Dear MSM reader,

With foreclosures on the rise, it can be difficult to stay on top of all the available leads. That’s why master investor Marko Rubel only concentrates on the best, and he’ll tell you how to spot them in today’s issue..

How to Focus on the Most Profitable Foreclosure Leads

By Marko Rubel

Whether you’re new to real estate investing or a seasoned pro, you can’t make money unless you have a list of qualified leads (people who are probably ready to sell their homes).

If you market your services to people in foreclosure, or to any targeted list of ready-to-sell homeowners, you’re going to get qualified leads. But leads aren’t deals… yet. Some may become super-profitable bargains that put thousands of dollars in your pocket - but if you want to make top profits, you’ll need to focus on the best leads and discard the rest.

It’s easy for new investors to get excited when their marketing starts working, and understandably so. And it’s tempting at this stage to want to contact everyone who responds. But it only takes a few days to discover that not all leads are created equal.

This is true even when investing in foreclosures, where most of your leads will be motivated to sell. Buying at foreclosure can be very profitable - especially once you learn how to flush out the best ones .

When I started investing, I quickly learned that I’d never have enough time to contact every lead. Instead, I’ve learned to evaluate and screen my leads to find the best possible opportunities. Over the years, I’ve used a 24-hour recorded message, direct mail, and a live answering service. But I’ve found that one tool works better than any other: the Internet.

Almost all my marketing to people in foreclosure drives the prospect to one of my websites, for two reasons:

• People in foreclosure are usually scared and confused. As a result, they’re more likely to visit a website - where they can remain anonymous at first - than call you directly.
• The website encourages prospects to qualify themselves.

I load up my websites with audio and video testimonials from previous sellers… people I’ve helped by buying their homes and stopping the foreclosure process… people I’ve helped after their listing with a real estate agent expired without a sale… and so on. These are all real people who sold their homes to me when they were in foreclosure or needed a quick sale.

If you’re new to real estate and don’t have these kinds of testimonials yet, you can partner with an investor who does have a track record and use his testimonials (while you also benefit from his experience). Or you can include general testimonials from people who know you and know you’re trustworthy. Have them say things like "Jack always comes through with his promises"… or "Alice does what she says she’s going to do when she says she’s going to do it." Then make sure you live up to those words.

I invite my website visitors to submit an electronic form with all the information I need. I promise them a response within 48 hours, but at no time do I tell them I will make an offer on their home.

The prospective seller must answer all the questions on the form before the website will allow them to submit the form to my office. The questions are designed not only to get qualifying information, but also - and just as important - to find facts that could disqualify them. That’s because I don’t want to waste a lot of time following up on unqualified leads.

Some of the questions are the sort of thing any investor would ask: how much the seller owes, to whom, and so on. But I also ask questions that "test the waters" to gauge how motivated they are (such as how many payments they’re behind).

Finally, I ask the seller to tell me why they want to sell now. In many cases, this question makes or breaks the deal. Here’s why:

If they write a long story on that last question (I often get as much as two and a half pages), I learn something important about them. And if all the numbers work, I put them on the top of the pile.

Why? Because people in distress appreciate it when you let them pour their hearts out. I’m a good listener, so I’m sympathetic when they tell me about the tragic circumstances and bad luck that have brought them to their present position. And because I listen, the seller is frequently on my side when it comes time for me to present my offer. That makes negotiations much easier.

But if they write something like "I’m not taking one penny less than the full value of my house. My bother-in-law says it’s worth $250,000 and that’s what I expect"… I won’t waste another 10 seconds on that lead. I won’t even waste the time it takes to put his address on a pre-printed, pre-stamped rejection postcard.

In short, my website does almost all the work of qualifying my leads. I waste no time on any where there is no deal to be made.

I recommend that you establish a method of pre-screening and pre-qualifying your leads, preferably with a system - like a website - where the prospects screen themselves. This method has made me a better, more focused real estate investor - and it can make you wealthier in your own business in a much shorter period of time.

The more I’ve concentrated on the best prospects, the less time I’ve wasted, the more deals I’ve closed, and the more money I’ve made. Recently, I made over $1 million in a 12-month period. I would never have been able to achieve that before I fine-tuned my marketing.

[Ed. Note: Marko Rubel is a multimillionaire real estate investor living and investing in the Phoenix, AZ area. To learn more about his secrets for finding motivated sellers, click here. ]

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The IRS: Torturing Taxpayers and the English Language Alike

Section 1250 is a part of the IRS code that addresses real estate. “Unrecaptured gains” is IRS lingo for the accumulated depreciation you’ve taken on an investment property.

“Unrecaptured section 1250 gains” is the IRS’s incredibly tortured way of saying they’re going to tax you on the accumulated depreciation you’ve taken on an investment property when you sell it. These “unrecaptured section 1250 gains” are taxed at your income tax rate or 25%, whichever is less.

[Ed Note: Mainstreet Millionaire is a program designed to take you from your first deal through your step-by-step system on how to purchase cash-flow properties below market value and use creative financing techniques to close the deals with the least amount of expense, time, and risk.]