Am I doing the right thing after 2 years in business?

Bird Dogs, Wholesaling
1

Hello to everyone and thanks in advance for your replies. I apologize upfront for the lengthy post but I wanted to get it all out at once. Here goes: Four years ago my hubby paid $22,000 for Russ Whitney seminars and ever since then he has doubled his profits from deals ever since. The first year he did two deals, the second year he did more and so on. I have been helping him for the last two years and business has really taken off. Last year he got fired from his management job because he was doing real estate at work more than he was doing his job and he tried for over a year to get fired because he really wanted to do the real estate instead of working a JOB. That was okay with me because we were making alot of money on our real estate deals.

Now deals have slowed down and we have gotten in the situation of not having money to spare to fix up properties if I get a lead on a sub to or lease options. I can’t borrow because I have many mortgages in my name and my credit score has dropped to the low 600’s. My spouse’s credit score is in the 580’s so that is out on him qualifing at the banks or hard money. What rental properties I do have we did buy them right (Equity and made money when we bought) and we have repaired them and have placed them for sale. I will take the proceeds of the sale to pay off existing debts (mortgages, credit cards) and will reduce my debt to income ratio and raise our credits scores. Once bad debt is payed off I am wanting to save money to do the expenses that are necessary on the sub to deals and lease options deals so I don’t have to pass them off. We still plan on wholesaling first to get the big chunks of money to pay off debt since that is our #1 priority.

Also my spouse is joining a realty company this week (he is a licensed Realtor) and will be strictly focused on that so that leaves me with doing the investing business. When I started helping him two years ago I had to start like every other newbie and read, study, attend seminars, etc. I feel I have a good base of knowledge but am not totally competent of everything. My biggest problem is negotiating and getting the property under contract. I am also having a hard time thinking out of the box and getting creative on the deals.

I feel since I have had the business going for 4 years now, have the marketing in place, and have leads coming in I need to continue to do real estate. Currently I have a website, member of the BBB, well known in the city as an investor, vehicle wrapped, and I mail out average 2500 letters a month. I have no problems getting leads and know marketing very well. I feel the best situation would be for me is to start birddoging for other investors I know. Yes I know you can make more money on wholesaling but I think not knowing how to negotiate and be creative is my weakness. I read on one post where someone said wholesale if you can and by all means refer the lead out if you can’t do anything with it. Just like someone else posted what one deal is for someone might not be a deal for another.

I like doing the real estate investing but the one gripe I have is not having steady pay. I have two small kids and it is difficult to hear them beg to go to Chuckie Cheese or McDonald’s and you don’t have the money for it. I know for a fact what I need t do financially to get out of this mess of bad debt and I know how I got into it. I also know real estate investing can be very lucrative if you are willing to work at it and be very disciplined. I guess I just want some reassurance from you all as to if I am heading in the right direction of birddogging for now until I can learn to negotiate better.

Sometimes I feel like a phony because the newbies from the REIA are always asking for my advice. I can tell them what they want to hear just as good as anyone else at the meeting can or they can look on here for their answers. Yes I am doing deals and yes I am making money but not enough for my spouse and I to do this full time and support the family and the business. I have always been honest and if someone asks me how I made $20,000 on a wholesale deal I will tell them how. The problem though is the newbies think that since I did it once I should be doing it on every deal and I have found that is unrealistic. I know the hubby and I have areas that we can improve in but I can’t do everything (rehabs, lease options, wholsale, sub to, etc).

Like I said I have been reading all of the post and I want to thank you in advance for everything. There is great discussions on here and the best part is it is free. Happy investing! :biggrin

2

FOCUS. Stop wasting you energy in in 5 different areas and focus on 1 or 2, 3 max. Rehabs take what 6-9 mths…So the next rehab you come across, your exit strategy is to wholesale (I’m using wholesale because you sound like you are very good at it) it to someone else that does rehabs. Cris Chico, who is on this website from time to time, claims to have made $1.4 million wholesaling deals last year. I say claim because I’ve never seen his bank statement but the point is that’s all he does. No lease option, no subject to just wholesale. When his FL market began to tank, he started doing deals in Houston (one of the few markets not tanking in the country).
The deals are out there. The question is what are you focusing on? I never liked rehabs but I know a guy in Bmore, by the name Capt Pete, who does nothing else but rehabs. In fact, the guy who taught him to wholesale, now goes to him (Capt. Pete) for help in rehabbing. So what works for you? Wholesaling, Short sales, Foreclosures, Lease Options. There are about 14 ways to make money in real estate but right now you only need 2/3 max. FOCUS on those 2 or 3 with wholesaling being your main one till your cash flow is where you want it to be.
Another thought: 2 years doing wholesaling, all you need to do is a search on negotiations on this site, and probably buy a course. I believe Nightingale.com has one for a decent price. This should help to improve your skills.
It will be interesting to hear what MichaelQ, fadi, propertymanger &ericmedem have to say.

3

I agree on the focus part and as far as negotiations they really are not covered in all the courses I already have. Thanks for the tip on the course. I have been talking with other investors throughout the day and they said they have no problem paying referral fees more than $1000 because they know me and what work I have done in the past. They know I am always honest on my deals and don’t try to be greedy. They also know I am no dummy and do have expierence.

I guess I just feel like I am taking a step back now and it is kind of depressing. When it was me and my husband doing this, I would find the properties, he would negotiate and put them under contract, I would market and he would get it to the closing table. I would also do all the networking of finding buyers, sellers, etc so i never really had to do negotiations. I honestly have never had the time to really sit down and learn.

Again, thanks for your input because it is greatly appreciated. And I too am interested to see what the others say. I love their posts.

4

I don’t understand why your husband spent 4yrs building a REinvesting business, lost his day job over it and went on to become a realtor only to work for someone else. Most people in his shoes would become a realtor to gain access to the MLS/MRIS system. So many of us on this forum would like to be able to do 2 wholesale deals a year (like you did your first year!). And build up to the point where your sole income is from investing. That’s truly awesome! Anyway, this just came to me; ask your husband to video tape/audio tape him when he’s negotiating a deal. Play it back with him watching and ask him why he did x. Simply leverage & learn on your husband’s ability. Ask him to give you pointers and practice constantly. I mean constantly-Mickey D’s, the grocery, a book store. Practise with the kid-they truly are the best negotiators, 6-12yrs old! It’s like asking for a discount. It becomes second nature after a while. You begin to “feel” how far you can go. I used to suck at customer service over the phone but I kept practising and I got to the point where I could have my boss chew me out but it did not affect the way I answered the phone.

5

The hubby got his RE license over two years ago so we could have access to the MLS and he didn’t want to be the traditional Realtor. I like the idea of recording his conversations of negotiating but what’s so funny is I don’t think he is very great at it. I truly think we probably would be doing more deals if he would improve so I am going to ask a fellow investor I know for help on that.

6

Negotiations?

Maybe I am just a little slow but why on earth worry about negotiations of all things. Our current real estate market has left desperate sellers on every corner. Make offers to motivated sellers and the offers and sellers motivation will negotiate on their own.

Tell people this is what I can afford to pay for your home, and in most cases you can leave it at that, with our current market conditions, if you have financing, or have buyers that have financing, you are the one with the power, not the seller.

I am sure that you can do great things, anyone can if they truly want to.

I would just hate to see you not achieving all that you can over something so small as negotiation. I know it is important and you can make money with good negotiation but many sellers will either sell or they won’t.

Best of luck.