I joined this forum a few months ago, when I decided to get into REI. Since I do not have a large amount of capital, I am working on building it up to make several purchases.
During my research, I found a company that buys homes, provides financing and allows people to sign up as Associates to market the business and gain a commision from each transaction. For each customer who sells their house, you get $750 if it is under $100,000 and $1000 if it is over. For new loans, you get 3/4 of a point. ($750 for $100,000, etc.).
I have two questions:
Any ideas on the best ways to promote this service? I don’t want to limit myself to only the ideas I have.
Would Real Estate Agents be interested in having this available? What do you think their reactions would be if I stopped in and discussed this with them?
Mike,
I’m not getting all the particulars so take this lightly. Why spend the time and money to market someone else’s biz? I don’t understand the motivation or benefit to you here?
I saw one recently that’s been making the rounds (KMT?) where they’re pushing essentially loan processor “rebates” for lack of a better term.
Anyway, I think the lack of responses is that you didn’t provide enough info for anyone to make suggestions. My guess is that there’s a way to do the same type thing, once you have a better grasp, for a bigger piece of the pie. Unless you’re simply going for an education, I would think it’s not worthwhile to work for commission fees to market someone else’s biz.
My opinion is that real estate agents in general would not be warm to this idea. In my experience many of them view the unknown as competitive, illegal, or immoral; sort of like creative REI… :roll:
That said, it can still be done, but it requires work. There are plenty of agents who will work with you in alternative ways if the approach makes sense and they will get paid. But, again, on a mass basis, it may be tough.
I am doing it for two reasons, and I’ll give you the particulars. Then maybe you can steer me a little better. I am still learning and listening to any and all advice I can get.
My reasons are:
I decided to get into Real Estate, but due to current circumstances, have not cash for REI, just the burning desire to learn and do it. KMT seems like a way to get between $500 and $1000 at a pop for referrals, which, since it is not part of my budget, I can sock away for REI use.
I want to learn more about the system, and this gives me a legitimate reason to talk to people in the industry, without “just looking” or possibly being percieved as wasting the person’s time asking tons of questions when I am not prepared to act on it today.
KMT Works this way: They buy homes and offer loans to people who would normally not get financed, or have a hard time. I get an “advertising fee” for getting them the customer through my website. The way I have been looking at it: the customer would not have gotten a loan other wise, so they win; The RE Agent would not have otherwise gotten that sale, so they win; KMT gets a customer, so they win; and I get additional money to be used for investing, so I win. It seems a win-win scenario. All I do is have a website with the home selling questionaire that gets sent to KMT, and the credit app, which also gets sent to KMT. Other than that, I am not involved in the process.
Now for a question you brought up. You said why promote someone else’s biz. That implies I could be promoting my own. At this point, I do not have the funds available to become active, so what did you have in mind? I would start if I could, and if you have a way, I am listening.
Thanks for the response, I am trying to kickstart myself, and any advice (especially from those more experienced in the “real world”) is greatly appreciated.
Mike
Mike,
The KMT thing is what I thought. My best guess is you’ll have to do very large numbers on your traffic stats to get paid, but I could be wrong.
Also, you can do that same format for numerous other loan companies which might be something to consider if you’re going to spend the effort. You essentially could become a loan broker. I’m not sure what legal ramifications you may face either doing it for KMT or otherwise. I’d suggest checking into it.
Many folks get their REI feet wet by bird-dogging and wholesaling. It’s worth researching as there are legitimate ways to make additional funds without too much risk. And that avenue will certainly provide you more knowledge about REI than focusing on the financing side, although I agree both are important.
Again, I certainly don’t know, but I bet you can generate additional funds for your REI biz much faster with wholesaling than you can brokering loans. Or perhaps do both at the same time.
You brought up 2 items of interest for me, brokering and wholesaling. I can start checking into brokering, I’ve got a few people who do this already and I should be able to learn more quickly on this.
as far as wholesaling, I may be looking at it all wrong, because I was expecting to need cash to start doing that. I thought the idea was tobuy a house at well below value (I was planning on using tax sales) and then selling to serious investors, or places like “Homevestors” etc. for a quick profit, until you got enough to start holding and managing a few properties, and growing from there. But I was still expecting to need at least $15,000 to start from that angle. What am I missing?
Mike,
Wholesaling doesn’t necessarily mean taking ownership. It can, but there are numerous folks who make a decent living selling their contracts to other investors or doing a simultaneous close.
If the gameplan is to wholesale the deal to another investor, you can even tell the seller this upfront. This is one of the those play by your ethics type thing. In other words some sellers wouldn’t agree if they know you don’t plan to buy without finding someone to buy from you. Other sellers won’t care. I think that if you decide to not inform the seller of your plans, you need to notify them as soon as possible (1 week?) that you won’t be buying.
Again, it’s a personal thing as to what you think is right. I know of a licensed agent who is an investor who doesn’t believe in the above rules. I frequently get calls from sellers after this investor has left them in a lurch at the last minute. In one instance the seller had quit their job and packed all their belongings and was leaving town the next day after close. The seller was informed less than 24 hours before close that their wouldn’t be a close.
So, again, I don’t know what the right answer is. It’s a fine line between helping and hurting and making a profit at it. Also, I don’t have any experience at wholesaling prior to ownership (I’ve always bought and then sold) so I’m just dipping my toes into this arena right now. I’ll have to figure out the “rules” like anyone else.
But I do know folks who are experts at it (Steve Cook, for one) and there are always local folks who do wholesaling professionally. So, my point is that perhaps it’s worthwhile to hook up with someone who knows the ropes and learn from them. I know the professionals do it without much risk of capital.