Real Estate News and Market Moves Week 22

Lead generation 101…

Last week, I discussed the 2007 real estate climate in Augusta, GA. In retrospect, it’s obvious that, because it was way too easy to buy, the financial strain was beginning to settle in. At the time, we still didn’t see it. We weren’t looking at the whole picture because we were looking at individual situations of distress–not even aware of the systematic distress which would soon topple the whole US economy. 

Scott and I were still intently learning to buy. 

We looked for potential investment leads everywhere. We drove neighborhoods, a practice known as “driving for dollars,” and looked for abandoned homes with overgrown lawns, newspapers stacked in the driveway, and exterior decay. We looked at advertisements in the Augusta Chronicle and the appropriately named Iwanta (a weekly pennysaver publication) scouring the print for the words “motivated seller” or “owner-financing.” We networked with other aspiring investors at early morning meet-up breakfasts and monthly real estate investor meetings at the Columbia County Library. And we worked with wholesalers who put up “We Buy Houses Cash” bandit signs next to freeway exit off ramps.   

We even had some really early internet-lead generation tools, basically online companies who required a monthly subscription exclusive to a county. They were essentially creating a platform for the company to run a PPC (pay per click) campaign in designated zip codes. 

Of all the practices we used, the most effective way of targeting properties turned out to be mass mailing postcards and letters to addresses which received tax bills at locations different from their physical property addresses. I still have a CD-ROM of non-owner occupant addresses in Richmond County, GA. 

The thrill of the hunt was an exhilarating rush, until you came face-to-face with the humanity feeling distress. When you are dealing with direct-to-seller acquisitions, problems are everywhere: divorce, death, bankruptcy, illness, layoffs. Many of the people we met lived very close to the edge. And generally, when we met them they were teetering on total collapse. One of the sellers Scott met with offered her diamond wedding ring to assume her mortgage payments. There were many sad stories and desperate people. 

During this time, I remember meeting with many sellers, but one in particular stuck with me. Sitting at her dining room table in Grovetown, GA, her kids watching TV in the background, a single mom pleaded with me to explain why her monthly mortgage payment had nearly doubled. She had an ARM (adjustable rate mortgage) product which had been sold to her on the initial payment. Apparently, that was the end of the mortgage broker’s explanation to her. 

Faced with this consistent level of despair, it was hard to know how to react but I adopted an approach of total transparency which seemed to resonate with the people I met. If I didn’t believe I was their best option, then I told them so. I probably missed a lot of deals, but I could still sleep at night. And I soon found that the houses I didn’t buy referred me to other people. It was a great education in referral networks assisting with acquisitions. 

However, with Scott and I both focusing all of our efforts on acquisitions, the assets began to pile up with mortgage payments coming due. As we would both soon find out, the majority of the work comes after you purchase. However, buying right, with the right plan and the right amount of capital, is what sets all the wheels in motion. 

Sixteen years later, it is Auben’s goal to help others become more organized and intentional when they invest. None of us gets it right every time, but by slowing down long enough to underwrite our investments we can hopefully prevent some of the missteps. See the links below that we provide to investors to help them underwrite their assets and their investment objectives.