Can you imagine making thousands off of a junk burned out house? I got this burned out dwelling on contract for $17,000 None of my regular cash buyers wants it. It’s in really bad shape & bad area.
The after repair value cud be about 90-120K and it will take at least 40K to rehab it, probably more.
I just put it on Craig’s List for $25,000 an hour ago an already got an offer for $20,000
I cud flip it for a quick 3K but I want a better offer.
Seller was in the house when it caught fire and escaped with his life, he said Red cross put him up in a hotel and bought him clothes and food too. The city made him remove all the asbestos exterior siding and the interior plaster on this 1928 2/1 1200 Sf house, and they charged him $16,000 also he had to put up a chain link fence around the property to keep out the riffraff.
You can see how he’s motivated to get this place out of his hair.
Maybe I should just take the quick 3K and be happy to get it.
Yea I agree, getting greedy can bite you in the ass, and it has before, but also selling to soon can be a big mistake, when your leaving thousands of dollars on the table,. I’ve experienced both scenarios.
I thought about doing the rehab myself, but I’ve been there also. Sometimes or maybe all times it takes longer than you think, & costs a lot more than you think. The problems of dealing with city permits and getting material, getting a private or hard loan, and then dealing with subcontractors or worse doing the work myself.
A major rehab like this one cud take up to 6 months and I be lucky to make 30-40K.
I can wholesale 10 houses in that amount of time and make 70K based on my average of 7K per deal. And that’s while I’m sitting on my butt.
This burned out junker is my first deal this year and it’s only 2 weeks into 2016, some exciting times.
The seller was holding out and finally we had a big talk, mostly him talking. We found out we both luv the 60’s band the Turtles, I told him the song “Happy Together” reminded me of my first kiss. It happened when I walked Terry Lynn home from school, a little blond girl with blue eyes, she was so pretty, we stopped under a big fig tree, oh man.
Wait, what was I talking about? Gotta focus, Oh yea. I had to increase my offer a little to 18K but I got a solid buyer at 22K Some nice pocket change to kick off the year with some marketing capital.
Got a few other prospects cooking.
Let’s make some Money…
Rando
It’s very interesting how often my deals go in different directions. Like this burned house. I had it sold to my buyer Michael R. Later he tells me to send the contracts to someone different. I did send them to the email he provided. I started getting worried cuz after 3 days there was no response and no signed contracts. I had already contacted all my other buyers, these are the guys that will buy almost anything, and none of them wanted it.
So, out of desperation I started running ads on Craig’s List and was surprised to start getting calls. Because I had some interest I decided to try for a bit more cash.
A young Mexican couple called, I only spoke with Rosa cuz Juan didn’t speak much English. I met them at the house and pried off the plywood on the back door. The interior was not half as bad as I thought. All the studs to the top plate was in great condition. But the roof was toast. We agreed on $24,000 and started escrow a few days ago.
They borrowed the cash from their Uncle.
So the first buyer fell thru but it turned out great cuz I’m making 6K instead of 4.
Let’s make some money…
Rando
The burned out house from hell. After several weeks I called my Title girl and asked what was the progress? She tells me she cant contact the buyers to come in and deposit their funds and sign the paperwork. So I txt the young Mexican girl (my buyer) and she says, “Oh my husband decided not to buy it but thanks it was a pleasure” I asked why didn’t you tell me this 3 weeks ago, she says because I never got back to her. I tell her we had a signed contract, it was in escrow, you cud of had the decency to tell me cuz I had other buyers, She then tells me I’m not a professional because of how I’m acting.
After about a half hour of ranting and raving, I cudnt kick the dog, (he was too fast). I txted the original buyer Michael R and tell him the burnt house is available again, he asks how much and I say 24K
I was shocked, he says send over the contract. Just a few weeks ago he told me he didn’t want it. But he had been txting me and asking if I had anything. I had another buyer looking it over and wanting it also, maybe I cud have squeezed that tater some more.
So, back on tract to make my 6K assignment. What have I learned? Get at least a $500 non refundable deposit from buyers you don’t know.
Rando
The great thing about Wholesaling Real Estate is I can write anything into my contract that I want.
My first discovery was I could write in, End buyer pays all closing costs. 1 buyer asked why he had to pay closing costs? I said its in the contract you signed. Another buyer asked if I cud pay half. But 99% of the time it’s never questioned.
In my purchase contract I changed it to a 21 day inspection period instead of 10. And I wrote in a 45 day period to bring in a cash partner or find financing and for $100 I can extend it for another 45 days. Most of the time it’s never questioned.
And why shud I be charged anything, I’m just the middle guy. I was asked by a homeowner if I cud pay the code enforcement fines, it was $2,400 I laughed and replied, Hell no, those are your fines not mine.
So Mr. Redstar, if you write into the contract that the fridge, the 38 Plymouth in the barn and the riding lawn mower go with the house and the seller signs it, then it’s yours.
If you write in the contract buyer to pay all closing costs and he signs it and the assignment fee is $28,000 that is the amount you walk out of the Title company with.
It didn’t take me long to figure out that I had a lot of leverage and control of these deals.
So ask and you shall receive, grasshopper.
Rando
Haha, Mr Redstar, that’s a good question. As in this burnt house I just sold, got it for 18 and sold it for 24K Why wud anybody in their right mind pay 6 Grand more for this house than I got it for?
Maybe cuz it’s a great deal even at 24K and ther is some good potential profit to be made.
I first got the grasp of wholesaling from an analogy that I once read. The supermarket pays $1.14 for a gallon of milk, the consumer goes to the store and pays $4.50 for it. The buyer or consumer cud probably get it for a lot cheaper if he drove 70 miles to the dairy, & he had a retail license and was willing to buy in bulk, hire employees, buy a truck & gas, pay a driver etc etc.
This guy that purchased my burnt house could have found this house on his own if he had purchased a list of absentee owners, sent out hundreds or thousands of postcards like I did, took the time to answer phones, negotiate with sellers, analyze deals, meet with seller, get the houses on contract, advertise and a lot of other steps that are too many to list.
Or how about he just do what he does best, rehab houses and let the experienced wholesaler bring the deals right to him.
When I try to explain it to my wife how I got the money to completely rehab our house with big decks, new TV’s etc, she gives me this confused look and says I don’t want to know. I get back ground chatter from my old buddies that I must be doing something illegal.
Wholesaling… It’s so simple but I’ll admit, it seems crazy as hell.
Rando
Well now it doesn’t sound so simple. You earn the money during the “finding” phase when you are driving 70 miles to see the cow instead of just calling a real estate agent.
Would this even be possible just by going to a realtor for listings? What do you think of the link to the house I sent you as a wholesale home?
Yea wudnt it be simple to just kick back and let the Realtor bring you the deals, haha Grasshopper, sounds good I know. But Realtors only deal with retail price homes for families willing to pay full price. It’s OK for them, they are not reselling trying to make a profit.
And sometimes you can find realtors to bring you fixers, but they will be 3 times priced higher than if you had found it on your own.
The frikin realtor tells the seller houses in your neighborhood are selling for 120K but your house need 20K in updating so we will list your home for $105,000 After 6 months and several price drops the seller will possibly sell it for $79,000 Which is still higher than I wud pay for it. But because of the mass exposure from being on the MLS they found a newbie investor that thinks he can make a few buks.
The Realtor makes a commission based on a percentage of the selling price, the higher that price the more money they make.
I’ve heard of investors making money from realtor deals exclusively. but I get my best deals going directly to the cow.
Your questions are starting to annoy me. Can you take some time to read a book? Can you watch some you tube videos on wholesaling? Can you order some books on wholesaling Real Estate on Amazon? They are very inexpensive. Can you take some initiative? Are you capable of intelligent reasoning? Can you learn by trial and error?
I suggest getting an education and learn by doing.
If you cant figure out what a vacant house is and you cant figure out what condition the interior is and you cant figure out how to find the owner, can you read a frikin book?
I sent you a book, now read it.
Okay I read the book. I’ll drive through the ghetto later today and see if I find any vacant houses. Finding the owner is as simple as using the property appraiser.
I can find lots of these houses on the MLS. Are you saying that the condemned houses for sale on the MLS are not good for these purposes due to exposure?
Redstar, I wud def look at junk houses on the MLS you might get lucky, I did once.
I use the Title company to find my owners, they have access to tax records, the tax info has lots of valuable data, sellers names and mailing addresses, year house was built, bedrooms and baths and square footage, when it was last sold and for how much, What the county accesses the current tax value, not always accurate but a good bargaining chip to use to ur advantage.
There are many ways to find these houses.
bandit signs, direct mail to absentee owners, tax delinquents, passing out fliers, Advertising in Craig’s List, handing out business cards,
Are you sure you read the book?
Are you gonna keep asking questions or are you gonna take action?
This deal finally closed, I’m celebrating by cooking a pot of home made chili beans. I also got some sour dough French bread and a case of energy drinks, I know, they are bad for me.
Now I’m getting ready to send out 10,000 post cards, my sister is doing half for 10% of the profits and I pay expenses, and my former bird dog Rich is doing the other half and were splitting profits and expenses.
Rich and I have done a half dozen deals together including the pigeon poop house and we got a sweet deal going now that shud pay about 6-7K each.
He calls for advice & such, but I’m letting him meet with the sellers, negotiate, take photos and do 95% of the work.
2015 I did less work than ever and made more money than I ever did in my life. It’s weird how that works.
Let’s make some money.
Rando