Last week I had to pull out of 3 properties that I had under contract. I knew going into these that they were marginal in nature, I was expecting to make a 2K spread on each one. The reason that they were so marginal was that the owners owed too much to the bank on each house. All three properties had the same owner and were in Foreclosure, however the lender wouldn’t consider a short-sale. The properties were owned by a husband and wife…soon to be ex-husband and ex-wife and the bank felt that the husband’s income at his 9-5 was too high to qualify them for a short-sale. This divorce/foreclosure situation is A LOT more messy than I’m explaining, so I’m just giving the core details.

So I felt like I’d take a stab and them and see if I could move them. I had some interest from the cash-buyer roster that I have in Champaign. But not quite the same response that I had with earlier properties. In the end, after about 6 weeks I pulled the plug, with no contracts assigned. This cancellation was after one contract extension already. I felt it was best to cut my losses (marketing dollars, effort, time, etc.) and focus on other deals. Sadly, they’ll probably get foreclosed on, the bank will buy the property back at auction, list it high with an REO agent and eventually accept a very low offer (perhaps it will be mine). I guess that’s how it goes sometimes….

The moral of this story for me was to never take on marginal deals when your gut is telling you you’re buying too high and so they’re priced too high wholesale. This would’ve been a different story had I had a buyer lined-up that was willing to pay the price I was asking. In that case, 6K for just a few hours of work isn’t bad. But in my case, even if these deals did go through, it would’ve been a total of 6K for hours and hours and hours spent….too much like a job.

No more ‘marginal’ deals for me. Not worth it.

- Peace

So I will maxin and relaxin yesterday and cooking up some heart-attack food (fried chicken and french fries) before the super-bowl and I get a call from the owners of the “wholesale deal from hell” (that’s its’ new name).  I said I wasn’t going to blog about it anymore but…..I lied.  The sellers called to arrange a meeting so that perhaps something could be worked out.  Just as a refresher, this deal is the one where I negotiated a short-sale as their 10K property was upside-down by 60K dollars.  After the short-sale was negotiated, the liens were reduced to the sum of 9K, which took all of the sellers’ proceeds.  I spoke with other local investors about this and one resolution is to write-up a bill-of-sale for the personal property inside the of the house in the amount of what’s negotiated between the seller and buyer.  So for instance, a bill of sale could be written for 9K for the personal property in the house, as that was the original agreed sale price of the house.

Apparently, this is a common practice in this unique situation.  However, it sounds fraudulent as hell to me.  I mean, if not, then why wouldn’t ALL short-sale investors do this to compensate pre-foreclosure sellers.  Maybe they do…do they?  My buyer that the contract was assigned to is willing to shell-out another 7K, if I shell-out 2K.  It’s not a problem for me, but I’m going to run this by my lawyer first.

Welp, off to the 9-5

So it’s late Saturday night.  And I’m contemplating hitting the streets to “advertise”, because late at night is the best time to do it.  But the bad part is that it just snowed today and I know my white advertisements do so well against a white background when stuck in a frozen ground (I’m being kinda subliminal for a reason that I can’t explain here), I need to order yellow ones.  So anyway, I think I may do something else with my time tonight.

The booty-butt cheeks deal is likely to fall through.  And I don’t even give a sh!t anymore.  I just spoke with the sellers today and they said.  We feel like we should get 9K regardless of the amount of liens on the property.  Uhm….okay lady…that’s not how it works.  Especially since, they’re not going to get sh!t for that house any way that they look at it.  But oh well, I don’t even feel like going into detail anymore about it.  I’m passed being pissed-off about it.  I’m not even going to blog about it anymore (maybe).  But I don’t think I’m going to let this go.  After all of the work, that I put into this thing…aw HELL NAW!  They haven’t seen the end of Justin…AKA “J. Stacks”…AKA “I work harder than hard-working”…AKA “Mr. Who put this Sh!t together? Me! That’s WHO!”

I’ve got other deals in the pipeline so, it’s all to the goodie.  I’m not superstitious…but I think I’m about to stop blogging about deals before they close.  Big-ass waste of time.  I’ll either wait until after they close or don’t close to give details.  I think that’s the route I’ll take from now on.

On another note, “nonchalant Justin” is slowly dieing from the self-inflicted stab wounds of being “too nice”.  And Type-A Justin is slowly emerging.  I remember being a kid and listening to my Dad on business-calls with the last words being “f*** you” before he hung-up on them.  And I also remember as a kid, running to my Mom and whining about how some kid on the playground didn’t like me.  And she said then what she says now, “Boy, everyone CAN’T be your friend”.  So with that said, things ’bout to change ’round these here parts (don’t think I’ll ever take it to the “edge” like my Dad did though).  I can only be Type-A Justin while I have to though…I do realize “Type-A”-ness and the side-effects can kill.

I’ve got BIG plans, that only I can vision and the naysayers are coming out of the woodwork, like I care what they have to say.  I know what I’m capable of, so I don’t need you to tell me what I “can’t do”.  This must be how Kanye West felt before anyone would sign him.  He didn’t fit the mold of a typical “rapper” and many wouldn’t give him the time of day.  As Kanye stated, he played the song “Jesus Walks” for a label and they didn’t sign him!  This “Jesus Walks” music video is one of the best videos of all time.  I’ve gotta remind myself sometimes that Jesus has got my back.

Things are really going to explode in a big way for my business soon.  I say that because I have been making major progress in many facets.  Last July when I was at the Short Sales Riches seminar in Las Vegas, I learned some cool tips on short selling and birddogging short sale leads.  But, the most valuable tip I learned was from Colin Andrews Egbert when he was informing the crowd about his REI Web 2.0 program.  That tip was that:

“exposure on the web will catapult your business”

Although the ticket to that seminar was included in my REO Rockstar course by Preston Ely, that one tip was worth the price of admission.  And speaking of Preston Ely, I learned from him that you should:

“give 80% before asking for 20%”

Those two nuggets (with honey mustard) of knowledge have already proven worth their weight in gold.  Since I’ve taken heed to those pearls of wisdom, things have started to happen for me.  I won’t go into detail about what I have brewing now, but remember that I said all of this.  And actually I’ll reference this post when I write about how I was able to pull a deal together.

On another front, the deadline for my assistant to complete my yellow letters is 9/19, so I have a while before I’ll have wholesale leads flooding in.  This timing will workout great because right now, I don’t have the $400 for postage anyway.  I’ve got all of my money tied-up and have no cash-flow until I receive payment for two of the video gigs and a freelance website gig.  Still no word on the City of Champaign web bid, by the way.

Before the end of the night, I’m going to shoot for writing-up a few offers and finishing the 1007 Beaver Creek video.  I’ll leave you with my latest contribution to the Bigger Pockets blog.  I put a lot of detail into this one, I came up with the idea just a few days ago when listing the BMW/Beaver Creek client’s property on CraigsList.  Necessity remains the mother of invention.  I can’t lie, this is a pretty good post.  I’m surprised it’s not redundant.  I surely can’t be the first person to write about it this resolution.  But I Google’d all over and didn’t find anything.  So anyway, check it out:

- Justin

I couldn’t just leave you all hanging with the videos and not explain how I did things and the costs involved, so here goes:

Materials Required:

- Stamps
- 8-1/2″ x 11″ yellow ruled-paper
- 8-1/2″ x 11″ white paper
- 4-3/8″ x 5-3/4″ Ivory Invitation Envelopes
- Red Ink Pens (Gel)
- Extra Printer Ink Cartridges
- Computer Scanner
- Image Editing Software
- Word Processing Software
- Local Personal Assistant
- Handwriting Font

Objective:

Yellow-Letter marketing has been proven over the years as one of the most effective marketing methods available. When sending a personalized, handwritten, hand-addressed yellow letter; it is not uncommon for marketers to experience response rates as high as 15%.

As a Real Estate Investor, marketing is what drives your business. A 15% response rate can inundate you with calls so be sure to be prepared. Read on, and I will give you the complete Do-It-Yourself instructions for creating a Real Estate Investor Yellow-Letter Direct-Mail campaign.

Step 1: Write the Letter

Place a white sheet of 8.5″ x 11″ paper directly over a sheet of 8.5″ x 11″ yellow ruled-paper. By doing this you should be able to faintly view the ruled lines from the underlying paper (if you have access to a light box, I suggest using it for assistance), this will keep your writing straight and the lines spaced according to the paper your letters will end-up printed on. Write your marketing copy on the white sheet of paper and be sure to leave spaces for fields that will be specific to the recipient (mail-merge will be used to fill those spaces with specific text). An example of the copy I wrote is below:

You may of course, use any copy you wish. This is just an example of my letter that was used to target homeowners in my farm area. Where you see circles, is where my Mail-Merge fields were to be placed.

Step 2: Scan the Letter to Image

Place the white paper with the handwritten marketing copy on a scanner and scan the image into an Image Editing Software. I personally use Adobe Fireworks, but any basic Graphics application will work for this project. You want to use the software to clean-up any smudges or inconsistencies that were scanned in (if necessary). Then save the image as a JPEG file.

Step 3: Edit the Image

Open a word-processing application. I personally use Microsoft Word 2003; however any word-processing software with the Mail-Merge feature will suffice. If you’re strapped for cash, you may obtain OpenOffice which contains a free word-processing application that has the Mail-Merge feature. OpenOffice is fairly similar to Microsoft Word.

Open a new document and import the handwritten JPEG into the document. You will do this twice as you need to crop the main JPEG twice to divide the image, so to make room for the mail-merge text fields.

Step 4: Create Handwriting Font

Create a font using your own handwriting. I used the website www.yourfonts.com to create mine. It is very easy to create a font with your own handwriting using their service. I won’t detail the instructions for their service here, but after following their simple directions you’ll have your handwriting font as an option available in your word-processing application. This takes 20 minutes or less.

Step 5: Setup Mail-Merge

I won’t detail how to use Mail-Merge here as the process differs per word-processing application. However, since I am aware of the fact that Microsoft Word is the most widely used application you may view Mail-Merge instructions here: http://office.microsoft.com/en-us/help/HA010349201033.aspx

For any of you that use a different application and want to know how to use Mail-Merge for it, Google it.

Step 6: Apply the Handwriting font

Once you have your Mail-Merge setup, you will have place-holders that show where the Mail-Merge fields are. If you’re using MS-Word, those fields will have containers of “<<” and “>>”. So for instance, your first field may be “<<Greeting>>”. You will need apply your handwriting font to the fields and adjust the font-size to match the size of your actual handwriting which was scanned in.

Step 7: Print your letters

After scanning in the static handwritten text of your marketing letter and applying your handwritten font to the dynamic Mail-Merge fields, you’re ready to go. Load your printer with your loose-leaf, yellow ruled paper and print your campaign.

It is very hard to distinguish the handwritten-font from the scanned-in handwriting, thus the reason I suggest using a mix of both. When you use a handwritten-font for the entire document and don’t scan-in your actual handwriting, it looks very computer-generated like this:

Although this is my custom handwritten-font that I generated on www.yourfonts.com, the font does not look natural. But when you mix in the handwriting font with your actual scanned-in handwriting, you get a great result as seen below:

Looks pretty good right? If, I didn’t tell you I doubt you’d be able to identify the mail-merged fields.

Step 8: Local Assistant

After you have a stack of papers printed, each unique to the homeowner recipient, you will need to find a local assistant to hand-address and stuff your invitation envelopes. Here is an example envelope:

Front:

Back:

Try to keep the envelopes as simple as possible. Only write the destination address on the front and place the return address on the back. Do not include your company name in the return address.

Step 10: Affix Stamps and Send

Go with actual adhesive stamps and not any printed-type, the common theme here is personalization. You may have your assistant affix the stamps or you can do that yourself. Then take the envelopes to your nearest mailbox or Post Office and send them out, wait a couple of days for the flood of calls!

Price Break-Down:

You may be saying to yourself, “Why would I go through such trouble, when there are services out there that can do this for me”. Well, if you’re just starting out, doing this yourself can get you in the game with quite a bit of cost savings. However, if you’re a veteran I wouldn’t suggest going the DIY route as it is very time consuming, at least for the initial run. Here is the itemized price break-down/comparison for a campaign of 900 letters (actual prices from a campaign of mine):

5 hours, 900 pages, 2 magenta, 1 cyan, and 1 yellow ink cartridge later, I’m finally done with my end of the yellow-letter campaign. The printing of all those pages took alot longer than expected and I also went through more ink that I originally thought. But, the end result was well worth it (can you ID what is the handwritten font and what isn’t?), in my opinion.  This morning I met with my new local assistant and dropped-off all of the letters, envelopes, etc. so that she can hand-address my envelopes and stuff them.  She says she can have them done in a week.  So about a week from today I should be ready to launch my first mass direct-mailing.

On another front, I happened to come across an email that stated that the biggerpockets.com site is looking for additional guest bloggers.  I think I’m going to try out for a spot as a guest blogger that contributes in the area of Computer Technology uses for REI.  My try-out article will most likely be a step-by-step how-to guide to produce a yellow letter campaign, just like the one I’ve completed.  I’ll mention the exact computer software used and everything.  I’m guessing there are other investors out there that may want to know exactly how I did this.  I’ll let ya’ll know how the try-out process goes.

- Justin

Man, I have been slacking completely on my blogging. I’m back on it though. I haven’t posted any ‘Accountability Tuesday’ updates lately because as I mentioned, I wasn’t going to do so until I completed the launch of my direct mail campaign. It’s still not launched yet. I’m very close however, as I have the mail-merge setup, all of the stationary, and I’ve selected a college student with nice handwriting to handwrite my envelopes and stuff them (all 900 for $120 or $0.13 each). This same college student is going to act as my phone receptionist and field my calls during the day. I found this girl on CraigsList and haven’t met her yet, however she stands far above the other candidates and just from the looks of her on paper. She sent me her resume and this girl is solid, college senior, great relevant work experience, good GPA, etc. I’m to meet her this weekend so that I can get her the materials to get started on this first project of hers’. I can already tell, this girl is a real go-getter…my kind of people. I’m already loving the idea of having a local assistant.

My attorney is on vacation, so I’m still waiting on some things from him that I have him working on. And it all concerns the usage of Birddogs in Illinois but on a completely different level than you may be familiar with. I’m looking to implement both buy-side and sell-side Birddogs. If it’s possible and safe from being misconstrued as a non-licensed practitioner of Real Estate, he is going to construct a proprietary model for my business to use Birddogs. My bill from him is going to be through the roof, but it will definitely be worth it if I can make this happen in my biz.

On a non real estate note, but business related, I am now a Mozenda affiliate marketer. That may not sound all that special, but I haven’t mentioned that I am the ‘only’ Mozenda affiliate marketer! This came about all because I happened to like their software, I posted a YouTube video about it, they noticed it, they interviewed me for an article, I asked about their affiliate program, they said they didn’t have one, they offered me a deal to become one, and here I am. This is an awesome opportunity, because not only is their product superior to their competition, but they are going to pay me $5 per trial sign-up and additional if those trials convert to memberships. As soon as this arrangement was made my mind started racing on how I could market and expose their product. There are so many voids in the marketplace it is ridiculous, GAME-ON! I did some research on Google and found that for the key term “Data Mining” (which is what this software does) ;245,000 people searched by that term on Google in July of 2009 alone! Let’s just say if I can advertise on Google and other places and send 10% of 245,000 to http://www.GetMozenda.com, which would make 24,500 monthly visitors. Their conversion rate is currently approx. 3%, which means 24,5000*3% = 735 people sign-up, which for me means 735*$5 = $3,675 gross monthly! This is going to take a little of my time away from Real Estate, for good reason as you can see.

I have a phone meeting with a web development firm out of New Hampshire this evening, about working with them and structuring an arrangement that will allow me to outsource my web projects to them, while I serve as the project liaison. Hopefully this will workout. Another source of income doesn’t hurt.

So, I’ve got a lot going on. I’ve been slacking on my other areas because of it. I think I gained about 7 pounds since I’ve been so busy. I need to quit eating the garbage and get my ass back in the gym regularly, no excuses. I’ve only taken like two weeks off and I feel like a bum, you HAVE to workout to keep yourself up. But anyway, that’s it for now. Stay on your grizzy.

- Justin

Another Friday night posted at my favorite spot; On the couch, with my laptop on a TV-dinner table. I fell asleep, after going for a long-run (7 miles and could’ve ran more, I still got it!) after work at around 10pm and now I’m up at 3:43am. Don’t know what that’s all about. I’m trying to decide if I should go back to sleep or start Saturday now. Either way, I’m blogging in the meantime.

I just checked out my Thursday post and found that I forgot to post again providing details of the past 8 days. Well you see that I received a follow-up mailing from the city of Champaign about the bandit signs. I thought that was amusing, especially the detective work required to find my home address and such to mail to. The Champaign zoning administrator probably RSS’s this blog for all I know. Sometimes, I feel like I disclose way too much. But I really don’t care. That’s what makes this blog different. I’m keeping it real 100% and sometimes “keeping it real goes wrong”. But it’s all in fun to me, life is not that serious.

The video I made about using Mozenda to screen-scrape got noticed by Mozenda, so I thought that was pretty cool. After finding my YouTube video, the company interviewed me and I am featured in an article about their software. Which reminds me, maybe I’ll make a video tonight about the data obtained using Mozenda for my direct mailings. Actually, first I need to find out why my damn audio gets out of sync with my video when I do recordings.

I’ve got the key to a commercial property in town. The owner, who is in Chicago, wants to get rid of it and gave me a call. I told him that I don’t normally invest commercial, however that I’d check it out. I have a buyer who buys both residential and commercial. The owner has the property listed, but also has the option to sell it FSBO (executive-agency listing). Communication between me and the buyer was lovely prior to receiving the key in the mail, but now that I have it, I can’t get in touch with the guy. He said that he wanted to view the property, perhaps I’ll drop the key off at his office. Yeah, I just thought of that right now. Why do I need to tag along anyway? He can check out the property and then tell me what he would want to buy at. I can then go from there and compose an offer. I wonder if I need to look into different contract forms, since it’s not a residential property offer?

I’ve been active on CraigsList. I posted an ad looking for an investor-friendly Realtor , I also posted an ad looking for a phone receptionist to take my incoming calls. I’ve received one call from a Realtor who seems pretty legit, perhaps we’ll be able to establish a lasting business relationship. I hope he doesn’t fall off into the abyss like so many other Realtors, I’ve come across. You communicate with them for a few days and then they just stop responding to you. Just unprofessional as shit! As far as the phone receptionist, I’ve received quite a few replies about this job and have yet to start screening candidates. But this should be a great alternative to PATlive and easier on the budget.

I’ve decided to start a Web Development Company. I used to freelance web design on the side of my nine to five, I’m now finding that my time is much better spent dedicated towards real estate. However, I still receive prospective client leads and requests for bids on projects. While I don’t have the will or the time to spend time designing and programming, I’m going to leverage my connections and sub-contract the development work. I realized that I should be doing this after spending entirely too much time on web projects and also having to turn a few projects down. I’m in talks with a few prospective sub-contractors currently regarding this joint-venture. This will be very hands-off for me and all I would have to do is act as a liason between the client and development team. Easy money, don’t know why I’m just now thinking of this. Not too early to start diversifying my investment portfolio right?

That’s all for now. Have much more to write about, so perhaps I’ll post again later today.

- Justin