Good morning folks, Well Mike and Jacqui have been moving forward with their real estate business. Their website is almost complete, they’ve been doing direct mail marketing and Mike was able to go to a property with Peg and a few others with the agent he’s working with. A little over a month ago, I got a call about a property in Newton center. I figured that this would be a great learning opportunity for Mike. I called my co-mentor Peg Graveline of JEM Property Group and set up a time for them to go view the property. Mike took all the pictures and got to watch Peg negotiate and sign the contract. In the Wednesday night mentoring sessions that we do every week, we’ve covered how to put together a package for exit strategies for a property. This is essential when pulling together funding partners or presenting to investors you may want to wholesale the property to. We’ve covered the importance of consistent marketing and developing relationships with Realtors. I introduced them to my favorite account Joe Craft, CPA and in our most recent session introduced them to John Syron of Aurelian Lending to go over the possibility of using their Unsecured Lines of Credit program. We will be doing a new webinar on this service in May. Stay tuned. I also sent them a property in Dorchester that came across my desk this past week. Not sure if they went to view it, that’s for the next post. For, now….what have Mike and Jacqui been up to over the past week? Update: Evaluating Potential Rehab Deals Since our last post we have been working with local real estate agents to learn more about the market for single family rehab investments. Last weekend, we went out with Matt Heisler, an investor friendly real estate agent who specializes in the central and metro-west markets. Matt understands we are looking at properties from an investment point of view and has been a great resource. With Matt we looked at properties inside the 495 belt, but about 30 minutes away from our target market of Framingham. The first house we saw, the Cat House, was a small 900 sq ft ranch in your average working class neighborhood. We immediately noticed the smell of cat urine and that the house was pretty much a mess. Our hunch is the house is currently rented to tenants and the seller may be motivated due to the extensive deferred maintenance inside and outside of the property. To expand the house, we could potentially add value by finishing the basement and adding a garage. However, we are unsure if the addition of a garage provides a significant enough return on investment to make it worthwhile. Our research suggests you may only get a 1:1 return on the money you invest to build the garage, however you will attract a larger market of potential buyers. Kitchens and bathrooms all need to be gutted and the exterior of the house needs some cleaning up. House has original hardwoods throughout but the current tenants have let their cat wild and don’t seem to care about cleaning up therefore flooring needs to be replaced. We are thinking of offering $160k. Estimated rehab costs: $45-60k depending if we add a garage) Potential sale price: $250-275k. House number two, the Old Folks House, seemed much more promising and we will admit, it was a breath of fresh air walking in. No cat urine! This was a much larger ranch in a quiet hill top neighborhood. Real estate owned property that has been on and off the market for the last year. Needs new kitchen, paint and possibly updating the basement. The basement was finished probably 25-30 years ago and although it is large and bright with a full bath, it is outdated. We would want to refinish the basement, but are concerned about return on investment. The house is located in a beautiful neighborhood, however across the street is a large Victorian that has been converted to a nursing home. Not really an eyesore, but definitely out of place in a neighborhood of single family homes. Is this a deal breaker for buyers? To be on the safe side of the budget we are reducing the estimated after repair value by 5-10%. We are thinking of offering: $200k. Estimated rehab costs: $50k. Potential sale price: $315k. As we move forward we are still refining our investment criteria for a rehab property, however we are current looking for: 3-4 bedrooms with the potential for 2 full bathrooms, hopefully a master bath or space to add one in. If the layout is not ideal, is it easy enough to manipulate? After that we don’t really care what the inside looks like because we will probably be replacing most of it, so the uglier the better. We also look outside and at the curb appeal, is there enough yard? How is the neighborhood? Spy on the neighbors, would you buy a house here? From a numbers perspective we are targeting a minimum of $30k profit and for houses over $300k we are targeting a profit of at least 10% of the purchase price. Stay tuned to hear about any offers we put in and if accepted, how we were able to finance the deal as new investors. In the meantime we are sending out our next batch of direct mail letters. With our last mailing we got one response “Please take me off your mailing list”. Hey, at least we know the letters were read! If you want to get in touch with us please contact us at email@example.com or firstname.lastname@example.org.
with Mike Fitzpatrick and Jacqui Pietrzak
Since our last post Jacqui and I have been working closely with Peg and Bernadette to put together a plan for accomplishing our $50k profit rehab goal. Our focus right now is finding a property to buy. Recently we have been spending our time driving for dollars and meeting with local realtors to explain our goals.
If you have never tried driving for dollars, I think it’s fair to say your first time is going to feel awkward. It is hard to look normal when you are circling a neighborhood, slowing traffic and wondering if you look like kidnappers. Essentially our plan was to pull up to a distressed looking property, run out with our “we want to buy your house” flyer, wedge it in the door, then run back to the car as quickly as possible and drive off avoiding any human contact.
Realizing it is less creepy if we actually get out and speak to people, our second attempt went much better. Now that the weather is getting nice, something we are more comfortable with is “running for dollars”. We take our dog with us on the run as this makes us feel more “normal” and offsets the fact that we have a pocket full of flyers and a notepad to write down addresses. People are willing to give you more information when you look like another neighbor walking around.
Time will tell if we end up with any leads, but it certainly was a good way to become more familiar with the neighborhoods in our area. Through some of these conversations we learned about other houses that were already being rehabbed. At first the thought of another rehabber in my target neighborhood was a bummer to us because we felt someone else beat us to the deal. But we are currently trying to get in touch with these other investors so we can learn from them and see if we could work together in the future.
We have also started setting up meetings with brokers in the metro-west area that are interested in working with us to find rehab and multi-family buy and hold deals. Anything within a 20-30 minute radius of Framingham is what we are looking at. If you are interested in working with us please drop us a message at email@example.com or firstname.lastname@example.org and we can set up some time to talk.
In the next couple weeks we are planning on launching our company website and first direct mail campaign. We are trying to narrow down our favorite logos for our company, stay tuned for a voting poll in our next blog post!
Mike & Jacqui
I wanted to share my favorite direct mail marketing campaign. It’s my favorite because it doesn’t cost that much and typically you get great results. First, you need to determine the area that you want to market in and know the zip codes.
I prefer to work with out of area owners, because depending on their situation, they are more likely to want out of the property. So, I go to my favorite list place, www.Melissadata.com. There are other list places, this is just the one that I’ve grown accustomed to using. Wherever you get your list, choose out of area owners in the location that you are looking to buy in.
Now, many folks will tell you to send a postcard campaign and make the postcard yellow or orange. I’m not all that fond of this method because the call rate is less than 1%. I like to use Send Out Cards. Yes, I send a card! Think about it, are you more likely to open a card or look at a postcard? If you are like me the postcards get thrown in the trash and the cards I open. It’s pretty simple. The call rate is higher and worth the little extra money you pay to send the card. It depends on the card, but, usually it costs 2 points plus the cost of postage. 1 point costs .31, plus the cost of postage, so around $1.00 per card, unless you create a card using your own photos, then it is 3 points, plus postage, so around $1.40. They also have postcards, but, I really like the cards better, higher open and respond rate.
Once you set up your Send out Cards account, it’s as easy as upload the leads to a specific group, then choose or create a card, enter your text, choose the recipients, hit send and within a week you should be getting calls. Now, mind you, I do this consistently so the phone rings consistently. Make sure you set your marketing budget ahead of time. If you are doing things right and consistently, in the beginning, your marketing budget is similar to a car payment every month…and not a Yugo car payment…are they around anymore?
Cheers to a great summer and happy investing!
DESIRE. COMMIT. SUCCEED!
Bernadette Trafton, Chief Connector
Good morning everyone! So, I’ve had some deals come in over the last few days. I will also be posting these deals on the deals page as well. Make sure you bring your deals next week at our Christmas in July meeting on July 18th! See all upcoming events for Boston AREIA real estate club on our events page.
Ok so, let’s go through the deals that came across my desk:
70 School Street, JP 2 family, 3/4 beds and 1 bath each. 2 parking spots, laundry hookups in each unit. 2,620 sq ft. $535,000. Good rental income property cash-flowing $3,600-$4,000 a month.
78 Pine Street, Fall River, MA 02720 Commercial Building Uses: Sober House or similar, office building Adjacent to Route 195, 79, 138, near 24 No 21E on File Handicap Accessible, 1st and 2nd Floor Lot 8,599 SF includes 20 space parking lot across the street Built 1917 Location within 1 mile of new courthouse Top floor office has view of River Close to Fall River Heritage State Park 12,228 SF The building is full business zoned. That allows for hotels / rooming house. The City of Fall River does not require a special Sober House license, just a rooming house license. No special permit or variance required. Information from others in the business says they use 200 sq ft per room, including hallways, common kitchen(s) and baths. That would allow for 52 rooms / beds without disturbing the 3rd floor auditorium. If the room charge is $500.00 per month, that’s $26,000 gross income per month. Purchase cost is only $7,692.00 per room.
Rare beachfront land and real estate on the north shore of Boston, Ma – email@example.com
Existing now is a parking lot along with a few older buildings to be torn down and rebuilt. Retail is now renting the street floor space in the existing buildings. This will be a five-phase project consisting of five buildings with 40 units in each building for a total of about 200 units based on the current permitted zoning.
The current property owners have owned the property for 100 years and are in good standing with the town. The assessed value of the property currently is over 3 million and it’s owned free and clear. The owners will sell for 8 million and will get paid on a per unit sold basis. Each of the 5 buildings sold out will generate over $20,000,000. Interested parties, email Bernadette@Bostonareia.com
Make sure you check back at your real estate club deals page
DESIRE. COMMIT. SUCCEED!
Bernadette Trafton, Chief Connector