I Pay Pennies on the Dollar for Houses (Full System)

TLDR

If you’re buying deals from wholesale and realtors, you’re paying a middleman tax on every house. The only way to get consistent deals is to go build your own list, filter it by motivation, and mail it every month until they sell you a house or tell you to stop. Here’s the exact system I use.

Table of Contents

• Stop Being Bait for the Sharks
• The List System
• Level 1: The Buy Box Filter
• Level 2: The Audience Filter
• Level 3: Pain (Motivators)
• Level 4: Exclusions
• Stack It, Mail It, Wait
• FAQ

Stop Being Bait for the Sharks

If you think you’re going to get deals from wholesalers and realtors, you’re probably just bait for the sharks.

Think about it. If a wholesaler has a deal, the only reason they’re not taking it themselves is because they can make more off of you right now. That means the price gets pushed up to the same level as if it were on the market. Supply and demand. When you put a house on the MLS, you’re trying to get the highest price humanly possible with the most buyers competing. A wholesaler’s “deal” is the same dynamic with a different middleman.

The only true way to have consistent deals is to go out and get them yourself. And a lot of people try to think of creative ways to avoid doing that because they’re scared of it. It’s like losing weight. You can chase pills and hacks, but the only real way is you move more and you eat less. Same thing in real estate. You have to go do the work to get your own deals.

You either cold call (because you have time and no money) or you send mail (because you have money and want autopilot). That’s it.

The List System

Here’s how the system works. You start broad and get narrow:

1. Buy Box — your geographic and property criteria
2. Audience — who owns the house (civilians, landlords, inherited)
3. Pain / Motivators — why they might sell (pre-foreclosure, probate, tax delinquent)
4. Exclusions — who to remove (your own properties, people who asked to be removed)

You stack buy box + one audience + one pain point into a single list. You make a separate list for each pain point. Then you compile all nine lists, apply exclusions, and that’s your mail list. Right now mine has 235 people on it. Next month it might be 240. The lists are dynamic.

I use Property Radar for list building. Not selling it. It’s what I’m used to, and I felt like the data was the most accurate when I chose it. PropStream, List Source, Property Radar, whatever. The logic is the same.

Level 1: The Buy Box Filter

I split my buy box into two geographic zones: Heart of Chattanooga and Outskirts. The reason is square footage.

In the city, I cap at around 1,800 sq ft. A bigger house in the city is an outlier, and I never buy outlier properties. In the suburbs, split levels and basements might push a house to 2,600 sq ft that would be perfect for me. So the outskirts list is a little broader. I combined both into one master buy box.

Pro Tip

There are always tradeoffs between broad and narrow. If I said “everybody in Hamilton County,” that’s 168,000 people I’d be mailing. Way too broad. But if I narrow too much, I leave out houses I’d actually buy. You have to find your spot on that spectrum and test it.

The filters on my buy box:

Why Tax Assessed Value, Not AVM

I use tax assessed value instead of automated valuation (Zestimate, etc.) for two reasons.

First, I don’t know how their valuation method is built. Second, and more importantly, they might not have an AVM for every property. If I filter by AVM, I might cut out the best deals because the system doesn’t have a value for them.

Every house has a tax assessed value. The county assessor goes out and looks at properties. If all the houses on a street are assessed at $60,000 but one is really crappy, they’ll assess it at $50,000. It’s like somebody’s doing your driving for dollars for you.

Key Concept

Any time you add a filter from a data source that might have gaps, you risk cutting out houses you’d actually want. Tax assessed value has no gaps. AVM does. Estimated equity does. Be careful with filters that use data the system might not have for every property.

Level 2: The Audience Filter

Inside the buy box, I filter again by who owns the house. Four audiences:

Civilians. Owner-occupied, meaning their mailing address matches the property address. Site not vacant, because if USPS can’t deliver mail there, why am I sending it? I cut out LLCs and filter for trusts, couples, individuals, or multiple owners. Less than 3 properties owned. At least 30% estimated equity. And they haven’t bought in the last 5 years.

Dumb Mistake

I used to think “owner-occupied + site vacant” was a goldmine. Vacant and they live there? Must be distressed! No. It just means USPS can’t deliver mail there. If they’re not reading their mail, why am I sending it? Stupid to mail.

Landlords. Same filters as civilians except owner-occupied = No. Their mailing address is different from the property. These are rental property owners.

Brats. Sorry for the name. These are properties where the transfer amount was very low and it was a non-arms-length transaction. Translation: mom and dad gave somebody their house. They inherited it, they care less about it, they might just want to cash out.

Seniors. 61+. I built this list thinking I’d write different copy for older sellers. I don’t actually use it. 80/20. I don’t want to write a bunch of different letters. I want to find one that works pretty good and send it on autopilot.

Level 3: Pain (Motivators)

This is where you get specific. I make a separate list for each pain point. Buy box + audience + one pain = one list.

I categorize them A, B, and C by motivation level:

A Pains (high motivation):

• Pre-foreclosure — 15 people in my county right now
• Probate — owner died. 373 people.
• Widows/Widowers — two owners, one died

B Pains (medium motivation):

• Owner lien — they owe somebody money, officially filed
• Property lien — tax lien or similar against the property itself
• Tax delinquent — haven’t paid their taxes

C Pains (situational):

• Vacant (landlord audience only) — property is sitting empty
• Expired listing — they wanted to sell and couldn’t. 18 people.
• Non-arms-length (brats audience) — inherited properties

That gives me nine lists. Each one is dynamic. When someone new matches the filters, they get added automatically. One new probate this month, maybe three next month. The system updates itself.

Do not stack pain points. One list per pain. You want to know which motivation is producing your deals so you can double down on what works.

Level 4: Exclusions

Three exclusion lists:

1. All my properties. I own a bunch of rentals. I don’t want to mail myself.
2. Removal requests. People who called and asked to be taken off. Most angry callers yell at you without ever saying their name or address, so you can’t actually remove them. But if they do, they come off.
3. Vacant + owner-occupied. Belt and suspenders. Already filtered in the audience, but I pull them out again as a dynamic exclusion to make sure.

Stack It, Mail It, Wait

Compile all nine pain lists into one master list. Apply exclusions. Right now that gives me 235 people.

Two options from here:

• Cold call: Skip trace the list (get phone numbers), use a legal dialer, start calling. Lots of rules around cold calling. Look them up.
• Direct mail: Send the list to a mailhouse. Mail monthly. Deals trickle in.

I mail. Every month, same list (dynamic, so it updates), same mailhouse, autopilot. A house comes off my list for exactly two reasons: they sell me a house, or they ask me to take them off. Otherwise I mail them until the end of time.

Pro Tip

When I was scaling up, I’d find new wholesale who were good but hadn’t built their buyers list yet. I could be their biggest and best buyer and get deals for a while. Eventually they built their list, prices went up, and the window closed. You can work strategies like that, but they’re temporary. Your own list is the only thing you fully control.

Sometimes you’ll buy a few deals in a month. Sometimes none. Over time it picks up. It takes hours to build the right list, but once you have it, it’s the gift that keeps on giving. You’ve removed the gatekeepers. You’ve cut out everybody else that needs to get paid on a deal. You will never get the best deal when other people are involved.

Move more. Eat less. Build your list.

FAQ

How much does direct mail cost per month? Depends on your list size and mail format. At 235 people, you’re looking at a few hundred dollars a month for postcards or letters. The cost per deal acquired is dramatically lower than paying a wholesaler’s markup or a realtor’s commission on every house.

What if I don’t have money for mail? Should I cold call instead? Yes. Cold calling costs time, not money. Same list, same filters, skip trace for phone numbers, and start dialing. You trade dollars for hours. When you have the revenue from your first few deals, switch to mail so you can get your time back.

How long before deals start coming in? It varies. Some people get a call in the first month. Some take six months. The consistency is what matters. You’re not looking for a home run on month one. You’re building a system that produces deals every month once it matures. This is the “eat less, move more” of real estate. No shortcuts.

Can I use a different list-building tool than Property Radar? Absolutely. PropStream, List Source, whatever. The logic is the same: buy box, audience, pain, exclusions. The tool just has to let you build dynamic lists with these filter types and export for mailing or skip tracing.

Should I target LLCs too? You can. I don’t because the percentage of LLCs that will sell me a deal is much lower than individuals. I focus my money and energy on the highest-return targets. There’s always a tradeoff between breadth and percentage. I optimize for percentage.