
will need some creativity. That creativity for me comes in the content and
frequency of my marketing message.
All things are relative to the time of the pre-foreclosure information once you
receive it but here is my game-plan that pays dividends for me month after
month. My basic approach is mailing to the individual in pre-foreclosure with a
total of two letters and two postcards. The seller will receive an alternating
letter/postcard each week until all are mailed. The vast majority of leads I
will hear absolutely nothing back from, but it just takes one deal to make it
all worthwhile.
My message is alternating and “incremental” in style. I’ll list here the
body/text of the letters and postcards to give you an idea. Make no doubt that
you can tweak your message in many different ways but here are just some
examples for you to think about:
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Letter #1 (Week #1)
Do you need to sell your house and F-A-S-T! I buy houses that others simply
won';t consider because of one reason: I Get Personally Involved. Others just
don';t take the time to listen how to meet your needs because everyone';s
situation is unique from the next person.
I am an investor and do expect to make a profit so if you need all cash and
retail value for your house, then simply do not call me. However, if you have
some flexibility and need a resolution quickly so you can quit putting your
entire life on hold then give me a call. No obligation, fees, commissions. I
just want to buy your house!
Postcard #2 (Week #2)
If you are looking for someone to possibly buy your house, then don';t call me!
However, if you want to already consider your house sold, then start packing
your bags so you can get on with your life.
There is a variety of ways I can buy your house and it doesn';t have to be a
complicated process. In fact I can close in little as 48 hours or as long
as……..you name when! Give me a call and I';ll explain in plain English how the
solution to your problems is a phone call away.
Letter #2 (Week #3)
Life can bring on many circumstances to deal with and unfortunately some of
those are not pleasant to work through. Selling your house can be the exact type
stress you need relief from and that is what I specialize in. I buy houses no
matter what the situation so people can simply make a difficult decision easy,
and just move on in life.
If no obligations, fees, or commissions has an appeal to you then give me a
call. I would be happy to meet with you face-to-face and discuss the
opportunities available to you so I can buy your house. I hope to hear from you
soon.
Postcard #2 (Week #4)
Well, I can certainly understand if you do not want to sell that property for
now. There may come a time down the line that you may decide to do something
with it. I would only ask that you keep this card and that way you can give me a
call when you';re ready
Thanks for taking the time to listen to my offer to purchase just in case you
know where to reach me if you decide to sell. Don';t hesitate to give me a call
if you have any questions and I do hope to hear back from you soon.
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You can see by the above listed examples that my message is incremental and
differing in nature. It’s just rare for the pre-foreclosure seller to call you
on that first letter or postcard. You just have to put yourself in the “shoes”
of the seller and know that if they are in pre-foreclosure then they are
probably getting a LOT of mail from creditors. The possibility of the
pre-foreclosure seller throwing some or all of your direct mail away is a given!
Just know that now and expect it. However, all it takes is one phone call and
one deal to see your next big payday dealing in pre-foreclosures.
A Couple of Points in Wrapping Up Here:
On all your letters, stamp on the outside in red ink, “I Want To Buy This
House!”. You can buy stamps like this at Office Depot or Staples costing you
about $25. You write in the script you want and mail it to them with the custom
stamp coming back to you in a couple of weeks. Before that potential foreclosure
seller throws away your letter, they will at least read that red stamped message
on the outside. I can’t tell you how many people have commented to me on that
one technique was the reason they took the time to open my letter and thus call
me.
Best success in direct mailing to pre-foreclosures is that you simply must mail
to them more than once. I don’t have the time or patience to mark on my calendar
or day planner when to write the next letter or postcard and that is where my
custom direct mail software comes in. It knows the date I enter a contact and
automatically calculates when the next scheduled mailing of letters and
postcards due. I just have to remember to print my letter/postcards at least
once a week and just keep pumping the leads into my database.
Bio:
Scott Rister is a successful full-time investor living in Dallas, TX. Closing 72
deals in one 9 month period, Scott's property acquisition company, One-Stop
Realty, LLC maintains current holdings in four states.
After building a sizable portfolio of keeper properties that was not getting him
where he wanted to go, he discovered the art of wholesaling. Since that time
he's done hundreds of deals and focuses exclusively on motivated sellers using
technology and a targeted marketing approach.
Scott Rister's approach is based on the belief that the successful real estate
investor will leverage the best use of his/her time by implementing systems that
can run on auto-pilot with minimal maintenance.