Wholesaling Real Estate Blog
Greetings everybody!
It’s been awhile since I last posted a new Reader Mail video, but I’ve finally got another one for you to watch!
In the video, I answer the following question that was posted on my Facebook wall…
And here’s my answer, delivered via video…
If you’d like to add your two cents or if you have additional questions, leave them below in the comments and I’ll do my best to answer!
Later Gators!
 | George on Friday Night Reader Mail: Reo Wholesaling Questions Hi Steph! With the high price of Real Estate in Southern California... Will wholesaling REO'S work there? I plan to move there ... |
 | Carlos on Friday Night Reader Mail: Reo Wholesaling Questions Hi Steph! I found a good investor friendly title company in my area, and I met with them last week. They ... |
 | Antonio on Friday Night Reader Mail: Reo Wholesaling Questions I need to know something about those investor comps you mentioned being the lowest comps in the neighborhood. I did ... |
 | Stephani on Friday Night Reader Mail: Reo Wholesaling Questions Hi George, Your questions aren't stupid....everyone has to start somewhere.
To answer your question about showing the property to your end ... |
| Stephani on Friday Night Reader Mail: Reo Wholesaling Questions Hi Robert, I'm not sure what you mean by a sellers list, but if you're looking for leads you can check ... |
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On November 26, 2011 at 7:51pm, Rich said...
I’m thinking of getting Open Road it seems at to least to me much better than Freedom Soft.
What do you think is better?
On November 26, 2011 at 8:50pm, Stephani said...
Hi Rich,
I’ve never used Open Road so I’m not sure which is better.
Hopefully someone else can chime in who has used it…
On November 26, 2011 at 9:06pm, Rick said...
I have been using open road for a few weeks now, I highly recommend it.. Any one looking for more info feel free to e-mail me, I can share my knowledge with you.
On November 26, 2011 at 9:11pm, Al Elliott said...
i don’t know i’ve heard some shady things about open road, it a toss up i prefer freedomsoft
On November 26, 2011 at 9:35pm, GeorgeB said...
I personally bought openroad, and did NOT like it. Total waste. Will soon be getting freedomsoft!
On November 27, 2011 at 6:19am, Carl said...
Hi Steph, Thanks for the excellent video response! I think the major take away is that the “30 day” myth is real, and that it does take time to land a deal. Sure, there may be exceptions, but the real deal is that it will take a lot of offers and time to really get going in this biz. I also take away that one has to make multiple offer daily (something I’m not currently doing). I, like your questioner, am also a little discouraged from not landing a deal yet, and what I’ve done is expanded my offers to include not only the MLS, but also HUD, FSBOs, local newspaper adds, craigslist, and the Thrifty Nickel (I haven’t bought any Bandit Signs yet because my pin-hole tight budget allows for either a $500 EMD or bandit signs…not both). Bottom Line: “Multiple Offers Daily”.
On November 27, 2011 at 3:23pm, Stephani said...
Hi Carl,
I think you are on the right track with expanding your offers to include HUDs, FSBOs, etc. The more lines you have in the water, the greater chance you have at landing a deal!
Good luck, and keep making those offers!
Steph
On November 27, 2011 at 9:43am, Leigh said...
You are near perfection on your reader mail videos, Steph.
On November 27, 2011 at 3:23pm, Stephani said...
Thanks Leigh- hope you are doing well!
On November 27, 2011 at 2:30pm, zack said...
How is it going Steph, I was wanting to know if you ever heard of this website called myhousedeals.com by founder Doug Smith ? Its a nationwide website for wholesalers and investors who are looking for wholesale and investment properties. Its a real estate investor website that offers a premium membership for fee that you join and it offers you full access to buyers and lenders etc. Would this be something for good newbies to join or beware of ?
On November 27, 2011 at 3:24pm, Stephani said...
Hi Zack,
I’ve never heard of it, but if it’s a free service I don’t see how you can lose by checking it out!
Steph
On November 27, 2011 at 3:05pm, Keith Mace said...
Thanks, Steph for the useful info.
Here’s what I’m wondering as someone who is just getting into wholesaling. Let’s say you are going to focus on flipping REO’s (listed on MLS, HUD, or otherwise). It seems as tho there are a TON of REO’s out there (at least here in Chicagoland). So, how do you time manage or leverage your time to be able to sift through them, sort out the ones to go look at, then walk through the ones that we want to make offers on (so we know how much to subtract for repairs) and still have time in the day to make dinner, bring the kids to school, do the housework, and the rest of what we have to do in our everyday lives? I feel like I’m drowning! Maybe I need to filter out some properties or get a system for sort, sift, and look.
Thanks,
Keith
On November 28, 2011 at 2:49pm, Al Elliott said...
hey i’m a chicago wholesaler/investor to we should network
On November 29, 2011 at 6:09pm, Keith Mace said...
I’d love to Al.
You may email me at keithmace@gmail.com
Thanks and I look forward to working with you.
On November 30, 2011 at 4:32pm, Stephani said...
Hi Keith,
I recommend picking one neighborhood/area and really focusing in on it like a laser- get to know who the investors are who are buying in that area, what prices they are paying for properties, and where your numbers need to be in order for you to make money wholesaling deals in that area. Then, once you’ve done your homework, start making offers on properties in that area that are priced reasonably (not too high).
It becomes a lot easier and much less overwhelming if you just focus on one area at a time (and become an expert in that area) as opposed to trying to conquer the entire city at once.
Hope that helps,
Steph
On November 27, 2011 at 3:23pm, Mark Shafrath said...
After viewing your “How to fill out contracts” videos, my question is whether or not you get your contracts notorized.
On November 30, 2011 at 4:32pm, Stephani said...
Hi Mark,
I do not get my contracts notarized.
Take care,
Steph
On November 27, 2011 at 4:06pm, zack said...
Its free to join but you have to upgrade to premium service to access their training for beginners and to get access to buyers nationwide. I think the premium service is like $233 for yearly membership.
On November 30, 2011 at 4:35pm, Stephani said...
I would ask around and see if you can find some (unbiased) people who have tried the service and see what they think about it. My experience with services that claim to have nationwide buyers is that they aren’t worth a crap.
On November 28, 2011 at 8:22am, Zac said...
Thanks for the video Steph! Great words of encouragement on staying positive and not getting discouraged!
-Zac
On November 30, 2011 at 4:36pm, Stephani said...
You’re welcome, Zac- glad you enjoyed it!
On November 28, 2011 at 9:29am, dale said...
Hi Steph,I had two HUD properties under contract, and failed to close on both.I lost both $500 EMD or $1000,as I had no contingencies and I thought the the properties would sell ,even to the very end. The houses were good deals or so I thought,with under 5k repairs.Needless to say I could not get a buyer,using CraigsList,Back Page,bandit signs or through local REIA. I contracted at 95% of HUD’s list Price.
My fee was only $3-5k Other comps in the area were selling at $29-35k. I listed the homes at $28-30k,and still nothing. This was an expensive lesson. One of the wholesalers I talked to says he bid on both homes at $15k.On both homes my initial bids were rejected. How does one ever get a bid if you have to offer 50% of list price,in order to flip to an end buyer?
On November 30, 2011 at 4:41pm, Stephani said...
Hi Dale,
If you did a proper job of marketing your deal and still weren’t able to find a buyer, it most likely was priced too high. That’s why it’s VERY important to do your homework/research in the area first to find out exactly what the active cash investors are looking for and what prices they are willing to pay. If I were you, I would go back to some of the buyers you presented the deal to and ask them what price you would have to sell it for for them to bite. Doing so will give you a much better idea of where your numbers need to be next time around.
As far as your initial offers getting rejected- keep in mind that, like I said in the video, it’s a numbers game. Many times a bank will reject your offer and then one month later they will be willing to accept that same offer or something less.
Hope that helps,
Steph
On November 28, 2011 at 11:06am, Rob said...
Rick,
Ill like to contact you to have some more info about open road. I’m not sure if I should go for it or freedomsoft. Need advise thanks. My e mail its robinsonarias8@gmail.com
On November 28, 2011 at 11:33am, GeorgeB said...
Freedomsoft 100%.
Open Road was not good at all!
On November 28, 2011 at 2:33pm, Carl said...
@Dale….Very sorry about the $1K loss. Can you expand a little? What was the ARV for the houses? How did you determine your asking prices? Did you allow for the End-Buyer’s profit, closing costs and holding costs?
@Steph…I don’t know if Dale would want to share, but this could be a helpful interview for him, et al.
On November 28, 2011 at 3:19pm, debbie said...
@Dale don’t feel left out Dale I have a friend ( wholesaler ) that just went through the same thing on a HUD. He has a few more days and I have been helping trying to find a buyer .
On his part it may have been location…the house maybe a little to far out for investors.
Best of luck …don’t ever give up..maybe try JV with another wholesaler
On November 28, 2011 at 3:28pm, Dee said...
GREAT Question / Answer in this video blog @STEPH. My two cents on this: I have found it more helpful to try and deal with the homeowner directly as opposed to using intermediaries of any kind including brokers.granted, being in real estate, you’ll have to deal with brokers.However,I prefer dealing with the person in need , not the one who’s waiting to get a commission check.
In my area, I’ve had my buyers tell me they’re not really interested in MLS Properties.My area is very competitive for the mls deals. I’ve found my buyers LOOOVE Non MLS Deals, for some reason they like that exclusivity feeling, the “its only me with access to this deal” feeling.
when you deal directly with property owners you can quickly build rapport and understand the sellers true motivation. ALSO You can illustrate the benefits of working with you coz (a) you pay cash, no inspections, can close in a week or two, will not waste homeowners time and he/she does not have to pay a realtor commission.If a homeowner is not motivated today, that may change in a few weeks, months down the line. if you’d built a good rapport with him/her and keep in touch, they’ll most likely give you a call.
think about it for a minute.if you have your broker making offers on your behalf to another broker, you have two people in the way b4 you get to the homeowner.with alot of the non bank properties, homeowners may have some sentimental attachments and if you low ball them,they may not be too thrilled about that.but if you meet them up in person, let them know what you do, you can xplain to them the reasoning behind your numbers, and even though they don’t accept your offer, always leave the door open.leave them ur biz card/contact , and follow up every so often, especially when you see a price drop.
However if you choose to pursue MLS Listed proprties, I’d do exactly as steph suggested.MAKE Offers on the right properties i.e. the ones with significant repair issues,expired listings,lengthy days on market,etc.
On November 30, 2011 at 4:45pm, Stephani said...
Good points, Dee.
I know a lot of wholesalers who prefer to deal w homeowners as opposed to going after MLS deals. There are definitely pros and cons to both, and it really just depends on what you are more comfortable with.
For me, I like the MLS because there are zero marketing costs, and I also don’t like going and meeting face to face with sellers. I like the unemotional aspect of just sending an offer out and either getting a “No” Yes” or a counter.
Take care,
Steph
On November 28, 2011 at 4:39pm, mobilehomegurl said...
Great advice, Steph!
It’s definitely true about this business being a numbers game. It took me almost a year to do my first deal as well. It’s not easy, but definitely worth it for those that can overcome the obstacles and push through the rough times. And, yes – you’re absolutely right about learning how to deal with rejection. I’ve definitely experienced my fair share of it through the years.
As always, thanks for sharing your insight and knowledge – looking forward to the next one!
p.s. It’s nice to see you continue with the blog and the videos. I miss the old crew of bloggers, some have disappeared from the blogosphere all together!!
On November 30, 2011 at 4:47pm, Stephani said...
Thanks for the comment, Rachel- as always!
It’s always nice to see a familiar face pop up in the comments! Hope you are doing well.
On November 28, 2011 at 5:50pm, Esther said...
Hi Steph.
How do you determine how much to offer?
On November 30, 2011 at 4:51pm, Stephani said...
You have to do some research to find out what price the investors in your area are paying for similar properties. Once you know that, you will need to subtract your wholesale fee along with repairs. Many people use the formula ARV (after repair value) x 65%- repairs- your fee = offer amount. That formula doesn’t work in all markets, though, so before you start making offers you need to do your homework and find out where your numbers need to be.
On November 29, 2011 at 8:25am, Richard B Maselow, CPA said...
If you have many Low-ball offers in your farm area that aren’t accepted, especially over a year, and you are offering CASH and no contingencies, the cause could be that your imputed ARV is too low and/or your repairs estimate is too high. It is a numbers game, but also requires your time to learn the numbers in your farm. Follow properties you’ve made offers on, find out what the rehabber purchased it for, how much he quality in repairs/upgrades was done and then what the property sold for to the End-Buyer. Knowing the numbers in your farm area and knowing your rehabbers purchase and profit requirements is just as important as putting out the 4-5 offers per day.
And of course, thank you Steph for your time doing these videos. They are very much appreciated
Richard
Richard B Maselow, CPA
5101 Balboa Boulevard, Suite 117
Encino, CA 91316.2731
Win-Win Real Estate Solutions, LLC
http://Win-WinRealEstateSolutionsBargainHouses.com
Smartcard@Earthlink.net
818.981.9748
On November 29, 2011 at 6:12pm, Keith Mace said...
Thanks, Richard. Good advice.
On November 30, 2011 at 4:52pm, Stephani said...
Great advice, Richard- thanks for you input!
On November 29, 2011 at 10:20am, Antonio said...
I have some investors who have properties they need to sell, but they do not have buyers. I have connections with those we buy houses companies. I figure I could use them as buyers to buy the properties. I contacted Zbuyer.com and told them I have some investors who need to sell their property. They told me they only buy residendtial properties dirrectly from homeowners, not investors. I was really hoping I could use these we buy houeses companies to flip properties to since people say they are a great source for buyers. Unfortunately, for me I can no longer do this if they do not buy properties sold by investors. I have sellers contacting me from out of state needing to sell their properrties and I was only using Zbuyer because they buy houses all across the states. My palan was to get a cut of the profit for finding buyers for the sellers. I had one seller that had a home for sale at $235k worth $350k and $45k in repair cost. I was going to up the price to $240k where the seller gets his $235k and I get my $5k as my share for bringing a buyer to this deal. No loss and everyone gets what they want.
Now I need help finding buyers outside of my state location that is willing to buy properties located in other states where the properties are located. I won’t find buyers in my state looking to invest in other properties outside of their state. They prefer to do all their business local. If I was going to go about making money like this, how would I go about doing so and what paperwork do I need to present to the seller explaining what I am doing to help him and how I expect to get paid a certain amount of money for my help with bringing buyers to sellers? By they way, is it possible for someone to learn how to do wholesaling all by themselves after only reading a few books? I read books and attended webianrs on wholesaling and figure I can do this without a mentor. Everyone keep advising me to get a mentor to guide me in the right the direction. The problem is I am in a financial mess where I cannot afford a mentor. My current job is kicking me to part time. I cannot find a better J.OB that will hire me on the spot. I am drowing in so much debt, which is mostly student loans. If it is that important to get a mentor, I would if I had the cash to pay them. Right now I just don’t know what to do. Local REIA has mentor programs that are way too expensive. I know I asked them.
On November 29, 2011 at 3:14pm, gordon said...
antonio what state are you in? I might be able to help with buyers.
http://www.realestateinvestorgordon.com
On November 30, 2011 at 4:58pm, Stephani said...
Hi Antonio,
You need to be careful if you are trying to match a buyer and seller together and get paid for it. In most (if not all) states, you need to have your license to do that. If you don’t have a real estate license, you would need to put the property under contract with the seller and then assign the contract to your end buyer (using an assignment of contract agreement) for a fee.
If you’re looking to find cash buyers in other areas, I would start calling some agents in those areas and having them run a search for cash sales in their MLS. If you look under the FAQ section on the top of my blog, there’s a video that explains in more detail how to find cash buyers on the MLS.
One question I have for you is why you aren’t looking for deals in your own market. Just curious.
Take care,
Steph
On November 30, 2011 at 6:12pm, Antonio Bodley said...
I made a list of old vacant homes in my area that I said I would consider wholesaling. I have your wholesaling contracts. The things that stopped me from going through with wholesaling is I am not good at coming up with good comps to get an accurate ARV, especially for the properties in my local area and outside area. I tried to get an ARV on my own and it was kind of difficult for the properties I was looking at. I tried to get help from real estate agents, but that did not work out because they did not contact me back after I asked for their help. Some agents just have no experience or knowledge about the aeras I wanted to invest in. I even offered to pay agents to get me comps just to see if that would get them interested. That also did not work. Then I have been advised that wholesaling where I am located is not that good of an idea and is not as easy as it seems. A real estate agent told me this. The president of the local REIA also advised against trying to wholesale properties at times like this. They are saying with the way the real estate market is these days it will be hard for me to get sellers to sell their homes for a lot less than what it is worth. Then there is my lack of support from my folks that I should try to get into the wholesaling business because they fear I do not know what I am getting myself into and would advise against it being this is my first time and trying to learn this on my own. To them, everything is either scam or something that is too risky to get involved in. Negative influences from family is what kept me from getting involved in a lot of things to make money. If I cannot make money from a 9 to 5 J.O.B, I should not be doing it. That’s pretty much how they see things. And I really want to try my chances at wholesaling to see if it is as easy and profitable as people say it is.
On November 30, 2011 at 5:03pm, Stephani said...
P.S.
Yes, Antonio, it is definitely possible to get started wholesaling without a mentor. It’s easier if you have one (provided they know what they’re doing), but it is totally possible to start doing deals on your own without the help of a mentor.
I’ve had people tell me that they’ve closed their first deal just by soaking up the information in my YouTube videos (which are free). There is more than enough free info on the internet to get you going. Here’s a link to all of the videos I’ve put together over the last few years. If you watch all of them, you will have enough information to do a deal… http://www.flipthiswholesaler.net/wholesaling-real-estate-faq/
Hope that helps,
Steph
On November 30, 2011 at 6:37pm, Antonio Bodley said...
Thanks for the great info. I feel better now knowing getting a mentor is not a requirement. I have had so many other real estate investor over at other real estate investing forums tell me otherwise.
On November 30, 2011 at 11:47pm, Antonio Bodley said...
You mentioned that we should get a deposit from the end buyer when we are flipping properties. How much deposit am I suppose to get from the end buyer? And how much earnest money do I need to put down when I am wholesaling properties from the private seller? At one time I was going to flip some HUD homes, but I don’t have $500-$1,000 of my own money to pay upfront? Could I use a cash advance from my credit card to help cover the cost of the earnest money deposit when purchasing either HUD homes or REO properties?
On December 08, 2011 at 7:47am, Stephani said...
I always get a 2k deposit from my end buyer- no exceptions.
The earnest money required when dealing with a private seller is negotiable. When I was getting started and was dealing with private sellers, I was broke, so I always just put $10 as an EMD in the contract and no one ever said anything about it.
I don’t see why you couldn’t use $$ from your credit card for a deposit. The seller doesn’t care where it comes from as long as they get it.
On December 08, 2011 at 10:19am, Antonio Bodley said...
Thanks. I owe quite a bit on my credit card, but I would use that as way to pay earnest money on governenment owned properties if my current credit card balance was paid off.
On December 01, 2011 at 2:02am, Antonio Bodley said...
What would I have to say to a realtor to get them to provide me with access to MLS? I have never seen what an MLS looks like nor do I know how to use it. I figure this may be one sure way to get the accurate value on homes I want to get under contract.
On December 08, 2011 at 7:49am, Stephani said...
Agents aren’t supposed to let non-licensed people use their MLS access, so unless you have a relationship of some sort with them, it might be hard to get them to give you access.
Here’s an article that you might find helpful about getting agents to let you use their MLS…
http://www.strugglinginvestor.com/2009/08/how-to-get-mls-access-without-your-license/
On December 01, 2011 at 2:07am, Antonio Bodley said...
What would I have to say to a realtor for them to get me access to the MLS? I never seen an MLS nor do I know how to use it to get accurate values on homes I want to get under contract. Will it cost me money to get access to this MLS?
On December 08, 2011 at 7:50am, Stephani said...
See link I posted above…
On December 08, 2011 at 11:02am, Antonio Bodley said...
Sorry. That was only supposed to be posted once. My computer was acting up when that happened.
On November 29, 2011 at 6:45pm, Robert Carter said...
help me I need a buyer I have a property in Illinois near Chicago email me @ grspk@ymail.com
On November 30, 2011 at 4:10pm, dale said...
Dale here again. Carl,the numbers were
ARV-$70,000 x 65%=$45,500-$5,000(repairs)=$40,500-$5,000(My Fee)=$35,500-$750(Closing Costs)=$34,750
I did not include holding costs as this was marketed to cash buyers only,and would make an excellent rental at $950-1000/mo
My asking price was 30k.The ARV was obtained from recent comps sold of like kind.
Debbie,I tried to JV with 4 other wholesalers,2 that listed the properties on their websites.
Are my numbers that far off? I have not been successful in winning any bids from HUD or other REOs as agents will not submit the offers if less than 90% of list prices,even for homes on the market for over 100 days or more. I have changed agents 3 times.The Atlanta market is bloated w/REOs so there is no shortage of inventory.Thanks for your advice.
On November 30, 2011 at 6:05pm, Carl said...
@Dale…(Just so you know up front, I am just starting this process too and haven’t done a deal yet, but here are my comments/questions). The first thing I would do is FIRE your RE Agent! My agent submits what I instruct her to submit no matter how low. There is no one in this process that will blacklist the agent, or you. All that happens is that the system will cancel (reject) the low ball offer and you resubmit by inching up your offer until you get to a yes (at least that is my strategy). Were you sure about your repair costs? $5000 seems a little light. Did you also allow for transactional fees (if you are using transactional funding)? I am trying to worse case everything when it comes to hidden costs because I would rather lose the deal than lose my money; besides if I lose money, momma will kick me out (no joke). I’m sure Steph will have some good advice for you as well, but that’s my two cents. Again, I am very sorry that you lost your money.
On December 04, 2011 at 12:16am, Michael said...
Hi Steph,
I just got my first home for free! This is a blessing being that the person that gave me the home doesn’t know me and lives in another state. His mother had left him a home that he just wants out of his name. I asked him if there was any leans on the home and he said that he wasn’t sure. How do you think I should handle this situation? It sounds too easy but at the same time it’s free. Should I leave the home in his name and assign a contract over to a buyer? Or should I take the home put it in my name and sell it myself. The reason why I’m asking is because the home is abandon and he said there might be property tax that may be owed on the home but he wasn’t sure. I don’t have the money to pay the taxes off if this is the case. But at the same time it could be paid up-to-date and I will be free and clear of a deed transfer right? Like I said it sounds too easy and if there is property tax that is owed, how do I get this home from him with out me being stuck with having to pay for the taxes?
On December 08, 2011 at 7:54am, Stephani said...
Hi Michael,
I would first contact a title company and have them run a title search to see if there are any liens on the property. Once you find that info out, if there is still enough room in the deal for you to make a profit, you can just put it under contract and then assign the contract to another investor.
Before you waste your time, though, you need to find out what is owed on the property (if anything), so I would contact a title co ASAP to find out.
Good luck with it.
Steph
On December 04, 2011 at 8:13pm, Steve Lorentson said...
Let me first say I have enjoyed your videos and information. I have bought 10 properties with my own money that I rent but I’m now interested in your method. When you decide to place an offer on a home what if any do you use as a down payment to the seller and how long does a normal contract give you to close or lose your earrnest money? Just curious how long you have to find a buyer normally without having to back out of a contract and lose whatever you have in the deal. Thanks for any info you can share. Steve
On December 08, 2011 at 7:58am, Stephani said...
Hi Steve,
When making offers on properties owned by private sellers, I usually only put a small earnest money deposit down when the contracts are signed ($10-$100).
Regarding how long you have to find a buyer- it depends on what your contract says. You can put an inspection period in your contract for X amount of days, and then if you can’t find a buyer before the inspection period is up, you can get out of the contract and get your money back.
Just keep in mind that in most cases if the seller is willing to sell at a substantial discount, they probably are under some sort of financial hardship, so you don’t want to get in the habit of jerking people around by tying their properties up and then backing out of contracts.
Hope that helps!
Steph
On December 08, 2011 at 1:12am, Steve said...
Great website Steph.
I am assuming you are using the same title company to close all your REO deals. How do you get the bank to go along with that? My understanding from everyone I have talked with is that the banks have their favorites that they use religiously and it’s their choice. I suppose if I had an ultra-clean offer with zero contingencies I could maybe push that issue a little but I am far from having that situation. I do have a title company that will handle my deals with transactional lending but the trick is getting the bank to allow me to specify the closing authority. So have you had any trouble with this? What do you say to them to get your way on this issue?
On December 08, 2011 at 8:01am, Stephani said...
Hi Steve,
If you go to my FAQ page: http://www.flipthiswholesaler.net/wholesaling-real-estate-faq/
and scroll down towards the bottom, there is a video there that explains how I structure my closings using my own title co. The video is titled: “How does a simultaneous closing work?”
Hope that helps!
Steph
On December 09, 2011 at 4:34am, Steve said...
Thanks Steph,
I just watched your video on simultaneous closings and while I was familiar with them I had never heard of anyone using two separate title companies before. It’s amazing to me how so many gurus don’t teach key details like that. I don’t mean to whine but it’s frustrating when something that can be so critical to a new wholesalers business can seem so trivial to those that teach this stuff.
I will be calling my new title company to discuss that with them tomorrow.
One more thing. I reviewed your downloadable contracts and found that your 2 page P&S agreement is possibly more effective than my 5 page one I crafted from clauses I stole from other investors and gurus. Well it’s at least AS effective and more streamlined and less intimidating to a seller. I may tweak it a bit but it’s already good enough.
Thanks so much.
Steve
On December 10, 2011 at 9:21pm, Antonio Bodley said...
This is a two part question.
PART 1
I contacted one of those WE BUY HOUSES companies one day. I asked if they buy properties from investors who have properties under contract. They said no. They only buy directly from the private sellers. I was thinking. If I buy a home using cash from transactional funding, that would make me the private seller. Right? After all I did close on the first half of the buyer and seller transaction. Then I turn around and close on the second half of the transaction when I sell the property, not assign the property for a fee, but sell the property to the end buyer. Would I then be able to use them as buyers since they say they only buy homes directly from the sellers?
Part 2
I was looking for a title company in my area that will allow investors to get paid assignment fees. I only heard of one title company from the local REIA that I thought I would allow assignments. I called them up and asked about this. They said no assigments. Do you know of any other title companies that will allow assignments at closings in any state? I need an investor friendly title company in Alabama that will allow this to happen.
On December 13, 2011 at 1:56am, Dee said...
Steph! I just need to talk to Antonio Bodley for a minute:
@ ANTONIO, I have read your comments/questions and wanted to offer some advice based on my experience- which is limited, However I just did my first deal – it was a great feeling of accomplishment but the numbers were dismal, no home run, just a the feeling of satisfaction. I can only share what I’ve learned thru my journey to that first deal:
FIRST, DO NOT LISTEN TO YOUR PARENTS! I know that sounds contrarian coz we’re always told to heed our parents warnings, however in Real estate they’re alot of naysayers and you really just can’t listen to them. Your parents and most people have very limited knowledge about Real Estate.Most people think of RE from a retail point of view or that you go thru a realtor, get a mortgage and pay market/retail price for a property
Whatever realtors tell you in regards to wholesaling, take it with a grain of salt. Most Realtors do not know/understand wholesaling.
The President of your REIA Who advised against wholeslaing in your area : I’d probe further and ask him exactly why he thinks its a bad idea. I’d also ask him how many deals he’s done and what kind of deals he’s done.
Getting comps for bread n butter properties like houses is not that hard. Not sure where you’re located but try using Redfin, it’s free, however its not available in all areas. It gives you lists of similar properties that sold close to your target property.Remember comps for single family houses are derived from Previous SALES of similar houses that are close to the target property.
Learn as much as you can about real estate in your area. Learn who the real players are. You said you contacted a “we buy houses ” company and they said they Only buy houses from private sellers ? I do not know what kind of investors they are because I believe deals can come from multiple sources. If a wholeslaer has a good deal already under contract, it saves the “we buy houses” guys time and money trying to market to motivated home sellers.
The guy who told you its hard to find people willing to sell you houses for below what they’re worth…..well….don’t listen to him. True, its not everyone who’ll do that BUT You as the expert wholesaler have to look for and market to MOTIVATED SELLERS…KEY WORD “MOTIVATED”..When there’s no motivation, its very hard to do a deal.The deal I just did was a house in a very desirable part of town that was inherited,and we were able to pick it up at 45% of ARV. The reason was coz the sons who inherited it just wanted the money and wanted out, plus the house needed work, thus MOTIVATION!
My Last tip: Honestly, just get out there and hustle, make a move and take massive action ( ok i don”t wanna sound like a guru, but u need to take action). Let people know u buy houses,called up classified real estate sale ads, fsbo, chat with the sellers and find out why they’re selling.I bought a course and started doing what was taught, but to be honest my first deal just came about from me using what i had- the newspaper.
Good Luck!
On December 13, 2011 at 2:13pm, Antonio Bodley said...
I never told my parents what I am trying to do. Everything is kept secret because I know what I have to listen to once they discover what I am doing. I admit I made some mistakes in my past and my mom is THE main one of the two parents who will always hold stuff ovder my head no matter how long ago it was no matter how I learned from that mistake and moved on. She is the type of person who will always and forvever remind me of my past mistakes. The more I hear all the negative talk from her along with the lack of faith and support, the more it cuts pretty deep and causes me to not try anymore.
I don’t have access to Redfin down here in Alabama where I live. Itreid to run comps on my own by comparing similar properties to the subject property. The problem is I can never seem to find properties in the neighborhood that matches the target property. The year built don’t ever match the target property. The sqaure feet don’t match. The number of bedrooms and bathrooms don’t match. I mean nothing matches up. Neither of the properties sold in the last 3 months. It’s just frustrating running comps on my own. Real estate agents won’t help me get comps either even after I offered to pay for comps. I only did that to get them motivated. I also need to find someone whether that be title company or a real estate lawyer who understands and except assignments at closings. I had to epxlain to one local title company who don’t know squat about wholesaling and how assignments work. I could have called and checked more but after trying to teach the assignment process to the title company. I felt I couldn’t bear having to explain the same thing to every title company or real estate lawyer I contact.
When you call up these sellers to let them know you buy houses, what exactly are you saying to them to get a deal under contract? I already have the wholesale contracts I got from this website. I need to find someone in my state of Alabama who allow assignments at closings. Without that, my chances at wholesaling is ruined.
On December 13, 2011 at 4:13pm, Dee said...
ANTONIO,
When you call up a title company or a Lawyer and you find yourself xplaining what assignments and double closings are, RUN, Don’t waste time trying to explain. If you call up a title company or attorney and they ask you what you mean, just end the call, its not worth the aggravation.
A simple method is simply to put an ad on Craigslist. I actually did that. it went something like this “Local Real Estate Investor looking for Title Co / Attorney to close multiple deals”…I also indicated ” Looking for a title company/attorney familiar with assignment of contract and double closings. If you are NOT Familiar with these techniques please do not contact me……”
That sets the stage for ONLY The people who you need to call you. The calls weren’t that many but they were quality response calls. I even got acquainted with an experienced investor who gave me couple ideas,pointers and leads.
If you’re having a hard time coming up with comps for your property, then I’m guessing your buyer might have a hard time too. Is the property functionally obsolete or economically obsolete? there must be a reason the property cannot Comp. is it in an isolated area?
when i call up homeowners, I ask open ended questions to get them to talk as much as possible. I want them to give as much info as possible. questions like ” Mr/Mrs. Smith , tell me a little more about your house….” that should get you a good amount of info.The reason you need as much info is coz I’ve found out that you have to get to the root cause of their motivation. are they selling coz they are behind on mortgage? house needs repairs they can’t afford? an inherited property they’re not interested in ?. My Initial call is to gauge whether there’s enough motivation for me to go over and see the house, coz you don’t want to go over to see houses if there was never any real motivation to begin with.
Homeowners, 90% of the time will want you to give them a price over the phone. obviously you can’t coz you havn’t seen the house.
On December 13, 2011 at 8:26pm, Antonio Bodley said...
Yeah I see what you mean by not wasting time with these people. It was a little embarrassing when I asked the question and they are like say what now? You want to do what? Assigning a contract? I was like oh no these people have no clue what I am talking about. It took a while but the lady who I talked to finally caught on after explaing how assingments work. I was told they require money be brought to these closings, not some piece of paper. Prior to this post I contacted two title companies. One was weeks ago. The other was yesterday. The one that I contacted like weeks ago finally contacted me back today after all this time. It was Clear Title America who I contacted a good while back and they just now contacted me today saying they do assignments. That is what I have been waiting to hear and they work with wholesale investors nationwide, which is even better. Now I have my go to people whenever I need to get my deals closed.
As far as comps goes, a lot of these target properties are in my part of town all within and around the same area I live in now. The target properties are all in poor low income areas, but they are not in isolated areas. They are just hard to comp and I got a good list properties I made long ago of old vacant properties around my town. I have no way of getting good solid comps to these target properties.
On December 13, 2011 at 11:12pm, Antonio Bodley said...
@ Steph. You talked about how you use investor comps when making an offer and that you also ask buyers how much they are willing to pay for a property. This is so new to me compared to all the other wholesalers who use the traditional wholesale formula ARV x (whatever %) – repairs = offer price. Where do you get investor comps? This can’t be something you can get from real estate websites like Zillow and the rest. How many people have used this method of yours and it actually worked? I may I want to try this strategy when I make an offer with the sellers.
How would I be able to determine how much money I could make from assignments using this method? For example, I come across a property that a buyer is willing to pay say $30,000 dollars for. Is that what I am using to offer the seller? I can see this will take some time to get use to because I would normally use the wholesale formula to arrive at an offer price that is lower than the sellers asking price then flipping that property for a higher price to the end buyer. Not only that, I don’t have a figure for what the house is worth. This does not sound so easy when flipping to another buyer. At least not to me it doesn’t seeing this is my first time discovering this new method to arrive at the offer price.
On December 14, 2011 at 3:02am, Dee said...
ANTONIO,
It seems you’ve gained some traction now that you have a title company that can actually close wholesale deals. If its not too far from where you live I’d recommend making a trip over there, introducing yourself and letting them know what you intend to do. I’ve found out that in Real estate, having that personal connection with people helps.
Also ask them how often they close these type of deals and when their last one was. reason I say this is coz when I posted my ad on CL to get attorneys who can close wholesale deals, I got a call from an attorney who seemed qualified, but when I asked her the last time she did a wholesale deal, it was a couple of years ago. You want to screen them and make sure they can do what they say.
You’re in a low income area? is it working people? war zone? most investors avoid war zones, however once you get to know your market, you’ll know who buys where.There are some “slumlords” who don’t mind getting properties in less desirable areas, they may need a wholesaler too.However, I’d recommend targeting areas where people want to buy and rent in.
You also need to find out the costs of closing deals from your title company, thus I recommend again, try and go there in person.that will be starting step.
On December 14, 2011 at 6:43am, Antonio Bodley said...
The good new it is Clear Title America who said they can close deals with who;esalers all day nationwide. The bad news maybe is that this company is located outside of my state. This means there is no chance I can go there in person whenever I need to close a deal. I would have to email or fax all the signed paperwork from all parties in the transaction.
Yes I live in a poor community and half of it looks like a war zone around the corner from where I live and on the street I live in it is a mixture of very poor with a blend of middle class with maybe a one or two upper class homes on the same street from block to block. I see more rent signs and for sale signs in my spot than I do sold signs. I have not seen a sold sign yet, which kind of tells me I am not in a good place for buyers to buy homes. I do, however, see some people doing some rehab work on the house behind me. It is still not complete and no one is buying anyway. Maybe I will try another city far away from where I live.
On December 14, 2011 at 9:08am, Stephani said...
Antonio- the best way to find a title company who is investor-friendly is to find some of the active wholesalers/rehabbers/investors in your area and ask them for a referral. I guarantee there are several in your area who know what assignments are- you just have to do some digging to find them. What city are you in? I have a good friend who is a very active wholesaler and rehabber in Mobile. If you’re anywhere near there I can ask him who he uses.
My advice to you would be to NOT try investing or wholesaling in another city far away from where you live. Instead, I would spend a month or two (or more) really getting to know YOUR area- find out who some of the players are in your market, find out what kind of deals they are looking for, and once you have figured that out then go out and look for deals. This will take a lot of time and effort on your part but will be well worth it in the long run.
If you haven’t done so already go watch all of the videos in the FAQ section of this blog. There are several videos where I talk about the steps you will need to take when learning a new market. There’s also one about how to find an investor friendly title company in your area. I think you will find them helpful.
Take care,
Steph
On December 14, 2011 at 1:42pm, Antonio Bodley said...
I have found a title company I can work with. I still want to know how you use investor comps when making an offer and that you also ask buyers how much they are willing to pay for a property. This is so new to me compared to all the other wholesalers who use the traditional wholesale formula ARV x (whatever %) – repairs = offer price. Where do you get investor comps? This can’t be something you can get from real estate websites like Zillow and the rest. How many people have used this method of yours and it actually worked? I may I want to try this strategy when I make an offer with the sellers.
How would I be able to determine how much money I could make from assignments using this method? For example, I come across a property that a buyer is willing to pay say $30,000 dollars for. Is that what I am using to offer the seller? I can see this will take some time to get use to because I would normally use the wholesale formula to arrive at an offer price that is lower than the sellers asking price then flipping that property for a higher price to the end buyer. Not only that, I don’t have a figure for what the house is worth. This does not sound so easy when flipping to another buyer. At least not to me it doesn’t seeing this is my first time discovering this new method to arrive at the offer price. I watched the video where you talked about how to make an offer without using the wholesale formula.
On December 14, 2011 at 4:12pm, Antonio Bodley said...
I live in Bessemer, Alabama, which is so very far away from Mobile, Alabama. I have been traveling around in my little part of town to see if any action has been going on. I do not see much of anything happening. I live in the least desirable town. I see a few WE BUY HOUSES signs in the neigborhood along with rent and for sale signs, but no signs of homes being bought in the past 3 months.
On December 14, 2011 at 4:28am, Justin McClelland said...
Good stuff Steph. Nice to see you back blogging again.
On December 14, 2011 at 9:09am, Stephani said...
Hey Justin! Glad to see you’re still “around” too!
Hope all is well!
On December 14, 2011 at 3:36pm, Dee said...
Antonio,
have you considered joining a mentor group? maybe steph could recommend one for you close to your area. That way you’ll have some one to guide you every step of the way. It might cost you, but it’s an option.
On December 15, 2011 at 12:20am, Antonio Bodley said...
I cannot afford a mentor right now due to my low income job and pile of debt.
On December 14, 2011 at 3:58pm, Stephani said...
Like I mentioned in the video- the investor comps are just the low comps in the area. I get them off of the MLS or the property appraiser website for my county. I use them (the investor/low comps) to get a rough idea of how much investors are paying for properties in a particular part of town.
What you need to do is take a month (or two or three) and get out there in your market, find some active buyers, and find out what they are looking for in a deal . Once you find that out and you have a good understanding of what the buyers in your market are looking for in a deal…….then you can go out and start making offers. You have to do your homework first, though.
If you feel more comfortable using a formula to come up with your offer amount, and if that’s what other wholesalers are doing in your market, then by all means- use a formula.
The bottom line is- you need to do some research/homework to find out what the investors in your area are paying for properties. Once you figure that out- then you can go and find deals for them. There are no short cuts. You have to get out there in the streets and do some due diligence.
On December 17, 2011 at 4:17am, Steve said...
Hey Steph,
You mentioned in that last message that you use “the property appraiser website for my county”. I don’t know what you are referring to, unless you mean the ‘county tax assessors office’. Of course that’s not actual market value, as you know, and I suspect you are talking about a site like zillow or such but I’d rather not guess. I am always interested in finding another tool for evaluating properties.
On December 17, 2011 at 4:29am, Steve said...
Hey Antonio,
I understand you live in a remote area that probably doesn’t have local REI group meetings such as REIA. You can get on facebook, linkedin, and of course other sites like this one to find investors in your area, that is operating in your area as they may not live there. Then ask them for referals for services and the missing pieces of your team, just like Steph said.
Another thing you can do to find these people is to watch for their marketing such as ‘Real Estate Wanted ads in C.L.’. I have ads there and so do many others. Call the ‘for rent ads’ and ask them if they are buying more properties like that one. They might be a major player and you could get referalls from them after building a rapport with them. Of course you will want to add them to your buyers list so get their criteria while your at it. Your title company employees know the investors active in your area as well. They may be a good source for a number of things.
Just some ideas I have picked up along the way.
Steve
On December 17, 2011 at 3:54pm, Antonio said...
Hi Steve,
Yes I live in a remote area that does not have local REIA anywhere in this area I am in now. The only REIA we have is many miles away in another city. I havea lready tried Facebook and Linkedin and neither of them has worked yet. I don’t really like talking to the people over at Linkedin. They are too close minded to what we investors here are trying to do, especially from the real estate agents who are against wholesaling.
As for Craigslists, I use them all the time. I have some posts on there that has gotten me plenty of responses depending on what I posted on those ads. The problem with those real estate wanted ads is that they are posted by people looking to buy properties outside of the area I want to invest in. This is also why I have been tempted to find deals in another town because my town is not working out so good. I see quite a few WE BUY HOUSES signs posted around the different parts in the area. I will stay clear of the wholesaler WE BUY HOUSES companies.
Using title companies to find active buyers in my area is not a bad idea. Can I use any title company to do this? What do I need to say to the people at the title companies to give me information about active buyers in my area?
I just had an idea pop up too. I want to try it, but I am not that good of a liar. The idea was to post fake ads about some make believe home(s) I have for sale. It will have great features to get someone interested in either buying (hopefully with cash) or asking me more details about the property. I get their contact information to add to my buyers lists. Of course the property for sale is all a lie. Once they show interest like they are ready to come by and see the house to decide if they want to buy it, I will tell them the property has just been sold. I will, however, tell them I will keep them posted if anything else comes up. That is when I go out and locate properties for real to get under contract if the sellers allow me to.
I will attempt to create a selling price and ARV that will sound so good it will be impossible to pass up on this (fake) deal. I almost hate doing this, but I really need some bait to see who will take the first bite. This is just my own little backup plan in case nothing else works.
On December 20, 2011 at 5:52am, Steve said...
I actually have already responded to Antonio’s message last night in an email but saw his post on here and thought perhaps I should give a reply for others who may be interested.
I won’t go as long as I did in my email to Antonio but the gist of it was:
On the question regarding asking the title company employees for referrals, I honestly don’t know what to say as I have not had that conversation with any of them yet, maybe I will some day. They should know a number of active buyers and other wholesalers though.
On the subject of the investors he’s finding wanting property types different than that which he is wanting to invest in, I say shop for your buyers. Not to be coy but if your playing Santa and asking the kids what they want for Christmas only to get them what you are looking at, be prepared for some dissapointed kiddies. OK I didn’t say it like that, but you need to gather their criteria then focus on finding those deals. If you get something close to what they describe I suppose you can run it by them before getting it on contract. Just don’t give away too much info about it. Just let the customer tell you what they want like they’re sitting on Santa’s lap, then go shopping for that deal. Once you know what they like it’s lather, rinse, repeat for their birthday, etc.. Now if you don’t have properties or deals like that in your neighborhoods nearby and you want to make the search easier for yourself you can look for buyers that want the kind of deals you can more easily find. The next paragraph describes one way to do that.
Antonio came up with a real good idea for something that is actually not an original idea but he did come up with it on his own, to his credit, nice job. This is called a “ghost add”. Some of you may have ran these adds, I have in the begging and it works well. A great way to find buyers looking for a particular kind of deal is to run an add advertising a property for sell which describes a type of deal like you can find or prefer to go after but is exceptionally attractive. This can be a real deal you have, if you do have something that good, but a “ghost add” is a fake add. When investors call or email you on it, you explain that you already have a buyer for that one. They will understand that such a great deal would go so fast. Then you tell them that you find deals like that regularly, though not usually as sweet as that one, and that you would be happy to give them a shout the next time you get one. Then you collect their criteria and add them to your buyer’s list.
Another tip I have learned but haven’t tried yet, this is to locate cash buyers and I really need to try this, is to have your agent friend do a search on the MLS for properties closed which were cash purchases and give you the addresses. Then you go on the county records site and look up that property to find the new owners name and whatever else you may find on them. Then you need to get their contact info perhaps via one of the 411 type sites. Now you can contact them and add them to your buyer’s list as you know they are an active, capable, real CASH buyer.
Sorry Steph. I don’t mean to hijack your blog here. I hope I’m not going on too long with these. I guess I didn’t make that much shorter than my email to Antonio. I’m just trying to help who I can, where I can.
Humbly,
Steve
On December 20, 2011 at 8:10am, Antonio said...
I never got that email, but thanks for posting that response on here. One of my biggest problems is finding cash buyers who will do deals with wholesalers. Alot of them want to buy directly from the private seller.
On December 20, 2011 at 3:51pm, Antonio said...
I honestly don’t know what to say to title companies either. What I don’t want to do is pick up the phone call the title company and start asking questions like that to the first person that answers the phone. A lot of times the first person that answers the phone usually be one of the secretary staff employees or who ever job it is to just answer phones all day. People like that don’t have the slightest idea what you are talking about. It is a lot easier for me to know ahead of time who exactly at the title company I need to speak with concerning the information I need to gather up. The last thing I need is to call them and ask them who are the active cash buyers in my area and can I get their conatact information. I’m pretty sure they are going to ask me all kinds of questions as to who I am and why I need this information. Now I have to go deep in to explaining all I am trying to do and why I need that information, which I really don’t have time for.
You mentioned I need to gather buyers criteria then focus on finding those deals. When you do that, are you randomly riding around the neighborhood looking at homes from the outside then just pick a house you guess is the right house that fits their criteria? I mean you can’t tell a lot from looking at houses from the outside whether they have the number of beds and bathrooms the buyers are looking for. You would have to find that out if you were to get into the house, which you don’t have access to. Maybe you can get lucky and take a sneek peak through a window and see something. Other than that it is difficult to drive around town picking some random house you cannot even see the inside of. That sounds like the hard way. The easy way in my opinion is to advertise what you are looking for in the newspaper, Craigslist, and Facebook or pay someone to birddog for you if you can afford to share some of the profit if the person finds you the deal you are looking for.
I had someone call me months ago because they found my info at leadtackle.com. This person wanted to bird dog for me, so I gave her all the information she needed to bring me what I want. I never heard back from that person again. I say depending on the deal I would pay anywhere from $500 to $1k depending on how much money I could make from the deal. The more I could make from the deal the more I will pay that person in bird dog fee. By the way, I appreciate you giving me credit for the idea I came up with even though I know it has already been done before.
What am I to offer these real estate agents once they locate buyers from the MLS? They won’t just do this for nothing. Right? So what do I have to give them in return?
On December 20, 2011 at 6:01am, Steve said...
Sorry, in the fifth paragraph that was supposed to say ‘begining’ not ‘begging’.
Steve
On December 20, 2011 at 10:04am, Bobby said...
Hi Steph, I’m new to investing, and I want to get into wholesaling. I was just wondering, when I assign my instrest over to someone else do I get paid the assignment fee at the time I assign the contract over or do I have to wait until they close on the property? If I have to wait how do I insure that I get paid. I mean if they wholesale it and don’t close on the property.
Thanks for your help.
Bobby
On December 20, 2011 at 10:28am, Joseph said...
great post and comments! so much good info! thinking about flipping now!
On December 20, 2011 at 5:30pm, Dee said...
STEVE,
How did the ghosts adds work for you? In my experience one has to be a bit careful when posting ghost adds. Usually I can tell when an add is a “ghost add”. I tried one once and it did not turn out quite the way I expected. The investor was quite knowledgeable about the area and wanted to know the address of the property that “he’d missed within hours as another investor had put it under contract” usually from my short experience, I know experienced investors want info like location, price, etc. So if you make up ads for properties you don’t have, there is a chance it may not work out the way one expects.but hey, I’m sure it will work with some investors.
After that I’d usually call investors up introduce myself and tell them a new wholesaler to the area and wanted to acquaint myself with them and their buying criteria. Usually the true investors who do it for a living are more than happy to send or show you their past deals and addresses for u to get a feeling of what they look for in deals. That method has always worked for me.
They know you’re new and will guide you as you bring them potential deals.Alot of these investors are just too busy to be chasing down motivated sellers, they have so many projects going on at the same time.
I actually wholesaled a deal to an investor who now wants me to re-wholesale it to another investor after he closed on it….how cool is that?
On December 21, 2011 at 8:06am, Steve said...
Dee,
That’s way cool that you get to hand it off again and make another assignment fee. One for the record books.
On ghost ads, my experience and what I’ve heard from others is that many may suspect that you were faking it but really who cares if you are going to find them a deal. I mean they are generally open to and even wanting new wholesalers and bird dogs finding them deals. So if they call on an add and discover it was a ghost add, do they really mind? Why would they? I wouldn’t as I would have possibly found the person that’s going to make me more money that I would have missed out on had they not added me to their list.
In fact this is a rather funny coincidence as I just caught my new agent at this the other day. Well she had a cover story, but I asked her about the property I had originally called her about, which she told me was sold and sent me the MLS sheet on it showing me the date it closed (back in September, OOPS) you see I had just called her on an add in craigslist for that property the previous week. That was less than two weeks ago now. She gave me an explanation but I really don’t care if it’s true or not. I pretended to buy it as I didn’t really want to put her on the spot and embarrass her. After all, I’ve done it and am a fan of the ghost add. I recommend it to all newbies. It’s part of the unfortunate evil necessity called “Fake it ’til you Make it”. I personally “Hate it”, but as human psychology dictates that people want to deal with those that are already successful and presumably reliable and trustworthy. Therefor if you go around announcing to everyone “Hey I’m brand new and would love for you to be my first!” people will run the other way, politely of course.
You stated that you usually call up investors and introduce yourself. How do you usually find them?
On December 21, 2011 at 8:27am, Steve said...
Another thing about using ghost ads. Geeesh, I can’t believe how this little tidbit grew into such a large topic,,, my fault,, anyway when I did that I made the mistake of not requesting a proof of funds from my new buyer. I just took for granted that they could do what they said they could do. Now some buyers you meet you know they are good for a certain amount because of prior knowledge of their deals or the fact you met at an auction where they were bidding, or whatever. When you get a call from someone telling you they are a cash buyer, blah blah blah, how do you know they aren’t just another wholesaler like you and me? You don’t. I don’t either. Steph doesn’t either, so you don’t have to ask her that. You can always ask her for more ideas of how to approach the subject. In fact I will do it now.
Hey Steph, when I am talking to a stranger for the first time that is claiming to be a cash buyer, looking to buy say 50 properties this year, and can go up to $250k on each one how can I tell if he’s just a wholesaler like me, or the real deal? Any tips are greatly appreciated.
I probably should have made that a separate post addressed to her. Though she will probably see all my babbling on here and wonder who the hell is taking over my site? Then read what I posted to see what craziness I have been dishing out.
Seriously though, a guru named Andy Heller actually teaches that when we fail to ask for the POF we expose our naivete and lack of experience to the buyer. He says when he has that conversation with a new wholesaler, if they fail to ask for POF, he just deletes them from his memory. I’m paraphrasing as I can’t quote him verbatim, but that’s the gist of it.
Steve
On December 21, 2011 at 8:46am, Steve said...
Sorry Antonio, I missed your last comment to me.
About buyers wanting to deal directly with the seller. OK some buyers would rather just pay you a $500 finder’s fee for giving them an address and maybe a phone number. They would rather not pay you a $5k assignment fee because they would prefer to negotiate their own deal and also put that $5k in their pocket not yours.
You can bird dog it to them for the $500 but if you have info indicating it’s a deal, and not just a vacant house you saw on your way home, then why not get the real money? If I have done the home work to determine: What it’s worth (ARV, FMV), What it should rent for, What it will cost to fix up, and seller’s motivation level or what they may accept for it, then I’ve done their job for them and have earned that assignment fee. I will go that extra step and get it on contract and assign it. The one time where I would consider just bird dogging it is if I don’t have a strong enough buyer’s list for that property type and have to give a sizable earnest money deposit. If I can get away with a small or no EMD I’ll write it up anyway and do my best to get a buyer in time. Banks would be a good example of this. Normally you can’t just give them $10 or $100. You need to give them $1k and hope you have the buyer that will take it. This is my biggest reason for preferring private sellers. Once I have a set of buyers like the ones Steph has the banks will probably be my primary hunting grounds.
OK I’m leaving now.
On December 21, 2011 at 4:57pm, Antonio said...
I use to bird dog for an investor that was willing to pay $1k for every deal I brought in. Unfortunately for me, it was difficult to bring in specific properties to keep this investor satisfied. By then I gave up the bird dog gig and focused on making the real money. That is where I want to be headed. I will never pay EMD in the hundreds or the thousands. Anywhere from $0 to $10 bucks is what I am offering. As for the buyers list, I am contacting landlords over at section 8 to see what deals if any can I work out with them. If they don’t mind buying properties from wholesale investors then I am in good shape. What I would like to do is take my chances attempting to flip these vacant homes in my neighborhood to landlords or rehabbers. A lot of these homes could be turned in to rentals for those who prefer that strategy or rehab then sale at retail.
On December 21, 2011 at 2:51pm, Dee said...
steve,
…….”It’s part of the unfortunate evil necessity called “Fake it ’til you Make it”…..lol but true.
On December 22, 2011 at 2:18pm, Antonio said...
When flipping properties to landlords, is it the same as flipping homes to an investor who will then sell that same property to someone else at retail price? We often use the wholesale formula to get our offer price to the seller. Then we flip property over to end buyer with enough spread in between for the wholesaler/flipper and end buyer to make a profit. That is if the end buyer is going to resell what I already sold them. Is it different with landlords? I am saying landlords should not be concerned with ARV/FMV if they are holding the properties for monthly cashflow. Should they? Landlords make their profit on a continuous basis, so that would be the same as an investor buying from a wholesaler and reselling the property at retail. They both are making just as much profit but in a different way. So I shouldn’t be worried about figuring ARV/FMV for the sake of the lanlords if landlords are not going to resell property for profit because the landlord is making up the profit with rent money received each month. Right or wrong? If I am wrong on this part, tell me what I missed. I do have a cash buyer that is a landlord.
That is just one cash buyer I found so far. Should I go ahead and start looking for deals to flip to this one landlord, or should I hold off until I get a bigger buyers list? By the way, how big of a buyers list do I need to get me going? I am still contacting more landlords to build up my list.
On December 24, 2011 at 5:27am, Steve said...
Antonio, the bottom line is always it depends on the buyer. I know I hate hearing answers like that too. As a general rule the cash flowing investors do not need as much equity as the flippers. That said, how much equity is enough for them varies from investor to investor but also even from deal to deal. Most investors are looking for a deal where they can either profit from renting it or flipping it. In fact many gurus even teach that you should choose properties that allow you at least two options such as flipping it or renting it. I know investors that are mainly using a rent-to-own strategy but buy cheap enough that they could sell it immediately or rehab it and no matter what they make money. So just like when gathering their criteria for property type, etc.. You need to know just how much equity they need and how much ROI or NOI they need if they may rent it. Understand your buyers needs and shop based on that.
I am currently just looking for getting them a price of 65% of ARV minus the cost of repairs to do the most likely scenario of rehab for that market. If the price range is towards the upper end of the median spectrum though I may go up to 70% since the actual dollar profit is there. This is based on what the buyers have told me. Also what other wholesalers are saying that their buyers want. It pays to talk to other wholesalers in your area to see what they are doing. If I know my deal appeals to most buyers and none of mine are biting then I can possibly still get a buyer that I don’t yet know by advertising it. If you have to just call another wholesaler with a strong buyer’s list and tell them about it. Maybe you can both make a small amount passing it on to one of their buyers.
Sorry, I didn’t intend to make that such a long answer to a short question.
Steve
On December 24, 2011 at 7:49am, Antonio said...
I asked the landlord what he is looking for such as price location and whether the homes need to be occupied with tenants. He said, “We buy 5-10 houses each month and 2-3 usually come through wholesalers especially occupied properties. I will look at mostly anything. Send me what you’ve got.” Now does that sound like a motivated buyer? Does that sound like I need to be concerned with accurate home values? Since this guy is not picky as to what he wants, I was thinking about testing a deal out to see what would happen. I would skip all the wholesale formula with the 65%, 70% whatever % of ARV minus repair cost. Skip all that and just wholesale the house at it’s original asking price added with my guess as to what repair costs are along with my assignment fee added on to it. If that is good enough for this buyer then I may have found what I have been looking for. This person doesn’t sound picky at all, which is much better than dealing with investors. I know if I was a landlord, I could care less about how a person came up with a selling price based off some wholesale formula because as you said landlords are less concerned with equity. They will be getting back what they spent on the property through the rent they receive each month for as long as they hold the property. Did I mention this buyer says they buy in cash? I just want to know if I am making a bad move by flipping property without using any wholesale formula to sell the property to the landlord. He said he looks at anything.
On December 26, 2011 at 3:43am, Steve said...
Merry Christmas Antonio,
It is one of my main irritants when investors don’t want to give you their criteria. Some just can’t be bothered to even think about it. Others don’t realize how many things they can actually tell you that will narrow down the leads your looking at. With these folks you won’t know until you talk with them about some properties, that is you send them leads and they, hopefully, tell you why they are rejecting them. Then you can figure out their actual criteria from that bit of market research on them that they made you do.
I know it is hard for me to tell people what geographic areas I am, and am not, interested in but I still do my best to make it as simple as possible for them. The more I give them to work with, the less time they will waste of theirs and mine with leads I can’t work with.
So I think your idea of throwing some higher prices at your buyer just to see their reaction is a good idea. I wouldn’t go full price but maybe if you can find something at say 80% of FMV, or 80% of ARV then subtract the cost of repairs. See how they react. That may be good enough. If not come down in price. If you re-present the same property but with a lower price you can say you were able to negotiate it down. I wouldn’t do that though unless I was only dropping it to say 70-75% from 80%, nothing lower, otherwise it looks like you are trying to get greedy with them. If they still turn it down I would ask for how low it would need to be for them to say yes. Just note that for future leads. Then present that deal to another buyer maybe at a lower price. Of course your ability to do this depends on how publicly you are advertising your deals and whether or not these buyers know each other. I wouldn’t risk sacrificing my reputation with a buyer by getting caught offering someone a substancially lower price than someone else.
Bottom line is they may sound like they have very loose and/or low standards but they probably just don’t want to lay out strict guidelines on criteria because they don’t want you to not send them deals that they may want. So they may want you to leave the sorting to them. I have been shocked at the deals I was presenting to buyers that exceeded their stated criteria and they passed on them, stating reasons such as “it was in an area they didn’t like”, or “it needs too much/little work”. Yes you read that last bit right. “Too little work”, one buyer told me as he had gone from buying light rehab (cosmetic) fixers to major (big money) rehabs. I still didn’t get it as it was a quick flip and at 52-58% of ARV with about $6k of repairs leaving it at about 61% of ARV total investment, worst case scenario. If I could have got the rehab money together in time I would have done it myself. That one taught me to never trust my buyers will buy it, no matter how sweet the deal. Which is why I’m gun-shy of high earnest money deposits.
So yes you can make offers all over the place and throw everything at him but make sure you don’t put your neck out there for them.
Steve
On December 26, 2011 at 8:22pm, Antonio said...
Merry Christmas Steve,
I am the same way. I don’t have time to play guessing games with investors. I prefer investors to tell me all I need to know upfont. It helps even more if the homes are not impossible to find. That last investor I use to bird dog for had me going on wild goose hunts for properties that were not easy to come across. I can deal having to look for homes with a particular sq. ft. and specific year built. I thought that was a bit over board. Now if it is something simple like finding homes with a certain number of beds and bathrooms then I can work with that. I could care less about year built. If the numbers are good, that is all that matters.
On December 26, 2011 at 8:29pm, Antonio said...
I meant. I CANNOT deal having to look for homes with a particular sq. ft. and specific year built.