I see this all the time from new investors. Its the same BS over and over.
I need to “BUILD MY TEAM”
I need to find a “GREAT REALTOR”
I need to “RAISE FUNDING”
WRONG, WRONG, WRONG!!!
Want the SECRET to REAL ESTATE INVESTING???
Are you listening???
Here it is…
F I N D A D E A L !!!
That’s it. Overly simple??? It’s not…
When you start out you know almost nothing. So start out with the simple. Single family RANCH HOUSES.
Become an expert in prices for those properties. LEARN a specific area in your territory and learn it like the back of your hand. There shouldn’t be a house that goes on the market that you’re not going to and walking through. Take detailed notes while you’re IN that house. Is it updated? How many bedrooms? How many baths? Is it on a busy street? Anything near it that is a drawback? (like a big commercial building in the back yard) Then write down EXACTLY how long that property was on the market, what was the ASKING PRICE vs SELLING PRICE and LEARN WHAT SELLS FAST!!!
You would think that houses that have been completely updated and look like a magazine cover would sell the best right???
The BEST selling houses are the ones that are UNDERPRICED!!! They can need everything, but if the price is right they’ll be gone on day one.
So what do you do with all your research???
Start sending letters to every house in your target area. Tell them you are a cash buyer, will buy their home in ANY CONDITION and you’ll even HELP THEM MOVE!!!
This is a numbers game. The more you mail, the more response you’ll get, and you won’t get much. But you don’t need a lot. JUST ONE.
When you get that call. Find out what the PROBLEM IS…HINT…It’s not the PROPERTY…It’s always something else. “I have no where to go.” I don’t have anywhere to put my stuff." “I need to find a place for my animals.”
These people need you to FIX THEIR LIVES. In most cases the property is secondary to the PROBLEM.
Once you know the problem…ASK them what THEY want for their house. NEVER OFFER!!! You might be thinking $60K. They’re thinking $30K.
If they are willing to take short money for their house, DON’T BE A PIG!!! Get them signed, thank them, and GET OUT OF THERE!!! I’ve seen IDIOTS who blew deals because they had to grind a seller another $5K just “because” The seller tells them…“Let me think about it” and a neighbor ends up buying the property because the “genius” real estate investor was a PIG.
Once you have your first BARGAIN in the hopper. You can assign the sale agreement, buy it, option it. It’s endless.
Here’s the bottom line…FIND A DEAL
If you found a 1967 Shelby 427 Cobra in garage and the seller wanted $2500 for it…Would you need “A TEAM” to sell that car for $1,000,000???
YOU WOULDN’T…The MARKET would set the price on that car as word got out about your barn find. Within a week you’d have people from all over planet EARTH calling you to buy that car.
Finda 3 bed ranch for 50 cents on the dollar and it’ll be the same story in your local market.
And one last thought…
You DO NOT need to renovate a house you buy for 50 cents on the dollar. Clean out the junk, cut the lawn, and price it at 80 cents on the dollar. IT WILL SELL IN A BIDDING WAR between the following buyers:
1)The guy who THINKS he’s a real estate investor.
2) The contractor who wants in as a rental
3) The parent (who’s a contractor) who wants it for his son or daughter
4) The homeowner who watches too many home improvement shows
5) The neighbor who wants it for a rental
ALL these people will GLADLY pay you 80 to 90 cents on the dollar for that property. If you purchased it for $100K and properties in that area in good condition sell for $200K it’s a MATH PROBLEM…Reno costs are lets say $20K. So take the $200K minus the $20K and you’re at $180K…Leave some meat on the bone for the buyer and realtor and you can easily sell that property for $150k by just cleaning it up a bit.
In my experience, it RARELY pays to do a “TV SHOW rehab” on any property. In fact, unless I can CLEAR 6 figures on a full rehab…I don’t do them. I’ll fix the stumbling block items. The roof, the heating system, the plumbing. Whatever may SCARE a group of buyers. There’s not much difference in the profit.
Case in point.
I recently purchased a 100 year old house in a great area. House was NEVER updated. Knob and tube wiring still in use. Old boiler, windows, kitchen, awful bathroom. I paid the sellers ask of $100K. It would have cost me another $100K to make this a RETAIL READY property and it would have taken 4-5 months. I would have made $80K after realtor commission.
INSTEAD…I cleaned it out. One 30 yard dumpster for a lifetime of crap. $500 for the dumpster, $400 for the labor to fill it. then immediately listed it for sale at $159K. It sold in 3 DAYS for $178,000. I paid a 5% realtors commission and walked away in ONE MONTH TOTAL TIME with a check for over $65,000 with holding costs included.
OR…I could have spent 4-5 months rehabbing it, tens of thousands more in costs, and dealt with every idiot HOME INSPECTOR in the area. Instead it sold to a CASH BUYER who closed in 2 weeks. The difference in profit would have been about $15K-$20K
GET IN…GET OUT…Move on to the NEXT ONE!!!