Wholesaling Houses In Real Time In A Changing Real Estate Market

Hey I wanted to try to do something different here and do a video post of a deal that  I have been working on. Let me know what you think. I will probably being doing some video posts on the basics of wholesaling. Let me know what you want to know about and I can do my best to try to answer you.

When wholesaling houses a lot of people have difficulty making offers because they are not sure if they will have a deal or not. I will tell you that once you learn howto determine value your confidence level will go through the roof!  You see if you can get to the point that you know that a house will sell like wild fire when you putit under contract it is going to make you unstoppable. So what is the best way to determine value without spending hours researching and missing out on dealsbecause you were just to dang scared to make an offer?

Well there are a couple of ways that you can approach this whole value dilemma but there is one way that I use that really helps me in my wholesaling business.Before I get to that I am going to give you some ways that you can get a quick number.

The FREE Website Method

Check out these three websites and get an average value of the property

www.Zillow.com

www.CyberHomes.com

www.RealEstate.com

Go ahead and check all three of the sites and get an average of what the properties are worth. This is not a bullet proof method but will give you a general idea of whatthe property is worth on the back end so to speak. To clarify back means what your buyer is going to sell it for

The Networking MLS Method

This method is a little bit more advanced and will require you network and start talking to real estate professionals. This is key to your wholesaling success. My bestbuyer is a realtor and actually gives me access to the MLS  (SHHHHHHH) so that I can see EXACTLY what is going on in the market. What is the MLS you say?The MLS stands for the MULTIPLE LISTING SERVICE. I knew you were afraid to ask so I just through that one out there This is priceless and has given mea full leg up on my competition! So anyways what I do is pull up what is listed in that exact area and check if my property is considerably lower than what iscurrently being offered on the market.

HINT: If you can offer your property cheaper than the bulk of the REO’s listed you are in good shape

 If I have a property that meets that criteria I know that I am somewhat in the ballpark of a good wholesale deal depending onthe condition of the house. That is a quick and dirty method of what to do on that and it is a little more involved but definitely should get you started.

Please comment on this post and let me know what you think and let me know that you are out there and kickin! What are some of the ways you determine value??

Well today is Sunday and for most people it is a day to relax and recoup for the upcoming week. I do apologize if you have to recoup to go back to the boss! I remember dreading  Mondays thinking about having to get back to the office and being confined to that desk. Thank God I don’t have to do that!

You won’t believe what happened to my last night. I have my family an d we were getting ready to head down to the ocean front. It is funny how my wife and I think a like; we both went to check the mail at the same time. Now normally when you check the mail you are expecting some cool things. In my instance it is always nice to get a check from a title company for like 10K or something. Its even not rare for my wife to get a little note from her mother with a couple dollars or something along those lines.

That was not the case yesterday. My wife was reading a notice with a very concerned look on her face. It was a summons from our local city. Oh get this, there was not ONE but TWO summons One for me and one for my wife. It said to find out more information you have to call the warrant division of the police department! It also said they could not give you specifics but you would have to come down to the police station in order to get more information. Anytime you get something like that it is a little bit of a wake up call!

So we get down to the police station and present our summons to the lady at the front desk and she calls a police officer to serve us our papers and give us our court date. All this type we are wondering what the heck did we do! The officer tells us it is one of our properties we own in the area and it is a CLASS U MISDEMEANOR. Again another reason to freak out but all this meant was it is unclassified.

Apparently one of our properties was given a code violation for the pool on the property and that it needed to be drained. Now the tenant I have at that property is on a lease option in which HE is responsible for the repairs but apparently he was not doing that. It is still ultimately my responsibility and being the man that I  readily own up to it.

So I am having to deal with this whole matter and will get it resolved and probably have to go to court and end up getting a fine for like 500 bucks or something like that. I am hoping I can just prepay the offense or whatever it is.  The worst part is that I may have to spend all day in court which is a complete waste of time! My time is worth more than the 500 bucks and yours is too if you are investing in real estate  by wholesaling houses.

The point to this whole mess is that I thought I could build wealth by acquiring rental properties. This is definitely not the case! The fact is that my rental properties have been nothing but a headache and have cost a ton more money than they have made me. The only advantage is that they have help offset my wholesaling income come tax time!

Don’t make the mistake of buying rentals until you have some good cash built up in the bank. This is not a blog about investing in rental properties but I will give you a helpful hint. If you are going to invest in rentals you need to have at LEAST a 6 month reserve for each property. Believe you me you will need it to. Tenants don’t pay and the mortgage company needs their money. So guess what? That’s right you get to pay it! That means if your mortgage is 1,000 bucks a month you need to have at least 6K in the bank in reserve for that one property. You want two properties you better have 12K in the bank.

So don’t make the same mistake I did! Wholesale some properties and put some money in the bank and then if you absolutely have to go buy some rental properties!

So we go down to the police station

Hope you had a fabulous week! It is Friday and it is time to get ready to enjoy the weekend. Man this has been a crazy week for me! In my last post I talked about the reason why a lot of investors don’t have any deals or leads to work on. The main reason is because investors are not getting busy for whatever reason. It could be that they are scared that their marketing is not going to work or that sellers are not going to accept their low ball offers. Remember I said I found myself struggling with that very snag for the last couple of weeks but I broke myself free! How did I break free? I just went ahead and even though I did not feel like going to see more people, I went and made the lowball offers to sellers that have the capacity to go down.

Well since I made the decision to get going and do somethings I have had some great results! I will tell you my goal is have a 100K month; I have alreday experienced a 50K month but I would like to have a 100K. I think that would be just great, don’t you? Can you imagine making 100K in one month? What would that do for you? Well I will tell you that if you want it all you have to do is get busy and start doing something. You know that is the #1 reason why most investors fail wholesaling houses is because they fail to take any action of any sort. If you keep doing nothing you will get nothing in return. The math is pretty simple and I am not even really good at math!

Here are some of my results so far.

5 Properties Under Contract

I want you to realize something here, just beacause you have a property under contract does not mean you are going to make money on it. However; you are a lot more likely to putting some money in your pocket by putting a property under contract than not. Make sense?

Hosier Property- This property has been a pain in my butt for the longest time. I had a buyer that was supposed to close on it but he backed out. In my efforts to take some more action I put a simple option contract on the property and blasted it out to the list again. I have had several more people through the property with no definite deal yet. We will see!

Bunche Property- This property I contracted last week for 68K which may be a little bit on the higher side. However I have a buyer who is interested in it at 70K so I need to go back to the seller and get a reduction according to my inspection period to maybe like 65K so I can pull at least 5K on the deal! Worst case I make 2K. Not too bad!

Chalk Ct Property- This property was a lead from my website and the seller wanted 62K I went out the same day and offered 49K for it and the seller accepted. I have a buyer for 61K so that will be a nice 12K! Actually should be set to close in 2 weeks!

Arnold Palmer Property- This was a property I was hesitating on for the longest time because the seller sounded so unmotivated but I went and made the offer anyway. He felt the property was worth 225 but he accepted an offer for 105K go figure! This is another property that I have sold and should pull another 12K!

Andrew Jackson Property- This was a property that I call OWD “Other wholesalers deals” It is actually an REO that he has under contract. This happened yesterday and I am working with a buyer right now and should be able to pull 5K on this one. This is not as definite as the previous listed but should work out. I will actually know today (hopefully).

SO……over the last week or so making the committment to get busy in my wholesaling business I have the potential of lining up 30K or so for the month….We are not yet halfway through so I still need to get extra busy if I am trying for that 100K month.

But you know what? Some of these deals could fall out due to title problems or flaky buyers. That could happen but that is not going to stop me. You just have to keep going and learn to never count your chickens before they hatch.  Some people get in trouble spending money they thought they had coming. So keep a positive out look but also keep a realistic out look and you will do great!

Remember the #1 Reason investors fail is because they fail to take action. Don’t do that! Take action!

You remember my last post about getting busy in your wholesaling business? Well I have decided to take my own and advice and am starting to see some great results. Over the last couple of days I have contracted 3 properties and I know 1 of them is sold for sure! I have several of my buyers running through the houses over the next couple of days so we will see what comes of it! I am feeling pretty good about it myself.

I will tell you why the one I contracted yesterday was so cool. I think I talked about this in my last post but I will give you a quick recap. When I first got this lead from my virtual assistant it did not look like a deal at all. In fact it looked like a complete waste of time! The seller is saying stuff like they want the tax assessment for the house, which in this case is 219K.

So anyway in my attempt to practice what I preach I called them and the seller was a total jerk over the phone! Acting very unmotivated and saying they want as much as they can get for it and they have all the investors over town looking at this house. So reluctantly I set the appointment and went out to see the place. They owe 90K on the house so they do have the capacity to go WAY down from their asking price. Let this be a lesson to you-if the seller has the capacity to go down on the price you should go out to the house.

So I chat with the seller and through building rapport I find out that he understands he is going to have the sell the house at a discount in order to get it moved. How much of a discount at the time I did not know. He gave me some what of an idea by telling me that he believed the house needs 50K in work. Remember all of this I would not have found out if I had not gone out and spoke to the seller.

After the initial meeting I told him that I would go back and figure my numbers and come back to him with an offer. Now, in my opinion this could have been handled better. I should have tried to figure out his bottom line then and there but I chickened out! Yes it does happen ..lol

This was a difficult one because I was not sure which one of my buyers this deal was going to fit. I called a couple of them up and tried to feel them out a little. I told them about he neighborhood and the repairs and what I thought the ARV (after repaired value) was. From talking to a lot of them I found that maybe 125K would be  a  good number for them to buy at. So I figured if I want to make 10K I am going to have to get it for 115K, right?

Already I am thinking that this is WAY to low and there is NO WAY the seller is going to accept this price. Again, this is another mistake on my end. In order to excel in this business you need to have your mind right. You need to believe for yourself that your offer is the BEST possible offer that the seller can accept. Also, that you cannot possibly offer anymore without it being extremely tight on the deal and the fact that anymore money and you will have to pass on the deal.

How do you communicate this? You do this with your face. You heard me right, your FACE. It is almost like playing poker. They have to be able to look at your face and see that you can offer what you offered without flinching.

How do you know what the seller is really thinking when you offer your price? You look at the seller’s face and their body language. It speaks volumes more than what they may actually say to you.

Ok,  so anyway in this particular instance I knew I needed to be at the minimum of 115K to make what I needed. I called up the seller yesterday and set another appointment for that day and went out there and offered 105K which means the seller would only net 15K from this entire deal with a house that has a tax assessment of 219K…lol…

He answered me back with “I was hoping for 125K but we really need to sell this house so we have a deal.” I actually was a little shocked!  The seller took the deal! So we wrote up the contract and I know I have a buyer for at least 117K. I am hoping to pull 12K on this one. I don’t see why this would not be possible. I will definitely keep you updated on that.

Hopefully this mini case study is a motivation to you to get out there and make offers on houses. Remember, if the seller has the capacity to go down, you should get off your butt and GO!  I know I will!

Well June has been an interesting month to say the least. I had a great trip with my family to Florida for two weeks and had a really great chance to relax and recharge. Also in the beginning of June I went to Massachusetts for a week so pretty much I have not been able to actively “look” at properties. Either way it was nice because I was able to close on a deal while I was on vacation for 7K! Since it was wired to me I don’t have the check to show you. Sorry!

I find sometimes that my volume slows down when I am not getting “busy” in the business. You know sometimes we all have the tendency to hope that deals are going to fall into our lap out of the sky. Sometimes that is the case and sometimes not.

I have had the call where the seller calls in and says “I know my property could probably sell for 140K but I know it needs some work so I am going to sell it for 70K. Man, those are the best! There are few things more exciting that that; an easy 10K minimum!

However sometimes and most of the time you have to work for it! I told you last month that I had a crazy amount of calls come in yesterday from the post cards and the calls are still coming in. Now they are not streaming in like a hundred a day but there is still some volume there and its almost time to send out another batch! One of those calls by the way I got a house under contract yesterday!The best part is I think I already have it sold! I will keep you up to date on that one.

The point is that if you want to make money and you want to make deals, you have to get busy! What I struggle with is calling back sellers that leave a message and are asking pretty much top dollar for their property. The key though is that if you want to know the quickest way to get deals you need to get out and start talking to sellers. You may even need to get off your butt and actually go speak to some sellers in person.

This is a mistake that  I have found out that  I have been making recently. I have been prescreening my sellers way too much. The fact is that if the seller has the capacity to go down meaning they enough equity and you do not have any other gimme deals on the table, you should go out there and talk to them.

You will find that most sellers put up a front over the phone that makes it seem like they are terribly unflexible. I mean who are you, right? You are just a voice over the phone. However, when you get out there in person it comes to a whole different level. You are an ACTUAL person that can REALLY solve their problem. You will find this definitely among sophisticated sellers. They do not want to get taken advantage of so they put up the tough person front.

In fact, you should get into a habit of making offers over the phone until you are decent at talking to a motivated seller in person. Once you can get the feel for talking to motivated seller in person it will greatly assist you in talking to them over the phone.

Come monday I have several other calls I need to follow up on and will be going out to make offers in person. I have one deal in particular that I am working on and I am very tempted to offer them a price over the phone but I think it will go a lot better if I can get out their in person. That way I can sit down with them and go over the comparable in the area and the repairs and give them an offer that they can digest and find reasonable.

Here is a quick overview of how my conversation with that seller has gone so far. When I first called the seller seemed very cold and unmotivated. In fact, they even told me that they had several people coming out to make offers on the property. I will tell you that they tell you that a lot so that you will feel inclined to make a higher offer. Honestly, when I hear that from a seller I immediately write that property off as a non deal. In this case, that was just a front as well. There has be nobody out to that property but me!

They even told me that the place needs 50K in work and that the market has dropped about 18% from what it was two years ago. They thought the property around that time was worth about 250K. So what have I learned by going out to the property? 250K with an 18% price drop is 205K -50K in work is 155K. I know I need to get this property for about 115K in order to make any money on this deal.

They understand that 155K is my break even point and they understand that I need to have rooom to make a profit on the deal or else it does not make sense.  So I took a deal from somebody telling me over the phone that they wanted full retail to finding out what they REALLY would take. By going out to the house I have accomplised a lot more than just making a blind offer over the phone.  I am going to call them on Monday and set up an appointment to further justify my offer.

So don’t be afraid to get out there and talk to a motivated seller or two. Every time you do it you will get better and better. One of the most important skills you can acquire is learning how to handle people.

Until Next Time!

I just got a quick break from the pool and the nice hot sun here in Florida! Remember I told you that I was going to be sending out 6,000 or so post cards to get the wheels moving? Well I did and so far I have  had over 300 phone calls!

I am not very good at math but that means we are tracking for a 5% response rate so far. Not too bad, huh? Ok so the phone is blowing up now I just need to get some deals from all of those leads. My virtual assistant has been working on getting through those leads but has not been feeling so well for whatever reason so that means I may have to make a few phone calls! Not a biggie because I always have fun on the phone with sellers. Even when you have a VA who will take your calls for you, you don’t want to get rusty!

Well I am nearing the end of my 2 week spree down here in FL and will be heading back on Wednesday! My batteries will be recharged and I am ready to make some MONEY! That is the great thing about vacation you get all motivated again to make it happen.

You know you can only take some much of this sitting in the sun by the pool

Enjoy the rest of the weekend!

Hey hope you are enjoying a great June. I am currently in the great sunshine state of FL. I have been hear for about a week and will be hear for another week as well. Normally my wife and I go on a cruise because this is our anniversary week. I love cruises. They are the best! I think it is the closest thing that you can get to being treated like royalty! This year we decided it against it because of our 7 month old baby. He is great but probably would not do to well on a cruise.

Ok down to business. If you are wondering what is going on my with my wholesaling business while I have been away for most of the month, I will clear that up for you. I have been working on several deals that have been in the pipe line for the last couple of months. I have also just sent out a mailer of about 6,000 and that should be hitting any time now.

The point is that while I am out of town my marketing to motivated sellers continues to go out and my virtual assistant continues to answer the calls. He sends me an email at the end of the day with the amount of calls he made and how many leads he was able to gather. I then decide who I want to talk to and pursue further.

One thing that you have to understand about wholesaling houses is that there is a pipeline involved. What is a pipeline you ask? In any type of sales related business you will have a pipeline. Basically a pipeline is a figurative term for deals in waiting or deals that you are working on. You can be the best negotiator in the world but not every seller is going to accept your first offer. It may be as well that you will not even be able to make an offer on a property right away for whatever reason. If this is the case, you need to follow up with them until you can make an offer or you get deal.

The key to building up to multiple deals in a month is managing your pipeline. The more deals you have in a pipeline the better chances you will have a big month. I am working on trying to figure how many leads or deals somebody would have to have to manage a 100K month. Once I figure that out I will let you know. I had a 50K month but I am not sure what it would take for a 100K month.

I wanted to give you a quick idea of deals that I working on right now and where they are in the pipeline.

Wakefield Property- This deal I have been working on for several months. I have it under contract and actually had a buyer at one time that chickened out (If you are a buyer and you do decide to chicken out on a deal please don’t just not return somebody’s phone calls and be a man and just be gosh darn honest). Ok sorry about that I don’t have much respect for people who don’t return phone calls.

Ok, like I said I have been working on it for several months and I have the property under contract for 30K and have a buyer considering it for 37K. Should know by the end of the week weather they will buy it our not. On this deal hear I have already give the seller the idea that I will be asking for a 5K reduction from the results of my inspection. This technique can actually turn a non deal into a deal or make you an extra 5-10K on a deal.

41st St Property- This property been working on for a month or so and the seller is entertaining my offer and is supposed to be getting back with me in the next day or so (One thing I have learned that when you are following up with people you don’t want to hound them, it could blow the deal for you. There is a special line between good follow up and just being a pain in the butt! ) I have a buyer that is interested in the property if I can get it for 60K he would gladly buy it for 65K. Notice that I do not have it under contract but I have notified one of my VIP buyers about it to get an idea off where I need to be to make it work.

Telstar property-This house has been a pain for the last couple of months. I think my mistake was that I jumped at the seller’s first asking price. The house is worth 150K and she told me 55K. This is an out of town or absentee owner and for whatever reason does not want to do “business” over the phone so I am waiting to see when she will be able to come down. I already have somebody interested at 75K so that will be a nice deal if it goes through.

Argonne Property- This property the seller is asking a fairly reasonable price for it. I do not have it under contract but he is asking 60K and I know it is worth at least 140K or so fixed up. The problem is that it is currently with a property management property. I guess I should just put it under contract and try to get a buyer or two into the property. The property management company complicates things but it can still be done.

Charlton Property- This is a property that should be closing this month.

Hosier Property- This is a property that have been working on for several months but should be closing this month.

Parker Ave Property- This property is interesting because I offered so little on the property like 17-18K but it is in a questionable area. The seller is interested in it and is willing to negotiate so I am waiting to hear back from her. I will probably put a follow up phone call to her today.

I currently have a lot more leads that I am working on that are in the pipeline but these are the main ones. Hopefully this helps you get an idea on what it type of volume you need to make some money wholesaling houses.

The key is before you can start working this many deals you need to have a steady source of leads coming to you every single month. I anticipate from the 6,000 postcards that I just sent out that I will at least get 250-300 leads to work on.

So go get some marketing out there and start getting some leads coming in!

If you have any questions or comments please let me know!

If you have been in the real estate investing arena for anytime I am sure you have heard of the term “probate investing.” Simply explained probate investing is working with people who have inherited a property and need to sell it to settle the estate. The great thing about probate is that you are dealing with sellers who NEED to sell. This is not something they are thinking about or mulling over….this is something they NEED to sell.

This is exactly the type of seller that we are looking for. I have found that if people have other options but selling it can be extremely difficult to make a deal. Let’s face it, in the wholesaling business we need to get the property discounted quite drastically to make it work. However, probate real estate gives us a great opportunity to do just that without making a seller feel like they are taking a ridiculous discount.

Probate properties can also be known as heir properties. In fact, the more heirs the better when it comes to negotiating these type of deals.  This may seem crazy to you know but by the end of this post I hope you will see what I am talking about. There is one that I am working on that currently has 13 heirs! The bad thing about this many heirs is that you have to get 13 different people on board wtih the idea of selling the property. The good thing is that a discount does not seem so bad when you have that many heirs.

For example, I will give you the details on the deal that I am working on.

They wanted 60K for the property

I offered 30K for the property

Normally this would look like a 30K discount right?

There is one thing that you need to emphasize when you are dealing with a probate scenario and that is what each Heir is going to NET. It’s all abou the money right? When you are dealing with the Executor of the will this is what you need to say

“Mr Seller, If you were to get 60K for the property that would mean you would end up with roughly $4,600 in your pocket right?? If I could offer you $2,300 in your pocket and a fast closing do you think we can get this wrapped up??

That is exactly the way I broke it down to my seller and she accepted it. Right now we are waiting for the case to work its way through the legal system and should hopefully close up on it next month.

The important thing again here is that you see what we just did. We just took a 30K discount and turned it into a couple thousand dollar discount! Because there are so many heirs involved it takes a little from each one and doesnt “hurt” as bad. Use this tool in your negotiating arsenal and you will make money!

You can use this principal on higher priced properties as well and it works beautifully!

If you want to find out more about probate investing click here===================>Probate Investing

Let me know your thoughts and comments on this.

Later!

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