Chapter 3

Create Your Mailing List

Use a public record search to find houses with the following criteria:

1.  Located in a favorable area for real estate investing.  A “favorable area” doesn’t necessarily mean fancy, expensive, or close to a beach.  It means an area where people want to live.  I avoid marketing to the most expensive neighborhoods because it’s harder to find deals in them, and instead I focus on areas that are a jump or two away from the most sought-after neighborhoods. 

Think places that are affordable, but offer good access to trendier spots via public transportation or highways.  Your sellers will be more reasonable, you’ll face less competition from other investors, and you’ll get a higher response rate on your marketing.

2.  Houses that haven’t sold in the last 5 years.  People are more likely to sell a house they’ve owned for a while.

3.  Houses with assessed values that fit my budget.  I don’t mail to luxury homes because they are harder to resell and less likely to hold value in a market downturn.  I also don’t want to put a large amount of capital in one property—one bad deal can bankrupt you.  Less expensive homes are less risky, there’s always a demand for affordable homes and it’s always important to be able to exit a property when you want to.  I would rather have the least expensive house on a nice street versus the most expensive home on a bad street.

4.  Absentee owners, especially out of state owners.

5.  Medium square footage for area I’m targeting.  I use this criteria to avoid unique properties because unique houses attract fewer buyers and tenants.  We want universal appeal.  Think about a house like any other product, such as a slice of pizza.  The pizza places put the pepperoni slices in display cases because people like pepperoni pizza.  They don’t put the anchovy slices in there because less people like them.  Sure, some people love anchovies on their pizza, but you’re still way better off with the pepperoni slices in the display cases. 

House are similar-- stick with “normal houses” with normal layouts that people like.  Think 3 bedroom/2 bath single family homes (pepperoni) instead of 10-acre farms with horse stables (anchovies).  You want to appeal to as many buyers or tenants as possible, and don’t fall into the trap of buying a weird house because you think it’s cool.

6.  Building type that fits your strategy.  If you’re trying to flip something, you probably want to stick with single-family or small multi-family buildings.  You want to sell your flips to retail end-user type buyers using traditional financing, not the smaller pool of shrewd cashflow investor types that look for commercial properties.  If you’re looking for a rental property, you should only be mailing to buildings with at least 2-3 units.  There are also a ton of condos out there, and you don’t necessary want to mail to every unit in a 150-unit complex.  Also make sure not to market to owners of raw land unless you’re prepared to put up new construction.

To Summarize:
1.  Suitable location, avoid the most expensive areas
2.  Last sale date greater than 5 years ago
3.  Assessed value that fits your budget, nothing luxury
4.  Absentee owners, especially out of state owners
5.  Average square footage
6.  Correct building type for your strategy 

So how do you make these lists?

Homeowner information is all public record. There are list aggregators that provide leads for 10-14 cents each and will allow you to quickly generate lists of homeowners with various filters.  Here is a list of some of the better known ones:

1.  AgentPro247.com
2.  ListSource.com
3.  RealQuest.com
4.  DataTree.com

These sites change their pricing regularly, so shop around and try to save as much money as possible.  I would give more specific info about their individual merits, but I have access to this info for free as a real estate agent through my local MLS.  If you don’t feel like paying for leads or getting licensed yourself, then you shouldn’t have a problem finding a local real estate agent like myself to generate lists for you.  It takes less than 5 minutes to generate the raw data into a spreadsheet, and most agents will be happy to spend a bit of time to form a relationship with someone buying and selling real estate.  You can also tell the real estate agent that you’d be happy to send him or her referrals from any sellers you meet that would be better off working with an agent. Most agents will be happy to have a free lead source in exchange for doing a couple minutes of work.

Here’s the info you need to create your mailers:
1.  First and Last Name of Homeowner
2.  Mailing Address
3.  Property Address (if different)

That’s it!  

Once you have that, you need to go through and check the list for typos and any other bad data.  It’s tedious, but people take their names seriously and will actually take the time to call or write you a letter to complain if you screw something up. Doing a good proofreading job also makes you appear more professional and gives the impression that you are mailing them a letter because you are interested in speaking to them specifically about their house, and not just blasting out thousands of letters to thousands of people. 

Check closely for issues such as inconsistent capitalization, screwed up abbreviations (like Obrien instead of O’Brien), and names that are written with the first and last names switched up.  This type of list is great way to compile a large mailing list in a short amount of time.  This list should return about a 2-5% response rate.

Another excellent list for mailersis your local town’s tax delinquent list.  These lists are free or very inexpensive to acquire, but do take some hustle. 

Here’s how you do it:

You’ll need to call your local town hall’s tax assessor and ask for their most recent list of property tax delinquencies.  It’s usually an uncomfortable call. 

Towns need to keep a list of unpaid property taxes, and that info is supposed to be public record.  As a member of the public, you have a right to view anything that’s public record and the town hall is tasked with allowing you access to view it. Sounds clear cut, but you’ll typically need to use a bit of talking to explain what you’re looking for.  The people working at the tax office might not have a received a call on this subject before, and it does sound kind of like privileged information, right? 

My approach is to say, “Hi, my name is John and I’m a local real estate investor.  I am calling to ask for a list of anyone in Dealsville (or whatever your town’s name is) with unpaid property taxes.”

More often than not, you’ll get the list right away.  Sometimes you’ll receive a PDF, excel spreadsheet, or even printouts.  Every town has a slightly different format for keeping track of this info and sometimes there a small fee involved, typically $10-$20.

The person you’re speaking with might ask why you need them.  Even though it’s your right to access this info, it’s best to not lead with that response.  You’ll probably be asking for this info a couple times a year and you want to be on good terms with everyone.  It’s also not being a jerk, which usually pays dividends.

If they do ask why you need the info, say, “I’m looking to buy property in the area and figured these folks might be willing to sell.”

Straightforward, honest, and the person in charge of collecting unpaid property taxes probably wouldn’t hate the help in getting some accounts paid up. 

If they still resist giving it to you at this point, then it’s okay to say, “You know, believe it or not, it is public record to keep this information on file for anyone who requests it” in a friendly tone of voice. 

If they’re still uncomfortable, they’ll probably kick you up to a manager or town attorney.  Any difficulty beyond this point could get somewhat adversarial so it could be best to call back another day.  They might just need an opportunity to ask for permission from someone or even google it to make sure that they’re not doing something that could get themselves in trouble.  If you trigger someone’s fight or flight response and they choose to fight, then you’re not going to get anywhere on the first try.  Better to try again later, be cordial, and be persistent.

It’s definitely more of a hassle to get tax delinquent lists, but they’re worth it.  They’re free, give you some experience in making uncomfortable phone calls, and yield some motivated sellers.  You’ll also get a good response rate on tax lists so they’re great for small marketing budgets.

Quick note:  if you’re able to complete a deal with someone with unpaid property taxes, the seller will use the proceeds of the sale to pay their back taxes

The next list to develop is a pre-foreclosure list.  This is another difficult but worthwhile list. 

Search for, “public notices” in your state, and find the correct site that aggregates all the foreclosure notices from local newspapers.   Then search for foreclosures in your target county or area.   Here is an example of one from mypublicnotices.com:

MORTGAGEE'S NOTICE OF SALEOF REAL ESTATE By virtue of a Power of Sale contained in a certain Mortgage given, by JOHN SMITH(the "Mortgagor") to Mortgage Electronic Registration Systems, Inc., as nominee for American Mortgage Network, Inc., DBA Amnet Mortgage, its successors and assigns, dated July 30, 2007 and recorded in the Rockingham County Registry of Deeds in Book 4824, Page 2381 and as affected by a Loan Modification Agreement recorded on December 31, 2018 in said Registry of Deeds in Book 4971, Page 2291 (the "Mortgage") of which mortgage the undersigned is present holder by assignment, pursuant to and in execution of said power and for breach of conditions of said Mortgage and for the purpose of foreclosing same will be sold at: Public Auction on September 2, 2020 at 11:00 AM Said sale being located on the mortgaged premises and having a present address of 43 FAKE STREET, DERRY in Rockingham County, NH. The premises are more particularly described in the Mortgage. NOTICE PURSUANT TO NEW HAMPSHIRE RSA 479:25, YOU ARE HEREBY NOTIFIEDTHAT YOU HAVE A RIGHT TO PETITION THE SUPERIOR COURT FOR THE COUNTY IN WHICH THE MORTGAGED PREMISES ARE SITUATED, WITH SERVICE UPON THE MORTGAGEE, AND UPON SUCH BOND AS THE COURT MAY REQUIRE, TO ENJOIN THE SCHEDULED FORECLOSURE SALE.The mortgagee's name and address for service of process is Wilmington Savings Fund Society dba Christiana Trust, not individually, but solely as Trustee for NYMT Loan Trust I c/o Fay Servicing, LLC at 1601 LBJ Freeway Suite 150, Farmers Branch, TX, 75234. The name and address of the mortgagee's agent for service of process is Registered Agent Solutions, Inc. at 10 Ferry Street 313, Concord, NH 03301. You can contact the New Hampshire Banking Department by e-mail atnhbd@banking.nh.gov. For information on getting help with housing and foreclosure issues, please call the foreclosure information hotline at 1-800-437-5991. The hotline is a service of the New Hampshire Banking Department. There is no charge for this call. The property will be sold subject to all unpaid real estate taxes and all other liens and encumbrances which maybe entitled to precedence over the Mortgage. Notwithstanding any title information contained in this notice, the Mortgagee expressly disclaims any representations as to the state of the title to the Property involved as of the date of the notice of the date of sale. The property to be sold at the sale is"AS IS, WHERE IS". The foreclosure sale will be made for the purpose of foreclosure of all rights of redemption of the said mortgagor(s) therein possessed by them and any and all persons, firms, corporations, or agencies claiming by, from or under them. TERMS OF SALE: A deposit of FIVE THOUSAND DOLLARS AND 00 CENTS ($5,000.00) in the form of a certified check, bank treasurer's check, or money order will be required to be delivered at or before the time the bid is offered. The description of the premises contained in said mortgage shall control in the event of an error in this publication. Wilmington Savings Fund Society dba Christiana Trust, not individually, but solely as Trustee for NYMT Loan Trust I Present Holder of said Mortgage, By Its Attorneys, Orlans PC PO Box 540540 Waltham, Massachusetts 02454 Phone: (781) 790-7800 As you can see, they’re written in legalese and you’ll need to identify the important parts. 

Look for the following info (bolded above):
-Homeowner name (mortgagor)
-Property Address
-Date/Time of Auction
-Foreclosure Attorney
-Amount of deposit required. 

The foreclosure sales are usually cancelled, but many of the homeowners will be open to selling if that means they can avoid losing their house to the bank while avoiding a foreclosure showing up on their credit history.  Send them a letter saying you’re interested in purchasing their property, and you’d be surprised at the response you get.  Be prepared for some angry calls though—anyone in this situation will be on edge and they may lash out at you.  Like any other time, be courteous and apologize for taking up their time.  Do not engage in any arguing back and forth and don’t take it personally.  

If you never hear anything back, keep track of the property as the auction date comes up and consider going to the auction.  Look up what auction company handles auctions for the foreclosure attorney, and call/check their website to make sure it hasn’t been cancelled. Go to the auction and watch what happens.  

The auctioneer will register anyone interested in bidding, ask to see their deposit check in the form of a bank check, and then begin taking bids.  It’s fascinating to see in person, but don’t try to buy a foreclosure if you’re new to investing.  You probably won’t be able to see the inside of the property and may end up responsible for existing liens that carry with the title.  It is a good place to meet other investors though—you’ll find that it’s usually the same dozen people at each auction looking for deals. They’ll initially view you as competition but show up to a couple, befriendly, and see if you can make some friends.

Also be aware that many prospective sellers from pre-foreclosure lists will owe more on their mortgage than the current value of their property, most often because they refinanced at the top of the market and then fell behind on their payments.  If you’ve ever heard someone say they are “underwater” in their home, this is what they’re talking about.  These situations call for a Short Sale. 

A short sale is a long, drawn-out process that entails the mortgage company agreeing to sell the property less than the amount owed by the homeowner.  The bank may be willing to do this in order to avoid going through foreclosure process.  They’re in the business of lending, not listing and selling homes after all. 

Expect a short sale to take 4-6 months to complete with an absurd amount of back and forth required.  You can get a good deal on a short sale, but many homeowners are not willing or able to deal with everything that the process entails.  You may be better off referring these leads to a local agent that specializes in short sales and save yourself the hassle while making a referral.  25% is considered standard for a referral fee.       

Another great list to develop is a Driving for Dollars list. 

Keep a notebook in your and write down the addresses of any homes you come across during your daily routine that look interesting to you.  By interesting, I mean any homes that look like they’ve become a burden on the homeowner. 

Here are a couple things I look for:
1.  Overgrown landscaping
2.  Lack of snow removal in the winter
3.  Deferred maintenance on roof, siding, etc
4.  Never anyone home (if you drive by it often enough to notice)
5.  Never any lights on at dark

It is amazing how effective these lists can be, and best of all, they’re free.  All it takes is a little bit of time here and there, and the discipline to pull over and write an address down before you forget it. 

Once you have the address down, all you need to do is the name and mailing address of the owner.  You can find that info easily by looking at tax records, either online or by calling the local town’s tax assessor. 

You’ll find that many of these homes are vacant and the owners haven’t listed them for sale for whatever reason.  Sometimes they belonged to someone who passed away and the family members live out of the area, and other times the homes are caught up in probate court. 

Probate court is the process by which property is passed on to a spouse next of kin when a homeowner dies without having a will.  The court needs to investigate who the property now belongs to, and legally pass title to that person.  It takes a longtime and can become complicated, so property held in probate can quickly become poorly managed and maintained. 

You will also come across interesting looking houses that are pending foreclosure auction while building your Driving for Dollars list.  The banks hold a large inventory of off-market properties at any given time and auction them off periodically.  If you look up a property’s owner info and find that it belongs to a bank, then there’s a good chance it will soon hit the auction block or get listed with a local agent as an REO.  REO stands for Real Estate Owned, and just means that the bank couldn’t sell the home at auction and is now prepping it for sale with a real estate agent. 

To summarize, here are the lists that I recommend developing:
1.  Public record lists with filters for absentee landlords, last sale date, assessed value, etc
2.  Property tax delinquent lists from local municipalities
3.  Pre-foreclosure lists
4.  Driving for Dollars lists I always start with the public record lists.

Consider this old saying in real estate—“Look at a hundred houses, offer on ten, and buy one.” 

This mentality is why the public record lists are so important and should make up around 80% of your total mailings.  They are easy to put together, contain thousands of recipients,and allow you to get the phone ringing fast.  You will need to look at a ton of houses to find the right one, and public record lists are the easiest path to open up some front doors.

The first part of the above saying is sneaky important as well—Look at a hundred houses.  Seriously, you need to actually look at the houses.  After a while, you’ll be tempted to write certain prospective sellers off a waste of time.  Someone will call you,say their house is nicer than all the other houses on the street, and they’ll only sell it for above market value price.  Sounds futile, right? Especially when you have other things to do.  It isn’t. 

First of all, you need to practice the skill of meeting homeowners.  You need to develop your routine, your story about who you are, and your unique value proposition (cash, no inspections, quick closing, etc).  There’s a whole universe of study dedicated to people skills, and you should view every appointment as an opportunity to improve them.

You also need to practice looking at houses, and again, the public record lists will help you get more reps. Once you’ve seen enough houses, you’ll eventually learn to tell the good ones apart from the bad ones.  Develop a checklist for walking through houses,and once you feel comfortable enough, consider dropping the inspection contingency from your offers. 

Not doing an inspection is a taboo thing to recommend, but part of my value proposition is that I don’t do them (except for well and/or septic inspections since you can’t see those without digging).  I have been looking at houses for 15 years at this point, and I feel qualified enough to pick out the winners from the losers.  I might miss something here or there, but nothing big enough that would make me regret buying a property.  You are trying to buy homes at your price with their terms—in other words, you want to offer an easy, clean deal in exchange for a great price. 

Definitely do a property inspection if you don’t feel comfortable, but don’t plan on negotiating with a seller over a broken window seal or a touch of rotted wood in the basement.  I would recommend bringing a contractor or knowledgeable friend along with you. Unlike an inspector, they will actually be able to recommend a course of action and ballpark price to resolve any issues.  They also won’t charge you $800 for their time, nor will they take 3 hours to do something that should take 30-45 minutes.

After you’ve sent out your public record list blast, then it’s time to sprinkle in the other lists.  The other lists will typically have higher response rates, but take more time to compile and most likely will not yield enough leads to establish a strong enough deal flow.

After sending out your public record mailing, you should then focus on the tax delinquent and pre-foreclosure lists.  They can be tedious, so don’t get frustrated if they take awhile.  They are great lists and worth the time.

The Driving for Dollars list should be more of a continuous thing— just try to send out a mailer within a couple days of seeing an interesting place.  It will be fresh in your mind and having a constant flow of mailers going out prevents you from getting overwhelmed with calls all at once.  It’s also helpful to have a steady stream of opportunities to look at, that way you don’t get impatient and jump on the wrong property.

Once you’ve tracked down all the data for your list, then you need to compile it into a spreadsheet.  Use these column headers for your spreadsheet:

1.  First and Last Name
2.  Owner’s Street Address
3.  Owner’s City/Town
4.  Owner Zip Code
5.  Property Address

Now that you have your mailing list, it's now time to create an effective mailing piece.
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