12. How to Find the Good Buys

Now that we have disposed of WHAT to buy and how to double check its features and suitability, you know what to look for when you see a property. We next undertake the subject of how to find them. It is quite simple and easy. There are three main methods.

METHOD NO. 1

By far the most productive method, you will find, is persist­ent advertising. Besides watching the ads of properties for sale, you should place a small ad, using no display or large type. This is an important rule. When a buyer uses large ads or ads that have too much "anxiousness and push" about them, or even when they are written too professionally, they lose their effec­tiveness. The average owner of an Aunt Toby does not want to deal with professionals. The reasons are obvious. The owner is in the same category in this regard as the fellow who sells a used car. He is convinced that if he sells it to a dealer he will get a price far below the price he could have obtained if he had sold it to a "private party." Further, it offends his pride. Except for those rare cases where a seller is in a desperate posi­tion and must sell at once, and for any price, he will shy away from people who, he suspects, are real estate dealers. That is, dealers why buy properties at distress prices and sell them for full market value.

That is why a large ad, or one which promises "fast action" or "pay top price" or "cash waiting" or "quick action" is usually unproductive. The seller is made to feel as if he is selling to a pawn-broker or to a junkdealer—and for a price accordingly.

The ads should be placed in your local newspaper, and once begun, changed as to wording from time to time. But resolve to persist. Stick with it or don't begin it. Remember you are buy­ing what you will have to "live with" for a long time. It is you who are holding out your hand with the money. That will bring many to your door in time. Some of these will have good prop­erties to offer, others, junk. You are not in any hurry. That, too, is a potent factor on your side. So run these ads about once or twice a week for a year or so as a starter. They should go into a classification, if available, of Real Estate Wanted. If there is no such classification readily available in your paper, ask the advertising manager to start one. Often the ad-taker just does not know that this classification is available, so before you ac­cept a substitute, press firmly for a final word from the Adver­tising Manager on this point. If there is no such classification obtainable, use the classification of Real Estate. And here's a little off-beat hint. Once in a while, run the ad on the front page of the paper. It is much more expensive but often catches the eye of the reader better than one tucked away in the classi­fied section. Here are the ads that have brought success to every one of my students who have been reasonably persistent.



3 or 6-family wanted. Private Buyer. (Your phone no.)
 

Wanted. 3 family or 6-family in decent (or “good”) location. I am not a dealer. (Your phone no.)
 
Small Rental Building Wanted. Private Buyer. 3 or more family. (Phone no.)
 
Wanted: 3 or 6 family. Condition not im­portant but must have good location. I am not buying as a dealer or a broker. (Phone no.)
 
Property In Good Location Wanted By Pri­vate Buyer. Condition not important. Pre­fer unheated. 3 or 6 family. (Phone no.)
 
If you are only at home to receive calls in the evenings, you should add the word "evenings"after the phone number.

Although as we have seen above, the words "quick action" are not good for general use, you will often get good results by varying your ad with an occasional one that emphasizes your willingness and ability to close the deal without delay.

This is especially true in those cases where an owner who WANTS to get rid of the property is fed up with deal after deal falling through for one reason or another. He has been told repeatedly by his broker that the property is "sold." Each time he has taken it off the market, and waited for the slow action of lender banks as the prospective buyer applies to one after the other for the mortgage loan. Then, after weeks and sometimes months of delay, the sale falls through and he is back where he started.

He is in the mood now to close a deal on almost any terms that will finish the business. When we discuss your unique methods of arranging financing on purchases, it will be ap­parent that if he is amenable enough, you can do what the others failed to do. You can take it off his hands and give him what he wants—an end to it.

In several of the purchases I have made, I distinctly recall how heavily this issue weighed in getting the deal consum­mated. When Mr. L. came to my office with the figures on No. 16, he set a price of $35,000.1 had seen the building and made up my mind long since that I wanted it. It consisted of eleven, four-room suites. Heat was supplied by the owner, but not hot water nor janitor service.

After doing the Value Formula, I offered $25,000. He made as if to leave. I let him. Then he came back to his chair and offered to sell at $30,000.1 held firm. He didn't know it, but he wasn't going to get out of the office (that is, not ALL the way out), without closing a deal. I insisted that $25,000 was my limit. The remark he made then will give you a hint as to the importance and usefulness of the wish on the part of the seller to make an end to it. He said, "Bob, what do you mean by you will 'give me $25,000?' Not that I'd sell it for that, but do you mean that you will buy it for that or do you mean that if you can get a given amount of mortgage loan, then only, will you buy?"

I replied that if he accepted the offer, I would give him $1,000 then and there and we would sign an agreement, and the remaining $24,000 when we passed papers. No escapes. No if's nor but's. That clinched it. I was giving him what he wanted badly—a finish to the whole matter.

I had previously approached the local bank about a mort­gage. When I told the mortgage officer I would probably be buying No. 16, he replied, "Oh, that one again!" Then I knew that other prospective buyers had previously been in to see him and had shopped around for financing without success. The amount they had been offered on mortgage by the banks had been so low that they would have been required to invest twelve or fifteen thousand dollars of their own cash, which took the deal out of their reach.

The mortgage officer told me that he would loan $19,000 to me which meant that my total investment would be $6000 to complete the purchase.

As for Mr. L., he wanted an end to the thing—now. I offered him just that, albeit at a not-too-attractive price. But by now, the desire for a consummation was having a strong effect on the hope for a big selling price. He was fed up with the "al­most" sales. I offered him a deal that was flat, final, and without an escape clause. Thus it transpired that the element of time had tipped the scales for me. In later transactions, the Waban and Sharon purchases, the same inducement and motivation were the deciding factors in getting the deal closed.

For this reason, I developed an ad in addition to the others, which gives assurance to those owners who are discouraged by repeated failures of deals. In the same light, I offer what they seek to those sellers to whom the most important thing is im­mediacy of action. Here is the ad:
 
3-6 family owner. If you wish to sell at a fair price without delay I can arrange to close the deal COMPLETELY in 3 days. (Phone no.)
 
or;
Will buy in 3 days. Want 3 or 6-family at fair price. Can complete entire transaction in 3 days. (Phone no.)
 
To back up this offer, you will need to make arrangements with a lawyer who understands your financing methods and who will make it his business to do the title and paper work accordingly. As a lawyer, I have found that this is perfectly practical. Of course not ALL your deals will be the three-day type, but you will have no difficulty in locating a competent lawyer in your city who will be glad to have all your business, the quickies, with the leisurely deals.

In no case should you ever use a box number ad, or blind ad. If you have a choice of which phone number to advertise, al­ways choose the one that is not a toll call, of course. In some areas there is an extra charge for calls to phones in city centers.

METHOD NO. 2

This method should never be begun until at least a month of advertising. Since Method No. 2 uses the realty brokers in your area, there will always be a commission involved in any prop­erties you buy through them. Usually there are several build­ings in your area that have been on the market for some time, when you enter the field. The owners of these may well see your ad and call you direct, and you thus save 5 per cent or more of the price. That is why it is best to give the direct ads a chance for a month or so before starting to use Method No. 2. If you went to the brokers at once, you might well be offered a property that, through your ad, would have been brought to your attention by the owner direct, and thus save you $700 to $1000. So give the ads a reasonable chance first. Then start Method No. 2. In Method No. 2, we phone or write all the realty brokers in the area. You will find them in the yellow pages of your phone book.

When you call them, do not tell them that you require that the buildings pass our three tests, with the exception of that of location. It is well to prevent waste of time looking at buildings that are in bad locations, but as to the other requirements, self-heat, and modest rents, hold the door open and be willing to look at a property even if the landlord supplies heat. Our country is so varied in climates, customs and conditions that in many areas you must buy what we call "heated property" or none. Further, you will be protected against making a bad buy by your application of the Value Formula. And these buildings, although they bring with them myriad headaches that we do not endure with unheated property, are often very profitable.

Also, as to the rule requiring that the rents be modest, we must keep an open mind. As I write this book here in New England, I can say that in 1960 a $75 per month rent is a mod­est one. But there are so many variants in different parts of the country that I must ask you not to pin this down as an arbi­trary rule. Again, your Value Formula will protect you against a poor buy, but you will be able to judge whether there is and probably will be, a good future demand for these apartments at these rents. Then you will apply our tests as to location and the Value Formula. If it passes these tests, you will go into the matter of financing and then make your offer.

METHOD NO. 3

This method involves several simple means of spreading the word to the various areas where your properties might be. A phone call or note to the mortgage officer of the various banks in your area will alert them to the fact that you are a prospec­tive buyer of this type of property. They often have some that have been foreclosed, or, in some cases, the bank is trustee-manager of some of them for an estate. It does no harm in any case to tell them you are in the market.

Then there's the tour-and-look way. You should drive around, up one street and down the other. A "for sale" sign on a building will tell you it is on the market. Often you will see an Aunt Toby in a good neighborhood, but in neglected condition. Just jot down the number. Then ask a tenant to tell you who owns the building. If you cannot get the information from the tenants, a call to the assessor, or the tax collector will usually elicit the information. If both of those are blind alleys, you will find that there is an address at the water department where the bills are sent. These means have never failed me in finding the owner for a direct deal.

When you reach the owner, ask him if he is interested in selling. If not, leave your name and address. If yes is the an­swer, you now get the facts and figures and you are making a start.

ANSWERING CALLS

It is important that we take a moment here to learn just how to answer calls that these methods bring to you. If you should receive a call from an owner who is suspicious that you are really a dealer in properties, or a broker looking for listings, and that you are trying to give the false impression that you are a buyer, you should be a little patient with him. It pays. Don't forget that he is not to be blamed for being suspicious. He may have answered many ads already. Some of them proclaimed that the advertiser wanted to buy property, but it soon de­veloped that, "Well, that's not exactly what I'm looking for, but I have a client who would be interested. I also sell properties for a commission. Why don't you list it with me?" Just a broker looking for listings with bait advertising.

Besides, he has probably run up against the scavengers who are always advertising their willingness to buy, but who, upon examination, turn out to be dealers who only want to buy at distress prices, taking advantage of the folks who are hard pressed to sell. So he may cross-examine you when he calls you. Don't let it throw you or stifle your sense of humor. Take the attitude that he has every right to ask all the questions he wishes and get all the frank answers he wants before disclosing his deal. I have found that this technique pays off.

If you have planted the seeds as described above, you will find results sprouting soon. Not only that, but all my experi­ence, and it's a mighty broad experience, in many areas and in various times and circumstances, has shown that you WILL get results, all you want!

Some readers will find this question popping up in their minds, "Shall I ask him why he's selling?" It matters very little If you're curious, go ahead and ask him. As a practical matter we place no weight on his answer. Our buying methods com­pletely eliminate all reliance on his reasons. He might have the best reasons in the world for selling. He might be able to invent a glorious lie. It's all the same to us. We test, decide, and that's it.

Now that we have discussed what to buy and how to find them, we are ready to learn how to figure out what the prop­erty is worth. We call it the Value Formula.

Are You Ready To Move Onto The Next Lesson? Click Here….