There are real estate wholesalers, and then there are real real estate wholesalers. Although the old “fake it ’till ya make it” theory may tried and true, the point of that saying is that eventually you’re supposed to stop faking it once you know what the heck you’re doing. But some real estate wholesalers take it to the extreme. They’ll fake it for as long as they can get away with it. Women everywhere continue to put on Academy Award winning performances, yet In the world of real estate wholesaling, the fake won’t fly.
So how to you spot real deal real estate wholesalers? The answer might surprise you…
Old School Real Estate Wholesalers Living Large.
When we think of businesses that don’t rely on technology to get ahead, we think primitive and uneducated. The Flintstones comes to mind, and we envision old Fred eating bront0saurus burgers.
You may be surprised to learn that lots of wholesalers have an old school business approach. It’s not out of the ordinary to find a seasoned wholesaler without a website. Eh? You’re probably wondering how the Sam Hell can on a real estate wholesaler function and succeed in today’s competitive, technologically-dependent world without a website or six? How do they promote their businesses? How do they share information about their businesses with prospective buyers?
TIP: Real estate investing is not a “tech business,” baby! Its a “networking” business. And I’n not talkin’ Cisco.
The best tech in the world; expensive websites, funnels, software from Guru’s don’t make you rich. Getting to know buyers (like me) makes you rich!
True wholesalers go old school. I’m talkin’ pen and paper, traditional print advertising, bandit signs, Craigslist, and straight up face to face communication. They have an established list of awesome buyer clients, and they know exactly what those clients want – what type of house, what area they want to live in, what their price range is. They rely on communication, organization, and relationship-building. Real deal wholesalers don’t need gimmicky pump-funnel websites with flash graphics and empty corporate speak.
If you want deals. If you want to be a real wholesaler – get out there and do some real work. I used to get in the 1991 Chevy Lumina “Sweet Lou,” armed with a few cigars, a 20 oz Venti BOLD & black from Starbucks, and I would ride neighborhoods until my then fiance would call to tell me it was time to come home. I used to leave at 5AM, and sometimes I wouldn’t come home till 8PM. That’s workin’ people. That’s knowing your farm market.
Next – spend a little money on marketing. I could write a whole blog on how to market, but suffice it say that the old tried and true methods still work. You can also enter your name and email below to get my free list of “100 sure fire ways to find super-motivated sellers.” Marketing works, you just have to be consistent.
The best real estate wholesalers don’t try to sell phony deals either. They keep it real (if I had a dime for every time I’ve said the word “real” in this post), they keep it honest, and they’re straight forward about deals, unlike some rookie wholesalers who think they can talk smack, BS a deal, BS the ARV, BS the repairs, and live to wholesale another day. Uh uh. Ain’t happening. I’ve said it before, and I’ll continue to drive the point home like Miss Daisy. Those who stay true to their word, know their areas, know their numbers and keep it real will get ahead. It’s that simple. True real estate wholesalers aren’t afraid to make $10-20,000 minimum paydays when they know they have a deal that’s gonna make the rehabber $50-60,000.00 BUCKS!!
Look, we’ve all go to start somewhere right? Even I was a newbie once. Even I tried to fake it till I made it. Treat this business like a business and not a hobby, build your network, market great deals NOT crap, and always keep your word – and you too will become old-school at some point.
If you’ve been able to avoid major repairs on your rentals, pour yourself a big ole’ bowl of Lucky Charms, and count your blessings. The odds of having little to no repairs to do on your properties, especially the older ones, are as good as me getting a date with the Queen of England. But don’t get too cocky and comfortable. Sooner or later, a water heater’s gonna go or you’ll need to do some major plumbing or replace a roof. What about a property repair fund for scheduled and unscheduled maintenance?
The question is – are you prepared?
Property repairs are inevitable, no question about it. So if you haven’t started a reserve fund, you deserve a slap up side the head and that “I’m so disappointed in you” look that your parents used to give you when you used your little sister’s beloved Cabbage Patch Doll, Maggie Genevra, for target practice like Sid from Toy Story. I’m always shocked, however, to learn how many landlords are unprepared for major repairs. I’m always shocked to find that most landlords are living on every penny of the cash flow from their rentals. They’re milking those cash cows for every drop. They think “it won’t happen to me” or “I’ll have plenty of time to save up”. But if you’re going to be a successful property owner, you have to expect the worst, and be prepared to pay up when problems arise.
If you don’t have one, you’ve got to start a dedicated repair fund, and the sooner the better. It should be set up when you secure your first rental. Put a portion of the monthly rent (I would recommend 10% – 15%) into the fund, and watch it grow. See where the wind blows you. If you’re swamped with repairs, beef up the percentage. Just remember why the money is there, and keep your hands off of it. You’ll be tempted to spend it on other things when times are good and you’re not being haunted by repairs. But don’t do it. Save, save, save. Trust me, there will come a time when you need that money.
So what about a line of credit? Sigh…..many people rely on it to get them through times of major repair, but many credit lines have been cancelled. Once you start relying on the devil’s plastic, the interest rates start piling up, and before you know it, you’re in debt up to your ears, on your way to a financial meltdown, and you’re looking at years before you’re able to dig your way out of credit card hell.
What About a Capital Expense Budget?
Capital Expense Budget is the fancy way of saying “oh crap fund”. A capital expense budget is a one-time amount that you should set aside each time you acquire a property to cover major expenses later on. Each time you acquire a new property, ask yourself where the weak points are. What things will need repair in 3-5 years. Are there quick and easy repairs that you can do immediately to increase the property’s value and up the rental fee? Check out the roof, the deck, appliances, flooring, and paint, and do not underestimate the power of landscaping and curb appeal. It goes without saying that a home’s outside the the first thing potential renters will see. The outside will leave the first impression, so if you hesitate to invest in attractive landscaping – don’t. Hopefully, you have a decent contractor in your corner, so ask him or her to help you check these things out before you make an offer.
You’re smart. So do the smart thing. Be proactive, and prepare for unexpected expenses. Otherwise, you’ll find yourself panicked, desperate, and running around like a chicken without a head trying to find cash in the darndest places. Worse yet, you’ll be banging on the doors of everyone you know, asking for money like some strungout fool….well, just see the picture. And that, my friends, is not a fun place to be. So do your due diligence. Save your dough, and this will save your butt when times get tough.
Funding your real estate deals can be as challenging as finding a red-hair in a haystack. What? That’s not how the saying goes? Whatever. You get the point. When you’ve got a bunch of experience and you’re ready to start looking for private money to fund your real estate deals, you’ll come to a fork in the road. Go right, you’ll work with debt partners, and if you hang a lefty, you’ll find equity partners. Both can be helpful, and both are very different. Money don’t come for nothin’, so one thing is for sure; no matter which way you go, you’re going to pay a price in exchange for debt or equity services.
Debt partners will lend you the money you need to fund your deals, but you’ll have to pay a designated interest rate, which is discussed up front along with the time frame that you’ll be given for the loan. Of course, they’re going to want to protect their investment, and they’ll do this with either a promissory note or mortgage on the property and may be even of your skin in the game. Here’s the catch. You have to pay the interest rate and return their principal during that agreed upon time frame or they can take your property and leave you “eff’d”. Debt Partners will generally charge higher interest rates, but they require little to no equity. So, all in all, they are the cheaper option, and you’ll get more bang for your buck.
When Should I Use Debt Partners?
Here’s the double banger rule for knowing when to use debt partners. If your deal can be financed by one investor, or if you’re confident you can beef up your property value in record time, run with debt partners. It’s that simple, folks. Just be to cover your ass, and by that I mean be sure you have enough cash to cover the interest, and make sure to pay off the loan by the deadline.
Unlike the debt dudes, the return is not always established up front with equity partners. Simply stated – they get a piece whatever the property makes. If it generates a crap-ton (yes, that’s a word), their return will be high. If the deal loses, they’ll invest mo’ money to sustain the property. They’ll invest money in exchange for an ownership percentage, which enables them to stay involved every step of the way. Their investment isn’t secured like with debt partners, rather it’s protected by property’s cash flow. This of course is one very simplified scenario. Deals with equity partners (like debt partners) can be structured in a bazliion different ways.
When Should I Use Equity Partners?
If you’ve got a long-term investment opportunity, the equity guys are the way to go, and if your deal requires more than one private money partner, equity partners can be used to pool money.
Don’t Be a Wuss
It’s a given. It’s gonna take more than one shot until you finally get a “yes” from a private money partner, no matter which way you decide to go. Stop bitchin’ and like Soul-2-Soul said, keep on movin’. Keep making those calls and negotiating, and whatever you do, don’t throw in the towel. If you know some common mistakes up front, and you know how to best deal with them, you’ll be better prepared to deal with either equity or debt partners. So listen up…
Build a Solid Rep
Trust is the key to any deal. I’m shocked at the number of letter my private money guys get from newbies asking, “Hey – will you lend me money?” Duh, Dumbass! You, my readers are smart, however. You already know that the way to establish trust is to build credibility. How do you do that? Build a track record of success, stay true to your word, meet payments with current lenders. Once potential investors know they can trust you and their money is safe as cute little kittens, they’ll work with you every time.
Push ‘Em Off the Fence
Well, not literally, although it is always funny to see people fall for some reason. Here’s the thing about investors; they can be wishy-washy, indecisive, and just plain noncommittal. You have to change that up front, right away. All investors must show the money before close. Get an EMD, fees for entity creation, or a reserves deposit as a way for investors to say “we’re in” before close. Make them commit. Don’t wait until settlement for them to back out and leave you with your ____ uh, house in your hand.
Both equity and debt private money partners can help grow your biz. You just have to know how each one works and what the differences are. Remember, money doesn’t go away, money isn’t real and it isn’t hard to come by. It just gets passed from one filthy, e. coli infested hand to another (excuse me while I dip myself in bleach). Stay motivated, stay confident, and do the right thing. Sooner or later, you’ll have all the money you need to do your deals.
Strengths. Everyone’s got them. Problem is, most people don’t know what their strengths are. If you’re unsure of what makes you happy? If you don’t know what really juices you, you’ve got to find out. You can do it today by taking a DISC PIAV Profile Assessment.
So how do you determine what your strengths are, and how can you apply them to your house flipping business? Maybe your strengths don’t even suit you for this business….ever thought of that? Once you’re able to recognize what truly juices you, you’ll be able to use that to your advantage. You’ll be better able to brand your biz, and you will know when to ask for help, because you’ll know where you fall short. And yes, even the most knowledgeable and seasoned flipper will be callin’ S.O.S. at some point. It’s inevitable, even for the best of us.
Do I See a Pattern Here?
When you’re trying to figure out what you’re good at and what you suck at, look back on past successes. What went right? What went wrong? What did you consistently do during those times when you experienced success? Knowing what that key ingredient is may help you pinpoint a strong point. Here’s what I’m talkin’ about…I’ve been flipping houses for more 8 years, and I can say with certainty that I’ve always stayed true to my word when working with buyers, sellers, investors, and everyone in between. If I say it, I mean it. I’m a man of my word, a man with integrity. There in lies one of my greatest strengths.
Be faithful in small things because it is in them that your strength lies. – Mother Teresa
Another personal strength is my creativity. Its at my core. I love to create. So you can understand why I must get juiced when i walk into a super-crappy house. All I see is “possibility” and a big super-highway of creativity. Conversely, I’m not a detail guy. When it comes to my rehabs, I see all the details in the finish, but I don’t like having to deal with all the details leading up to the finish trim stage. Its bores the crap out of me to deal with plumbing, HVAC, electric. I also hare dealing with accounting, and book keeping. That’s why I farm all that out to other people who get juiced by that kind of stuff.
You Betta Ask Somebody!
Sometimes it’s difficult to know what you’re good at, to see your own strong points. So, why not ask the people who are close to you? However, with that said, I would strongly advise not asking your mother or your father. The answer could go one of two ways – either you’re the perfect child who shines brighter than the ice around 50 Cent’s neck or you’re like freakin’ Eeyore from Winnie the Pooh – a sorry, sad, and pathetic (but huggable) “Debbie Downer” who just can’t seem to get it right (work that crap out in therapy). Perhaps it would be in your best interest to ask someone with a more neutral, objective view of who you are and what you do. Why not talk to the people who work with you? Ask them what you do well, what they respect most about you, why they choose to work with you. For some, this may be an awkward question, but the key is presenting it the right way. Don’t just call a former buyer, for example, and say “hey, what do you like about me?” The person on the other end will think you’re either hitting on them (and we know that won’t end well) or you have major self-esteem issues. Explain that you’re making efforts to better your service, and improve your business. Tell them you want to know what it is about you and your communciation, organization, or overall business processes that worked for them. You’ll be surprised at how many people will welcome to opportunity to give you feedback. This may be another effective way to identify your formula for success.
DISC PIAV PROFILE ASSESSMENT
Finally, I’m a big fan of taking tests to see what type of people we are, and what really makes our engines rev. Wanna know what makes you tick? Wanna know what would really be a good fit for you in terms of the type of job you’re doing. You need to take a DISC / PIAV test I’ve heard so much good from people who have taken these two assessments – that I’m actually about to take one right now! Do it people. Find your happiness!
Remember, you’re going to have weaknesses. That’s a given. Having not-so-strong characteristics and skills doesn’t mean you’re your own weakest link. More importantly, remember that have weaknesses does NOT mean you won’t be as financially successful in the real estate biz. What will make you lose money and become less profitable is ignoring those weaknesses. Deal with them head on, be honest about the challenges you face, and know your strengths. Maybe you’re really organized, or you’re great at networking, or perhaps your enthusiasm is infectious and helps you close the deal every time. Whatever your strengths are, you need to recognize them, embrace them, and put them to good use with each and every house flipping venture you pursue. Know your weaknesses, and don’t be afraid to ask for help. Outsource to the experts when you fall short or better yet, get more training and education in the areas that need work. Follow these guidelines, and watch your house flipping business soar to new heights.
Negotiating. I know, I know. Just the thought of it makes you feel all nervous and uncomfortable inside, your palms start to sweat, you suddenly feel like you should be wearing an eye patch, gold chains, & bustin’ rhymes and the name on your office door should now read, “Slick Rick.” Listen up, when you put on your negotiating hat, you don’t have to seem like you just stepped off the used car lot.
Getting to yes, in negotiation doesn’t mean you have to be sleezy, slimy, slick or any of the other Seven Dwarfs. Huh?
The thought of negotiating is scary, I’ll admit it (at first anyway), but don’t panic. You have to get out of your head and into the moment. It takes time, practice, and a constant reminder of these three tips to become a master negotiator.
Here’s a Can of Shut the Hell Up
If you’re gonna be a good negotiator, you must be a good listener. Now, this is challenging for most of us men (yes, I’m stereotyping, and I’m pretty damn sure I’m right), so listen up. First and foremost, stop talking. Negotiating is not about you. Its not about beating your chest. You have to uncover the needs of your buyer, seller etc., and the only way to do that is to listen. Don’t be thinking about the game, what you’re going to eat for lunch, or the chick you met at the bar last night. Focus! Its human nature to hate feeling like we’ve lost or failed, but (lemme’ let you in on a little secret) someone always wins or loses in a negotiation. That “Win Win Negotiation” stuff is bull-manure! Your job is to make sure your opponent does not feel like he’s lost. Ask open questions that lead the person across the table to believe they’re getting precisely what they are asking for. Try to make them come to your conclusion as if it was there idea. Try to make them verbalize why they should sell their house to you at the insanely low price your offering.
The very best book I’ve ever read (and I’ve read many) on negotiating is, “Getting to Yes,” by Fisher & Ury. What if you learned just two things in this book that could give you the upper hand in every negotiation with a seller? Wouldn’t it totally be worth the $10 bucks you’ll spend – especially if you make $10,000 bucks on your next deal?
Check out the book ——> Getting to Yes: Negotiating Agreement Without Giving In
Stick to Interests not Positions
When you’re dealing with sellers, know what your max dollar is, but also know and relate with the seller’s interests. Get them to understand that you are the resolutions to their problem. You know in your head, that you’re only going to spend $100,000, and their should be discussion with the seller to focus on this number – but you should help the seller paint what $100,000 grand does to resolve their problem. Plant the seed. Reinforce why you’re the one for them, and when they say they need more money (and they will), don’t budge. Tell them your hard and fast dollar amount again, and have them keep reminding themselves them why they called you. Eventually, they’ll understand the value of you and your service, and the price will get pushed to the back burner.
Invent Options for Mutual Benefit
Gain Sometimes its not just about the dollars. In fact, many times – its not about the dollars. Suppose you walk into Grandma’s house and you discover that Nonna was a hoarder! You’re amongst the mounds of crap negotiating with Jr and his wife, and you’re at a stalemate. Then Jr. pipes up and says, “I just can’t bear to get rid of all this stuff. Its gonna be too emotionally draining to throw all of this in a dumpster.”
At that point I would say, “I’m not sure I can help, but let me understand, are you saying that you’re just too tied to all your Mom’s belongings to throw it away? Its so soon right? I can understand why this would be so hard for you to have to do all of this yourself.”
Then after Jr. stops wiping the tears from his eyes, you say, “What if I could help you get rid of everything? I’m not sure that I can – but what if, I could get the people, and the dumpsters, and the permits? Would that be helpful?”
Not only have you tapped in to pain, you’ve also made Jr reiterate that pain – and most importantly you’ve proposed a possible solution. This makes you look like a hero, and it makes Jr. feel like he’s won. That little move brings “goodwill.”
Negotiating is like a delicate dance. Learn how not to stand on your partners feet – and you’ll find yourself winning more deals.
S0 many stories lately on the next wave of foreclosures. Is the foreclosure dam ready to break? Maybe its wishing thinking, maybe I’m just bored as I twiddle my thumbs through one rehab at a time – but I oh, how I dream of riding that next sudsy wave. Frank and Brian over at ThinkBigWorkSmall.com are all over this story in a wildly entertaining way that only they can report.
What do you think? Is the foreclosure dam ready to break?
How does 1.6 to 8 MILLION foreclosures sound to you? Tasty, huh?
Watch below. These guys are my heroes!
I said it once (and I don’t like to repeat myself), but I’ll say it again – just for you. Yes, you can invest in real estate with NO money down. Remember, being broke doesn’t mean you’re a real estate joke, but you’ve got to play your cards right, and that means you’ve got to have more than 4 aces up your sleeve. Ok, I’ll stop being so cryptic and metaphoric. In short, you gotta get your head right and play the negotiation game like it’s your J-O-B. Get creative. Use the following no-money-down tactics to your favor:
Get the Seller to Pay You to Take The House
I know, you’re sayin’ – Craig, what are you smoking? Like Bill Clinton, I never inhaled. Believe it or not, you can actually get owners (or distressed sellers) to owner finance the deals. Owner financing still works people. It doesn’t happen a lot in this over-leveraged market, but it does happen! Suppose you meet a family who are trying to sell Grandma’s free-and-clear house for $80,000 – but you only have $60,000, which you know you’ll need for the rehab. Let’s assume the house is worth $230K- solid! Maybe you could offer the owners $90,000 if they agree to a hold a note for $90,000 while you rehab with your $60,000. Once you’re done the rehab, you sell the house for $230,000 and give the owners their 90K. Starting to get the picture? You just purchased, rehabbed and sold a 90K house worth $230K for $60,000 bucks.
Am I Losing Karma Points Here? Is No-Money Investing Ethical?
Uh, no and yes. You have to stop feeling like you had to step on someone’s neck in order to get a good deal. Its called negotiation.
Let’s say you get a response to one of your mailers or bandit signs. The person on the phone sounds a bit desperate and says, “I really need 75,000 for this old beater.” You muster up the courage to make an offer for $55,000 and crazy enough, the seller accepts. Why feel guilty at this point? The Seller accepted your offer and you didn’t even have to bring in Tony Soprano to close the deal.
You’re a problem solver.
Should I Ride the Guilt Train All the Way to the Bank?
You may have robbed your mother’s heart, but you’re no house robber. A house thief is a person who unethically and dishonestly swindles his or her way into a property investment using deceitful and diabolical methods (insert evil laugh). Come on, that’s not you. You simply used smart, creative methods to invest in your future while quite literally solving the problems of distressed homeowners. So, in essence, you’re a freakin’ house hero, man! Ok, that may be a stretch, but consider this. If sellers could turn elsewhere and get more for their homes, wouldn’t they? Your service is needed and in most cases, welcomed, so ride the wave dude and enjoy the gnarly biz that is property investment.
You’re Down Wit OPM? Yeah You Know Me!
Naughty by Nature sang about OPP (other people’s, well…you know), but you need to get real familiar real quick with OPM – Other People’s Money. Even if you have a large wad of cash stashed away, try to rely on a lender to purchase and rehab your property. That means the lender covers the purchase price, closing costs, holding costs, and rehab costs – the whole kitten caboodle (what the heck is a kitten caboodle, anyway?). What’s the theme here? With this form of No-Money-Down Investing….NOTHING in the process comes out of your pocket. Period.
Now getting such sweet financing might seem like a tough hurdle to cross – especially for you newbies, but once you get several deals under your belt, you’d be surprised at who comes out of the wood-work to hear about your success. Just be sure to tell everyone about what you do. I work with several private lenders and I plan to build that network to many more! Just work on building a pristine reputation for doing solid deals, and the money will find you.
Remember – Working Capital. It’s a Must!
Is that working capital in your pocket or are you just happy to see me? If you played your cards right above, you already know that your deal isn’t being funded by you, and that’s all well and good. Butlet’s suppose for a minute that you need money for earnest money deposits, up-front payments to contractors or perhaps overages in rehab budgets. Well, working capital becomes the glue that will hold your deal together. Whether it’s money from your own account or a friend who is willing to fund your holding costs, just be sure you have working capital checked off your list before you invest in a property.
There are many ways to buy, rehab and sell houses using none of your own money. From owner financing, to subject-2 purchases, to using other people’s money – you can still do crazy deals like Carlton Sheets has been teaching for all these years. That dude was out there! Starting this business with wads of cash and huge lines of credit makes you fat and lazy. I can not tell you all the rich guys I’ve seen who have been dismal failures in this business. Seriously, in this business, the more money you have, the less hungry and creative you seem to become. I guarantee that if you follow at least some of these no money down investing tactics – you’ll walk away smarter and with razor sharp real estate investing instincts.
Here’s the good thing about being down and out. You learn. You learn to adapt, you learn to fight for survival, and if you’re smart, you learn how to talk to people into getting what you want. That’s called negotiation my friends. Being broke is no exception. That’s not to say when you’re broke you don’t wish you had a fist full of dollars to wipe your ass with, but when your piggybank no longer rattles and rolls when you shake it, try not to think of being broke as a bad thing altogether.
Au Contraire Mofrer: You Can Buy a Home Without Your Own Dinero & Without a Deposit.
Ok, so I don’t speak French or Spanish, but damn I sounded sexy, huh? If you don’t have enough money or any money for that matter for property investment, what’s the obvious next step? Drum roll………………….find a private money lender who will loan you the money for purchase and renovation costs – 100% of it if necessary. Will some lenders turn you down? Of course! So get a set of cajones and power through it. Be persistent, confident and always be humble, and sooner or later, you’ll get the loan.
Flip Tip: Be willing to give up some of the deal. I’m not gonna try to blow wind up your skirt, if you have no experience, its gonna be pretty hard to get private lenders to fork over hundreds of thousands of dollars for you to sink into some crappy house. Heck, I wouldn’t lend my mother that much money – if she had no experience. Unless of course she was willing to “sweeten the pot.” Always be willing to sweeten the pot.
NO MONEY DOWN
Let’s say for instance that you find a house for 100,000, and you are absolutely sure the rehab required is, $45,000 – and comps show the ARV is a solid $250,000. But you have no money. You come to a guy like me and say – will you lend me the money? I say, uh….sure it will cost you 15% interest and 50% of the deal. What do you say to that? Do you walk away in disgust, or do you jump at the offer and chance to work with an 8 year pro who has done hundreds of rehabs? I don’t know about you – but I’d jump at that offer. In fact, I did. I had no money – not one dim for my first rehab. My father-in-law to be put up all the scratch, and I did the work. In 90 days, we rehabbed the house and split a total net profit of $98,000.00. I didn’t spend a dime of my own money and I netted, $49,000.00.
I’ll ask you again. What would you do?
REAL ESTATE SUCCESS
Those who have mo’ money than they know what to do with (bastards) are experiencing real estate success right now. Good for them, right? But listen- you can too. Be persistent, work your plan, and tell everyone you know that you are trying to get in the game. Ya never know – that next person you tell just might be enchanted enough to be your Sugar Daddy!
WHOLESALING REAL ESTATE = FLIPPIN’
TIP: As a bird dog, you don’t actually put the house under contract. You simply refer the deal to an investor who will pay you for the referral.
Tip: Be sure to fill in your name where the contract says “buyer” and “and/or assigns”, so you can “assign” or flip your contract to the rehabber investor.
The homeowner will expect a deposit ($500 bucks should do it – but you can offer less.) to make the contract binding. You’re probably thinking I left at least one zero off the deposit amount, right? Well you’re wrong, smartass. The key is – tell the seller, don’t ask – when it comes to the deposit. Never forget that your offer has to work for you – and for your end buyer. If you make some insane offer with a crazy earnest money deposit, you may not find a buyer who wants to front that kind of scratch.
MAKE A SIGN
Wholesaling houses is a numbers and negotiation game, and dealing with the investor rehabber is no exception. It’s safe to assume that the distressed homeowner needs to get out quick. If you’ve done your homework, and you know what amount the homeowner needs to make the fast move, then you should know what to offer. What else do you know? You know what the home is worth, what the repairs will cost, and that the rehabber will pay 65% of the retail value. If the rehabber does what he or she (’cause I know you ladies are out there rehabbing too) is supposed to do, you should be looking at substantial profit, typically $5-10k, which does not suck.
Last year I paid $40,000 wholesale fees on two separate deals! $40-large! How could that one flip change your year?
HOW TO GET PAID
You’re all wet behind the ears “and all what not,” and new to the real estate investment game, and you’re probably wondering what are the typical rookie real estate investor mistakes? What you should really be asking is, “How can I avoid making those mistakes?” In your defense, you need to recognize (you betta recognize) the mistakes first before you can avoid them, and you need a crash course on goal setting. So here we go….
Mistake #1: How to Be A Real Estate Investor. The Honeymoon Phase.
When you first start out, you’re all full of piss and vinegar and newbie dreams, ready to rock the real estate investment world, but as with all things that start out hot and heavy, the fire quickly burns out and passion fades into the sunset like Mel Gibson’s career. Heck, most quit before they even figure out how to be a real estate investor.
So, how can you avoid the burnout? Lay off the wacky tobacky (for starters), but more appropriately, set short-term goals for yourself over the long-term. That may sound like an oxymoron, but here’s the skinny; know your long-term goals, but then break them down into 90-day chunks that you easily measure, analyze, and extract valuable lessons from. Shorter term goals are more achievable and foreseeable, so you’ll stay on track and charged up to continue striving for success.
Mistake #2: Analysis Paralysis. Obsessive Compulsive Analysis.
We’ve all got a lil’ “OCD”, which is no “BFD”, but if you spend more time analyzing a deal than checking out properties, you’ve got issues. If you have to smack it up, flip it, and rub it down, it ain’t a good deal dude, so move on with your life, and spend your time looking at potential properties. You’re in the stage we seasoned pro’s call; Analysis Paralysis. My good buddy, Steve Cook once told me, “You can’t steal houses in slow motion.”
Here’s the key; create “good deal” guidelines, and stick to them. If your deal doesn’t meet those guidelines, then it’s hasta la bye bye baby. Simple stupid, but take it from me, your real estate coach, goal setting will help you avoid the endless cycle of unproductive obsessive analysis.
Mistake #3: Going It Alone. Get a Real Estate Coach.
A good deal isn’t gonna fall in your lap like your girl at the strip joint. You create your own destiny, but not without some sound guidance. This market does not reward mistakes. Ok, it’s not rocket science. You gotta bust your ass, focus like a laser on your market, hone your deal spotting skills, and surround yourself with solid, knowledgeable people. Seriously, if you don’t have a real estate coach in this market; like Craig Fuhr – you’re setting yourself up for a short ride on the dead-end bus. Set your team up right and eventually, The Good Karma Gods will give you the wink and pinch on the ass that you deserve.