How to Send Yellow Letters to Buy Discounted Properties

Buying a rental house is fun and has made us a great deal of money thus far. However, we needed to find a way to buy them even smarter, cheaper, faster. Until now, we had been good at scouring the local MLS (Multiple Listing Service) to find excellent deals or talking to people we knew who were wholesaling a house and needed to dump it quickly for the right price.

How could we consistently buy properties at below-market value? This would ensure that we mitigate the risk of overpaying and accelerate our net worth, as each house would have an incredible amount of bonus equity upon purchase.

Yellow Letters to Buy Rental Properties

We often listen to the Bigger Pockets podcast, and one time, we came across an episode with Jerry Puckett, who helps investors obtain leads to purchase homes at a discount. He does this by mailing letters to homeowners. (For some reason they have removed this episode from the podcast circuit, podcast #21). We decided to hire Jerry and start to mail some letters to hopefully find some more houses. We were so excited to try this new marketing channel, so we dove headfirst and created a list in our favorite zip code with some specific criteria.

Yellow Letter Criteria

• Specific ZIP code
• Size range of property
• Age range of property
• Mortgage Date
• Absentee Owner

With these criteria, we devised a list of about 400 owners we could mail. We decided to purchase the option where Jerry would send the letters to us, unstamped and unstuffed. Having them sent “unfinished” saved us some money, and we felt a little bit of a duty to work to earn these future leads. The letters arrived all nicely bundled and ready to go. What was impressive to us and different than what we saw our competitors doing at the time was that these were printed on typical yellow-lined paper. Also, they appeared to be handwritten, stuffed into a small envelope, and on the outside, they looked like someone had handwritten the address. They were also personalized in the letter with their name and a specific address in which we were interested. We believed we would get a better response rate with this type of piece rather than a postcard or something that appeared as junk mail.

(Fast forward to 2018, and everybody is sending these it seems! We still get success off each campaign, however.)

How to Land a Rental House with Yellow Letters

After we send the letters, we have to have a way to organize these leads and figure out the best way to qualify and close them. We aren’t fancy, so we didn’t set up a CRM. All we did was create a google phone number and have it forward to both of our mobile phones. We would always let the calls go to voicemail, which was a catchy message I setup, prompting the caller to leave their name and address of the property they wanted to sell potentially. They always left a detailed message even if they wanted us to pound sand and jump off a bridge for mailing them a letter :). At least in these cases, we could cut our mailer cost in the future and not send the letter to them anymore!

Research and Plan of Attack

Once we had the address, we could start our research on the property. We used google street view, looked at old photos on the MLS or Zillow, trying to get an idea of the quality of the inside. We have gotten so good at this, that if you tell us an address within our “farm,” we can nail the value within a few thousand, without even looking at it. That’s the kind of pulse we have in our area and why we are hesitant to expand. We know it, we love it, we internalize it. This method of finding deals is how we have obtained STEALTH WEALTH.

Once we have a rough number in mind for the house on what we are willing to pay, we make the call back to the owner from our google voice account. We used to have a script that we followed, but now we play it by ear. We introduce ourselves, tell them we are small-time investors trying to buy a few investments to help our kids through college, and then the name of the game is to get the owner talking. We want to understand their story. They had some initial interest, or they wouldn’t have called us. Almost 100% of the time, there’s a pain point on why they need to sell. Either they are getting divorced; a loved one has died, they had a tenant move out, they inherited the house. The common theme here is that they value cash over the property, and The Stealthy Rich are here to solve the problem.

All of these situations are perfect opportunities for The Stealthy Rich to help make the problem go away.

We then ask about the condition of the home: age of the roof, what has been replaced, age of HVAC, etc. After we have an idea of the bones of the house, we offer them a ballpark figure and tell them we don’t do inspections and that we can close in 10 days. This moment is the most critical; if they can get comfortable with the estimate, then you are well on your way to scoring a sweet income-producing, appreciating asset.

Rental Home Visit

If they agree to our ballpark, we then visit the home and do a quick walkthrough. We look at and check for the following:

• Roof and fascia condition (Ain’t nobody got time to climb up there, just a visual inspection)
• HVAC condition ( a simple visual inspection)
• Exterior walls inspection (paint quality, and is it wood, brick or Hardie board)
• Any significant settling or cracks in walls or brick (remember house #4!)
• Quality of bathrooms (have they been redone or are they in disrepair)
• Kitchen countertops and appliances
• Flooring
• Paint
• Yard Quality (Is it a jungle out there, or would a few hundred bucks of clean up get it up to snuff?)

This inspection should only take 10-15 minutes once you get good at inspecting properties. Next, once we have a list of what needs to be fixed, we have a frank discussion with the owner and tell them of all the repairs they would need to make to be able to get this property “ready” to sell. We assign realistic values to these repairs and truthfully explain that if they wanted to get “retail” price for their house, they would need to fix all these things. Of course, they would also need to pay a realtor 6% of that retail price as well.

After we explain all these items, the seller has a choice to make. They can either sell to us for a discounted price based on the condition, or they can make some significant investments in the property, which required time and money and hope to get a better price on the retail market with a realtor. Their decision all comes down to their pain level. How badly do they want or, more importantly, NEED to sell the property? In our experience, once we get to this point, we can agree to a fair deal about 90% of the time. Sometimes it takes a little negotiation, but D is a master negotiator, so we usually get what we want.

We then close the property in a few days, make a few updates if necessary, like paint, light fixtures, and floors. We then get it rented and added to the list of money-making assets, which help to make our net-worth snowball roll even faster and harder.

Example Yellow Letter

Here’s an example of a yellow letter from Jerry Puckett that has made us so much money and helped us become The Stealthy Rich! They are a fantastic way of finding off-market deals and recommend them to anyone! Leave a comment and let us know if you’d had success with similar strategies.