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By Leon McKenzie, CEO, US Probate Leads

The real estate industry is full of potential for both REALTORS® and investors looking to cash in. One sector within the industry that will allow you to spread your wings and fly is the probate real estate sector. This sector has a value that runs in the trillions due to wealth left behind by aging and dying American homeowners. If you are interested in building a profitable realty or real estate investment business, then you definitely should pursue probate leads.

There is one question though: what constitutes a good probate real estate lead? What should you be on the lookout for when determining whether to spend your time and money investing in marketing to that lead?

After all, time is money and you do not want to pursue probate leads that are going nowhere. Not when you have to contend with competition.

Well, the secret is in having a list of criteria that you can use to find the right leads. Here are some of the factors that you can consider:

1 THE REPUTATION OF YOUR PROBATE LEADS SOURCE

Probate leads are only as good as their source. Do you have any idea of the reputation of your source? Now, you could go down to the county courthouse yourself and attempt to find a few leads that you could follow, but be prepared to spend a lot of time there.

You can rest assured however, that this is the most reliable way of getting good leads.

You could also use referrals to find leads but there is only so much you will get in the way of quantity of leads. How many people do you know who can tell you where the latest probate leads are?

You could also utilize online resources like social media, but there would be no way of you ascertaining whether the information you are getting is correct until you follow up. And this could waste a lot of your time.

For all the above reasons, you should consider using a probate leads company whose sole job is to find good probate leads for its clients. A company of this nature would do due diligence because its reputation depends on the quality of the product it provides.

Do note that not all probate real estate leads companies are worth your money. You want to get your information from a company that is reputable and reliable. A company that provides the latest leads is your best shot of getting access to good quality leads that have yet to be pursued. In addition, your leads source should provide a comprehensive list of leads from as many counties as possible from across the nation.

2 THE POTENTIAL VALUE FOR MONEY YOUR PROBATE LEADS CAN BRING

You have no way of knowing which probate leads will work out for your real estate business and which ones will not. However, you can determine based on the pricing package whether leads are worth buying in the first place.

Quantity is not always a good thing. Cheap is not always better. What you want is quality. Ten probate leads that will result in a sale or two are much better than 50 probate leads that will not work out at all.

So, what you are looking for is how many leads are on offer for sale, how much they will cost you, and their potential return on investment. You also need to consider just how many people will have access to the same set of probate leads at the same time you do.

The latter is very important because it determines the level of competition you will have with other REALTORS®and investors for the same leads. This in turn will determine your success rate when it comes to converting those leads into clients.

It would be prudent therefore for you to be on the lookout for a set of probate leads sold for a fixed affordable price. It would be even more profitable for you to hold out for leads that are offered to you exclusively for a set period so that you can have the first shot before your competitors get access to the same leads.

3 THE QUALITY/ COMPREHENSIVE NATURE OF THE LEADS

What is the nature of the leads that you have access to? We definitely are not talking about the name of the executor and nothing else.

A name alone will not help you if you want to launch a marketing campaign strategy to reach out to your potential clients. What you want are details; lots and lots of details. You are far better off getting a probate lead that constitutes of the mailing address of the probate property and the phone number of the person who can be reached as primary contact. This is much better than having a name only. You can always address an introductory letter to the title “the executor” until you are able to get the name of the contact you reach out to.

If a lead does not contain at least the mailing address, ignore it. That lead is not worth your time and energy. It will require you to waste a lot of resources just to find out if the lead is worth pursuing, which you could have spent wooing otherleads and trying to convert them.

4 RESPONSIVENESS OF THE LEAD

A lead remains so until you convert that person into a customer. For that reason, you need to gauge whether a lead is worth pursuing further based on how responsive that party is to your first attempt to communicate.

If you want to be the best REALTOR® or real estate investor in your locale, it is important for you to learn how to read into not only what people are saying, but also what they are not saying. When you choose to stick to probate real estate, be aware that you will be dealing with the grieving on a regular basis, and they are a bit more unpredictable than the ordinary potential seller. So, gauging how responsive they are is a skill that you need to learn, and learn very fast.

The fact of the matter is that most executors who act as the primary caretakers of probate properties are motivated sellers. It’s just that some of them need to grieve and get their act together first before they choose to part with the properties that they are in charge of.

As a REALTOR® or real estate investor, you need to keep two lists. One list should be for those leads that are very responsive, and the other should be for those leads that are worth revisiting several months in the future.

The moment a lead that you reached out to contacts you, pay very close attention to what that person wants. If the lead in question just wants to ask what it is that you do, that’s good enough. Even if that lead is not ready to be converted into a customer, the fact that he or she has reached out to your business means that what you are offering in the way of services has caught the lead’s attention. You should double down, and nurture that lead until you can get what you want.That is a very good quality lead.

Other very good quality leads consist of executors who live far away from the probate property they are in charge of, as well as those in charge of prime properties that beneficiaries are fighting over. Such executors are usually very motivated to sell and get rid of the troubling property just so that they can have peace of mind and steer clear of stress. Also be on the lookout for leads associated with properties that have pending bills. The bills indicate an overwhelmed executor who has no idea of how to go about managing an additional property. Leads of this nature can easily be converted to customers because they do not want to handle financial stress for long.

That said you should not completely ignore leads that show a reluctance to even contemplate selling a prime probate property. If the death of the lead’s loved one is still fresh, it makes sense that the executor will not be in a mood to part with that person’s property. But if you were to offer your services a few months down the line, that lead would be more amenable to being nurtured and converted into a customer.

It would be prudent therefore, for you to learn the useful skill of gauging the responsiveness of a probate lead on a case-by-case basis.

CONCLUSION

While the real estate industry as a whole is very competitive, a significant part of the probate real estate sector is still uncharted. You can be a pioneer in your locale, if only you take the time to invest in your realty or real estate investment business.

The quality of your probate leads is the foundation to building your real estate business into a successful company, so tread carefully when acquiring them. Start by scrutinizing the reputation of your probate

leads source, determining the ROI, selecting the highest quality of leads based on details provided, and then learning how to gauge the responsiveness of the leads you contact. By paying attention to the details, you will set yourself up for success. It will be much easier for you to laugh all the way to the bank thereafter.

FOR MORE INFORMATION

Leon co-founded US Probate Leads more than 12 years ago and has witnessed its growth during that period from a one city lead provider in the probate space to the only national provider of probate leads for virtually every county in the country.

Leon likes to point out that US Probate Leads is the only company providing Probate-related Real Estate-related leads to Investors and REALTORS® based on data collected directly from individual probate courts in virtually every state. This has been achieved by building a National Network of Researchers that visit each county one time each month. Leon’s team processes this incoming data and makes it available to individual subscribers for their use in reaching out to highly motivated property sellers.

 

By Gary Massari and Bruce Kellogg

Introduction To Real Estate Matters

This is an initial article in a new series called, “Gary’s Real Estate Matters” from Gary Massari, CEO of REI Fortunes and Bruce Kellogg, Real Estate Consultant.  In this article you will learn the importance of estimating repair and renovation improvements and how you can benefit financially!

Use With Contractors

When working with contractors, you can save money several ways; first, buy your own materials and only hire the contractor for labor. This will save you 20% on materials that contractors mark up.  Secondly, if you are a veteran, Home Depot will give you a 10% discount. If not, then find a friend who is a veteran to make your material purchases for you.

We are going to show you a template we use so you can see how it works, especially with contractors and sub-contractors for each area of rehab. It is important for the bidding to be uniform so that careful comparisons among bids can be made. If a bidder departs from the estimator, there must be discussion to reconcile any differences. Otherwise, you are comparing apples and oranges, as the saying goes.

Building Your Own Estimator

There are a lot of cost estimators you can get for free by searching Google, but designing your own to meet your specific needs is far better and more accurate.

When designing your estimator using an Excel spreadsheet, there are four summary parts you want to include to the estimator:

1. Exterior
2. Interior
3. Mechanics
4. Other

Exterior will look something like this…

Notice that the UNIT SF works together with the COST (unit price) to calculate the total cost, as in this case for a new roof.  You can easily contact a roofing contractor in your area to get a square foot cost to replace a roof.

Here are the categories for the Exterior:

1. Roof
2. Gutters
3. Finish
4. Masonry
5. Painting
6. Windows
7. Garage
8. Landscaping
9. Concrete/Asphalt
10. Decks
11. Fence
12. Pool
13. Septic

Here are the categories for the Interior:

1. Painting
2. Hardwood
3. Carpet/Vinyl
4. Kitchen cabinets, flooring, counter tops, electrical & plumbing
5. Appliances
6. Bathroom
7. Framing
8. Insulation
9. Walls
10. Doors & Trim
11. Basement
12. Foundation

Mechanical

1. HVAC
2. Plumbing
3. Electrical

Other

• Demo & Dumpsters
• Termites/Mold
• Permits

Concluding Remarks

• The unit cost in our example is based on the San Francisco Bay area. They will need to be revised for areas that have substantially different cost structures. Input from local contractors submitting bids should make this possible.
• In many markets around the country, sale prices are now declining. Therefore, it is critically important that rehab costs be estimated accurately, and an extra margin be added for safety.
• Put a Yes/No column, and that way you can walk through a home in minutes and mark Y or N based on your observations. When you leave you can then calculate the cost.
• Make sure you add a 10% to 20% contingency to the total project to cover unknowns. Some hard money lenders will only allow 5% overall contingency, so in that case pad your line items to include a sufficient contingency.
• When doing major renovations, it is wise to get SKU numbers for your kitchens, bathrooms and mechanical items.
• The best use of a detailed cost estimate is to assure that you have covered your bases to have a profitable project, and to convince your investor as a wholesaler of your accuracy and credibility.
• Your cost estimator will also come in handy when you negotiate your final offer on a discounted property to assure profitability.

Let Gary and Bruce know if this article helped you, and write us to request other topics.  You can always reach either of us by calling us or emailing us…

Gary Massari, CEO REI Fortunes, https://reifortunes.com

925-451-1619 [email protected]

Bruce Kellogg, Real Estate Consultant, [email protected] (408) 489-0131

 

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By Tom Wilson, CEO of Wilson Investment Properties

There are so many reasons to get excited about owning a multifamily property that it can be easy to overlook one or more critical areas of due diligence. I’ve been investing in real estate for five decades, and I love multifamily products. My best performing asset is a multifamily that I purchased 17 years ago. And the worst deal I ever owned was also a multifamily asset.

Often deals look amazing with the proforma (projected returns with ideal conditions and assumptions) showing high cash flow and high IRR (Internal Rate of Return) projections. These returns are indeed the goal; however, you need to determine if they are just virtual (on paper) or if they can actually reach your pocket. I’ve seen the good and the bad, compiled my experiences, and would like to share the top ten things to consider before closing on your next multi-family deal to maximize your success.

1) LOCATION LOCATION LOCATION.

The metro and the sub market are critical. What is the traffic count? Visibility? Is it on the right side of the freeway, or in the path of progress for its city or town? What do its neighbors look like? Who is shopping in the local stores? Would you walk the streets at night?

The answers to these questions are going to be indicative of your experience if you purchase the property.

2) GREMLINS INSIDE?

Every property has surprises. Some good, mostly not. While a smart purchaser always includes contingency and reserve accounts, certain multifamily properties hold more surprises than others.

The foundation, age of chillers and boilers, environmental review, roofing and all deferred maintenance can be major red flags of potential deal-breaking capital expenditures. Make sure your team walks every unit, not just a sample. Twenty percent of the units can chew up 80% of your rehab capital. Also, who is actually living inside your potential property? Review every lease and check if they are really representative of the area. Did the seller fill up the property with low qualification residents just to show a high physical occupancy?

3) JOB & POPULATION GROWTH.

How good is the metro? Any multifamily property requires stable or growing rents and tenancy to be a successful investment. Good tenants have jobs and pay their rent on time. Look at individual job growth statistics. Is the city growing faster than the state or nation? What about in your sub market? Good job markets attract people, while bad markets see net negative population growth.

If your property’s market is stagnant or on the decline, chances are your occupancy rates will follow.

4) ONE HORSE TOWN?

So you like the metro, employment is good, and population increasing. Now ask yourself “why?”. A good metro has good employment diversification that will weather storms and booms of economic sectors and individual corporations, while singular economy metros are more vulnerable.

Remote military towns can be shut down overnight by congressional base closures. Large corporate offices or manufacturing plants can be relocated else-where or even overseas with mass layoffs in the local area. Natural resource boom towns are vulnerable to single commodity prices and competition.

Even government offices can be moved to newer, cheaper areas, which can leave a non-diversified metro in shambles and hurt your investment. I like growing metros over 1 million people with a broad economic base.

5) PARKING LOT TEST.

Another surefire way to take a litmus test of a property’s tenants is to drive the parking lots at different times of the day and week. Good tenants have jobs and are at work, and the number of cars during the day should be pretty scarce.

If you find a full parking lot during mid weekday, chances are there are many tenants on various levels of subsidized or governmental support, who tend to live with less of a financial buffer to pay rent and care for their unit. This could indicate a higher likelihood for turnover, make-ready costs, and lower occupancy. Park at the property at night and watch. Who is coming and going? A lot of traffic on site that are not occupants could indicate illegal operations or extra tenants who are not on the contract.

6) SELL STORY.

Why is the current owner selling? Have they been struggling for years to make it perform and have just given up? Did they not have enough capital to mitigate deferred maintenance or to attract higher rent tenants? Perhaps the neighborhood is rougher than the listing broker is making it out to be.

I’ve passed on what appeared on paper to be amazing investment opportunities, simply by asking,“Why couldn’t the existing owner do better, and what makes me think I can outperform the current owners?”. Sometimes the property is good but the nearby properties are better, and it would take too much capital to just come up to par with the competition. Remember, the seller knows more about the property than you, so it is important to fully discover the history and challenges.

7) MANAGEMENT & MAINTENANCE.

A critical way to control the tenant density environment, improve service to tenants, and reduce costs is to have full time on-site property management and maintenance.

This allows you to better control who lives in your property and get prospective tenants to sign leases before finding other options. It also allows you to quickly evict problem tenants, and to get maintenance and other problems fixed with minimal wait times and maximum tenant retention.

Typically, a multifamily has to have $40-50 thousand minimum income to afford to have on-site management and maintenance. Any less or a parttime solution with less effective service can hurt your property’s performance. That is why I avoid small multifamily properties.

8) WEAK ASSET IN A GOOD NEIGHBORHOOD.

You can have a lot of control on improving a property, however, almost no control on fixing the neighborhood. I will look at C properties but almost always insist on a B- or better neighborhood.

You’ve heard one philosophy for buying houses to look for the ugliest house on the best block – the same can work for multifamily properties. Find a property for which added value and better management can take advantage of the lift from neighborhood. The sub market around you can help or hurt you. Choose it as carefully as you choose the property.

9) RECESSION REVIEW.

It’s easy to have a Midas complex in this bull market and start believing that everything anyone touches turns to gold. And it’s true, when the economy is on an up-swing, even mediocre properties with average management can be successful. This holds true until it doesn’t, and those who don’t plan accordingly will get hurt the most.

I look at the great recession performance years  (2007-2010),  and  see  how  the  product  and sub-market performed then. How much did the occupancy drop? Did the NOI crater? How did the sub-market’s population and unemployment do?

These are good tests on how the property and area will do in the next recession. And all expansions end, we just don’t know when. Select a historically resilient market and plan on having enough reserves and low enough leverage so your property will survive the next recession.

10) FRIENDS AND FAMILY TEST.

Lastly, especially if you are responsible for other investors’ money to help fund acquisition, ask yourself “would I offer this investment to my friends and family?”.

If the answer is “no”, or even if you have to pause and think about it, you likely already know the answer and should listen to your subconscious and walk away while you can. That final “gut test” is useful in overriding our mind’s uncanny ability to talk ourselves into a bad decision even when we know deep down it’s likely higher risk than we feel comfortable with.

This is just a sampling of the many important things to look for during due diligence before closing or even making an offer on a multifamily property. One of my top observations is that sub-markets vary a lot from the average of the metro, and the sub-markets and surrounding areas can be as important as the property itself in determining likelihood of success.

And lastly, don’t reinvent the wheel. Ride on the coattails of experts and utilize the experience of others. Even though I have almost five decades and 4,000 unit transactions of experience, I never do a new deal without consulting an expert for every aspect of the investment, including the sub-market and the asset class. Use those trusted advisors around you that have honed their expertise and judgment and you’ll greatly increase your probability of having a successful multifamily asset.

To your financial success,

Tom K. Wilson

CEO Wilson Investment Properties

Interview by Anita Cooper

In the real estate world, investors have a lot of choices to grow their portfolios; fix and flip, buy and hold, residential, multi-family or commercial, and finally, one type of investment that’s often forgotten or at the least remains shrouded in mystery: note investing.

Note investing is a fantastic way to grow your wealth, but until the last ten or so years, it’s not been on the radar of many property investors. We sat down with Jasmine Willois, founder of The Note Assistance Program (N.A.P.) to learn more about her and to discover how her organization can very often help investors reap double digit returns.

Question: Jasmine, how did you get involved with note investing?

ANSWER:Note investing is one of those things that kind of came to me. I started out with a real estate investment club called Lady Landlords of San Diego, and that really took off! We ended up expanding to two clubs, the latter being Lady Landlords of Orange County.

After years of flipping homes, offering turn-key investments (rentals) and some life changes, it occurred to me that I didn’t want to work this hard at investing.  So I called a hedge fund manager I knew from networking, and we will it off. I ended up shadowing him for the next two years of my life, and learning everything he did inside and out.

Question: Do you enjoy your work?

Yeah, it’s exhilarating… it really fits my personality. It’s something that allows me to use my problem solving skills to help those in need. You see, I used to be a day trader and a stock broker. It was a lot of money, but not as rewarding. With note investing I’m able to make good money and also feel good about what I do.

Question: Why should investors add notes to their investment portfolios?

ANSWER: Outside of the sheer return, which is very alluring — it’s really a product that, whether investors know it or not, they’re most familiar with.

The majority of people use traditional means to invest and save, such as stocks, bonds, ETFs and mutual funds. These vehicles are really hard to understand and that’s the difference with notes, if explained correctly almost anyone can get it.

Again, because most of us are familiar with the underlying asset, real estate and even further a majority of them have experience getting mortgage loans from one of the bigger mortgage banks, like Wells Fargo or Chase.

As far as the underlying asset, which is the actual real estate, investors who buy notes are already very familiar with the concept. They’ve bought a home before with a loan, so whether they realize it or not at first, they’re very familiar with the product.

Question: What is The Note Assistance Program process and how quickly can investors expect it to take?

ANSWER: Well there are two opportunities, but what is making this revolutionary and bringing real change to the market is that we have built a platform for the retail investor. You no longer have to go to a $16,000 to $40,000 program unless you need the crowds.

Until recently, the past three to six years, this side of the market really wasn’t open to the average investor, never-mind the fact that still to this day it’s hard to find out about notes without running into a guru, broker joker or scam artist.

One product we offer is our Non-Performing Note Trade Desk. Here you will find a cornucopia of notes usually around $35M to $55M worth of unpaid balances nationwide that can be cherry picked.

Investors have access to tapes that are direct from the seller, so no daisy chains! And here’s the most exciting part, because we have established such a track record with the sellers, our clients are actually benefiting from lower pricing than they can find anywhere else. Our members benefit from our relationships by being able to curtail on a bulk trade or with direct pricing from the sellers.

This is something the average note buyer cannot get just due to barriers of entry. Seasoned investors love our trade desk because they are finding that we have the inventory and the pricing that cannot be beat. Even in cases where they have access to the same inventory our the transparency and pricing you find on our trade desk is hard to beat.

They get to benefit from those relationships with my pricing so they’re buying in bulk, and then they get direct pricing from the seller there, THAT’s something that the average individual can’t get.

The second way investors benefit from The Note Assistance Program is the educational piece. We’ve put together the most comprehensive on-line note education platform to date. This platform takes out all the fluff and distractions that can be found to throw investors a loop.

For those, like me who learn best by doing, there is our accelerated hands-on program where we have a flat fee. This program is different because you have to be committed to buying a note to join, it’s not one of those programs where you can join and hang out for a few years and not invest.

Like I mentioned, we have well over 37M worth of inventory on our trade desk as we speak.

We’ve got big banks like Bank of America, all the way to smaller hedge funds in rural america. So for those who are committed to learning, buying and have the capability the program is here for you.

Through this program we offer support for the life of the loan the investor purchases. This in not a joint venture situation where we split the profits in the end, you get the full experience and the full profit at the end of the investment. To that point, being actively involved with your note is mandated here at The Note Assistance Program.

So you’ve got to know how to be active and know what you’re doing. This industry is just as dangerous as the others, you can hurt yourself and the borrowers so it’s very important that you are trained correctly. I have found that most of the programs out there are too cumbersome or leave out certain tips and best practice that ultimately leave the investor dependent on the guru. We do it differently here, and that is how we are shaking up the industry.

Question: How does the additional layer of protection work?

Answer: The protection really is for the people using self directed IRAs. It’s not a “dollar-for-dollar” type of protection; it’s really about keeping these investors compliant with IRS regulations, and avoiding decisions that jeopardize their tax benefits. If you own a self directed IRA, you shouldn’t be doing “hands-on” activities with the investment. There is a fine line with the IRS, they have prohibited transactions and even disqualified people for investors to navigate around. So a lot of people choose to use The Note Assistance Program and it’s team to handle these grey areas.

Most investors want to be active so we train them to outsource with the professionals in the industry, and extend our black book of trusted vendors to them as well. There is no need to become an attorney, to learn how to read title or do foreclosures on your own. We attract those investors who want to build a working portfolio, not another job. We focus on building the right team of professionals who can help keep us out of trouble, because as I mentioned, you can loose money.

Question: How many investors have you helped?

Answer: So far we have helped over 200 people since we opened our doors. We’ve expanded and added two locations one in Newport Beach, CA and another in Bayonne, New Jersey. Our investors are very successful, which in turn is why we are successful. We are not running a private island or club, it’s a community of investors that have established and implemented best practices.

We take our community of clients in small teams. The classes for the Non-Performing note lab that we teach isn’t more than thirty-two.

Four times a year, I get out there and teach small classes of 20 or less in our 2-Day Non-Performing Note Lab as well, so that has helped us with our reach. We keep those classes small and practical so each investor can get what they need from the experience. We want to make sure the investor is given a real life view of what it means to be a note investor, not a lot of hype.

Question: What would you say is the average return an investor could expect with a note?

Answer: It’s definitely double digits, and if you approach the business the right way you can do that consistently.

That’s what this is really about, beating Wall Street. We get these numbers because of the relationships we have built over the years with these banks, and because we have a system of people who work our system. We also only play in the 1st position space, so we aren’t buying 2nds or 3rds for that matter. You will find that most investors are junkies for control and security, we find both when note investing.

With that first position comes THE security and the control that we’re looking for, to make sure that we can tackle those types of returns. Unlike second or third position, when you buy in first position, you pretty much “win some and win some”, and that’s what appeals to me.

ABOUT JASMINE WILLOIS

An advocate for responsible investing Jasmine spends her time educating audiences on conservative real estate strategies. She has owned rentals and flipped out-of-state properties since 2005 in states such as California, Mississippi, Indiana and New Jersey to name a few. She is the Managing Director of The Note Assistance Program a firm that provides additional security and education on real estate investing, specifically with non-performing notes. Her reputation for the judicious use of resources, result-oriented management style and skillfull negotiations, has opened many doors.

Jasmine offers a unique blend of experience. She received her B.A in Economics from California State University at Long Beach, and enthusiastically accepted her first job as an equity trader with Joseph Stevens, in New York, NY. She emotionally ended her 7-year long career on Wall Street as financial advisor with Morgan Stanley Dean Witter after losing colleagues to the world trade center attacks.

Jasmine focuses on conservative real estate cash flow strategies and the abundance of opportunities that lay out side of her backyard. She hosts a note mastermind at her Note Lunch & Learn every Thursday from noon to 2 pm at her Newport Beach, Calif., office. Find out more on Meetup.com or their Facebook page.

Photo caption:Known for her signature pink cowgirl hat, Jasmine Willois, MBA, likes to incorporate fun while learning about a serious topic: distressed notes.