I got a call from one of my postcards. The owner lives out of state. The property is occupied by a tenant. He said the house is listed for sale and to contact the listing agent, but I can’t find it on the MLS.
The house is in Ocoee, FL.
He said the house is in “good” condition, but needs some work.
What is my next step to try to profit from wholesaling this house?
Comps come to about $194,000.
Here is my situation. I just got a call from Meralyn, a realtor, she says her client got one of my post cards and wants to sell.
I asked about the condition and Meralyn goes on to tell me its an older vacant home near the freeway and vagrants are breaking the windows and sleeping in there and doing damage. The house is listed for $96,000
Meralyn also tells me seller is out of state and is motivated. I asked realtor what it wud be worth if it was in pristine condition and she tells me “Oh I don’t know, maybe 130K” My comps come in a bit higher at 150K
I call Meralyn back the next morning and I still havnt seen the house, but I decide I can do 70K. She asked how fast I can close and she was going to call seller.
I sent it to a few of my fav buyers and every one of them wanted it at 78K One offered me 85K
Now I’m hoping seller will accept the 70K offer or near that and I’ll be counting the clams.
I know I shud hav it on contract b4 sending it out but these few buyers are trustworthy and we have done multiple deals together. I also like to know if there is interest b4 I waste too much time on these properties.
So what’s next? Maybe a little negotiation, getting the seller to sign my contract of the realtor’s 20 page official one. Getting my buyer to sign my assignment of contract and starting escrow.
How easy is that?
If realtor demands a proof of funds, and they usually do, I get them free from a lending company or my buyers can furnish it.
Now get out there and make a mess of things and make some Money…
Rando
Are you still using the Zestimate?
I want to take action and make a mess of things, but I also don’t want to waste my time getting a house under contract for a price that won’t sell.
ARV = $194,000. * .7 - $5,000 = $130,800.
I realize I don’t have to go see the house to estimate repair value, but I don’t know where to start. Should I use $30/sq. ft. as a rule? The house is 1714 sq. ft. So 30 * 1714 = $51,420
Does this leave me with an offer of $79,380 on a $194,000 house? Who in their right mind would accept that?
I have no problem telling him that’s my offer if that’s what I should be doing, it just seems a little far-fetched. I’m trying to be successful, not live in fairytale land.
Btw: my old computer crashed so I lost your book and contracts. HAHAHAHA.
I also noticed that you’re not using $5,000 as a standard assignment fee.
I realize I’m new to this and will catch up, but what do you think about my numbers for this house?
First, go look at the house. I know you don’t want to, but everybody in this business starts off doing things they don’t want to do. My mentor, and many others, said go see 100 houses. That way you get a feel for all things real estate.
Second, if the house is really in “pretty good” condition, $50K+ is way too much.
Yes, Zillow is a decent tool to use for comps. I don’t use the Zestimate, you can view the actual recently solds on ZIllow. In my market, Zestimate is fairly accurate in the decent to nice areas. In the below average parts of town it’s way, and I mean way off.
You HAVE TO LEARN YOUR MARKET! The wholesaling formula is only a guideline, there are people in your market that buy above and below what that formula says. I know a guy who buys at 75%-repairs. I know people who pay 85-90% of retail as well…
If I were you, I’d submit a blind offer around $120,000 and see what happens… With a 15-20 inspection period of course.
Okay, I’ll go look at the house.
Zillow recently added a feature to their website where they basically find the comps for you. It’s a sidebar to the right of the map.
Good to see you finally out there doing it by the way. Don’t give up.
What do you think of this?
For my next direct mail campaign, should I use yellow letters, 6 x 9 postcards (like the picture attached), or does it matter?
https://www.dropbox.com/s/4zabla1bz7cwxqg/IMG_20170120_083314634.jpg?dl=0
Also, forward thinking…
You said a while ago that 16,000 leads came up in Orlando from Listsource. If I’m one of these wholesalers that sends out 30,000/month, wouldn’t my business be done in half a month? Or would it be necessary to expand to new territories where I, or my associates, could not actually go see?
I left a message with the realtor.
This house is a short sale. Does that affect matters at all?
If you want to make your life more difficult, deal with a realtor and an REO property, a bank owned foreclosure or a short sale.
If you want to do things the easy way, deal only with distressed sellers and junk houses.
But I don’t know why I give you advice, you wont follow it, or do it. But I guess I was that way.
Until I decided I wanted to make some money.
So it’s impossible to wholesale bank owned stuff. Okay, I’m new to this.
I think I need to hire some bird dogs as that’s how you seem to get a lot of deals.
Rando is absolutely right, don’t waste time with bank REO’s.
I spent about two years at the bottom of the market in the mid 90’s chasing them. I contacted the banks, gone to court house step actions, at site auctions, at site auctions where I was the only one showing up, as well as public auctions. After all of that, I managed to only snag two, at public auctions, including the home I now live in.
Even so, I felt good at snagging just two, with one of them at well over $100,000 below FMV.
If I had to do at all over again, I will only go to public “absolute” auctions, that is, it’s agreed beforehand the highest bidder wins. I submitted bids at a number of at site auctions, not declared “absolute”, even when I was the only one showing up, only to have them send me a letter a week later rejecting the bid.
My wife was a VP at a finance company at the time, dealt with REO’s, and she tells me they want what they want, and if not, they’ll just let the property sit, i.e. till they decide it’s time to auction.
Okay.
I didn’t know it was impossible to wholesale short sales until now.
I luv watching videos on you tube, I watched an interview with a Millionaire wholesaler in Seattle, it was crazy a young guy under the age of 30 that was friking killing it.
He had a team of helpers he used, He paid commissions, he had an office and had went from wholesaling junkers to also wholesaling land to developers and was making over 100 grand on some of his deals.
He was being interviewed by another successful wholesalers that was asking him all the deep down questions of what it took.
The most important take I got was he said he had to change himself b4 he became successful. .
He claims that wholesaling is 10% work and know how and 90% mindset and attitude.
That’s what I’ve been trying to tell you, but ur just too stubborn and boneheaded to even listen.
Time to upgrade ur thinking my friend, and that goes for me too.
I’m still far from where I want to be.
Let’s get he right attitudes and make some Frikin Money…
Rando
Yes, I do have to change my mentality as well as increase my knowledge.
I had a meeting with a local wholesaler yesterday that I met at the local REI association.
They told me something like…
If the seller has a mortgage and the mortgage is <$30k, they sub2, if it’s >$30k, they lease-option and if the seller owns it free and clear, they owner finance. They only rarely do traditional wholesale deals.
They wanted $3,000 as a deposit where they would teach me how to find my own leads and would give me the $3,000 back after our first deal.
They also told me about a second real estate investor club in this area which I joined and got another 68 buyers for my list.
Don’t even attempt to learn sub2, owner finance, or any other creative technique until you’ve made some money with wholesaling. You’re becoming a victim of analysis paralysis, every new shiny technique will lead you down a rabbit hole. Focus on wholesaling.
Second, you know how to get leads. Paying these yahoos will only separate you from your money. Everyone on here has told you exactly what to do. There’s nothing these guys will tell you that we haven’t told you. Consistency is key. You can’t send out 1000 now, not get a deal and think it doesn’t work. Set a weekly budget, send mail each and every week.
This Millionaire wholesaler I mentioned earlier told how he was victimized and ripped off by someone in his REA meeting for exactly the same amount of $3,000.
He went on to say it was when he first started, and the 3K was every penny he had & he was devastated.
It may have been part of the experience you need to go thru of hitting rock bottom to make a determined mental mindset to get your hairy butt in gear.
Maybe I shudnt of said anything.
If your using Daddy’s money you will never get to that point of rage, the end of your rope, your back against the wall and you make that deep heartfelt vow that you will never quit and will prevail no matter what.
I’ve been there.
Rando you nailed it. Every mentor I’ve had said the same thing. You have to find your “why” to really be successful. Most people, I’ve determined, are too comfortable and they will never find that reason they charge forward.
Red, take that $3K you were going to pay them, divide it by two months ($1500/month) and that is your monthly budget. That’s about $375/week, or about 700 pieces of mail per week. Assuming a 5% response rate that’s 35 calls per week. Dude there’s a deal in there, I guarantee it.
Okay, I have a really good question, though.
You (Luke) found 16,000 absentee owners in my area on ListSource.
If I send 1000 letters/week, doesn’t that mean my business is over in 16 weeks?
Do I send to the same people twice? Do I expand to further areas that I can’t physically inspect?
You need to trim that list down. Once I establish my budget, I trim the list to the zip codes I want to target. Then I mail on a regular basis to that list. If it’s absentee owner, keep mailing over and over. Re-pull the list every six months or so. I do the same to my mortgage lates too.
Have you done anything anybody has told you to do yet? Or are these endless questions going to continue? Do something.