MAREI's March 2021 Newsletter

2 0 2 1 M A R C H

MAREI

MID-AMERICA ASSOCIATION OF REAL ESTATE INVESTORS

This month learn how to invest in Mobile Homes & Mobile Home Parks with Frank Rolfe

NETWORKING OFFERING A WEALTH OF OPPORTUNITY TO CONNECT

EDUCATION FROM MEETINGS & WORKSHOPS TO ONLINE RESOURCES

DISCOUNTS FROM LOCAL AND NATIONAL VENDORS TO SAVE YOU MONEY

what's coming up 09

March 9th, MAREI Monthly Meeting Huge profits from Small Investments.

How the Mobile Home Investing Busines Works with Frank Rolfe.

Networking at 6, Legal Market Update at 6:30 and Presentation at 7:00pm.

20

March 20 MAREI Workshop Building Your Mobile Home Investing Empire with the 5th Largest Owner of Mobile Homes, Frank Rolph. 9 to 1.

13

April 13th MAREI Meeting Starting your Vacation & Short Term Rental Property Business with Elizabeth Maora Sickles. Networking at 6, Legal Market Update at 6:30 and Presentation at 7:00pm.

1/2 Day Workshop May 1st 9 am to 1pm

All Above Events are VIRTUAL See MAREI.org/Calendar for more events across the Kansas City Metro from the local landlord groups and events hosted

by MAREI Members.

MAREI Staff Chapter

Executive Director

Kim Tucker: Kim@MAREI.org - 913-815-0111

Newsletter

Staff: Newsletter@MAREI.org - 913-815-0111

PartnerCast Legal

John Wires: JohnWires@gmail.com Julie Anderson-Clark: Julie@MOKSLaw.com Rick Davis: RDavis@LevyCraig.com

Membership in National REIA provides our members with

Mission Statement

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Legal Disclaimer

Mid-America Association of Real Estate Investors is a trade association dedicated to promoting ethical real estate investing and to protect and promote the best interest of our membership through educational and networking opportunities as well as community, legislative and public relations.

MAREI does not exist to renter and does not give legal, tax, economic or investment advice and disclaims all liability for the actions or inactions taken or not as a result of communications from or to its members, directors, contractors and volunteers. Each individual should consult his/her own counsel, accountant and other advisors as to legal, tax, economic, investment and related matters concerting their business.

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Content Disclaimer The views and opinions expressed by authors of articles contributed to this newsletter do not necessarily reflect those of the association, the director, or the staff.

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F R A N K

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R O L F E

M O B I L E

Mobile Home Investing

H O M E

I N V E S T I N G

COVID Proof . . .

THOUGHTS FROM FRANK ROLFE

The Covid-19 pandemic has ushered in

impact on mobile home park

This huge price variance has made

a new era in American real estate

occupants.

mobile home parks one of the hottest

investment. Overnight, some asset

sectors of real estate. Many mobile

sectors such have plunged in value.

And those that lost their jobs were in

home parks receive over 100 calls per

However, some have been only

the sweet spot for finding employment:

week from Americans seeking places

marginally impacted and one has

minimum wage to $15 per hour labor

they can afford to live on their salaries.

actually become stronger. That special

opportunities. These are exactly the

And this trend is only accelerating.

asset sector is the old-fashioned

type of employees sought out by such

mobile home park. So why have mobile

companies as Amazon and Domino’s

Prior to Covid-19, apartments had

home parks fared well while other

pizza—both of which grew their

strong rents and occupancy. However,

niches of real estate have been

employment basis during the

now the tables have turned on what

crushed by Covid-19?

pandemic. If you look down any street

attributes Americans want in their

in the U.S., you will see the only “Help

housing. Mobile home parks offer

Most residents of mobile home parks

Wanted” signs are for jobs paying $15

things that apartments can’t including:

fall into two categories 1) retired or 2)

per hour and less.

essential jobs. The basic backbone of

No neighbors knocking on your

our country—the jobs that keep the

It’s no shocker that a huge amount of

walls or ceiling

engines running and the food on the

Americans (estimated to be over 30%)

A yard that you can use as an

table—fall upon the employment

are in need of housing they can afford.

outdoor space for yourself, kids or

sector that traditionally has lived in

Indeed “affordable housing” is one of

pets

mobile home parks such as fast food,

the nation’s biggest challenges. While

Parking by your front door and not

auto repair, and shipping. So while the

the national apartment rent averages

an impersonal parking lot

government shut down all “non-

over $1,200 per month, mobile home

A sense of community with

essential” industries at the start of

park lot rents average around $280 per

neighbors who are not transient

Covid-19 back in March, this had little

month.

The ability to be a homeowner

F R A N K

R O L F E

Many apartment dwellers—after

assess what the options are for

The customers never leave because

spending months stuck at home—hare

“contrarian” investment. These are

the value is so high. Mobile home

realized the short comings of attached

sectors that actually have greater sales

parks have the most steady revenues of

housing and now seek out detached

and demand during bad times, coupled

any real estate sector and for good

options that meets their budget. The

with barriers to competition so that

reason: nobody wants to give up their

stimulus money for Covid-19 has

everyone can’t just jump into that line of

spot in line. Mobile home parks offer

helped mobile home park residents

business. And unless you are able to

the lowest cost detached housing in

and owners more than probably any

turn back the hands of time and start

the U.S. and there is a fixed supply of

other declaration. When the $1,200 per

Amazon, then the next best thing is to

them. If you own a 3 bedroom/2 bath

adult and $500 per child was handed

buy a mobile home park (or several).

mobile home outright (and it’s

out, there were no strings attached on

Indeed, there is no greater “contrarian”

estimated that 80% of those in mobile

having to have lost your job to get it..

investment available today. So why is a

home parks have no mortgage), then

And many of these groups then used

mobile home park a successful

you only pay the lot rent which

that money to move to a mobile home

“contrarian” option? There are several

averages $280 per month in the U.S.

park. Indeed, our sales and rentals

reasons:

That’s $1,000 per month less than an

have never been as strong in any other

apartment alternative. So if the

period prior to the Covid-19 pandemic

The demand for “affordable housing”

customer sells, rents or walks away

as they are now.

goes up in bad economic times.

from their mobile home, their financial

Mobile homes are the least expensive

life is ruined. This inherent value is what

form of dwelling in the U.S. During

keeps mobile home parks around full

economic declines, the demand for

capacity regardless of the economy.

But what should we expect in 2021?

Prior to the pandemic, most

cheap housing skyrockets, and this

economists predicted the next U.S.

places mobile home parks in the sweet

At the same time there are several

recession would begin in 2021.

spot of demand during every crisis.

unique features of mobile home parks

However, they still do. Effectively, the

Most mobile home parks receive

that make them unusually high-yielding

Covid-19 outbreak was simply a

around 20 to 30 calls per week looking

from the onset:

prelude to a larger economic event,

for affordable housing, and the best

which historically always falls

receive over 100 per week. The giant

You can buy them from the original

immediately following the U.S.

demand for mobile homes is what fuels

moms and pops at lower prices. This

Presidential election. In this case it’s all

higher rents and strong occupancy,

simple feature produces a huge

about the final reckoning of the debt of

and only grows as the economy

amount of value for the buyer. Moms

those businesses that failed (hotels,

diminishes.

and pops are less sophisticated and,

restaurants, retail stores, etc.) coupled

therefore, they ask less for properties

with displacement of workers in non-

There is a huge barrier to new

and there is always plenty of room for

essential industries and state/cityfiscal

construction in virtually every city in

improvement in the net income by

calamity as the result of plummeting

the U.S. Warren Buffett always talks of a

increasing rents and occupancy

tax income. The bottom line is that if

“moat” -- which means a barrier to

coupled with lowering costs (typically

you think it’s all upside in 2021, you’re

competition – as one of the key drivers

manager and utility line items).

not aligned with economic models and

to a successful business model. And

probability, nor are you being realistic.

mobile home parks have perhaps the

You can obtain extremely attractive

Talk is cheap – and we heard a good

largest moat in the U.S.: the complete

interest rates on loans. Even though

bit of it during the election – but the

shutdown of zoning for new mobile

most Americans have never considered

fact is that America is well positioned to

home park construction in virtually

mobile home parks as an investment,

go further down the tubes in 2021 and

every American market. And it’s not a

banks sure have. Mobile home parks

with perhaps greater acceleration.

new feature as it’s been that way for

have the lowest default rate of any real

over a half-century.

estate sector and, as a result, they are

In times like these, smart investors

much in demand by lenders. Mobile

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home parks have essentially four basic lending groups: 1) seller financing 2) bank financing 3) CMBS financing and 4) Fannie Mae/Freddie Mac financing – and these all offer rates that run from around 2.8% to 5%.

Their rents are ridiculously low with plenty of upside. The average lot rent in an American mobile home park is around $280 per month. In many markets that’s $1,000 per month less than a competing apartment. The reason ties back to the mom and pop management of the sector, and a refusal to raise rents in-line with inflation. When mobile home parks were built in the 1960s, for example, the standard lot rent was around $50 per month. In today’s dollars that’s around $500 per month. So what happened? Mom and pops engaged in their own form of “quantitative easing” and kept rents artificially low. But the bottom line is that most mobile home park lot rents are ridiculously low and need to be raised dramatically to be back in-line with market forces.

So if you’re currently making your financial plans for 2021 and want to position yourself to profit from the coming national recession, then you should focus on “contrarian” plays with mobile home parks at the top of the list.

There are around 44,000 mobile home parks in the U.S. and only around 4,000 of those are institutionally owned, leaving almost 90% of the industry up for grabs. But this window of opportunity will not last long as investors search for ways to hedge the coming U.S. collapse.

Frank Rolfe has been an investor in mobile home parks for almost two decades, and has owned and operated hundreds of mobile home parks during that time. He is currently ranked, with his partner Dave Reynolds, as the 5th largest mobile home park owner in the U.S., with over 250 communities spread out over 25 states. But it all began with one mobile home park, Glenhaven, in Dallas, Texas.

"When I bought Glenhaven, I had absolutely no idea what I was doing or how a mobile home park worked. If I had, I would have never bought that park, as it saddled me with a master-metered gas and electric system - two of the biggest challenges a mobile home park owner can face - and a tenant base that was straight out of COPs. We had carnival workers, hookers, the absolute dregs of society. It even had a wrestling ring in the back. A few years later, I had unbelievably turned that dump into a nice, quiet, family community, with a neighborhood feel and kids riding bicycles down the streets.

Another five years later, the park was worth around $1 million more than I had paid for it." With his success with Glenhaven, Frank continued to buy more mobile home parks, focusing on parks that had good locations, but were terribly managed.

H O M E

I N V E S T I N G

Frank has always believed that mobile home parks are all about "affordable housing". "Beginning with Glenhaven, I noticed that a mobile home park - when properly managed - offers a significantly better quality of life than a comparably priced apartment. Nobody likes to have neighbors banging on their walls and ceilings, or the lack of a yard or nearby parking - or just the lack of a neighborhood "feel". It occurred to me that I could have my phone ringing off the hook if I could deliver an affordable detached dwelling with a yard that was safe, clean and respectable. That's what I delivered at Glenhaven, and that's what I've been doing ever since."

Frank lives in a small town in Missouri with his wife and daughter. He is very active in community affairs, being a member of the Lions Club, the school board, and Chairman of the Landmarks Commission. He holds an A.B. in Economics from Stanford University.

Frank and his partner also operate Mobile Home University and have written a book.

To get access to their digital newsletter and their book on mobile home investing go to MAREI.org/MobileHome

M A R E I . O R G / E V I C T I O N

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R E N T A L

A S S I S T A N C E

RENTAL ASSISTANCE KS HOUSING CORP

MISSOURI HOUSING ERAP

Coming in March- The Kansas Emergency Rental Assistance Program will provide rental assistance to households behind on payments due to COVID. Serving the entire state except for Wichita which will have its own program.

More Info at KSHousingCorp.org

Open Now, the Missouri Rental Arrears Program (ERAP) provides financial support for landlords and renters who are struggling due to COVID in the State of Missouri, Information and applications can be found online at MOHousingResources.com/ERAP

CATHOLIC CHARITIES

EL CENTRO

Catholic Charities help with basic utility and rent payments; vital prescriptions; and medical supply expenses. Offering many services, start your search by calling 913.433.2100 or go to their website.

El Centro can provide one-time Emergency Assistance for those in need. To receive assistance, they require that you complete a financial literacy course. Please contact El Centro at 913.677.0100,

CatholicCharitiesKS.org

ElCentroInc.com

SAVE INC

VETERANS COMMUNITY PROJECT

Through the Rental Assistance Due to Medical Crisis program, SAVE, Inc. provides assistance to help temporarily pick up the bills for families facing health crises.

VCP's Veterans Outreach Center provides a variety of support services to Veterans in the Kansas City metro-area including Rent and Utility Assistance by appointment.

To learn more call 816.531.8340 SaveIncKC.org

Please call 816.599.6503 VeteransCommunityProject.org

PLUS 211KC.ORG OR KCMO.GOV/RENTHELP

E L I Z A B E T H

S I C K E L S

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T E R M

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V A C A T I O N

R E N T A L S

Airbnb Design for Maximum ROI

PROVIDED BY ELIZABETH MAORA SICKELS Designing for vacation rentals can be a challenge! You have to think in terms of the guest, as well as resale value down the road. We run property rehabs, doing the full design and furnishing of he properties for our clients for vacation rentals. We’ve found the following as extremely beneficial in maximizing ROI for both immediate, and long term needs.

I never design on trend, but rather for the long haul, assessing current needs and anticipating future needs. Making a space inviting, by providing a unique experience, is the goal. Every one of our properties are themed, everything from Downtown Serenity, Viva Las Vegas, Elegance in City, to An Upscale Dog’s Life and Indy’s Grand Slam. Sometimes our properties are themed around a piece of artwork. I was in Chicago and found a gorgeous oil flower painting. The entire property was themed around this painting. All you need in some cases is one piece of inspiration to get you going!

Open concept, I believe it’s here to stay

and design for this factor. We have a lot of business guests, having an open concept, allowing them to work and eat and collaborate together in a private setting has been invaluable. Knocking down walls will make your contractors happy as well! Having the kitchen, living and dining rooms all open enhances the space, makes it look bigger and more inviting. In the dining room area, we buy as big a table as we can. The reason is because everyone gathers around food.

Our business guests have commented on how great this table is for meetings and to have plenty of room to put papers and other items they’re working on out and really collaborate and get work done.

Kitchens and bathrooms are where you want to absolutely maximize your budget if you rehabbing a property. Interesting fact, only about 10% of our guests ever actually use the kitchens. Most of the time they are just making coffee. However, everyone wants a gorgeous kitchen! We do granite counter-tops, soft close

cabinets, and tiled back-splash.

Dishwashers are absolutely a must. The only time we don’t require dishwashers are in the efficiency units, a 1bedroom/1 bath property. Even though we do everything we can to make that happen.

High end appliances are not necessary but welcomed. The fingerprint proof appliances are great to have, just to keep that clean look.

You can have a lot of fun designing bathrooms now! I highly recommend the tiling, it’s classic and clean. Spending a little bit more money on shower heads and fun functionality will make for very happy guests. The bathrooms need to have as much light as possible, so we can see when putting on make-up and as many electrical outlets as well. We keep the décor simple in the bathrooms, typically some type of canvas or resin artwork and greenery.

We are incorporating more and more greenery all of the time. Both artificial and

E L I Z A B E T H

S I C K E L S

eal greenery. Guests are loving that we have real plants in our properties. It is healthier for the home cleaning the air, depending on what time of plant it is of course. In this fun bedroom, we incorporated the greenery. As well, this beautiful canopy bed. It’s very luxurious and inviting, the guests just love it. The candles that are on the dresser are battery operated. We do not use any real candles, as we do not supply matches in the properties. We try to be as cautious as we can and eliminate risk when and where possible.

For the entry ways, rugs, shoe holders and coat hangers are a must. As large as rug that will fit in the space and still look great is recommended. This is to be able to catch as much moisture and junk from shoes as possible when guests walk in.

While we don’t require it, we do encourage guests to leave their shoes at the door. This helps keep the properties cleaner and makes it easier for the cleaning staff.

At least one signature lighting fixture is a must. In this house, because these three rooms are all open, I did three fun light fixtures all in the same line for each room.

The theme of this house is “ Viva Las Vegas”, so the fixtures are glitzy and glamorous.

The living rooms are another key area.

We have found that guests want a large

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couch. Most people do relax around the tv in the evening time, a vacation rental is no exception. We make the spaces really inviting with a lot of throw pillows, blankets and a large rug. A rug makes a house a home, as well they are so inexpensive now.

In Elegance in the City, this beautiful peacock oil painting just had to be used.

The piece is just enormous, we paired in front of it these two gorgeous chairs that pick up the color in the painting and also have the muted brass that is very prestigious yet welcoming at the same time. We like to use couches that fold out into a bed as well, however, the space and budget dictate if that’s possible.

For bedrooms we only do white, lots and lots of white! White bed linens, white duvets, and white duvet covers. White is clean, guests know the linens have been laundered, there are no stains they are pristine. It might sound boring, but after we’ve finished decorating the room, you don’t even realize it! Using a lot of color from pillows, blankets and art work, really makes the bedrooms sing! There are always bed stands and lamps in the bedrooms. Research has shown that people always want additional lighting in bedrooms, both for their personal home and when traveling. We are huge supports of local, this is a great piece of resin artwork done by a local Indianapolis area artist. We display her artwork

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V A C A T I O N

R E N T A L S

throughout this property and allow our guests to purchase them.

The most fun part of design is offering that unique property. Everyone has a home to go back to, make your guests feel really special by keeping their experience in mind when they stay in your property. It’s so rewarding when we get additional communication from guests that love the property even more when they check in and get to see, feel, and touch that love that wen tin to make it not just another vacation rental, but truly one of a kind.

About the Author: Elizabeth Maora Sickels is a new breed of entrepreneur. Spending 15 years in corporate America traveling the world. A farm girl originally from the east side of Indiana, a Boilermaker (Purdue engineering grad), and Sparty (Michigan State MBA grad) she considers herself a reformed corporate engineer! She has a passion for hosting and property management.

Elizabeth now resides in Indianapolis starting up and running several small businesses.

Including an affordable housing 501c3 named “Exquisitely Engineered, Inc.” Currently serving on the Indiana State Real Estate Investor’s Association Board, two committees for the VRMA (Vacation Rental Management Association), and hosts a monthly subgroup through the Central Indiana Real Estate Investors Association. And she will be our guest speaker and trainer at MAREI in April

C N B

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C U S T O D Y

D I R E C T E D

I R A

Buying Real Estate with IRA Funds PROVIDED BY MICHELLE THOMAS Real estate is a popular retirement investment among self-directed IRA investors. While purchasing real estate within an IRA has been around for many years, finding an IRA provider who is willing to service this type of investment has been challenging. That’s why it’s important to do your homework, understand the regulations, and talk to an experienced provider who can walk you through every step of the way.

Locally, there aren’t many options for selfdirected IRA custodians. However, CNB Custody, located just outside the KC metro area, has decades of experience and seasoned IRA experts you can count on. While IRA custodians cannot give advice about specific investments or strategies, they can point out potential legal issues, provide answers to your questions, and offer a number of educational resources. If you are considering diversifying your portfolio and adding real estate to your IRA or Roth IRA, be sure to do your research and find a reputable custodian to work with.

BENEFITS OF REAL ESTATE IN AN IRA

investment professional before investing.

Internal Revenue Code (IRC) 4975 outlines

An IRA can purchase many types of real estate, including residential, commercial, raw land, and agriculture. In addition to properties you own personally, owning real estate within an IRA means you also have strategic control over the properties that your retirement account owns.

You are able buy, sell, and exchange properties in a tax advantaged account. Earnings and appreciation from real estate property are tax-deferred if held in a Traditional IRA and have the potential to be tax-free if held in a Roth IRA.

prohibited transactions to consider before deciding

to

hold

property

within

a

retirement account.

HOW A REAL ESTATE IRA WORKS

An IRA is its own financial and legal entity, separate from your personal portfolio. As a separate legal entity, your IRA will have its own name. The IRA is the owner of the real estate, not the IRA holder.

All legal

documents related to an IRA-owned asset must be in the name of the IRA, not your personal name.

Real estate investing also offers multiple investment strategies, including “buy-andhold” or “flip-and-sell.” In addition, there are multiple options for funding your real estate investment. This includes direct purchases, partnering with other investors, and leveraging with a non-recourse loan.

Before investing, it is also important to know the risks and potential pitfalls of owning real estate within an IRA. Speak with an attorney, tax accountant, or

All expenses for the property must be paid by the IRA. Expenses may include but are not limited to, earnest money, closing costs,

appraisal

fees,

insurance,

maintenance, property taxes, etc. Rent from income-producing property must be made payable and deposited to the IRA. Documents associated with your IRA’s real estate investment need to be registered to and signed by the custodian of your

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account to meet IRS guidelines.

DISQUALIFIED PERSONS

D I R E C T E D

I R A

Expenses – All expenses related to the property must be paid by the

REAL ESTATE INVESTMENTS YOU

Disqualified persons are people who

IRA.

CAN OWN IN A SELF DIRECTED IRA

cannot

Repairs and Maintenance – The

benefit

from

the

property

owned by the self-directed IRA. This Many types of real estate can be held

includes the account holder, his or her

within

parents,

an

IRA.

Some

popular

investment types include

grandparents,

grandparents,

spouse,

great children,

grandchildren, great grandchildren, or Residential real estate, such as

any of their spouses. These are called

single or multifamily properties,

“lineal ascendants and descendants.”

condos, and apartments.

For example, you cannot rent a flower

Commercial real estate, such as

shop owned by your IRA to your child.

office buildings, retail shops, and

IRC 4975 has a full list of disqualified

convenience stores may also be

persons.

account holder or any disqualified person, such as a child, cannot perform any repair or maintenance work on the property. This type of work must be done by a third party and services paid by the IRA. For example, your son or daughter may not mow the grass or paint the walls for a rental property that your IRA owns. The IRA would need to pay someone who is not

held.

PROHIBITED TRANSACTIONS

disqualified for these tasks.

vacant land.

When purchasing real estate within an

held in an IRA cannot be purchased

Lending instruments such as trust

IRA, it is important to consider how you

deeds and mortgage notes.

plan to use the property. A self-directed

person, including the account

IRA cannot own any property that is

owner.

Timeshares and mobile homes that

used for the personal benefit of the

Use of Property – Disqualified

aren’t affixed to the property are some

account holder or any disqualified

persons may not live in, rent, or use

examples of real estate products that

person. For example, you cannot run

in any way property owned by the

cannot be held in an IRA.

your business out of a building owned

account holder’s IRA.

by your IRA or live in a house owned by

Please see IRC 4975 for a complete

your IRA. If an IRA owner engages the

list of possible prohibited

Other types of property including farm land, resort property and

IRA RESTRICTIONS

IRA into these types of transactions, it It’s important to understand all the

could lead to a disqualification of the

rules governing IRA investments.

IRA and an immediate distribution of the entire account with possible taxes

The IRS requires IRA real estate to be

and penalties incurred.

for investment purposes only and has rules regarding how the real estate can

Prohibited transactions may also

be purchased and used. IRC 4975 also

include:

provides a list of disqualified persons that your IRA cannot transact with. It is

The account holder acting as

important to understand these rules

property manager - All rents must

and the IRS definition of the term

be paid directly to the IRA and not

“disqualified persons.”

the account holder.

DISCLAIMER

Purchases and Sales – Properties from or sold to a disqualified

transactions.

ABOUT CNB CUSTODY With more than 35 years of experience, CNB Custody has built a solid reputation for providing exceptional service, accuracy, and competitive fees. Located in the Heartland of America, we pride ourselves on delivering a level of customer care and dedication unmatched in the industry. We are known for our expertise, responsiveness, and reliability. CNB Custody works closely with advisors around the country providing innovative solutions, professional services, and education that empower clients to control their investment options.

You are urged to seek professional guidance and/or consider proper diversification and risk tolerance before directing any investment activity. Community National Bank (CNB) does not recommend or evaluate the prudence, merit, viability, or suitability of any investment and will not be responsible for the performance of any investment product. CNB will provide custodial services with respect to the investments in your IRA, but we do not provide investment advice or information, nor are we the agent, partner, employee, representative, or affiliate of any financial representative, product sponsor, or other individual or entity except as otherwise disclosed.

We are not responsible for and are not bound by any representations, warranties, statements, agreements, disclosures, advice, or information made by any such person beyond the terms and provisions contained in the CNB Custodial Agreement, Disclosure Statements, or other CNB forms or CNB documents.

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K C I N V E S T

M A R K E T I N G

Motivated Sellers Part 2 - Direct Mail PROVIDED BY KIM TUCKER Contrary to what you might believe, Direct Mail remains one of the most effective methods for generating seller leads for real estate investors.

But why is it effective? Most of it gets tossed in the trash right? But consider all the work we did on finding and developing our targeted list? We can now create a marketing message designed specifically for the motivation of the person receiving the mail.

The list you will gather will depend on what you want to target. The higher the pain point of the target, the more motivation. And now with some of the great technology out there you can stack lists.

An Absentee owner may or may not have a lot of motivation depending on how far out of the Kansas City Metro they might live. But if that same owner is an heir to a deceased owner and the property has back taxes and is receiving code violations, that owner is going to be

be a lot more motivated.

DIRECT MAIL IS A NUMBERS GAME

So now you have your list, your not quite ready to start mailing letters and postcards. I remember my first direct mail piece. I had a list of 1000 names, I had a post card to send. I mailed it and guess what. NOT A SINGLE PERSON CALLED. I was so let down that I didn't send it again for 6 months.

In direct mail, it's a numbers game. You might get lucky on that first mailing and then again you might get diddly like I did.

But guess what. I got over my lack of response and mailed the same exact postcard to the same exact list. This time I got 3 calls and one of them turned into a house we bought to rehab. And after it was trashed out we sold it to the neighbor with no work at all and made a cool $12,000 profit.

You need to have a decent budget and a

plan. You don't need to mail 1000 at once like I did, you could take that 1000 and send 250 a week. But if you just send 250, you might not get anywhere. And be prepared to mail to the same list 4 to 5 times.

DIRECT MAIL PROCESS Step 1: Get the list

We talked about this in last month in Part 1. Just remember the harder the list is to get, the fewer people will be marketing to the same people. And the more motivations they might have, the better your response.

Step 2: Create Your Mailing Piece.

You can spend some time on Googling for images of "I Buy Houses Letters" and "I Buy Houses Postcards" and find a ton of examples.

Letter or Postcard: In most cases I would say a mix of the two. You might

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start with a letter, then send a postcard, and then send another postcard. Now if you are targeting a probate list or a foreclosure list you may want to stick to a letter in my opinion because there are just some things you don't want to share with the mail carrier.

Typed or Handwritten: There are many services to get letters and postcards printed that look like they were hand

written. But do keep get a few hard copy samples and check them out. If they are hard for you to read then they are no good. And maybe have a friend who needs a pair or readers take a look too. I get many of these mailing pieces and some are so hard to read that I can't see them being effective.

The Envelope: There are many options here. Hand Addressed is better than a Printed Font that looks like Hand Writing

and that Hand Writing Font is Better than Times New Roman. Those little return address labels on an envelope that have no company name are good too. And using an invitation or greeting card envelope that might be some fancy paper is ideal. With a pointy flap that you can seal just at the tip or with a sticker so its really easy to open. Last make sure you use a cutsie stamp: I like a holiday themed, puppies, flowers, just about anything except the old standard flag.

Pretty Postcards Vs Ugly Ones. I have not done a lot of studies but I have studied under many of the masters who have conducted tests and they have found that the pretty ones are less effective. The more simple , yellow postcards worked much better.

There are also several apps out there that you can subscribe to that lets you drive by the house, take a photo of the house and send a postcard with the picture of the house. These have proven to be fairly effective when you are out driving for dollars. Or driving your list on Google Maps and using the street view as the

photo.

What Should It Say?

Your message should speak to the motivation of your list. Target their pain.

And then solve their problem. It's not about you, its about them.

If your house is in HORRIBLE condition, stinky and full of stuff that no one wants, I can look past that and make you a fair offer anyway.

If you have inherited a property and are tried of it dragging out forever and all your time spent managing the property, I can be ready with cash to close when the court is done with the process.

Tired of all the code violation letters piling up on top of all the repairs you know your property needs? Don't waste a dime of your hard earned money on repairs, sell it to me, I love a good project.

Note its not just about their problem, but the way that problem makes them feel.

Dig into that pain point and then solve it with your offer.

Disclosures. If you are a licensed Realtor, consult with your broker as to what you need to disclose. For me, I put in the bottom fine print, but still readable, that While I am a licensed agent, I am writing to buy their house, not list it. And if their property is listed, to please disregard this letter.

Step 3: Print and Send

I have done this a lot of different ways. I have worked with a mail house where I use their mail pieces and give them the list and they send it on a set schedule of every so many weeks. You pay for it up front and they take care of it from there.

The major flaw with this one is that if you have a bad address, or someone who wants removed from the list, you can't.

M A R K E T I N G

There are a few mail services that maintain your list in an online database, so if you want to remove an address, you can with in a certain time frame.

I have also worked with a service that would pretty much do what you want.

Each week I would take a look at my returned mail, try to find better addresses and update my list and remove the ones who wanted removed. I would then send my mail piece template and my list, they would merge it, they would print it and they would hand address and live stamp my envelopes.

And for postcards, if you want to design your own, which I like to do, I can create my postcard on click2mail and use it over and over again and send for less than 50 cents a postcard. My ladies who did the printing and hand addressing were getting close to about $1.30 per letter last time I used them. The more manual the process the more it costs, but the better the results.

How Often to Mail: The sooner the seller's deadline for motivation would call for sending each piece closer together.

For example if you are targeting sellers being foreclosed, you might mail every 7 days. While if you are targeting just an absentee list, you might send once a quarter.

Step 4: Clean Up and Resend or Contact Another Way

You will get mail back. This is huge opportunity. Sometimes it a simple typo that you need to fix. But other times its going to take some work to locate the right address, phone, Facebook profile, LinkedIn or Other Social Media Profile. I generally buy 1 houses a year from doing my extra homework and finding the right mailing address, but more often finding the seller and contacting them on Social Media.

So how can you track down that elusive

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seller when the tax records do not have a correct mailing address? Google baby.

I start out and search their name and address in Google, something like Bob Smith 123 Main Street, Overland Park, KS. See what you find.

Next I might try that same search with just Overland Park. If they are a husband and wife I will try several combinations. One with Bob and Sue Smith as well as Bob Smith and Sue Smith. And if it really is a smith, search for both together and add in middle initials if you know them.

What I usually find is either Bobs or Sues obituary. I read it and find a wealth of information there. Sometimes you will find heirs and sometimes you can go to the county court and search the probate records and find their executor and the attorney handling the case.

I also like the free phone book searches. I use Zaba Search but any will do. My goal is to find my name that is associated with my address and maybe get a phone. I also subscribe to Intellius.com so I can do a deeper dive and sometimes find phone numbers, emails, social media profiles, and other addresses.

And then armed with some basic knowledge of names of relatives and where they might work, I can go to Facebook, LinkedIn and Twitter to either find my owners or their heirs and send them a message - something like "Hi, my family and I buy houses in the KC Metro and I came across this house at 123 Main Street. I am trying to track down the owner, would you know anything about it?"

For every person that has responded, some say "Yes, that's my house" or "was my mothers house and it's not for sale" I have also had several say, "Yes, that was my mothers (brothers, uncles, ect) house, and we will be selling it soon. Give me a call let's talk." I even had one lady say it

had been her fathers house, but the bank had foreclosed. I did a bunch of research and could not find any record of a foreclosure ever taking place. I reached back out and she said she would be happy to sell it to me, except as the bank had said they had foreclosed and instead they had sold the loan, she didn't know how to clear the mortgage that was for way more than what I could pay. It too me and some help from the team at Accurate Title (our local title company) about 6 months of work to track down a lender who was more than willing to do a short sale and sell us the house. I found her on LinkedIn. (she has a great review for me on my LinkedIn Profile. Last year I found a lady on Facebook who had 3 family members die in a row. We were able to buy one of the houses from Crystal and she left us several glowing reviews.

There is gold in those returned letters, so don't toss them. You could even go knock on the door and probably get no one, but leave a note on the door and while you are there, TALK TO THE NEIGBHORS you just might get to the owner.

Step 5: Seller Contacts You

Now if you are just starting out, you might want to go simple with just a phone number and an email address. For years we used a free google voice number and a free gmail address for them to contact you.

I really think you should have some sort of website where they could also find out about you. The theory is that you don't put your website on your mail piece but that they will do their home work to learn more about you finding your website and hopefully a few other things. For me I have an Investor Carrot Website that does it's job, I have used a lot of their training to make my website better and to make sure sellers can find us listed on other sites like Facebook, LinkedIn, Google Local and The Better Business Bureau. If you want

M A R K E T I N G

to learn more about a carrot website follow my affiliate link to get there at www.MAREI.org/InvestorCarrot. If you buy a site, MAREI makes a few dollars in referral.

But back to the Seller Contacting you. If at all possible answer the phone live, if you can't consistently, during business hours answer the phone live, then pay someone to do so. There are a lot of call answering services that will do this for you, take some basic info and email it to you. But you still need to call them back within the hour.

If you don't answer the phone, the other person who sent a card or the other website they found when researching you online will. So be prompt.

What you say and do while talking with the seller is actually an article for another day. However, your goal is to get their story, their reason for selling, to find out their motivation behind selling, all while being conversational and making them like you. I have also found that being honest and up front with them works.

There are so many investors out there, all using the same letters, the same canned scripts the same read it out of a book everything, so when they talk to a real person, who is honest and real, you get more deals. But maybe that's just me Step 6: Evaluate and Follow Up Now out of all the sellers that contact you, many will not be a deal. Some will never be a deal as they call not about the house in your letter but another one they have that is out of your area. But for those that could be a property we would want, if you are new, go look at it, evaluate it and talk to the seller. After some practice will figure out what is a deal and what is not .

Make an offer that makes sense for you. If they don't take it, or you don't even get to the go look at the house stage, remember to follow up.

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Kim Tucker REI BlackBook is the platform I use to manage my business.

II only wish I would have switched over sooner. I could have saved countless hours and $1000s on other systems that didn't work or work together. I wonder how much money I wasted and how many deals I lost?

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