The rule of 100

21 Nov The rule of 100

Insurance and telemarketing taught us this: list the first 100 people you know, contact and sell them the goods. Out of a hundred, a conservative probability of 5-10% will respond to your call and actually buy the goods. Another list of 100 buyers will crop up from the original 100 by charming (or forceful) referral. As buyers are convinced, the list stretches but we gradually developed a more methodical way of getting more buyers. The next list is then filtered, as criteria of target market are identified.

That listing method is also applicable and mandatory in the tax delinquent properties, so as the conservative response rate. The differences are:

1. the big list comes from the county or assessor or treasurer or IT guy or clerk or recorder, not from your personal phonebook;
2. target market is already known;
3. the list of 100 is a filtered list;
4. the next list of 100 comes from the same sources; referrals are rare because friends or neighbors of a tax delinquent, who is selling his/her property, just would not clearly know that the property owner is tax delinquent; and

The following criterion filtered the big list to 100 properties:

1. real property tax delinquents;
2. rural land;
3. land without houses;
4. accessible location;
5. real property without mortgages;
6. real property without zoning issues;
7. real property without environmental issues;

The list is essential. Without it, you will not know where to send your letters and your transaction cost of buying and selling properties will be high.

By experience, I buy around 35 of 100 properties at around $300. I sell each property at $5,000, but only 2-3 properties. I earned a net profit of $4,500 for a start. Those properties nowadays are sold at $20,000-$150,000, which is an 8-fold profit based $5,000.