First, let me say the deals you are looking for are not on the MLS. The MLS is the Realtors® domain and they own and control it. They’re looking for end buyers to pay top dollar for their inventory, they’re not in the business of cutting you a deal because their job is to sell for as much as they can get so they can make a higher commission…..
Next, you need to look up the right tree. If you want mangos you’re not going to get them off of a banana tree, so why would you go searching for Subject to deals among those who aren’t motivated? Ok, so now we need to identify those who are motivated and then go fishing.
The people you are looking for have problems, it might be family, illness, financial, career and the list goes on and on. When a seller reaches out to you for help with his home, he’s asking for debt relief really. For whatever reason, he is threatened and fears he will not be able to pay his mortgage as agreed and is trying to avoid a complete loss. This seller will try everything to sell on his own, you will see his ads on Craigslist, Backpage, Zillow and the like. When you send out your mailing piece, you will strike up a conversation, that’s for sure.
One thing is to be made perfectly clear, 99% of the time you are in the business of finding deals, you’re a marketer. Subject to deals are about buying using OPM, Other Peoples’ Mortgages.
One of my favorite ways is using direct marketing. Why? Because it targets exactly what I want. Let me show you how I do it.
I use a list to sift out data for my mailing campaigns. I use filters to give me just what I want. I target homeowners who recently bought a new home say 1-3 years ago with a low down payment. The filters look like this:
- Homeowners who got their loan with 95% or more loan to value, that’s like everybody.
- Home was built 1-3 years back. I want newer homes with no repair issues.
- They got a conventional loan, depending on what state I’m mailing, I might not choose to work with FHA or VA loans. However, I’ll do these cautiously. Some of these FHA loans are what’s called subsidized meaning the borrower has to live in that house for a period of time before they can sell otherwise they must repay part of that financing.
By the way, the homes you are looking for have 3 or more bedrooms with 2 or more baths. They should be at least 1,200 sq feet and have a backyard. Most newer homes will have all this unless they are condos. If you are targeting mobile homes or condos, these values could be different but the general idea is to work with the demand, that’s why I advocate advertising for your buyer first (another blog).
Those are some basic filters, but as you get more sophisticated you’ll start chasing deals that are in foreclosure, by the amount they owe, narrowed down to specific neighborhoods, etc. My strategy works best with properties with very little to no equity. I’m working with a more motivated seller who would be willing to consider my subject to offer, heck by the time I’m done with them, they’re giving me the deed! That’s how I roll.
Send out mailings on a consistent basis. First I send a letter, say for the first two mailings, then I send postcards for the next two, sort of like a follow-up mailing. As time goes by, I will drop some people or keep mailing in longer increments.
My strategy does not require you to send out thousands of pieces per month, but you ought to target one or more neighborhoods exclusively. Then I’m going to tell you to get off your duff and go driving. Drive the neighborhood where you mail. You can do in person marketing by door knocking or just leaving a flyer at the screen door. Your conversion rates will go up drastically when you include driving the neighborhood.
Your list is important, I have not listed any in particular because you don’t have to buy one, you could just find a neighborhood like this and use public records to cross reference. This is called farming when you target a particular neighborhood and work it, this is what Realtors® do a lot.
Doing direct mail and driving neighborhoods gets it all, expireds, pre-foreclosures, job transfer, vacant properties… You could definitely have a magnetic car sign that says “We buy and sell houses” and your phone number.
We BUY and SELL Houses
10-Day Closings
(310) 000-0000
Check out my YouTube Chanel for more tips and How to Get Rich Buying and Selling Real Estate Using Other People’s Mortgages.
Investing Subject to Existing Mortgage. http://www.youtube.com/c/AliciaCoxMedia