In this video, we will show you how to build your real estate buyers list by placing bandit signs on vacant houses.
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Sunday, November 8, 2009
How to Grow Your Buyers List, Tip #3
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In this video, we will show you how to build your real estate buyers list by placing bandit signs on vacant houses.
In this video, we will show you how to build your real estate buyers list by placing bandit signs on vacant houses.
Sunday, October 4, 2009
Chicago Bungalow Money-Making Home Run!
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Don't miss out on this money-maker! This brick bungalow sits on a quiet block. There is a lot of money being poured in this area by other investors. The house has a sound structure. It is a ripe opportunity for the beginner as well as the seasoned investor. There is room to add more bedrooms for a bigger return on investment.
The house has two equally rewarding exit strategies:
1. You can chose to buy, fix up, and then sell this house and hit an investment home run, or
2. You can chose to buy, fix up, and then rent this beauty for a huge cashflow.
Here are the stats:
Address: 8523 South Kingston Avenue, Chicago, IL
Asking Price: $39,000 ARV: $115,000+
Square Footage: 1,040
Lot Size: 3,125
Don't wait too long! This one will not last long. To inspect this property or for more information, send an email to customercare@therealestatedealer.com or call us at (888) 803-1392 ext 2112.
Don't wait too long! This one will not last long.
Don't miss out on this money-maker! This brick bungalow sits on a quiet block. There is a lot of money being poured in this area by other investors. The house has a sound structure. It is a ripe opportunity for the beginner as well as the seasoned investor. There is room to add more bedrooms for a bigger return on investment. The house has two equally rewarding exit strategies:
1. You can chose to buy, fix up, and then sell this house and hit an investment home run, or
2. You can chose to buy, fix up, and then rent this beauty for a huge cashflow.
Here are the stats:
Address: 8523 South Kingston Avenue, Chicago, IL
Asking Price: $39,000 ARV: $115,000+
Square Footage: 1,040
Lot Size: 3,125
Don't wait too long! This one will not last long. To inspect this property or for more information, send an email to customercare@therealestatedealer.com or call us at (888) 803-1392 ext 2112.
Don't wait too long! This one will not last long.
Sign up to receive a list of real estate for sale.
Bookmark this page:
Monday, August 31, 2009
The 7 Steps To Successful Negotiations For Real Estate Investors
Thank you for visiting the official blog of TheRealEstateDealer.com. If you are new here, you may want to subscribe to our RSS feed by clicking the link in the upper right-hand corner of this page that says, "Subscribe to this Blog". Thanks for visiting us!
By: Tom Bukacek
Negotiations is not a science, rather it is an art and the degree of success most often depends on the negotiator’s knowledge and application of various tips, strategies, and tactics. No matter how good you are, you will not always be able to produce a successful negotiation. Some negotiations inevitably fail to achieve agreement. But the purpose of this article is to assist you in having the necessary skill sets to put you in the best position for success when negotiating in real estate.
In real estate, the investor will have the most success negotiating with a motivated seller. Sellers can be motivated to sell for several reasons: moving and don’t want to be a landlord, job loss and looking to avoid foreclosure, divorce, house is an unwanted inheritance, mortgage increased and can’t afford, etc… Therefore, the most important step in negotiations is to find their ‘why’ or pain point. Why are they looking to sell? And what are their consequences if they are not able to sell?
Let’s take a probate example from a property in San Antonio, TX. The seller inherited a house that needs quite a bit in repair. The property has an After Repair Value of about $100,000. However, this is an ugly house that hasn’t been painted or had new carpeting installed in a couple decades, and requires updates. The foundation needs repair and the A/C is about 20 years old. The seller is asking $60,000 but you feel the price is too high given the amount of repairs needed. How can understanding the seller’s motivation assist you in creating a more profitable transaction for you?
The property, as mentioned, is in San Antonio, but the seller lives in Austin, TX, about 90 minutes away. After talking with the seller for a little while, the skilled negotiator finds that the seller doesn’t want to fix up, maintain, nor be a landlord for the property. He is doing well financially and the money from selling the house isn’t as important to him as just being rid of the burden. The seller is tired of having to go there every weekend to landscape the property and clean the house for perspective buyers. What you end up finding is that his biggest need is not making a huge profit on the property; rather it is getting rid of the house so he can go back to his normal life routine of spending his weekends with his family, and will gladly trade equity for time. Would this information benefit you in your negotiations? Absolutely.
Therefore, the most important aspect of negotiations is having an understanding of the consequences of not achieving agreement for the seller and being able to provide a solution to those consequences.
This part of the negotiating process is absolutely important. Once you, as the investor, understand the sellers’ consequences of not achieving the agreement, then you are able to add value to your offer without adding money to your offer. If money is not the issue but time and managing the property is the issue, could you create an offer to discount the price in return for speeding up the buying process? If you could propose an offer where the banks were not involved, and you could purchase the property in 7 days but for a discounted rate, would the seller be happy with that offer? Would you be happy picking up a property for $.40 on the dollar? Finding out the needs of the seller will lead to a win-win scenario.
The following are the eight steps to a successful negotiation:
1- Be prepared. When you are going to visit and begin negotiations with a seller or a buyer, you will want to be informed about the property and the area. Do your homework. The more information you have about the property and the area, the more tools you will have for negotiating. How many foreclosures are in the area? Is there any new construction in the area? What are the school districts like? The crime rate? Know any item necessary to discount value from a seller or add value to a buyer.
2- Have open dialogue. You will want to make your case and you will want to listen to theirs as well. Active listening is the most important part of this step. Listen for consistency in their story to find out if your have the real pain point or motivation. As in the example above, if price appears to be the issue but the seller mentions the inconvenience of managing the property from 90 minutes away, then addressing his pain point will probably lead to a discount in price.
3- Watch for non verbal clues when negotiating. The following are some clues as to whether or not the seller or the buyer is losing interest in what you are discussing:
a. Watch the direction of their feet. If the feet is pointing towards the door, you are losing them. If the feet is pointed towards you, you have their interest.
b. Closed palms, crossed legs, or folded arms can indicate a closed person, or someone who is suspicious or not buying what you are saying.
c. A hand to the back of the neck or a finger in the collar could also signal that the person is losing interest in what you are saying.
d. An object in someone’s mouth, such as a pen or paperclip, means that the person isn’t being ‘nourished’ by what you are saying and requires more information.
e. Lack of eye contact or lint picking or flicking of the fingers can be a sign of boredom or lack of interest as well.
The following are non verbal cues that the person has interest in what you are saying
a. Nodding their head indicates agreement and understanding
b. Leaning forward while you are speaking shows a good connection is being made and there is interest in what you are saying
c. Open gestures can indicate that the other person is interested and you should proceed, such as open palms, leaning back in a chair with arms open (not crossed), and nodding
d. Touching can be a sign of acceptance
e. Head tilts can mean interest as well.
4- Argue- state your case and expose the other party’s case. Many times this argument will be over the value of the property, the amount of repairs, or the length of time needed for the transaction to occur. When ‘arguing’ it is important to stay objective. Do not take business personal, and do not allow emotions to get in the way.
5- Signal- indicate your readiness to work together. Find whatever common ground you have with the other person and build on it. In the probate example, the common ground is that both parties would like the property acquisition to happen quickly. If there is agreement on this principle, what sacrifices will each party be willing to make in order to make this transaction occur? Remember, whether buying or selling, if you are not able to get the price you want, then get the terms that you want. The seller dropping the price 20% is a sacrifice. The cost of me acquiring cash at a higher rate within 7 days plus taking the property in ‘as-is’ condition is a sacrifice. But if both parties are willing to make sacrifices then a successful transaction can occur.
6- Package the deal. Put all the elements of the deal together. Make sure that both parties understand the deal and are in agreement. The more thorough you are in this step, the less chance of a last minute back-out by the other party.
7- Finalize the deal. Document all of the agreements.
Again, not every negotiation will end up with a successful transaction, but if you take the time to follow these simple steps, you will put yourself in the best position to use your knowledge base and skills in order to offer the best possible strategy to create a win-win scenario for you and your customer.
Tom Bukacek is a real estate investor / mentor in Austin, TX. For more information on Tom or how to get started in Real estate, please visit http://www.austinmillionaireblueprint.com.
By: Tom Bukacek
Negotiations is not a science, rather it is an art and the degree of success most often depends on the negotiator’s knowledge and application of various tips, strategies, and tactics. No matter how good you are, you will not always be able to produce a successful negotiation. Some negotiations inevitably fail to achieve agreement. But the purpose of this article is to assist you in having the necessary skill sets to put you in the best position for success when negotiating in real estate.
In real estate, the investor will have the most success negotiating with a motivated seller. Sellers can be motivated to sell for several reasons: moving and don’t want to be a landlord, job loss and looking to avoid foreclosure, divorce, house is an unwanted inheritance, mortgage increased and can’t afford, etc… Therefore, the most important step in negotiations is to find their ‘why’ or pain point. Why are they looking to sell? And what are their consequences if they are not able to sell?
Let’s take a probate example from a property in San Antonio, TX. The seller inherited a house that needs quite a bit in repair. The property has an After Repair Value of about $100,000. However, this is an ugly house that hasn’t been painted or had new carpeting installed in a couple decades, and requires updates. The foundation needs repair and the A/C is about 20 years old. The seller is asking $60,000 but you feel the price is too high given the amount of repairs needed. How can understanding the seller’s motivation assist you in creating a more profitable transaction for you?
The property, as mentioned, is in San Antonio, but the seller lives in Austin, TX, about 90 minutes away. After talking with the seller for a little while, the skilled negotiator finds that the seller doesn’t want to fix up, maintain, nor be a landlord for the property. He is doing well financially and the money from selling the house isn’t as important to him as just being rid of the burden. The seller is tired of having to go there every weekend to landscape the property and clean the house for perspective buyers. What you end up finding is that his biggest need is not making a huge profit on the property; rather it is getting rid of the house so he can go back to his normal life routine of spending his weekends with his family, and will gladly trade equity for time. Would this information benefit you in your negotiations? Absolutely.
Therefore, the most important aspect of negotiations is having an understanding of the consequences of not achieving agreement for the seller and being able to provide a solution to those consequences.
This part of the negotiating process is absolutely important. Once you, as the investor, understand the sellers’ consequences of not achieving the agreement, then you are able to add value to your offer without adding money to your offer. If money is not the issue but time and managing the property is the issue, could you create an offer to discount the price in return for speeding up the buying process? If you could propose an offer where the banks were not involved, and you could purchase the property in 7 days but for a discounted rate, would the seller be happy with that offer? Would you be happy picking up a property for $.40 on the dollar? Finding out the needs of the seller will lead to a win-win scenario.
The following are the eight steps to a successful negotiation:
1- Be prepared. When you are going to visit and begin negotiations with a seller or a buyer, you will want to be informed about the property and the area. Do your homework. The more information you have about the property and the area, the more tools you will have for negotiating. How many foreclosures are in the area? Is there any new construction in the area? What are the school districts like? The crime rate? Know any item necessary to discount value from a seller or add value to a buyer.
2- Have open dialogue. You will want to make your case and you will want to listen to theirs as well. Active listening is the most important part of this step. Listen for consistency in their story to find out if your have the real pain point or motivation. As in the example above, if price appears to be the issue but the seller mentions the inconvenience of managing the property from 90 minutes away, then addressing his pain point will probably lead to a discount in price.
3- Watch for non verbal clues when negotiating. The following are some clues as to whether or not the seller or the buyer is losing interest in what you are discussing:
a. Watch the direction of their feet. If the feet is pointing towards the door, you are losing them. If the feet is pointed towards you, you have their interest.
b. Closed palms, crossed legs, or folded arms can indicate a closed person, or someone who is suspicious or not buying what you are saying.
c. A hand to the back of the neck or a finger in the collar could also signal that the person is losing interest in what you are saying.
d. An object in someone’s mouth, such as a pen or paperclip, means that the person isn’t being ‘nourished’ by what you are saying and requires more information.
e. Lack of eye contact or lint picking or flicking of the fingers can be a sign of boredom or lack of interest as well.
The following are non verbal cues that the person has interest in what you are saying
a. Nodding their head indicates agreement and understanding
b. Leaning forward while you are speaking shows a good connection is being made and there is interest in what you are saying
c. Open gestures can indicate that the other person is interested and you should proceed, such as open palms, leaning back in a chair with arms open (not crossed), and nodding
d. Touching can be a sign of acceptance
e. Head tilts can mean interest as well.
4- Argue- state your case and expose the other party’s case. Many times this argument will be over the value of the property, the amount of repairs, or the length of time needed for the transaction to occur. When ‘arguing’ it is important to stay objective. Do not take business personal, and do not allow emotions to get in the way.
5- Signal- indicate your readiness to work together. Find whatever common ground you have with the other person and build on it. In the probate example, the common ground is that both parties would like the property acquisition to happen quickly. If there is agreement on this principle, what sacrifices will each party be willing to make in order to make this transaction occur? Remember, whether buying or selling, if you are not able to get the price you want, then get the terms that you want. The seller dropping the price 20% is a sacrifice. The cost of me acquiring cash at a higher rate within 7 days plus taking the property in ‘as-is’ condition is a sacrifice. But if both parties are willing to make sacrifices then a successful transaction can occur.
6- Package the deal. Put all the elements of the deal together. Make sure that both parties understand the deal and are in agreement. The more thorough you are in this step, the less chance of a last minute back-out by the other party.
7- Finalize the deal. Document all of the agreements.
Again, not every negotiation will end up with a successful transaction, but if you take the time to follow these simple steps, you will put yourself in the best position to use your knowledge base and skills in order to offer the best possible strategy to create a win-win scenario for you and your customer.
Tom Bukacek is a real estate investor / mentor in Austin, TX. For more information on Tom or how to get started in Real estate, please visit http://www.austinmillionaireblueprint.com.
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Monday, August 24, 2009
How To (Obsessively) Meet With A Seller
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By: Jason Hanson
When I get ready to meet with a seller I'm obsessive-compulsive. Why? Because this is such a high dollar transaction business. If I was going door to door selling encyclopedias and making a $150 profit I might not focus so obsessively on the meeting. But since each meeting can yield anywhere from $5,000 to $30,000 depending on the deal, I take these meetings very seriously.
When I'm getting dressed I make sure that I look good. Are there any stains on my khaki's? Is my shirt ironed or is it all wrinkled? Your image is everything and when a seller sees you for the first time, you don't want to look disheveled or look like a bum. Also, and this is one of my biggest pet peeves--if you're ever going to be even one minute late to a seller's house, call them and let them know. This courtesy call can be the difference between a deal and no deal.
Make sure you're enthusiastic too. People like to work with people who are enthusiastic and believe in their services. Use lots of "ly" words such as "certainly", "absolutely". And, if this is your first time ever meeting with a seller and you're scared out of your whits, don't show it--fake it until you make it. Act like you've closed one thousand deals before.
So what do you do if it's your first meeting with a seller and they ask you a question you don't know the answer to? Well, you tell them it's a great question and that you're not 100% sure of the answer, but that you know your partner could answer it. Then you tell them you'll find out the answer as soon as you leave and you'll give them a call back that night.
Whatever you do, don't be ashamed if you don't know the answers to seller's questions. Just write down the question and have your partner give you the answer--Seller's will actually appreciate this honesty and it will make them more comfortable in dealing with you.
A few more quick things. Before you leave your house, double check that you have all the necessary paperwork you need--contracts, testimonials, comps, special reports. And then check again. Lastly, SMILE. When you first meet with the sellers smile a lot. Smiling is very powerful.
Jason R. Hanson is the founder of National Real Estate Investor Month, author of “How to Build a Real Estate Empire” and mentor to students all across America. To get a FREE copy of Jason’s Special Report “The Insider’s Guide To Buying Your First Investment Property in 83 Days or Less!” visit http://www.PrimoCoach.com or call 800-865-1702.
By: Jason Hanson
When I get ready to meet with a seller I'm obsessive-compulsive. Why? Because this is such a high dollar transaction business. If I was going door to door selling encyclopedias and making a $150 profit I might not focus so obsessively on the meeting. But since each meeting can yield anywhere from $5,000 to $30,000 depending on the deal, I take these meetings very seriously.
When I'm getting dressed I make sure that I look good. Are there any stains on my khaki's? Is my shirt ironed or is it all wrinkled? Your image is everything and when a seller sees you for the first time, you don't want to look disheveled or look like a bum. Also, and this is one of my biggest pet peeves--if you're ever going to be even one minute late to a seller's house, call them and let them know. This courtesy call can be the difference between a deal and no deal.
Make sure you're enthusiastic too. People like to work with people who are enthusiastic and believe in their services. Use lots of "ly" words such as "certainly", "absolutely". And, if this is your first time ever meeting with a seller and you're scared out of your whits, don't show it--fake it until you make it. Act like you've closed one thousand deals before.
So what do you do if it's your first meeting with a seller and they ask you a question you don't know the answer to? Well, you tell them it's a great question and that you're not 100% sure of the answer, but that you know your partner could answer it. Then you tell them you'll find out the answer as soon as you leave and you'll give them a call back that night.
Whatever you do, don't be ashamed if you don't know the answers to seller's questions. Just write down the question and have your partner give you the answer--Seller's will actually appreciate this honesty and it will make them more comfortable in dealing with you.
A few more quick things. Before you leave your house, double check that you have all the necessary paperwork you need--contracts, testimonials, comps, special reports. And then check again. Lastly, SMILE. When you first meet with the sellers smile a lot. Smiling is very powerful.
Jason R. Hanson is the founder of National Real Estate Investor Month, author of “How to Build a Real Estate Empire” and mentor to students all across America. To get a FREE copy of Jason’s Special Report “The Insider’s Guide To Buying Your First Investment Property in 83 Days or Less!” visit http://www.PrimoCoach.com or call 800-865-1702.
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Thursday, August 20, 2009
Mortgage delinquencies hit record high in Q2
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Delinquencies and foreclosures set record in 2nd quarter, as more homeowners lose their jobs
By Alan Zibel, AP Real Estate Writer
On Thursday August 20, 2009, 10:12 am EDT
WASHINGTON (AP) -- More than 13 percent of American homeowners with a mortgage are either behind on their payments or in foreclosure as the recession throws more people out of work, the Mortgage Bankers Association said Thursday.
The record-high numbers in the report are being driven by borrowers with traditional fixed-rate mortgages, rather than the shady subprime loans with adjustable rates that kicked off the mortgage crisis. As of June, more than 4 percent of all borrowers were in foreclosure and about 9 percent had missed at least one payment.
One in three new foreclosures between April and June was from a prime, fixed-rate loan, up from one in five a year earlier. Last year, subprime adjustable-rate loans caused the largest share of foreclosures.
The worst of the trouble is still concentrated in California, Nevada, Arizona and Florida, which accounted for 44 percent of new foreclosures in the country. Nearly 12 percent of all loans in Florida were in foreclosure, the highest in the country, followed by Nevada at 9 percent.
"Clearly we have not seen the bottom in Florida," said Jay Brinkmann, the trade group's chief economist.
President Barack Obama has pledged to fight the problem, but its foreclosure prevention program, known as "Making Home Affordable," is off to a disappointing start. As of July, only about one in 10 of eligible borrowers had signed up.
The success of the program depends on the economy stabilizing. The number of first-time claims for unemployment benefits rose unexpectedly for the second straight week, the Labor Department said Thursday.
The number of new jobless claims rose to a seasonally adjusted 576,000 last week, from a revised figure of 561,000. Wall Street economists expected a drop to 550,000, according to a survey by Thomson Reuters.
AP Economics Writer Christopher S. Rugaber contributed to this report.
Delinquencies and foreclosures set record in 2nd quarter, as more homeowners lose their jobs
By Alan Zibel, AP Real Estate Writer
On Thursday August 20, 2009, 10:12 am EDT
WASHINGTON (AP) -- More than 13 percent of American homeowners with a mortgage are either behind on their payments or in foreclosure as the recession throws more people out of work, the Mortgage Bankers Association said Thursday.
The record-high numbers in the report are being driven by borrowers with traditional fixed-rate mortgages, rather than the shady subprime loans with adjustable rates that kicked off the mortgage crisis. As of June, more than 4 percent of all borrowers were in foreclosure and about 9 percent had missed at least one payment.
One in three new foreclosures between April and June was from a prime, fixed-rate loan, up from one in five a year earlier. Last year, subprime adjustable-rate loans caused the largest share of foreclosures.
The worst of the trouble is still concentrated in California, Nevada, Arizona and Florida, which accounted for 44 percent of new foreclosures in the country. Nearly 12 percent of all loans in Florida were in foreclosure, the highest in the country, followed by Nevada at 9 percent.
"Clearly we have not seen the bottom in Florida," said Jay Brinkmann, the trade group's chief economist.
President Barack Obama has pledged to fight the problem, but its foreclosure prevention program, known as "Making Home Affordable," is off to a disappointing start. As of July, only about one in 10 of eligible borrowers had signed up.
The success of the program depends on the economy stabilizing. The number of first-time claims for unemployment benefits rose unexpectedly for the second straight week, the Labor Department said Thursday.
The number of new jobless claims rose to a seasonally adjusted 576,000 last week, from a revised figure of 561,000. Wall Street economists expected a drop to 550,000, according to a survey by Thomson Reuters.
AP Economics Writer Christopher S. Rugaber contributed to this report.
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Wednesday, August 19, 2009
How to Grow Your Buyers List, Tip #1 - Contact People Who Are in Foreclosure
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In this video, we will show you how to grow your real estate buyers list by contact people who are in foreclosure. Homeowners who are in foreclosure typically receive mail from real estate professionals such as real estate agents, bankruptcy attorneys, and real estate investors.
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Monday, August 17, 2009
Ensuring Minimal Risk When Purchasing Foreclosures
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By: Jonathan LaFountain
Today, the real estate market involves so many foreclosed homes or properties that have begun the foreclosure process. If you're looking into entering the real estate industry and are hoping to make investments, you may want to look into foreclosed properties. There are many great prices on these homes and you can make massive amounts of profit when you sell them. However, there are also some risks involved.
The risks that are related to buying one of these properties comes from the lack of protection systems that are typically present during a standard home sale. But the potential rewards of buying foreclosures far outweigh the risks. Especially if you arm yourself with these few tips that will help mitigate the risks.
The first thing that you should know is that you don't necessarily have to pay for a listing of foreclosed properties. This information can be obtained for free from a few sources. A local real estate agent who is experienced in handling these types of properties can help you to find a listing of the available homes. The local courthouse will also provide you with this information. And finally you can get the listing information from the tax office as well.
When you are buying these properties, you should make sure that you get a home inspection. This is often the only way that you will uncover problems with the property before you decide to buy. Many times a home that has been foreclosed will be in bad shape. There may be vandalism in the property or the utilities might be turned off as well. Try to have the utilities turned on before the home inspection. You should expect that an inspection will cost you between two hundred and fifty to four hundred dollars – a sum you will find is well worth the investment.
Make sure that you buy title insurance. This will protect you from liens against the property. You will also find that it will protect the property in the event the previous owner tries to sue you for the home.
Use a lawyer for any transaction involving a foreclosed property. This will protect you from problems with the contract and other parts of the transaction that could go wrong.
You should not assume that the sale is final after you have purchased the foreclosed property. Depending on the particular state's laws, a homeowner is given a certain amount of time (up to six months in some states) after the foreclosure to pay off the debt and be able to reclaim the house.
You should check out the area where you will be buying your foreclosed property. Cities such as Tampa or Las Vegas have had so many foreclosures in recent years that the market has weakened. You will find it difficult to sell a property in those areas. If you are looking for a home to buy that is in foreclosure, you should look in areas that are beginning to stabilize. Check the newspapers, magazines and other respected publications for news on the best markets for buying foreclosed homes.
Buying a foreclosed property can be a risk, but the reward can be great if you do what you can to minimize the risks.
There is a lot more to know. http://www.4closureprofits.com
By: Jonathan LaFountain
Today, the real estate market involves so many foreclosed homes or properties that have begun the foreclosure process. If you're looking into entering the real estate industry and are hoping to make investments, you may want to look into foreclosed properties. There are many great prices on these homes and you can make massive amounts of profit when you sell them. However, there are also some risks involved.
The risks that are related to buying one of these properties comes from the lack of protection systems that are typically present during a standard home sale. But the potential rewards of buying foreclosures far outweigh the risks. Especially if you arm yourself with these few tips that will help mitigate the risks.
The first thing that you should know is that you don't necessarily have to pay for a listing of foreclosed properties. This information can be obtained for free from a few sources. A local real estate agent who is experienced in handling these types of properties can help you to find a listing of the available homes. The local courthouse will also provide you with this information. And finally you can get the listing information from the tax office as well.
When you are buying these properties, you should make sure that you get a home inspection. This is often the only way that you will uncover problems with the property before you decide to buy. Many times a home that has been foreclosed will be in bad shape. There may be vandalism in the property or the utilities might be turned off as well. Try to have the utilities turned on before the home inspection. You should expect that an inspection will cost you between two hundred and fifty to four hundred dollars – a sum you will find is well worth the investment.
Make sure that you buy title insurance. This will protect you from liens against the property. You will also find that it will protect the property in the event the previous owner tries to sue you for the home.
Use a lawyer for any transaction involving a foreclosed property. This will protect you from problems with the contract and other parts of the transaction that could go wrong.
You should not assume that the sale is final after you have purchased the foreclosed property. Depending on the particular state's laws, a homeowner is given a certain amount of time (up to six months in some states) after the foreclosure to pay off the debt and be able to reclaim the house.
You should check out the area where you will be buying your foreclosed property. Cities such as Tampa or Las Vegas have had so many foreclosures in recent years that the market has weakened. You will find it difficult to sell a property in those areas. If you are looking for a home to buy that is in foreclosure, you should look in areas that are beginning to stabilize. Check the newspapers, magazines and other respected publications for news on the best markets for buying foreclosed homes.
Buying a foreclosed property can be a risk, but the reward can be great if you do what you can to minimize the risks.
There is a lot more to know. http://www.4closureprofits.com
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Monday, August 10, 2009
How To Wholesale A Hot Smoking Deal For 5 Figure Profits
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5 Figure Assignment Fees may be hard for some people to believe in today’s Real Estate Market. Believe it or not, they are still out there for the active, persistent and methodical real estate investors, even the first-timers!
Wholesaling
Wholesaling is the art of finding and assigning properties. It can be so appealing to new investors because there is very little cash required to support these types of deals and credit is not an issue. A new investor requires only a small amount of cash to cover earnest money deposits, advertising, etc.things like this.
Discover your mission, vision, or purpose in life.
Spend some time envisioning the type of lifestyle that fits your family and personality traits. Then begin to realistically set your goals based upon the vision.
Remember the basics about goals – they should be SMART GOALS.
S-pecific
M-easurable
A-ttainable
R- ealistic
T-imely[/b]
Aim for what really matters to you. Discover your mission/vision/purpose. and teach yourself how to set and persist to achieve your goals. To manage time effectively track your tasks consistently, so that you don’t waste time on non income producing activities. Visualize and focus on your goals daily to ensure that your actions reflect that which pertains to your goals.
What tools do you need?
The basic tools that you will need as a new wholesale investor are these:
* Cell phone - (preferably a PDA) with unlimited minutes, you’ll need them! This will help you to organize your tasks, records, phone numbers and synchronize with your computer.
* Computer - researching data comps and for marketing your wholesale deals
* Printer - print out contracts, contracts and any documents
* Camera - this is an absolute must have for creating your e-flyers to mail our to your database to sell your deal
* Contracts / Agreements
* Fax Machine
* Filing Cabinet – you’ll need this too.
As your business evolves, you’ll reach a point where you will find other tools and gadgets that increase your productivity and your profits.
How to find deals:
There are many places to you can locate deals and here is a list a few of them:
* Vacant Houses
* Title Companies
* Home Inspectors
* REIA Clubs
* FSBO’s
* Bankruptcy Attorneys
* Homeowners Associations
* Burned out Landlords
* Bail Bondsmen
* Code Enforcers
* Hard Money Lenders
* Meter Readers
* Waste Management
* Divorce Attorneys
* Probate/Trustees
* Tax Offices
* Garage Sales
* Estate Sales
** Every time you go for a ride, take a different route to get to know your neighborhood, the properties, comps, vacants and utility workers.
Once you’ve made contact with a truly motivated seller- you’ll make them an offer on that property based on the comps, repairs and your desired profit.
Quick Calculation of the Maximum Acceptable Offer: (MAO)
MAO = (ARV x .65) – RC – CC – AF
ARV = After Repair Value
RC = Repair Cost
CC = Carrying Costs
AF = Assignment Fee
Assigning The Contract
The most important thing to do here….in the money step is to be very clear that you’ve contracted to purchase the property as “your name….and/or assigns”: By placing and/or assigns after your name, you’ve ensured your ability to assign the deal to an end buyer. Although a contract is usually assignable unless otherwise stated, I would hate for you to fall down on the money step by leaving it to happenstance. Once you have an executed purchase agreement with the motivated seller that contacted you and you’ve negotiated a hot, smoking deal with your and/or assigns on that top line…you are ready to find your buyer.
Note: In my contracts, “and / or assigns” is a part of the agreement along with the following clause.
Buyer shall receive a key within 48 hours and be granted access to the property to allow partners and contractors to evaluate it as needed. If the seller is still living in the house, I request access on pre-arranged days and times. When they won’t be there and this allows me to get my investors in to see the property.
How to help your buyers see the value in your deal
I try to make it as easy as possible for my buyers to access, evaluate and purchase my wholesale deal by doing the following. By having my contractor to come out and submit an estimate on the needed repairs (on his professional letterhead) can save my buyer/investor a great deal of time and guesswork and I also ask my real estate agent for some accurate comps on the subject property. Even though I encourage every buyer/investor to pull their own comps, perform their own due diligence, I’ve found that by doing these things, they are steps that aid in the process of assigning the deal.
So at this point, you’re so close to that meeting with your bank teller right? …hang on!
At this stage, you have the property under contract, you’ve got your estimate(s) for the repairs, comparables, photos, and you’ve got access to the property and your blank assignment of contact in your hot little hands. You’ve done a lot and you’re close.
How to Find a Buyer for your Deal
During this point, time is certainly of the essence and you’ve got to get your e-flyer made and sent out to your database, your craigslist ads, your for-sale-by-owner posts, directional arrows and a hard copy to bring to your local real estate investor club.
In my experience, they are many, many “wanna-be” investors that read book after book, attend seminars and invest within the confines of their minds. My advice to my students is to weed out the tire kickers from the decision makers, early on before they have a deal. Create a performing database. It doesn’t have to include many, many names…. just the ones that know a hot, smoking deal when they see one and that will perform when the times comes to do so.
What day is it? Now it’s payday!
Your end buyer / investor will be exchanging a signed assignment of contract with you for a fee. They are paying for the right to step into your place and fulfill the obligations that you and the seller have set forth.
Collect a deposit from your buyer as you hand over the purchase agreement and obtain a signed assignment of contract . This will help you to separate the decisive, action taking investors from those that have a case of paralysis of analysis. If your buyer is serious about moving forward, they will have the wherewithal to hand over a deposit in good faith thereof.
Since it’s your deal, you would be using your title company who is most knowledgeable and skilled in the art of wholesaling properties and the manner in which you operate your business. You will provide your title agent with instructions about the remaining funds that will be released to you upon settlement. If your title company is not able to release those funds to you at that time, it’ll be necessary to execute an addendum with your buyer.
An addendum attesting to the fact that you will be both be at the closing and the buyer ( your assignor) must pay you in the lobby immediately following the closing, along with a Notarized Memorandum of Agreement would help to protect your interest.
Assignment fees can be very lucrative in certain markets. On my very first wholesale deal- the assignment fee was $7,000 and I had never done it before….so not bad right? My third wholesale deal allowed for a $40,000 fee because it was a hot, smoking deal. The buyer, a contractor was thrilled to get that property so that he could rehab it and make his profit.
Hot, Smoking deals are out there….if you’re not paying attention, you’ll bump right in to one of them!
So, with that- see your vision, steady yourself, prepare with vigor and head in that direction with renewed energy, confidence and persistence…and remember to enjoy the journey.
Karen Roberts
Karen is a real-estate entrepreneur, investor, mentor and REIA Club president. She is dedicated to building financial independence and inspiring, empowering others to achieve their financial freedom through the FEC - http://www.financialenlightenmentclub.com
5 Figure Assignment Fees may be hard for some people to believe in today’s Real Estate Market. Believe it or not, they are still out there for the active, persistent and methodical real estate investors, even the first-timers!
Wholesaling
Wholesaling is the art of finding and assigning properties. It can be so appealing to new investors because there is very little cash required to support these types of deals and credit is not an issue. A new investor requires only a small amount of cash to cover earnest money deposits, advertising, etc.things like this.
Discover your mission, vision, or purpose in life.
Spend some time envisioning the type of lifestyle that fits your family and personality traits. Then begin to realistically set your goals based upon the vision.
Remember the basics about goals – they should be SMART GOALS.
S-pecific
M-easurable
A-ttainable
R- ealistic
T-imely[/b]
Aim for what really matters to you. Discover your mission/vision/purpose. and teach yourself how to set and persist to achieve your goals. To manage time effectively track your tasks consistently, so that you don’t waste time on non income producing activities. Visualize and focus on your goals daily to ensure that your actions reflect that which pertains to your goals.
What tools do you need?
The basic tools that you will need as a new wholesale investor are these:
* Cell phone - (preferably a PDA) with unlimited minutes, you’ll need them! This will help you to organize your tasks, records, phone numbers and synchronize with your computer.
* Computer - researching data comps and for marketing your wholesale deals
* Printer - print out contracts, contracts and any documents
* Camera - this is an absolute must have for creating your e-flyers to mail our to your database to sell your deal
* Contracts / Agreements
* Fax Machine
* Filing Cabinet – you’ll need this too.
As your business evolves, you’ll reach a point where you will find other tools and gadgets that increase your productivity and your profits.
How to find deals:
There are many places to you can locate deals and here is a list a few of them:
* Vacant Houses
* Title Companies
* Home Inspectors
* REIA Clubs
* FSBO’s
* Bankruptcy Attorneys
* Homeowners Associations
* Burned out Landlords
* Bail Bondsmen
* Code Enforcers
* Hard Money Lenders
* Meter Readers
* Waste Management
* Divorce Attorneys
* Probate/Trustees
* Tax Offices
* Garage Sales
* Estate Sales
** Every time you go for a ride, take a different route to get to know your neighborhood, the properties, comps, vacants and utility workers.
Once you’ve made contact with a truly motivated seller- you’ll make them an offer on that property based on the comps, repairs and your desired profit.
Quick Calculation of the Maximum Acceptable Offer: (MAO)
MAO = (ARV x .65) – RC – CC – AF
ARV = After Repair Value
RC = Repair Cost
CC = Carrying Costs
AF = Assignment Fee
Assigning The Contract
The most important thing to do here….in the money step is to be very clear that you’ve contracted to purchase the property as “your name….and/or assigns”: By placing and/or assigns after your name, you’ve ensured your ability to assign the deal to an end buyer. Although a contract is usually assignable unless otherwise stated, I would hate for you to fall down on the money step by leaving it to happenstance. Once you have an executed purchase agreement with the motivated seller that contacted you and you’ve negotiated a hot, smoking deal with your and/or assigns on that top line…you are ready to find your buyer.
Note: In my contracts, “and / or assigns” is a part of the agreement along with the following clause.
Buyer shall receive a key within 48 hours and be granted access to the property to allow partners and contractors to evaluate it as needed. If the seller is still living in the house, I request access on pre-arranged days and times. When they won’t be there and this allows me to get my investors in to see the property.
How to help your buyers see the value in your deal
I try to make it as easy as possible for my buyers to access, evaluate and purchase my wholesale deal by doing the following. By having my contractor to come out and submit an estimate on the needed repairs (on his professional letterhead) can save my buyer/investor a great deal of time and guesswork and I also ask my real estate agent for some accurate comps on the subject property. Even though I encourage every buyer/investor to pull their own comps, perform their own due diligence, I’ve found that by doing these things, they are steps that aid in the process of assigning the deal.
So at this point, you’re so close to that meeting with your bank teller right? …hang on!
At this stage, you have the property under contract, you’ve got your estimate(s) for the repairs, comparables, photos, and you’ve got access to the property and your blank assignment of contact in your hot little hands. You’ve done a lot and you’re close.
How to Find a Buyer for your Deal
During this point, time is certainly of the essence and you’ve got to get your e-flyer made and sent out to your database, your craigslist ads, your for-sale-by-owner posts, directional arrows and a hard copy to bring to your local real estate investor club.
In my experience, they are many, many “wanna-be” investors that read book after book, attend seminars and invest within the confines of their minds. My advice to my students is to weed out the tire kickers from the decision makers, early on before they have a deal. Create a performing database. It doesn’t have to include many, many names…. just the ones that know a hot, smoking deal when they see one and that will perform when the times comes to do so.
What day is it? Now it’s payday!
Your end buyer / investor will be exchanging a signed assignment of contract with you for a fee. They are paying for the right to step into your place and fulfill the obligations that you and the seller have set forth.
Collect a deposit from your buyer as you hand over the purchase agreement and obtain a signed assignment of contract . This will help you to separate the decisive, action taking investors from those that have a case of paralysis of analysis. If your buyer is serious about moving forward, they will have the wherewithal to hand over a deposit in good faith thereof.
Since it’s your deal, you would be using your title company who is most knowledgeable and skilled in the art of wholesaling properties and the manner in which you operate your business. You will provide your title agent with instructions about the remaining funds that will be released to you upon settlement. If your title company is not able to release those funds to you at that time, it’ll be necessary to execute an addendum with your buyer.
An addendum attesting to the fact that you will be both be at the closing and the buyer ( your assignor) must pay you in the lobby immediately following the closing, along with a Notarized Memorandum of Agreement would help to protect your interest.
Assignment fees can be very lucrative in certain markets. On my very first wholesale deal- the assignment fee was $7,000 and I had never done it before….so not bad right? My third wholesale deal allowed for a $40,000 fee because it was a hot, smoking deal. The buyer, a contractor was thrilled to get that property so that he could rehab it and make his profit.
Hot, Smoking deals are out there….if you’re not paying attention, you’ll bump right in to one of them!
So, with that- see your vision, steady yourself, prepare with vigor and head in that direction with renewed energy, confidence and persistence…and remember to enjoy the journey.
Karen Roberts
Karen is a real-estate entrepreneur, investor, mentor and REIA Club president. She is dedicated to building financial independence and inspiring, empowering others to achieve their financial freedom through the FEC - http://www.financialenlightenmentclub.com
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Friday, August 7, 2009
What Is A Quitclaim Deed?
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Find out what a quitclaim deed is. Many people mistakenly call it a quickclaim or quick claim deed. Be sure to check out our other video on our YouTube channel.
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Monday, July 27, 2009
The 4 Strategies To Make Money From Subject To’s
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By: Jason Hanson
I've said it a million times and I'm going to say it again. This is a subject-to market, and if you aren't using this method you're probably throwing away hundreds of thousands of dollars in profits. Now, I want to show you the four ways that you can making money from Subject-To's:
1. "Traditional" Subject-to
2. "They Pay You" Subject-to
3. "Guaranteed Money" Subject-to
4. "Wholesaling" Subject-to
Alright. Let's first begin with the way that most of you are familiar with, the traditional subject-to. This is when you get a call from a motivated seller, and all they want you to do is simply take over their payments. They don't want any money, or anything else. So, if you get a call from a seller who owes $200,000 on the house, you're just taking over the payments on the $200,000 and the sellers will walk away (of course you will do your due diligence and make sure the property will cash flow, check the payment amounts, interest, rates, etc).
Next, is the "They Pay You” Subject-To. We all know that you will not purchase a property subject-to and take on negative cash flow. If the payments are $1,500 a month and market rent is $1,000, then most people are smart enough not to go negative $500 a month. Of course I say most people, because there are a lot of idiots out there who will take on negative cash flow. Anyway, let's pretend you got a call from a seller and he wanted you to take over payments of $2,000 a month. You did your due diligence and you learn that market rent is $1,800 a month. You also know that you want to get $200 a month in positive cash flow from every property that you buy. This means that your payment should be no more than $1,600 a month (because you will rent it out for the market rent of $1,800 and get your $200 in cash flow). Well, first off, when most investors get a lead like this they immediately toss it in the trash can and don't let their "creative juices" flow. However, being that you're smart (you're reading this aren't you!) you know that there's a way to make the above deal work. So, what you do is call the seller and let them know that you can take over their mortgage payments; however, because your company doesn't take on negative cash flow, he will have to write you a check for $400 a month. Yes, you read that correctly, you can create your own cash flow and have a seller write you a check for any amount you desire.
Now, you're probably wondering about the risks of the "They Pay You” Subject-To right? The risk is, that they won't pay you the amount of money they owe you every month, which is why you only do this type of subject-to on straight rentals (you will not do this on properties you sell via lease option). The absolute worst case scenario is that the seller doesn't send you the $400 check every month and all you will do is simply let the property get foreclosed on…..by the way, this is why the correct paperwork is so crucial. My subject-to contract states in very clear language that if the sellers don't make the payments to me then I will let the property go into foreclosure and their credit will be ruined. I bet you're probably wondering if this has ever happened to me, I know you are!
Well, one time I did this type of deal on a property in Baltimore, MD. To make the property cash flow the sellers had to write me a check for $300 every month. One month the money didn't come and I called the sellers. I spoke to the wife, who was a real BI%$#^ and she basically told me that she didn't feel like making the payments anymore. Then, I spoke to the husband who started making excuses about how his wife got in a car accident and some other B.S. So, the sellers tried to call my bluff, but I immediately stopped making the mortgage payments. A few months went buy and the sellers got a foreclosure notice in the mail and wouldn't you know, the sellers made up the payments so that the property didn't go into foreclosure. Remember, that's only happened to me once and the sellers ended up paying. This is the way I see it: With this type of deal I'm purchasing no money down and its risk free. Because, I will make $200 a month in cash flow and if for some reason I have to let the property go, at least I made $200 a month for several months (plus, most people care about their credit and don’t want it damaged).
The above technique works, but you have to believe it yourself. When I was doing the consulting day with a new investor, we were making calls on leads we had. One of the leads was a potential subject-to and we figured out that in order to make the deal work, the owner would have to write this investor a check for $600 every month. We called the seller on the phone, I "pitched" the idea to him and he was interested (I actually recorded this call on video, so go to YouTube and type in "Jason Hanson Real Estate Investing" to watch it). Now, to be realistic the majority of the time you pitch this idea the owner will say no, however, we know this business is simply a numbers game.
So, when the phone call was done I remember looking at this new investor and he seemed astonished that this would work……Remember the name of the game is "creative" real estate investing. The game is also finding motivated sellers and if you don't ask someone if they will write you a check for $600 a month, then you'll never find out if they will actually do it, plus, all they can do is say no. By the way, in the interest of full disclosure the above deal did not close where this investor was going to get the $600 check every month. But, he did learn a very lucrative lesson that you can ask people to write you a check to make a deal work, and if they're really motivated they will say yes.
We're rockin' and rollin' onto the third type of subject-to, the "Guaranteed Money" Subject-to. Here's how this works: Sometimes you're going to get a call from a seller who wants you to take over their monthly payments, however, they have a lot of equity and they want some cash at the closing. Since you know we don't do that, here's how we solve the problem of the seller who wants cash. Once again, let's create a scenario: You get a call from a seller who wants you to take over their payment, but they have $80,000 in equity and they want half. They want their $40,000 at closing, which of course you know we would never do (that would be the worst "no money" down deal in the world). When you have someone who wants cash, you will go into your script of "Mr. Seller, we will be able to give you your $40,000 within five years. This is because our company specializes in helping people with less than perfect credit……(you know the rest of the script so I'm not typing it, and if you don't, go to YouTube and watch the videos). Anyway, once the seller agrees to receive their $40,000 in five years, you will simply give them a note that states within five years you owe them $40,000. As you can see, you created another no-money down subject-to and did not have to come out of pocket at all. (Because when your tenant buyer buys the property and cashes you out, you will have $80,000. You keep your half and give the other half to the seller).
Lastly, there is wholesaling subject-to. This is where you play the middle man as you do with regular wholesaling. You have a seller who wants someone to take over their payments. For one reason or another you don't want to own the house, so you find a retail buyer to take over the payments. You will run ads in the paper that say "Desperate Seller, Take Over My Payments, $10,000 moves you in!" The $10,000 will be your wholesaling fee and the buyer will take over the seller's payments. The biggest risk with wholesaling subject-to is lack of proper paperwork. You MUST have paperwork which states you're just a middleman and that you have no control over whether the third party that you wholesale to will make the monthly mortgage payments. Of course, you also tell the seller that you're wholesaling the property and you cannot make any guarantees.
Wow, that's a lot of typing and one long article. This is the type of article that I would make copies of and keep near your desk when you're evaluating properties so that money isn't slipping through the cracks. Also, go back to your old leads and see if you can make any potential subject-to deals out of them. And now you should make a lot more money this year, because you’re now armed with 4 more money making strategies!
Jason R. Hanson is the founder of National Real Estate Investor Month, author of “How to Build a Real Estate Empire” and mentor to students all across America. To get a FREE copy of Jason’s Special Report “The Insider’s Guide To Buying Your First Investment Property in 83 Days or Less!” visit http://www.PrimoCoach.com or call 800-865-1702.
By: Jason Hanson
I've said it a million times and I'm going to say it again. This is a subject-to market, and if you aren't using this method you're probably throwing away hundreds of thousands of dollars in profits. Now, I want to show you the four ways that you can making money from Subject-To's:
1. "Traditional" Subject-to
2. "They Pay You" Subject-to
3. "Guaranteed Money" Subject-to
4. "Wholesaling" Subject-to
Alright. Let's first begin with the way that most of you are familiar with, the traditional subject-to. This is when you get a call from a motivated seller, and all they want you to do is simply take over their payments. They don't want any money, or anything else. So, if you get a call from a seller who owes $200,000 on the house, you're just taking over the payments on the $200,000 and the sellers will walk away (of course you will do your due diligence and make sure the property will cash flow, check the payment amounts, interest, rates, etc).
Next, is the "They Pay You” Subject-To. We all know that you will not purchase a property subject-to and take on negative cash flow. If the payments are $1,500 a month and market rent is $1,000, then most people are smart enough not to go negative $500 a month. Of course I say most people, because there are a lot of idiots out there who will take on negative cash flow. Anyway, let's pretend you got a call from a seller and he wanted you to take over payments of $2,000 a month. You did your due diligence and you learn that market rent is $1,800 a month. You also know that you want to get $200 a month in positive cash flow from every property that you buy. This means that your payment should be no more than $1,600 a month (because you will rent it out for the market rent of $1,800 and get your $200 in cash flow). Well, first off, when most investors get a lead like this they immediately toss it in the trash can and don't let their "creative juices" flow. However, being that you're smart (you're reading this aren't you!) you know that there's a way to make the above deal work. So, what you do is call the seller and let them know that you can take over their mortgage payments; however, because your company doesn't take on negative cash flow, he will have to write you a check for $400 a month. Yes, you read that correctly, you can create your own cash flow and have a seller write you a check for any amount you desire.
Now, you're probably wondering about the risks of the "They Pay You” Subject-To right? The risk is, that they won't pay you the amount of money they owe you every month, which is why you only do this type of subject-to on straight rentals (you will not do this on properties you sell via lease option). The absolute worst case scenario is that the seller doesn't send you the $400 check every month and all you will do is simply let the property get foreclosed on…..by the way, this is why the correct paperwork is so crucial. My subject-to contract states in very clear language that if the sellers don't make the payments to me then I will let the property go into foreclosure and their credit will be ruined. I bet you're probably wondering if this has ever happened to me, I know you are!
Well, one time I did this type of deal on a property in Baltimore, MD. To make the property cash flow the sellers had to write me a check for $300 every month. One month the money didn't come and I called the sellers. I spoke to the wife, who was a real BI%$#^ and she basically told me that she didn't feel like making the payments anymore. Then, I spoke to the husband who started making excuses about how his wife got in a car accident and some other B.S. So, the sellers tried to call my bluff, but I immediately stopped making the mortgage payments. A few months went buy and the sellers got a foreclosure notice in the mail and wouldn't you know, the sellers made up the payments so that the property didn't go into foreclosure. Remember, that's only happened to me once and the sellers ended up paying. This is the way I see it: With this type of deal I'm purchasing no money down and its risk free. Because, I will make $200 a month in cash flow and if for some reason I have to let the property go, at least I made $200 a month for several months (plus, most people care about their credit and don’t want it damaged).
The above technique works, but you have to believe it yourself. When I was doing the consulting day with a new investor, we were making calls on leads we had. One of the leads was a potential subject-to and we figured out that in order to make the deal work, the owner would have to write this investor a check for $600 every month. We called the seller on the phone, I "pitched" the idea to him and he was interested (I actually recorded this call on video, so go to YouTube and type in "Jason Hanson Real Estate Investing" to watch it). Now, to be realistic the majority of the time you pitch this idea the owner will say no, however, we know this business is simply a numbers game.
So, when the phone call was done I remember looking at this new investor and he seemed astonished that this would work……Remember the name of the game is "creative" real estate investing. The game is also finding motivated sellers and if you don't ask someone if they will write you a check for $600 a month, then you'll never find out if they will actually do it, plus, all they can do is say no. By the way, in the interest of full disclosure the above deal did not close where this investor was going to get the $600 check every month. But, he did learn a very lucrative lesson that you can ask people to write you a check to make a deal work, and if they're really motivated they will say yes.
We're rockin' and rollin' onto the third type of subject-to, the "Guaranteed Money" Subject-to. Here's how this works: Sometimes you're going to get a call from a seller who wants you to take over their monthly payments, however, they have a lot of equity and they want some cash at the closing. Since you know we don't do that, here's how we solve the problem of the seller who wants cash. Once again, let's create a scenario: You get a call from a seller who wants you to take over their payment, but they have $80,000 in equity and they want half. They want their $40,000 at closing, which of course you know we would never do (that would be the worst "no money" down deal in the world). When you have someone who wants cash, you will go into your script of "Mr. Seller, we will be able to give you your $40,000 within five years. This is because our company specializes in helping people with less than perfect credit……(you know the rest of the script so I'm not typing it, and if you don't, go to YouTube and watch the videos). Anyway, once the seller agrees to receive their $40,000 in five years, you will simply give them a note that states within five years you owe them $40,000. As you can see, you created another no-money down subject-to and did not have to come out of pocket at all. (Because when your tenant buyer buys the property and cashes you out, you will have $80,000. You keep your half and give the other half to the seller).
Lastly, there is wholesaling subject-to. This is where you play the middle man as you do with regular wholesaling. You have a seller who wants someone to take over their payments. For one reason or another you don't want to own the house, so you find a retail buyer to take over the payments. You will run ads in the paper that say "Desperate Seller, Take Over My Payments, $10,000 moves you in!" The $10,000 will be your wholesaling fee and the buyer will take over the seller's payments. The biggest risk with wholesaling subject-to is lack of proper paperwork. You MUST have paperwork which states you're just a middleman and that you have no control over whether the third party that you wholesale to will make the monthly mortgage payments. Of course, you also tell the seller that you're wholesaling the property and you cannot make any guarantees.
Wow, that's a lot of typing and one long article. This is the type of article that I would make copies of and keep near your desk when you're evaluating properties so that money isn't slipping through the cracks. Also, go back to your old leads and see if you can make any potential subject-to deals out of them. And now you should make a lot more money this year, because you’re now armed with 4 more money making strategies!
Jason R. Hanson is the founder of National Real Estate Investor Month, author of “How to Build a Real Estate Empire” and mentor to students all across America. To get a FREE copy of Jason’s Special Report “The Insider’s Guide To Buying Your First Investment Property in 83 Days or Less!” visit http://www.PrimoCoach.com or call 800-865-1702.
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Monday, July 20, 2009
How To Buy Rental Property With These Quick And Easy Steps
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By: Teo Zhenjie
Learning how to buy rental property involves more than just grabbing the first available property and renting it to any tenant that comes along. You will have to prepare and plan for your buying process to make sure you get the perfect property for your needs. Follow these quick and easy steps to invest in real estate today.
Set Your Investment Goals Before You Begin
Understanding how to buy rental property means having a solid plan in place that you carry out to achieve your investment aims.
Come up with an investment plan based on your goals. If you want to rent out your property for the long run, you will be looking for a healthy cash flow instead of just a cheap price tag.
If you plan to rent the place as a stop gap measure, you can consider buying a cheap fixer upper to renovate while waiting for the house to appreciate in value.
How Much Can You Afford for Your Rental Property?
Determine ahead of time how much you can afford to pay. Do a good cost analysis based on property maintenance requirements, typical rents in the area, vacancy rates and so on.
Are you able to handle simple property repairs by yourself? If not, you should add another 5 to 10% to your estimated maintenance cost. Naturally a brand new rental property will rack up less maintenance costs than one which has seen better days.
Decide if You Want to Hire a Real Estate Agent
While you will have final say in whatever property you choose to buy, a real estate agent can be invaluable in providing professional advice on how to buy rental property. An experienced agent can also empower you with far more negotiating leverage than you would have on your own.
Get Yourself Pre-Approved for a Rental Property Loan
Before you go shopping for a rental property, you will have to get yourself pre-approved for a mortgage loan. This means finding a lender who is willing to grant you financing for your property investment in advance.
On the other hand you can choose to work with a good mortgage broker. You'll know just how much of a down payment will be coming out of your pocket and you'll have better negotiating leverage since you'll know exactly what your bottom line is.
Now it's Time for You to Shopping for a Property
Now you're ready to look at properties. For every property you evaluate, you'll want to consider:
- The cost of necessary repairs: Can you afford to keep it up?
- Location of the property: Is it likely to stay occupied?
- Neighbourhood rental rates: Are they profitable relative to the property price?
If you are looking for ready rent, you can look for a rental unit that's already occupied by long term tenants. You may also want to consider buying a multi-family unit and living on-site. This way your rental income may cover the whole mortgage and allow you to live virtually rent-free. It'll also be easier to monitor and maintain the property if you live on site.
Negotiate with the Property Seller and Close the Deal
Negotiate wisely. The seller may be willing to pick up some or all of the closing costs, depending on market conditions and the seller's own financial situation. Remember that you have more bargaining power in a saturated market and less when supply is down.
Make sure you have the property inspected. Even if you're buying a fixer upper, you don't want to be surprised down the road with a major and unexpected problem. Having the property professionally inspected can't guarantee this won't happen, but it can certainly help.
As you can tell, learning how to buy rental property involves having a solid plan and knowing what to do every step of the way. Make sure you do your homework and go into a deal with your eyes wide open.
Teo Zhenjie has been showing landlords how to manage their tenants and rental property effectively on Propertydo ( http://www.propertydo.com/ ). Visit his website today for step-by-step real estate guides, free resources and forms. Click here for more important tips on how to buy rental property: http://www.propertydo.com/buying-rental-property.html
By: Teo Zhenjie
Learning how to buy rental property involves more than just grabbing the first available property and renting it to any tenant that comes along. You will have to prepare and plan for your buying process to make sure you get the perfect property for your needs. Follow these quick and easy steps to invest in real estate today.
Set Your Investment Goals Before You Begin
Understanding how to buy rental property means having a solid plan in place that you carry out to achieve your investment aims.
Come up with an investment plan based on your goals. If you want to rent out your property for the long run, you will be looking for a healthy cash flow instead of just a cheap price tag.
If you plan to rent the place as a stop gap measure, you can consider buying a cheap fixer upper to renovate while waiting for the house to appreciate in value.
How Much Can You Afford for Your Rental Property?
Determine ahead of time how much you can afford to pay. Do a good cost analysis based on property maintenance requirements, typical rents in the area, vacancy rates and so on.
Are you able to handle simple property repairs by yourself? If not, you should add another 5 to 10% to your estimated maintenance cost. Naturally a brand new rental property will rack up less maintenance costs than one which has seen better days.
Decide if You Want to Hire a Real Estate Agent
While you will have final say in whatever property you choose to buy, a real estate agent can be invaluable in providing professional advice on how to buy rental property. An experienced agent can also empower you with far more negotiating leverage than you would have on your own.
Get Yourself Pre-Approved for a Rental Property Loan
Before you go shopping for a rental property, you will have to get yourself pre-approved for a mortgage loan. This means finding a lender who is willing to grant you financing for your property investment in advance.
On the other hand you can choose to work with a good mortgage broker. You'll know just how much of a down payment will be coming out of your pocket and you'll have better negotiating leverage since you'll know exactly what your bottom line is.
Now it's Time for You to Shopping for a Property
Now you're ready to look at properties. For every property you evaluate, you'll want to consider:
- The cost of necessary repairs: Can you afford to keep it up?
- Location of the property: Is it likely to stay occupied?
- Neighbourhood rental rates: Are they profitable relative to the property price?
If you are looking for ready rent, you can look for a rental unit that's already occupied by long term tenants. You may also want to consider buying a multi-family unit and living on-site. This way your rental income may cover the whole mortgage and allow you to live virtually rent-free. It'll also be easier to monitor and maintain the property if you live on site.
Negotiate with the Property Seller and Close the Deal
Negotiate wisely. The seller may be willing to pick up some or all of the closing costs, depending on market conditions and the seller's own financial situation. Remember that you have more bargaining power in a saturated market and less when supply is down.
Make sure you have the property inspected. Even if you're buying a fixer upper, you don't want to be surprised down the road with a major and unexpected problem. Having the property professionally inspected can't guarantee this won't happen, but it can certainly help.
As you can tell, learning how to buy rental property involves having a solid plan and knowing what to do every step of the way. Make sure you do your homework and go into a deal with your eyes wide open.
Teo Zhenjie has been showing landlords how to manage their tenants and rental property effectively on Propertydo ( http://www.propertydo.com/ ). Visit his website today for step-by-step real estate guides, free resources and forms. Click here for more important tips on how to buy rental property: http://www.propertydo.com/buying-rental-property.html
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Monday, July 13, 2009
How to Prescreen Motivated Sellers
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This video is available in two parts. Please go to our YouTube channel to view the second part.
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Vital Facts To Know When Buying Real Estate
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By: Peter Vekselman
If you are considering buying real estate, you will learn that there is a lot that goes into the overall process. After all, it will probably be the most expensive purchase of your life. As exciting as it is to start looking for a new home, it can be stressful and overwhelming.
You will find that there are many unexpected costs and details you need to consider prior to contacting a real estate agent. It is important you are aware of every little aspect and facet involved with purchasing a home before you take the step toward buying real estate.
Obviously you want to get the most value possible with the money you spend. Luckily, with the way the economy is today you can buy real estate for an incredible price. It is important you are aware of every detail possible in regards to the homes you look at.
Make sure you have a thorough home inspection conducted to help reveal any hidden flaws and problems the home may have. Many times there will be some problems you would have never noticed until after purchasing. This is precisely why a home inspection is essential.
The next thing to do when buying real estate is compare the mortgage terms and interest rates that are offered by various mortgage lenders. The smallest difference in interest rates can add up to thousands of dollars over the length of your mortgage. A pre-approval from the lender can give you the confidence needed when shopping for a new home as well as the added leverage when bargaining with the seller.
From there, you will want to consider using a buyer agent. Using a buyer agent is a great way to protect your interests when shopping for a home. They will be responsible for helping you get the best deal possible on the home of your choice. There are numerous features that can adversely affect the resale value of the home, so be aware of this. Just make sure to educate yourself on the home buying process as much as possible to protect your investment.
Buying real estate is a complicated process that you do not want to mess up with. It is going to be the most expensive purchase you make in your life. Therefore, make sure you are well educated and understand the entire process. Take the facts and tips in this article into consideration as you work towards purchasing a home.
Peter Vekselman has been successfully investing in real estate since 1996. He has completed over 1000 real estate deals, owned a construction company, been a private lender, and owned a property management company. Peter currently works with clients all over the US helping them achieve riches in real estate http://www.CoachingByPeter.com .
By: Peter Vekselman
If you are considering buying real estate, you will learn that there is a lot that goes into the overall process. After all, it will probably be the most expensive purchase of your life. As exciting as it is to start looking for a new home, it can be stressful and overwhelming.
You will find that there are many unexpected costs and details you need to consider prior to contacting a real estate agent. It is important you are aware of every little aspect and facet involved with purchasing a home before you take the step toward buying real estate.
Obviously you want to get the most value possible with the money you spend. Luckily, with the way the economy is today you can buy real estate for an incredible price. It is important you are aware of every detail possible in regards to the homes you look at.
Make sure you have a thorough home inspection conducted to help reveal any hidden flaws and problems the home may have. Many times there will be some problems you would have never noticed until after purchasing. This is precisely why a home inspection is essential.
The next thing to do when buying real estate is compare the mortgage terms and interest rates that are offered by various mortgage lenders. The smallest difference in interest rates can add up to thousands of dollars over the length of your mortgage. A pre-approval from the lender can give you the confidence needed when shopping for a new home as well as the added leverage when bargaining with the seller.
From there, you will want to consider using a buyer agent. Using a buyer agent is a great way to protect your interests when shopping for a home. They will be responsible for helping you get the best deal possible on the home of your choice. There are numerous features that can adversely affect the resale value of the home, so be aware of this. Just make sure to educate yourself on the home buying process as much as possible to protect your investment.
Buying real estate is a complicated process that you do not want to mess up with. It is going to be the most expensive purchase you make in your life. Therefore, make sure you are well educated and understand the entire process. Take the facts and tips in this article into consideration as you work towards purchasing a home.
Peter Vekselman has been successfully investing in real estate since 1996. He has completed over 1000 real estate deals, owned a construction company, been a private lender, and owned a property management company. Peter currently works with clients all over the US helping them achieve riches in real estate http://www.CoachingByPeter.com .
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Monday, July 6, 2009
What If A Seller Calls With A Listed House
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By: Tony Severino
As full-time Real Estate Investors and Mentors, Tony and I get all kinds of calls from motivated as well as unmotivated sellers, but we also get calls from Real Estate agents as well.
What is creative real estate? To me it is a method to buy and/or sell real estate in the non-traditional method. For example, creative is using private funds or the owner’s existing financing versus the traditional method of going through a realtor/broker to list a house or buying a listed house and going to the bank to get a loan.
Ethics a. A set of principles of right conduct. b. A theory or a system of moral values.
Ethics (used with a sing. or pl. verb) The rules or standards governing the conduct of a person or the members of a profession.
What does that have to do with anything? Well, Tony and I buy most of our stuff creatively or with cash and always ethically and that is what we encourage, but lately we (Tony and I) have been receiving calls from our students wanting to discuss houses that are listed with a broker/realtor. We have said many times that we don’t buy homes that are listed. Not that we are against realtors. We are not. I am a realtor, and Tony is not.
We have said many times that we will not go on appointments if the house is listed. Some of our students want us to break our rules or say it is okay for them to go look at houses that are listed and maybe buy it and cut the broker/realtor out of their commission by having the seller cancel their listing after they looked at it. We are not going to okay that method.
The broker/realtor has a contract with that homeowner, probably an exclusive-right-to-sell listing contract. What does that mean? The broker is given the exclusive right to market the seller’s property. If the property is sold while the listing is in effect, the seller must pay the broker a commission REGARDLESS OF WHO SELLS THE PROPERTY. In other words, if the seller finds a buyer without the broker’s assistance, the seller still must pay the broker a commission.
But, that is not all. All exclusive listings have a definite period of time during which the broker/agent is employed. ALSO, the agreements may contain a broker protection clause. This clause provides that the property owner will pay the listing broker a commission if, within a specified number of days after the listing expires or is canceled, the owner transfers the property to someone who viewed the property while it was listed. The time for such a clause usually parallels the terms of the existing listing agreement. A six-month listing may carry a broker protection clause of six months AFTER THE LISTING’S EXPIRATION OR CANCELLATION.
There is also a “MUTUAL RELEASE FROM LISTING CONTACT” in most states that has a contingency that is written as follows and can be used when the seller asks the agent to cancel their listing:
‘SELLER AND BROKER AGREE TO WITHDRAW THE PROPERTY FROM THE MARKET, BUT UNDERSTAND THAT THIS DOES NOT TERMINATE THE LISTING CONTRACT. BROKER WILL CEASE TO ADVERTISE AND/OR MARKET THE PROPERTY. IF SELLER DECIDES TO SELL AT ANY TIME BEFORE EXPIRATION OF THE LISTING CONTRACT OR UNDER CONDITIONS AS OUTLINED IN THE EXTENSION CLAUSE OF THE LISTING CONTRACT, THE LISTING CONTRACT IS STILL IN EFFECT AND A FULL COMMISSION SHALL BE DUE AND PAYABLE IN ACCORDANCE WITH THE LISTING CONTRACT. SELLER SHALL NOT LIST THE PROPERTY WITH ANOTHER BROKER DURING THE REMAINDER OF THE TERM OF THE LISTING CONTRACT.
If you are thinking that this doesn’t apply to you because the broker will never know that the house transferred ownership, all I can say is don’t be naive. If the broker finds out that the seller did transfer ownership, a commission is due. Don’t risk a lawsuit and a lien on a property because you didn’t want to pay someone what was rightly theirs.
Now, please consider this. Are you an ethical person? Do you consider yourself running your business ethically? What kind of image is given to a seller when it is suggested that they cancel their listing so you can buy their house and so they won’t have to pay the realtor their commissions? The realtor doesn’t deserve it anyway because they didn’t bring us together. Are you operating as an ethical investor then? Would a potential seller think that is ethical for you, as a business owner, to suggest. My view of that that suggestion is someone who doesn’t honor an agreement so why would I risk entering one with them.
I can go on about this topic and if you want to discuss it further or have questions, shoot me an email or call me.
In the meantime, Go Get A FREE House that is not listed and if it is listed….do the right thing.
Lisa Severino 219-923-3000 www.TonySeverino.com
By: Tony Severino
As full-time Real Estate Investors and Mentors, Tony and I get all kinds of calls from motivated as well as unmotivated sellers, but we also get calls from Real Estate agents as well.
What is creative real estate? To me it is a method to buy and/or sell real estate in the non-traditional method. For example, creative is using private funds or the owner’s existing financing versus the traditional method of going through a realtor/broker to list a house or buying a listed house and going to the bank to get a loan.
Ethics a. A set of principles of right conduct. b. A theory or a system of moral values.
Ethics (used with a sing. or pl. verb) The rules or standards governing the conduct of a person or the members of a profession.
What does that have to do with anything? Well, Tony and I buy most of our stuff creatively or with cash and always ethically and that is what we encourage, but lately we (Tony and I) have been receiving calls from our students wanting to discuss houses that are listed with a broker/realtor. We have said many times that we don’t buy homes that are listed. Not that we are against realtors. We are not. I am a realtor, and Tony is not.
We have said many times that we will not go on appointments if the house is listed. Some of our students want us to break our rules or say it is okay for them to go look at houses that are listed and maybe buy it and cut the broker/realtor out of their commission by having the seller cancel their listing after they looked at it. We are not going to okay that method.
The broker/realtor has a contract with that homeowner, probably an exclusive-right-to-sell listing contract. What does that mean? The broker is given the exclusive right to market the seller’s property. If the property is sold while the listing is in effect, the seller must pay the broker a commission REGARDLESS OF WHO SELLS THE PROPERTY. In other words, if the seller finds a buyer without the broker’s assistance, the seller still must pay the broker a commission.
But, that is not all. All exclusive listings have a definite period of time during which the broker/agent is employed. ALSO, the agreements may contain a broker protection clause. This clause provides that the property owner will pay the listing broker a commission if, within a specified number of days after the listing expires or is canceled, the owner transfers the property to someone who viewed the property while it was listed. The time for such a clause usually parallels the terms of the existing listing agreement. A six-month listing may carry a broker protection clause of six months AFTER THE LISTING’S EXPIRATION OR CANCELLATION.
There is also a “MUTUAL RELEASE FROM LISTING CONTACT” in most states that has a contingency that is written as follows and can be used when the seller asks the agent to cancel their listing:
‘SELLER AND BROKER AGREE TO WITHDRAW THE PROPERTY FROM THE MARKET, BUT UNDERSTAND THAT THIS DOES NOT TERMINATE THE LISTING CONTRACT. BROKER WILL CEASE TO ADVERTISE AND/OR MARKET THE PROPERTY. IF SELLER DECIDES TO SELL AT ANY TIME BEFORE EXPIRATION OF THE LISTING CONTRACT OR UNDER CONDITIONS AS OUTLINED IN THE EXTENSION CLAUSE OF THE LISTING CONTRACT, THE LISTING CONTRACT IS STILL IN EFFECT AND A FULL COMMISSION SHALL BE DUE AND PAYABLE IN ACCORDANCE WITH THE LISTING CONTRACT. SELLER SHALL NOT LIST THE PROPERTY WITH ANOTHER BROKER DURING THE REMAINDER OF THE TERM OF THE LISTING CONTRACT.
If you are thinking that this doesn’t apply to you because the broker will never know that the house transferred ownership, all I can say is don’t be naive. If the broker finds out that the seller did transfer ownership, a commission is due. Don’t risk a lawsuit and a lien on a property because you didn’t want to pay someone what was rightly theirs.
Now, please consider this. Are you an ethical person? Do you consider yourself running your business ethically? What kind of image is given to a seller when it is suggested that they cancel their listing so you can buy their house and so they won’t have to pay the realtor their commissions? The realtor doesn’t deserve it anyway because they didn’t bring us together. Are you operating as an ethical investor then? Would a potential seller think that is ethical for you, as a business owner, to suggest. My view of that that suggestion is someone who doesn’t honor an agreement so why would I risk entering one with them.
I can go on about this topic and if you want to discuss it further or have questions, shoot me an email or call me.
In the meantime, Go Get A FREE House that is not listed and if it is listed….do the right thing.
Lisa Severino 219-923-3000 www.TonySeverino.com
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Monday, June 29, 2009
It's Time To Make Lemonade
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By: Pete Milano
Before I get into the story here are a few things that can help you keep from failing.
Regardless of your situation the following does apply. Did you keep a running up-to-date record of all costs associated with your flip? If not, either get on the ball or get out of the business. You will FAIL!!!
Purchases
When it comes to tracking expenditures I'll give you the best piece of advise to get you on the right track. A credit card purchase should have either the "flip" items or not. Never mix for the same purchase on a CC. Get an online account at the banks where you have credit cards and use the download transactions option. You will now have the exact amount of each purchase and the vendor. For stores like LOWES they will have the store # listed too. You can open the downloaded file with your spreadsheet software.
The Story
I purchased the foreclosure well below market, fixed it up doing all the "right" things and at way below the going rates and costs. I contacted a knowledgeable broker who was recommended to me by my mentor. The broker and I sat down and reviewed our findings of area comps. Since the nearby homes are all different with none to compare to we decided to use "price per square foot" of the home sales to determine an asking price. Then I listed the house for sale at a great price (for this house). The listing company is a major brand name nationwide real estate firm.
Before I go any further let me tell you about the property. Great curb appeal. The lot is considered a "double lot". Very large size (just under 10,000 sqft) with plenty of room for anything one might think of doing with it. This property is a corner lot, with one large shade tree, new porch, solid foundation, and fairly recent aluminum siding. That's just to name a few of the positive things.
So the property gets listed and we have one showing the first weekend. Unfortunately, since the showing we have not realized any bites or interest. A week or so passes and now it's time to think this over. Taking into consideration the expected financial situation of the profiled buyer I lowered the price and I offered to pick up $5,000 of their closing costs. Granted there are many houses in the area that are for sale but they are either in a need of rehabbing or priced $30k+ above my price. So, another week or so passes without any activity. It is now time to roll up my sleeves and get creative so I prepared and sent out individual packets using high quality paper, colored picture of the property and an offer letter to every Church in the zip code (over 40 mailings). The letter presented a very generous donation offer to the church (1% of the sale price) if anyone from the church or referred by the church purchased the house. Still no bites! What gives?
Now I'm getting serious about the matter at hand. It is no longer a pricing question for me. Of course I want to find out if the price is too high but maybe it is that people are not looking to purchase a house at any price? First thing is I talk with my broker and he just happened to have spoken with another broker who focuses selling and buying homes in my area. I tell my broker to call the other broker and offer the house during the current week at a ridiculously low price that is way below value and even a steal for another investor. Mind you, this house is picture perfect and almost all new inside too. New kitchen, plumbing, bathrooms, 2-zone HVAC, electrical, washer/dryer, prepaid 3 year security system, and more. Calls are made by my broker and still no bites. But just wait a minute. Didn't I just say "way below value and a steal for an investor"? I'm an investor, ain't I? Like Da!
It's time for the Indian story
Like the Indian who stayed up all night to see where the Sun came from. It finally DAWNED on him.
No thanks there will not be any extra helping of Stupid at breakfast for this guy
And, to think I was almost going to sell the house at any price! I was going to NET $126,900.00 at the "fire sale" price. Yes, I would be making a nice profit for a flip that took me just 7 weeks. But, just wait till you see how the numbers work out for me. I've used realistic and representative dollar (I rounded) values so we all can see how this works. First, I would like to add a kind word here for my mentor. As my mentor said to me some time ago, "the way to get rich in real estate is to never sell, only buy". Yipes! He was right.
As you too will read from many other investors, "it's all in the numbers". So here is a table to reference and see where and how much I win. All of these numbers are proportional to the actual numbers. I just rounded to make it easier to demonstrate.
Description - Total Amount - Commission - Net before taxes
Property Purchase price $ 50,000.00
Property Improvements $ 50,000.00
Associated Additional costs $ 15,000.00
My Original sale price $ 165,000.00 $ 9,900.00 $ 155,100.00
My Reduced sale price $ 145,000.00 $ 8,700.00 $ 136,300.00
My Fire sale price $ 135,000.00 $ 8,100.00 $ 126,900.00
Description Monthly PMT 12 months
One year rental lease with 100% POC's $ 850.00 $ 10,200.00
Renter's purchase price $ 145,000.00 $ 4,350.00 $ 140,650.00
Monthly PMT
I Mortgage the property $ 125,000.00 $ 790.00
It's time to make lemonade
I decided to rent and offer 100% POC's (Purchase Option Credits) of the rent towards the purchase of the property at the end of the 12-month lease. At six months into the rental agreement I will start asking the tenant to think about the option and if they will be exercising it. I should note here that I am using a Property Management firm and within two weeks of contacting them they signed up a tenant and had them moved in. That means I have revenue at 4 months after I closed on the property.
Since I purchased the property with cash and funded the rehab I now need to get some working capital for my next project. At the six-month mark I will apply for a mortgage. To keep the cash flow positive I will go for $125k that I will put in my pocket to use for my next investment. Now, I do think that $125k amount covers my TOTAL investment of $115k. I can put the extra $10k aside and use it to make the monthly $790 mortgage payment or use the tenant's monthly rent for that purpose. It's all up to me.
Summary
Let's say the tenant exercises their option to purchase. I will then receive $145k minus the $10.2k Purchase Option Credit, minus the $4.35k commission, minus my mortgage of $125k, which comes out to $5.45k. I will wind up somewhere near $125k plus $6k for a total sales price of $131k. Now for the fun of applying depreciation, revenue, taxes and such. So, here you have just one "real" example of what will most likely occur for me. I hope they decide not to purchase as the house will most likely sell come early 2010 and I would expect somewhere between $155k - $195k.
From my point of view this lemonade sure tastes good to this person.
Good luck on your next investment.
Pete Milano is a real estate investor, rehabber, renovations and ...
By: Pete Milano
Before I get into the story here are a few things that can help you keep from failing.
Regardless of your situation the following does apply. Did you keep a running up-to-date record of all costs associated with your flip? If not, either get on the ball or get out of the business. You will FAIL!!!
Purchases
When it comes to tracking expenditures I'll give you the best piece of advise to get you on the right track. A credit card purchase should have either the "flip" items or not. Never mix for the same purchase on a CC. Get an online account at the banks where you have credit cards and use the download transactions option. You will now have the exact amount of each purchase and the vendor. For stores like LOWES they will have the store # listed too. You can open the downloaded file with your spreadsheet software.
The Story
I purchased the foreclosure well below market, fixed it up doing all the "right" things and at way below the going rates and costs. I contacted a knowledgeable broker who was recommended to me by my mentor. The broker and I sat down and reviewed our findings of area comps. Since the nearby homes are all different with none to compare to we decided to use "price per square foot" of the home sales to determine an asking price. Then I listed the house for sale at a great price (for this house). The listing company is a major brand name nationwide real estate firm.
Before I go any further let me tell you about the property. Great curb appeal. The lot is considered a "double lot". Very large size (just under 10,000 sqft) with plenty of room for anything one might think of doing with it. This property is a corner lot, with one large shade tree, new porch, solid foundation, and fairly recent aluminum siding. That's just to name a few of the positive things.
So the property gets listed and we have one showing the first weekend. Unfortunately, since the showing we have not realized any bites or interest. A week or so passes and now it's time to think this over. Taking into consideration the expected financial situation of the profiled buyer I lowered the price and I offered to pick up $5,000 of their closing costs. Granted there are many houses in the area that are for sale but they are either in a need of rehabbing or priced $30k+ above my price. So, another week or so passes without any activity. It is now time to roll up my sleeves and get creative so I prepared and sent out individual packets using high quality paper, colored picture of the property and an offer letter to every Church in the zip code (over 40 mailings). The letter presented a very generous donation offer to the church (1% of the sale price) if anyone from the church or referred by the church purchased the house. Still no bites! What gives?
Now I'm getting serious about the matter at hand. It is no longer a pricing question for me. Of course I want to find out if the price is too high but maybe it is that people are not looking to purchase a house at any price? First thing is I talk with my broker and he just happened to have spoken with another broker who focuses selling and buying homes in my area. I tell my broker to call the other broker and offer the house during the current week at a ridiculously low price that is way below value and even a steal for another investor. Mind you, this house is picture perfect and almost all new inside too. New kitchen, plumbing, bathrooms, 2-zone HVAC, electrical, washer/dryer, prepaid 3 year security system, and more. Calls are made by my broker and still no bites. But just wait a minute. Didn't I just say "way below value and a steal for an investor"? I'm an investor, ain't I? Like Da!
It's time for the Indian story
Like the Indian who stayed up all night to see where the Sun came from. It finally DAWNED on him.
No thanks there will not be any extra helping of Stupid at breakfast for this guy
And, to think I was almost going to sell the house at any price! I was going to NET $126,900.00 at the "fire sale" price. Yes, I would be making a nice profit for a flip that took me just 7 weeks. But, just wait till you see how the numbers work out for me. I've used realistic and representative dollar (I rounded) values so we all can see how this works. First, I would like to add a kind word here for my mentor. As my mentor said to me some time ago, "the way to get rich in real estate is to never sell, only buy". Yipes! He was right.
As you too will read from many other investors, "it's all in the numbers". So here is a table to reference and see where and how much I win. All of these numbers are proportional to the actual numbers. I just rounded to make it easier to demonstrate.
Description - Total Amount - Commission - Net before taxes
Property Purchase price $ 50,000.00
Property Improvements $ 50,000.00
Associated Additional costs $ 15,000.00
My Original sale price $ 165,000.00 $ 9,900.00 $ 155,100.00
My Reduced sale price $ 145,000.00 $ 8,700.00 $ 136,300.00
My Fire sale price $ 135,000.00 $ 8,100.00 $ 126,900.00
Description Monthly PMT 12 months
One year rental lease with 100% POC's $ 850.00 $ 10,200.00
Renter's purchase price $ 145,000.00 $ 4,350.00 $ 140,650.00
Monthly PMT
I Mortgage the property $ 125,000.00 $ 790.00
It's time to make lemonade
I decided to rent and offer 100% POC's (Purchase Option Credits) of the rent towards the purchase of the property at the end of the 12-month lease. At six months into the rental agreement I will start asking the tenant to think about the option and if they will be exercising it. I should note here that I am using a Property Management firm and within two weeks of contacting them they signed up a tenant and had them moved in. That means I have revenue at 4 months after I closed on the property.
Since I purchased the property with cash and funded the rehab I now need to get some working capital for my next project. At the six-month mark I will apply for a mortgage. To keep the cash flow positive I will go for $125k that I will put in my pocket to use for my next investment. Now, I do think that $125k amount covers my TOTAL investment of $115k. I can put the extra $10k aside and use it to make the monthly $790 mortgage payment or use the tenant's monthly rent for that purpose. It's all up to me.
Summary
Let's say the tenant exercises their option to purchase. I will then receive $145k minus the $10.2k Purchase Option Credit, minus the $4.35k commission, minus my mortgage of $125k, which comes out to $5.45k. I will wind up somewhere near $125k plus $6k for a total sales price of $131k. Now for the fun of applying depreciation, revenue, taxes and such. So, here you have just one "real" example of what will most likely occur for me. I hope they decide not to purchase as the house will most likely sell come early 2010 and I would expect somewhere between $155k - $195k.
From my point of view this lemonade sure tastes good to this person.
Good luck on your next investment.
Pete Milano is a real estate investor, rehabber, renovations and ...
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Monday, June 22, 2009
Time Management For The Real Estate Investor
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By: Dennis Henson
Time is important!!
Whether you are the world’s richest person or broke and out of work—time is your most valuable asset. By eating right, exercising and driving carefully, you might increase your time on earth by a few years, but only a few. So in order to achieve the things you want to achieve in life, it is important that you manage the time you have wisely.
The foundation of a time management program is daily planning.
Over 30 years ago, at the beginning of my business career, I read books and listened to many tapes on how to be better at sales, motivation, negotiating, etc. On one of those tapes I heard a story that has had a great positive impact on my life. Within that story was a time management technique that impressed me so much that I immediately adopted it for my own use and have continued to use it to my advantage to this day. It’s called…
“The TWENTY FIVE THOUSAND DOLLAR Idea”
The story took place around the turn of the last century—about 1900.
At that time the..
Average yearly income.........................................$703
DOW Average.......................................................$49
New Home (median price)..................................$2,200
New Car (average cost).....................................$1,157
Milk (quart)............................................................7¢
Bread (loaf)............................................................4¢
Steak (pound).......................................................15¢
Stamp...................................................................2¢
Around 1905, Charles Schwab was President of the then fledgling Bethlehem Steel Company. The small steel company was struggling due to its inefficiency and poor sales.
Mr. Schwab was of course a very busy man and had little time to waste with sales people. One day Mr. Ivy Lee (a business consultant) made a call on the company and asked if he might have a few minutes of Mr. Schwab’s time. He was met with reluctance but persisted and was granted a short interview with the busy business executive.
“Ok” Mr. Schwab said “What do you have in mind?” The optimistic Mr. Lee told Schwab that he would allow him to spend only fifteen minutes with him and each of his managers he (Lee) could increase the efficiency of his entire company and that Schwab and his managers would learn to “manage better."
The indignant Schwab said, "I'm not managing as well now as I know how? What we need around here is not more "knowing" but more doing, not knowledge but action! If you can give us something to pep us up to do the things we ALREADY KNOW we ought to do, I'll gladly pay you anything you ask."
“By the way, what do you propose to charge me for your services?" asked Schwab. Mr. Lee replied, "Nothing, unless it works. I will provide the service and in three months you can send me a check for whatever you feel it was worth to you." Mr. Schwab, thinking he had little to lose, shook Lee’s hand and the deal was made.
Lee indeed spent only about fifteen minutes with Schwab and each of his executives. At each meeting Lee asked each manager to do the following:
At the end of each day they were to:
• Write down the six most important things for the next day.
• Mark the most important item with a number one the second most important with a two and so on until all were marked.
• First thing the next morning, begin working on the task marked number one and upon completing that task, check off the completed item and immediately start on the next number until all the items were completed.
Only a few weeks passed when Lee received a letter from the Bethlehem Steel Company. Inside the envelope, Lee found a check in the amount of $25,000.00 and a note from Schwab saying the lesson was the most profitable from a money standpoint he had ever learned.
Do you think that possibly efficiency and sales had increased at Bethlehem Steel? In the five years that followed, Schwab turned the unknown Bethlehem Steel Company into the largest independent steel producer in the world and Schwab became a millionaire a hundred times over. Charles Schwab became the best known steel man alive at that time.
Wow, was I impressed when I first heard this story. I thought if Charles Schwab, one of the smartest businessmen of his day, was willing to pay so much money for this advice then why shouldn’t I use it also and I’m in good company.
When I was doing time management research in the early 1990’s and living in Carrollton, Texas, I was searching for the "$25,000.00 Idea" story but was having a difficult time finding it. At that time the internet was not available to me but a friend told me that Mary Kay Ash often told that story in her speeches. The Mary Kay Company was just a few miles from my apartment and I passed by it every day going into Dallas. So I picked up the phone and called Mary Kay’s office. I did not get to speak to Mary Kay but I did get to explain my problem to her assistant.
Mary Kay was kind enough to fax me a copy of her notes about "The $25,000.00 Idea". Years later in her book “You Can Have It All” Mary Kay referenced the story and stated the following:
"I decided I would follow it, too. Each night, I put together my list for the following day. If I don't get something on my list accomplished, it goes on the next day's list. I put the hardest or most unappealing task at the top of the list. This way, I tackle the most difficult item first, and once it's out of the way, I feel my day is off to a good start." Not only did Mary Kay use this time management system but she encouraged her thousands of sales people to put it to use also.
One final note
Dr. Robert Schuler had a simpler version of time management that simply says… "Ask yourself what is the most important thing you need to accomplish, and what are you doing about it today?"
For more articles on real estate investor training and to sign up for free reports, articles and e-books please visit my website at http://www.dennisjhenson.com. Also visit http://www.turbo-bidder.com for great real estate investor tools. Good luck with your real estate investing. Dennis Henson
By: Dennis Henson
Time is important!!
Whether you are the world’s richest person or broke and out of work—time is your most valuable asset. By eating right, exercising and driving carefully, you might increase your time on earth by a few years, but only a few. So in order to achieve the things you want to achieve in life, it is important that you manage the time you have wisely.
The foundation of a time management program is daily planning.
Over 30 years ago, at the beginning of my business career, I read books and listened to many tapes on how to be better at sales, motivation, negotiating, etc. On one of those tapes I heard a story that has had a great positive impact on my life. Within that story was a time management technique that impressed me so much that I immediately adopted it for my own use and have continued to use it to my advantage to this day. It’s called…
“The TWENTY FIVE THOUSAND DOLLAR Idea”
The story took place around the turn of the last century—about 1900.
At that time the..
Average yearly income.........................................$703
DOW Average.......................................................$49
New Home (median price)..................................$2,200
New Car (average cost).....................................$1,157
Milk (quart)............................................................7¢
Bread (loaf)............................................................4¢
Steak (pound).......................................................15¢
Stamp...................................................................2¢
Around 1905, Charles Schwab was President of the then fledgling Bethlehem Steel Company. The small steel company was struggling due to its inefficiency and poor sales.
Mr. Schwab was of course a very busy man and had little time to waste with sales people. One day Mr. Ivy Lee (a business consultant) made a call on the company and asked if he might have a few minutes of Mr. Schwab’s time. He was met with reluctance but persisted and was granted a short interview with the busy business executive.
“Ok” Mr. Schwab said “What do you have in mind?” The optimistic Mr. Lee told Schwab that he would allow him to spend only fifteen minutes with him and each of his managers he (Lee) could increase the efficiency of his entire company and that Schwab and his managers would learn to “manage better."
The indignant Schwab said, "I'm not managing as well now as I know how? What we need around here is not more "knowing" but more doing, not knowledge but action! If you can give us something to pep us up to do the things we ALREADY KNOW we ought to do, I'll gladly pay you anything you ask."
“By the way, what do you propose to charge me for your services?" asked Schwab. Mr. Lee replied, "Nothing, unless it works. I will provide the service and in three months you can send me a check for whatever you feel it was worth to you." Mr. Schwab, thinking he had little to lose, shook Lee’s hand and the deal was made.
Lee indeed spent only about fifteen minutes with Schwab and each of his executives. At each meeting Lee asked each manager to do the following:
At the end of each day they were to:
• Write down the six most important things for the next day.
• Mark the most important item with a number one the second most important with a two and so on until all were marked.
• First thing the next morning, begin working on the task marked number one and upon completing that task, check off the completed item and immediately start on the next number until all the items were completed.
Only a few weeks passed when Lee received a letter from the Bethlehem Steel Company. Inside the envelope, Lee found a check in the amount of $25,000.00 and a note from Schwab saying the lesson was the most profitable from a money standpoint he had ever learned.
Do you think that possibly efficiency and sales had increased at Bethlehem Steel? In the five years that followed, Schwab turned the unknown Bethlehem Steel Company into the largest independent steel producer in the world and Schwab became a millionaire a hundred times over. Charles Schwab became the best known steel man alive at that time.
Wow, was I impressed when I first heard this story. I thought if Charles Schwab, one of the smartest businessmen of his day, was willing to pay so much money for this advice then why shouldn’t I use it also and I’m in good company.
When I was doing time management research in the early 1990’s and living in Carrollton, Texas, I was searching for the "$25,000.00 Idea" story but was having a difficult time finding it. At that time the internet was not available to me but a friend told me that Mary Kay Ash often told that story in her speeches. The Mary Kay Company was just a few miles from my apartment and I passed by it every day going into Dallas. So I picked up the phone and called Mary Kay’s office. I did not get to speak to Mary Kay but I did get to explain my problem to her assistant.
Mary Kay was kind enough to fax me a copy of her notes about "The $25,000.00 Idea". Years later in her book “You Can Have It All” Mary Kay referenced the story and stated the following:
"I decided I would follow it, too. Each night, I put together my list for the following day. If I don't get something on my list accomplished, it goes on the next day's list. I put the hardest or most unappealing task at the top of the list. This way, I tackle the most difficult item first, and once it's out of the way, I feel my day is off to a good start." Not only did Mary Kay use this time management system but she encouraged her thousands of sales people to put it to use also.
One final note
Dr. Robert Schuler had a simpler version of time management that simply says… "Ask yourself what is the most important thing you need to accomplish, and what are you doing about it today?"
For more articles on real estate investor training and to sign up for free reports, articles and e-books please visit my website at http://www.dennisjhenson.com. Also visit http://www.turbo-bidder.com for great real estate investor tools. Good luck with your real estate investing. Dennis Henson
Sign up to receive a list of real estate for sale.
Bookmark this page:
New Video: Short Sale Package: Authorization to Release Information
Thank you for visiting the official blog of TheRealEstateDealer.com. If you are new here, you may want to subscribe to our RSS feed by clicking the link in the upper right-hand corner of this page that says, "Subscribe to this Blog". Thanks for visiting us!
Check out our new video on our YouTube channel. The video is about the Authorization to Release Information. If you are doing a short sale, loan modification, loss mitigation, subject to, or any other type of real estate transaction that requires you to talk with the seller's lender, you will need this document. Richard will show you what it is, how to use it, and how you can get it for FREE.
Check out our new video on our YouTube channel. The video is about the Authorization to Release Information. If you are doing a short sale, loan modification, loss mitigation, subject to, or any other type of real estate transaction that requires you to talk with the seller's lender, you will need this document. Richard will show you what it is, how to use it, and how you can get it for FREE.
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Monday, June 15, 2009
Ultimate No Money No Credit Strategy Subject To...
Thank you for visiting the official blog of TheRealEstateDealer.com. If you are new here, you may want to subscribe to our RSS feed by clicking the link in the upper right-hand corner of this page that says, "Subscribe to this Blog". Thanks for visiting us!
By: Tom Bukacek
Regardless of your experience level or finances, the best type of real estate investment is the type where you invest as little of your own capital and risk as little of your own credit as possible. One of the best strategies out there that meets these criterions is known as 'subject to'.
Every purchase agreement has a subject to clause. A ‘subject to’ offer simply means that the buyer is willing to purchase a piece of property ‘subject to’ some specific circumstance. Usually that circumstance will be subject to an inspection, or subject to new mortgage or something of the like.
But for the sake of this article, the use of the term ‘subject to’ is in relation to purchasing a property "subject to the sellers existing mortgage remaining in place.” This phrase means that at closing, the property is titled in the buyer’s name, but the loan is still in the seller’s name. Therefore, you are buying the property ‘subject to’ the sellers existing mortgage payments.
This statement means that you are not assuming the loan. The terms you create with the seller are between the two of you as long as you follow to the letter the terms set up when the loan was conceived.
Why on Earth would someone just give you the deed to his or her home? Many motivated sellers are willing to trade EQUITY for Peace of Mind. If someone is finically strapped and doesn’t want a foreclosure on their record, or their job is being relocated and they don’t wish to be landlords from afar, or they are going through some other personal hardship, they may be willing to sell their home as quickly as possible in whatever way possible and as low a price as possible in exchange for the relief of not being responsible for the debt any longer.
For example, I recently purchased a property ‘subject to’ from a gentleman in Pflugerville, TX, for $126,000. The property value was $145,000. The house was less than 2 years old and was in immaculate condition. Why did he sell to me subject to? Because his job was transferring him immediately to Georgia. He did not feel comfortable being a landlord from afar. He also felt (accurately) that to sell his house quickly, he’d have to drop the price. After closing costs and fees, he’d probably be upside down. This method of selling his house to me ‘subject to’ the existing financing remaining in place achieved his goals of ridding himself of the property quickly without coming out of pocket.
Purchasing their house ‘subject to’ can provide the motivated seller with instant debt relief and help them out of their situation immediately.
Once you acquire the property in such a manner, what exit strategy should you use? The best strategy in this situation is to find a buyer and finance the transaction. You, as the investor, now become the BANK, and like a bank, you create multiple money making opportunities for your business.
How does owner financing work? Suppose you come across a family that has cash, a FICO score in the mid 600’s, and has been at their place of employment for 1 year. Can this family get conventional financing in this current market? No. Would YOU be willing to seller finance this property? Yes. So with this strategy, you can help a family who cannot purchase a home using traditional methods. Plus, your owner financing fee that you will charge them will be less than typical closing costs.
How do you as the owner of the property make money when owner financing? There are four ways:
1- Make money with the owner financing fee. Typically, as the owner, you can charge between 4-7%. This fee is non-refundable.
2- Make money with the monthly spread. When you take over a mortgage with a 5.25% interest rate, you are not going to charge a 5.25% interest rate to you new buyer. Rather, you will probably mark up the rate to 8-12%. On average, you will want to make a minimum monthly profit of $200.
3- Make money when you sell the property. If you purchased ‘subject to’ and the loan amount was $120,000 and then you sold for $150,000, when the buyer refinances the mortgage with another bank 2-3 years later, you will profit the difference.
4- Tax benefits such as depreciation and interest deductions.
So as you can see, purchasing subject to is a ‘Win-Win-Win’ for all parties involved. It is a ‘Win’ for the motivated seller because they have peace of mind. It is a ‘Win’ for the buyer because they can now move into their dream house. And this strategy is a ‘Win’ for the investor because they add a profitable transaction to their portfolio without using their own money or credit!
With Subject to, are you assuming the loan? NO. When a property owner sells his home ‘subject to’ the existing mortgage, the buyer must make the payments on the mortgage or get foreclosed on, like a traditional mortgage. However, since the buyer is not legally obligated to the bank to make payments, the foreclosure will not have a negative impact on the buyer's credit where it will have an impact on the seller’s credit.
Does this mean that the buyer has no pressure to make payments? Absolutely, unequivocally wrong! First off, if you purchase the property and sell it correctly, and manage each property as its own business entity, then you will never have any reason to miss a payment. But even more than the business reason, the investor has a moral obligation to both the seller he purchased from as well as the buyer to whom the property was sold to make those payments. Your word is the most important thing you have. Keep it.
Finally, the most common question asked by the investors is "What about the due on sale clause?" This one concern often times keeps numerous investors from purchasing properties using the ‘subject to’ method. So what does that due on sale clause actually say?
Typical due-on-sale language states that, “the Lender may, at its option, declare immediately due and payable all sums secured by the Mortgage upon the sale or transfer, without the Lender’s prior written consent, of all or any part of the Real Property, or any interest in the Real Property.”
First and foremost, people say that due to this clause, performing a ‘subject to’ is illegal. The due on sale clause is a clause in a contract. This is not a government statute! If the lender chooses to execute this clause, you will not go to jail. There is nothing illegal about purchasing a property ‘subject to’.
Second, the word that stands out is the word may. For a rule to be absolute, the language must be definitive. The due on sale using the word ‘may’ means that this rule is subjective and not absolute.
A reading of the language shows that the term, ‘due-on-sale’ is misleading. In fact, the mortgage may be called in if there is any transfer of any interest in the real estate, and not just a sale of the property.
For example, it is possible that even a long term Lease will allow the Lender to accelerate their mortgage, especially if the Lease contains an option to purchase. But any Lease that contains an option to purchase will be sufficient to call in the loan if it contains an option to purchase the property, regardless of the length of the Lease. Have you ever heard of a lender calling a note due because the owner was renting or leasing the property? Of course not. The same scenario holds true for purchasing properties ‘subject to’.
In reality, very few due on sales clauses are ever called in. Between my own deals and those of the people with whom I work, I have not heard of any instance out of over 600 transactions where the due on sale clause was invoked.
Why? Understand that the job of a lender is to collect payments. They loan out money at a higher interest rate then they are paying and create their cash flow from the difference on that spread. Why stop this profitable process?
Banks are not motivated to ever take a performing asset and turn it into a non performing asset. When an asset is performing, they are allowed to lend 9 times its value and collect interest on that amount. When the asset is not performing, they cannot loan out eight times the amount loaned.
Example. Let’s say you purchase a property ‘subject to’ the existing finance staying in place. The loan amount is $200,000. As long as the asset is performing, the bank can loan and collect interest on $1,800,000. Now, if they decide to execute the due on sales clause, then the bank would not only stop receiving money on that loan, but they would put it into the ‘bad debt’ category and not be able to loan out $1,600,000 until the bad debt is resolved.
As you can see, there is little motivation for the bank to ever evoke the due on sales clause.
In conclusion, purchasing homes ‘subject to’ is a creative, quick, low risk, and financially rewarding way to add to your real estate investing portfolio. Under current Fannie Mae guidelines, an individual may own up to 10 homes before being considered overleveraged. With this strategy, you may own as many homes as you can buy. I know and work with a gentleman in Austin, TX, who currently owns more that 90 properties, each cash flowing over $300/month. Would this passive cash flow change your life?
The ‘subject to’ method of buying homes allows the investor to achieve financial freedom with little risk and great rewards. It takes little money to get started buying homes 'Subject To' and, is quicker and easier to sell a home when the banks are not involved.
ABOUT THE AUTHOR: Tom Bukacek is a real estate investor with properties in both Arizona and Austin, TX. For more information on how to get started with Real Estate Investing as a business, please go to http://www.austinmillionaireblueprint.com. For more information on his real estate website, go to http://www.endurablesolutions.com.
By: Tom Bukacek
Regardless of your experience level or finances, the best type of real estate investment is the type where you invest as little of your own capital and risk as little of your own credit as possible. One of the best strategies out there that meets these criterions is known as 'subject to'.
Every purchase agreement has a subject to clause. A ‘subject to’ offer simply means that the buyer is willing to purchase a piece of property ‘subject to’ some specific circumstance. Usually that circumstance will be subject to an inspection, or subject to new mortgage or something of the like.
But for the sake of this article, the use of the term ‘subject to’ is in relation to purchasing a property "subject to the sellers existing mortgage remaining in place.” This phrase means that at closing, the property is titled in the buyer’s name, but the loan is still in the seller’s name. Therefore, you are buying the property ‘subject to’ the sellers existing mortgage payments.
This statement means that you are not assuming the loan. The terms you create with the seller are between the two of you as long as you follow to the letter the terms set up when the loan was conceived.
Why on Earth would someone just give you the deed to his or her home? Many motivated sellers are willing to trade EQUITY for Peace of Mind. If someone is finically strapped and doesn’t want a foreclosure on their record, or their job is being relocated and they don’t wish to be landlords from afar, or they are going through some other personal hardship, they may be willing to sell their home as quickly as possible in whatever way possible and as low a price as possible in exchange for the relief of not being responsible for the debt any longer.
For example, I recently purchased a property ‘subject to’ from a gentleman in Pflugerville, TX, for $126,000. The property value was $145,000. The house was less than 2 years old and was in immaculate condition. Why did he sell to me subject to? Because his job was transferring him immediately to Georgia. He did not feel comfortable being a landlord from afar. He also felt (accurately) that to sell his house quickly, he’d have to drop the price. After closing costs and fees, he’d probably be upside down. This method of selling his house to me ‘subject to’ the existing financing remaining in place achieved his goals of ridding himself of the property quickly without coming out of pocket.
Purchasing their house ‘subject to’ can provide the motivated seller with instant debt relief and help them out of their situation immediately.
Once you acquire the property in such a manner, what exit strategy should you use? The best strategy in this situation is to find a buyer and finance the transaction. You, as the investor, now become the BANK, and like a bank, you create multiple money making opportunities for your business.
How does owner financing work? Suppose you come across a family that has cash, a FICO score in the mid 600’s, and has been at their place of employment for 1 year. Can this family get conventional financing in this current market? No. Would YOU be willing to seller finance this property? Yes. So with this strategy, you can help a family who cannot purchase a home using traditional methods. Plus, your owner financing fee that you will charge them will be less than typical closing costs.
How do you as the owner of the property make money when owner financing? There are four ways:
1- Make money with the owner financing fee. Typically, as the owner, you can charge between 4-7%. This fee is non-refundable.
2- Make money with the monthly spread. When you take over a mortgage with a 5.25% interest rate, you are not going to charge a 5.25% interest rate to you new buyer. Rather, you will probably mark up the rate to 8-12%. On average, you will want to make a minimum monthly profit of $200.
3- Make money when you sell the property. If you purchased ‘subject to’ and the loan amount was $120,000 and then you sold for $150,000, when the buyer refinances the mortgage with another bank 2-3 years later, you will profit the difference.
4- Tax benefits such as depreciation and interest deductions.
So as you can see, purchasing subject to is a ‘Win-Win-Win’ for all parties involved. It is a ‘Win’ for the motivated seller because they have peace of mind. It is a ‘Win’ for the buyer because they can now move into their dream house. And this strategy is a ‘Win’ for the investor because they add a profitable transaction to their portfolio without using their own money or credit!
With Subject to, are you assuming the loan? NO. When a property owner sells his home ‘subject to’ the existing mortgage, the buyer must make the payments on the mortgage or get foreclosed on, like a traditional mortgage. However, since the buyer is not legally obligated to the bank to make payments, the foreclosure will not have a negative impact on the buyer's credit where it will have an impact on the seller’s credit.
Does this mean that the buyer has no pressure to make payments? Absolutely, unequivocally wrong! First off, if you purchase the property and sell it correctly, and manage each property as its own business entity, then you will never have any reason to miss a payment. But even more than the business reason, the investor has a moral obligation to both the seller he purchased from as well as the buyer to whom the property was sold to make those payments. Your word is the most important thing you have. Keep it.
Finally, the most common question asked by the investors is "What about the due on sale clause?" This one concern often times keeps numerous investors from purchasing properties using the ‘subject to’ method. So what does that due on sale clause actually say?
Typical due-on-sale language states that, “the Lender may, at its option, declare immediately due and payable all sums secured by the Mortgage upon the sale or transfer, without the Lender’s prior written consent, of all or any part of the Real Property, or any interest in the Real Property.”
First and foremost, people say that due to this clause, performing a ‘subject to’ is illegal. The due on sale clause is a clause in a contract. This is not a government statute! If the lender chooses to execute this clause, you will not go to jail. There is nothing illegal about purchasing a property ‘subject to’.
Second, the word that stands out is the word may. For a rule to be absolute, the language must be definitive. The due on sale using the word ‘may’ means that this rule is subjective and not absolute.
A reading of the language shows that the term, ‘due-on-sale’ is misleading. In fact, the mortgage may be called in if there is any transfer of any interest in the real estate, and not just a sale of the property.
For example, it is possible that even a long term Lease will allow the Lender to accelerate their mortgage, especially if the Lease contains an option to purchase. But any Lease that contains an option to purchase will be sufficient to call in the loan if it contains an option to purchase the property, regardless of the length of the Lease. Have you ever heard of a lender calling a note due because the owner was renting or leasing the property? Of course not. The same scenario holds true for purchasing properties ‘subject to’.
In reality, very few due on sales clauses are ever called in. Between my own deals and those of the people with whom I work, I have not heard of any instance out of over 600 transactions where the due on sale clause was invoked.
Why? Understand that the job of a lender is to collect payments. They loan out money at a higher interest rate then they are paying and create their cash flow from the difference on that spread. Why stop this profitable process?
Banks are not motivated to ever take a performing asset and turn it into a non performing asset. When an asset is performing, they are allowed to lend 9 times its value and collect interest on that amount. When the asset is not performing, they cannot loan out eight times the amount loaned.
Example. Let’s say you purchase a property ‘subject to’ the existing finance staying in place. The loan amount is $200,000. As long as the asset is performing, the bank can loan and collect interest on $1,800,000. Now, if they decide to execute the due on sales clause, then the bank would not only stop receiving money on that loan, but they would put it into the ‘bad debt’ category and not be able to loan out $1,600,000 until the bad debt is resolved.
As you can see, there is little motivation for the bank to ever evoke the due on sales clause.
In conclusion, purchasing homes ‘subject to’ is a creative, quick, low risk, and financially rewarding way to add to your real estate investing portfolio. Under current Fannie Mae guidelines, an individual may own up to 10 homes before being considered overleveraged. With this strategy, you may own as many homes as you can buy. I know and work with a gentleman in Austin, TX, who currently owns more that 90 properties, each cash flowing over $300/month. Would this passive cash flow change your life?
The ‘subject to’ method of buying homes allows the investor to achieve financial freedom with little risk and great rewards. It takes little money to get started buying homes 'Subject To' and, is quicker and easier to sell a home when the banks are not involved.
ABOUT THE AUTHOR: Tom Bukacek is a real estate investor with properties in both Arizona and Austin, TX. For more information on how to get started with Real Estate Investing as a business, please go to http://www.austinmillionaireblueprint.com. For more information on his real estate website, go to http://www.endurablesolutions.com.
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Saturday, June 13, 2009
TheRealEstateDealer.com Participates in the 16th Annual Chicago Cares Serve-a-thon
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Members of the TheRealEstateDealer.com team took time out of their busy schedule to give back to the community.
TheRealEstateDealer.com's team gave a helping hand when they participated in the 16th Annual Chicago Cares Serve-a-thon. According to the Chicago Cares website:
"On the second Saturday of every June, thousands of Chicago Cares volunteers create positive and inspiring learning environments for Chicago's children at the annual Chicago Cares Serve-a-thon - the city's largest day of service. At schools throughout the city, volunteers paint bright murals, organize libraries, brighten classrooms and hallways, create line games on playgrounds to encourage play and activity, and beautify school grounds with landscaping and planter benches. Children and community members are proud of their schools and volunteers see an immediate change in their community."
A group including the TheRealEstateDealer.com team went out to the Anthony Annex of the Burnham/Anthony Mathematics and Science Academy on the southeast side of Chicago. They helped to paint several classrooms and landscape. The group put in six hours of charity work.
The event was particularly gratifying to one of the team members, Richard Woodfork. Richard said, "I am always willing to give back in any way I can. This was a no-brainer for me because I went to kindergarten here. I remember 33 years ago sitting in this very classroom. It brings back memories."
That same day, the management team at TheRealEstateDealer.com proclaimed it will add a link to the website so that visitors can see what the team is doing in the community. Also, links to various charitable organizations will be added so that people can join and give back to their community.
The management team said the addition to the website should be completed during the first week of July, 2009.
If you would like more information about the Chicago Cares program, visit their website.
You can view additional photos from the event at our website.
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Monday, June 8, 2009
The Crucial Steps All New Investors Need To Take
Thank you for visiting the official blog of TheRealEstateDealer.com. If you are new here, you may want to subscribe to our RSS feed by clicking the link in the upper right-hand corner of this page that says, "Subscribe to this Blog". Thanks for visiting us!
By: Jason Hanson
When I’m at networking events I always get multiple people who come up to me and ask me what they should do first. I then inquire if they have any real estate investing experience and determine how “new” they really are. Most of the people I’ve talked to have maybe read a book or two or purchased a course and that’s about it.
So, the first thing I tell them is to make sure they really want to get into this business and that they’re not just looking to get-rich-quick (you will make a lot of money in this business, but there is a learning process just like any new endeavor).
Of course most people quickly nod their heads and let me know they’re 100% serious and devoted to becoming a successful real estate investor. Next, I tell them they need to get educated (read and learn everything you can about real estate investing). Then I tell them they need to decide on their target market. What zip codes do they plan to invest in? (You want three bedroom, two bathroom properties in decent neighborhoods).
Once they have identified their market, they have to set up the infrastructure for the business. They need to form an LLC, they need to get a phone number, they need to order business cards, they need to create a website.
After a person has their infrastructure set up, the next thing to do is focus on marketing. They need to drive for dollars, send out letters, get on craigslist daily, and put out bandit signs. Once the marketing is started, the fun begins…because then the calls roll in, people learn to evaluate a deal and then eventually close a deal and receive a fat check.
So, after a person has their infrastructure in place they should immediately begin marketing and never stop. Marketing is the lifeblood of this business so please learn to love it because the most successful real estate investors invest the most time in marketing.
Jason R. Hanson is the founder of National Real Estate Investor Month, author of “How to Build a Real Estate Empire” and mentor to students all across America. To get a FREE copy of Jason’s Special Report “The Insider’s Guide To Buying Your First Investment Property in 83 Days or Less!” visit http://www.PrimoCoach.com or call 800-865-1702.
By: Jason Hanson
When I’m at networking events I always get multiple people who come up to me and ask me what they should do first. I then inquire if they have any real estate investing experience and determine how “new” they really are. Most of the people I’ve talked to have maybe read a book or two or purchased a course and that’s about it.
So, the first thing I tell them is to make sure they really want to get into this business and that they’re not just looking to get-rich-quick (you will make a lot of money in this business, but there is a learning process just like any new endeavor).
Of course most people quickly nod their heads and let me know they’re 100% serious and devoted to becoming a successful real estate investor. Next, I tell them they need to get educated (read and learn everything you can about real estate investing). Then I tell them they need to decide on their target market. What zip codes do they plan to invest in? (You want three bedroom, two bathroom properties in decent neighborhoods).
Once they have identified their market, they have to set up the infrastructure for the business. They need to form an LLC, they need to get a phone number, they need to order business cards, they need to create a website.
After a person has their infrastructure set up, the next thing to do is focus on marketing. They need to drive for dollars, send out letters, get on craigslist daily, and put out bandit signs. Once the marketing is started, the fun begins…because then the calls roll in, people learn to evaluate a deal and then eventually close a deal and receive a fat check.
So, after a person has their infrastructure in place they should immediately begin marketing and never stop. Marketing is the lifeblood of this business so please learn to love it because the most successful real estate investors invest the most time in marketing.
Jason R. Hanson is the founder of National Real Estate Investor Month, author of “How to Build a Real Estate Empire” and mentor to students all across America. To get a FREE copy of Jason’s Special Report “The Insider’s Guide To Buying Your First Investment Property in 83 Days or Less!” visit http://www.PrimoCoach.com or call 800-865-1702.
Sign up to receive a list of real estate for sale.
Bookmark this page:
Monday, June 1, 2009
Building Your Buyers List And Finding G.R.E.A.T. Buyers
Thank you for visiting the official blog of TheRealEstateDealer.com. If you are new here, you may want to subscribe to our RSS feed by clicking the link in the upper right-hand corner of this page that says, "Subscribe to this Blog". Thanks for visiting us!
By: Matt Gerchow
Building Your Buyers List and Finding G.R.E.A.T. Buyers
Your goal as a Wholesaler is to find between 6-10 GREAT buyers. Go ahead and put your hand down, I know what your question is already. But Matt, shouldn’t we try to have as many buyers as possible? Shouldn’t we market all of our deals to everyone? The answer to both of these questions is no, but yes at the same time.
Let’s start by dissecting the word GREAT into the individual letters.
G is for Good
A GREAT buyer is good at what they do. They take their business seriously and want to succeed in real estate.
R is for Ready
A GREAT buyer is ready to buy. They will usually have two or three rehab projects going at a time. Paying one additional month of interest is merely a cost of doing business.
E is for Eager
A GREAT buyer is eager to close. They know that you don’t make any money unless you convert properties into dollars. The sooner they can close the sooner they can get their crew started on it.
A is for Accountable
A GREAT buyer is accountable to their word. You don’t have to wonder if they are going to disturb tenants or homeowners, will forget to order an appraisal or forget to show up for a closing.
T is for Timely
A GREAT buyer is timely and on time. If they say they will meet you there at 10am, they are there. If you schedule them to close at noon and your sellers at 2pm, there will not be a problem.
Now that we know what a GREAT buyer is, there are several reasons we want to work with a limited amount of buyers, many of which we learned the hard way.
You need to watch out for people that try to go around you on a deal. This has to be the lowest form of slime-ball that I have ever seen. If you are one of these people, put the book down and ask for your money back now. I really don’t want you becoming successful in wholesaling or any other type of real estate.
A “Go-Around”, happens when someone approaches the seller of the property, usually with your email in hand and attempts to undercut your assignment fee by offering them a few thousand more than you did. This started happening especially after we allowed people to automatically enroll themselves as one of our buyers through our website. The more people you advertise to, the better chance you have of this happening.
Here’s a way to fix this in a jiffy. Send an email blast to your entire group about one of your rentals. If you don’t have any rentals, advertise a friend’s house who works from home. If you don’t have any friends, well, that’s a different book.
Here’s what you do. Blast out a real juicy deal with lots of equity that will be hard for them to pass up. Make very clear instructions, “Do Not Disturb, Owner Living in House.” Instruct your tenant or friend to act like the owner and listen to everyone that stops by and tries to intervene in “the contract.” Pay them $20 for every name, phone number and email that they get. For a hundred bucks you’ll weed out your list in a matter of a week.
In addition, to “go-arounds,” working with many buyers requires you to educate each new buyer on how you do business. When I first got started Paul would hammer home the fact that whatever terms we agreed to on the first deal would set the precedent for every deal that followed with that Investor. This would include; the percentage of the assignment fee up front, who held the escrow and which title company conducted the closing.
Where else can you find GREAT buyers?
The County Courthouse
Try going to your local courthouse auction and see who is buying. Chances are they have a boatload of bank and private finds behind them. Keep in mind I said “buying.” The newbie Investor that has their heart set on Aunt Jenny’s condo that is in foreclosure is not your buyer.
Your Email Inbox
Search your email inbox for the person that originates an email about new properties. You have to be careful because a lot of these people are wholesaling everything and don’t have any real money for a closing.
Hard Money Lenders
Call every hard money lender you know. Ask them who currently has money and is looking for properties. Incentivize them by telling them you will direct the hard money loan back their way. They may not want to release the information but they can find out what they are looking for on your behalf.
Bandit Signs
We used to put signs out all over town that are totally different from the ones that you normally see. Most signs are yelling at you that they want to “’Buy Houses for Cash!” We have signs that say “We Sell Distressed Properties”. They then call a phone number and are instructed to enter their fax number and a list will be sent to them. Here’s a bit of logic to think about. The people we buy properties from usually do not live in the neighborhoods where we buy properties. They are landlords and what we term “don’t-wanters.” Investors are the ones driving these neighborhoods looking for properties that have the usual distressed markings, such as: overgrown grass, busted windows, bad paint, etc.
Website
You take your pick on how you want to gather the information, but the best way I have found so far is to direct them to a website. The reason being is you can squeeze them for information before they see any properties for sale.
Let’s face it in this day and age if someone does not have internet access, they probably are not your Buyer. Even as I write this I am sitting in a hotel room two hours outside of Bogota, Colombia and my high speed access is working just fine.
If you want to include a phone number, I recommend you using Kall8 for 800 numbers as you can reroute them very easily with an internet connection. This way you can easily transfer the calls to an office when your business starts to grow and you won’t have wasted a ton of money on advertising to your cell phone. Trust me on this one, I learned the hard way.
Fax-On-Demand or FaxBack
Another service that is great for building a buyers list is Fax-On-Demand. If you use a service to send them the current list of properties they enter their fax number or “opt-in” and then you are able to send them faxes in the future as well. Although I do not use this service any longer, here is a link where you can see a real example of a faxback. Use your bandit signs to promote this number.
Here are a few sites that offer this service. Corporatefax.com, Globalfax.com and Mast-ent.com are a few of the companies that can provide this service for you. This list is just to get you started. Try and find one where you upload a computer file vs. faxing in your ad copy, the quality will be MUCH better.
Direct mail to high end apartment complexes
These folks are usually on the cusp of buying their own home. They might have moved to a new location temporarily and have now accepted that they are going to be living in this new location and would like to start earning equity every year rather than dumping it into rent. I am a perfect example of this having lived in Seattle, New York, Miami and Bogota. Each time I move I like to rent before deciding on a property to buy.
This strategy is usually applied once you have implemented several other marketing techniques first.
Craigslist.org
Placing ads for investment partners is another great way to build your Investors list. Try something like this:
“Investment company seeks partner for several properties in the [your county] area. We have secured special access to non-listed properties that are direct to seller.
WHAT TO ASK FOR
So what type of information should you collect from a potential buyer? If you have visited several investor sites, you already know what to ask for. If you are like me and are ambitiously lazy, here is the information in concise format.
• Email address
• Company Name
• First and Last Name
• Company Address
• Preferred Phone
• Fax Number
• Type of property they are interested in: Single Family, Multi-Family, Commercial
• Approximately how much capital are they working with?
• Are they interested in loaning money on mortgages?
• What level of Rehab are they comfortable with?
• How many transactions have they completed in their career?
Remember... you only need 6-10 G.R.E.A.T. buyers to have a very successful career as a Real Estate Investor. Finding these 6-10 buyers is the challenge.
If anyone has any additional questions regarding the creation of their buyers list, please feel free to post them on this thread.
Hope this helps,
Matt Gerchow
Currently In S. America for 4-Months...Next Stop, Thailand for 6-Months
www.Real-Estate-Investing.com - Learn to Invest, set your business on auto-pilot and start traveling the world full-time. Your lifestyle could completely change, in a lot less time than you think.
By: Matt Gerchow
Building Your Buyers List and Finding G.R.E.A.T. Buyers
Your goal as a Wholesaler is to find between 6-10 GREAT buyers. Go ahead and put your hand down, I know what your question is already. But Matt, shouldn’t we try to have as many buyers as possible? Shouldn’t we market all of our deals to everyone? The answer to both of these questions is no, but yes at the same time.
Let’s start by dissecting the word GREAT into the individual letters.
G is for Good
A GREAT buyer is good at what they do. They take their business seriously and want to succeed in real estate.
R is for Ready
A GREAT buyer is ready to buy. They will usually have two or three rehab projects going at a time. Paying one additional month of interest is merely a cost of doing business.
E is for Eager
A GREAT buyer is eager to close. They know that you don’t make any money unless you convert properties into dollars. The sooner they can close the sooner they can get their crew started on it.
A is for Accountable
A GREAT buyer is accountable to their word. You don’t have to wonder if they are going to disturb tenants or homeowners, will forget to order an appraisal or forget to show up for a closing.
T is for Timely
A GREAT buyer is timely and on time. If they say they will meet you there at 10am, they are there. If you schedule them to close at noon and your sellers at 2pm, there will not be a problem.
Now that we know what a GREAT buyer is, there are several reasons we want to work with a limited amount of buyers, many of which we learned the hard way.
You need to watch out for people that try to go around you on a deal. This has to be the lowest form of slime-ball that I have ever seen. If you are one of these people, put the book down and ask for your money back now. I really don’t want you becoming successful in wholesaling or any other type of real estate.
A “Go-Around”, happens when someone approaches the seller of the property, usually with your email in hand and attempts to undercut your assignment fee by offering them a few thousand more than you did. This started happening especially after we allowed people to automatically enroll themselves as one of our buyers through our website. The more people you advertise to, the better chance you have of this happening.
Here’s a way to fix this in a jiffy. Send an email blast to your entire group about one of your rentals. If you don’t have any rentals, advertise a friend’s house who works from home. If you don’t have any friends, well, that’s a different book.
Here’s what you do. Blast out a real juicy deal with lots of equity that will be hard for them to pass up. Make very clear instructions, “Do Not Disturb, Owner Living in House.” Instruct your tenant or friend to act like the owner and listen to everyone that stops by and tries to intervene in “the contract.” Pay them $20 for every name, phone number and email that they get. For a hundred bucks you’ll weed out your list in a matter of a week.
In addition, to “go-arounds,” working with many buyers requires you to educate each new buyer on how you do business. When I first got started Paul would hammer home the fact that whatever terms we agreed to on the first deal would set the precedent for every deal that followed with that Investor. This would include; the percentage of the assignment fee up front, who held the escrow and which title company conducted the closing.
Where else can you find GREAT buyers?
The County Courthouse
Try going to your local courthouse auction and see who is buying. Chances are they have a boatload of bank and private finds behind them. Keep in mind I said “buying.” The newbie Investor that has their heart set on Aunt Jenny’s condo that is in foreclosure is not your buyer.
Your Email Inbox
Search your email inbox for the person that originates an email about new properties. You have to be careful because a lot of these people are wholesaling everything and don’t have any real money for a closing.
Hard Money Lenders
Call every hard money lender you know. Ask them who currently has money and is looking for properties. Incentivize them by telling them you will direct the hard money loan back their way. They may not want to release the information but they can find out what they are looking for on your behalf.
Bandit Signs
We used to put signs out all over town that are totally different from the ones that you normally see. Most signs are yelling at you that they want to “’Buy Houses for Cash!” We have signs that say “We Sell Distressed Properties”. They then call a phone number and are instructed to enter their fax number and a list will be sent to them. Here’s a bit of logic to think about. The people we buy properties from usually do not live in the neighborhoods where we buy properties. They are landlords and what we term “don’t-wanters.” Investors are the ones driving these neighborhoods looking for properties that have the usual distressed markings, such as: overgrown grass, busted windows, bad paint, etc.
Website
You take your pick on how you want to gather the information, but the best way I have found so far is to direct them to a website. The reason being is you can squeeze them for information before they see any properties for sale.
Let’s face it in this day and age if someone does not have internet access, they probably are not your Buyer. Even as I write this I am sitting in a hotel room two hours outside of Bogota, Colombia and my high speed access is working just fine.
If you want to include a phone number, I recommend you using Kall8 for 800 numbers as you can reroute them very easily with an internet connection. This way you can easily transfer the calls to an office when your business starts to grow and you won’t have wasted a ton of money on advertising to your cell phone. Trust me on this one, I learned the hard way.
Fax-On-Demand or FaxBack
Another service that is great for building a buyers list is Fax-On-Demand. If you use a service to send them the current list of properties they enter their fax number or “opt-in” and then you are able to send them faxes in the future as well. Although I do not use this service any longer, here is a link where you can see a real example of a faxback. Use your bandit signs to promote this number.
Here are a few sites that offer this service. Corporatefax.com, Globalfax.com and Mast-ent.com are a few of the companies that can provide this service for you. This list is just to get you started. Try and find one where you upload a computer file vs. faxing in your ad copy, the quality will be MUCH better.
Direct mail to high end apartment complexes
These folks are usually on the cusp of buying their own home. They might have moved to a new location temporarily and have now accepted that they are going to be living in this new location and would like to start earning equity every year rather than dumping it into rent. I am a perfect example of this having lived in Seattle, New York, Miami and Bogota. Each time I move I like to rent before deciding on a property to buy.
This strategy is usually applied once you have implemented several other marketing techniques first.
Craigslist.org
Placing ads for investment partners is another great way to build your Investors list. Try something like this:
“Investment company seeks partner for several properties in the [your county] area. We have secured special access to non-listed properties that are direct to seller.
WHAT TO ASK FOR
So what type of information should you collect from a potential buyer? If you have visited several investor sites, you already know what to ask for. If you are like me and are ambitiously lazy, here is the information in concise format.
• Email address
• Company Name
• First and Last Name
• Company Address
• Preferred Phone
• Fax Number
• Type of property they are interested in: Single Family, Multi-Family, Commercial
• Approximately how much capital are they working with?
• Are they interested in loaning money on mortgages?
• What level of Rehab are they comfortable with?
• How many transactions have they completed in their career?
Remember... you only need 6-10 G.R.E.A.T. buyers to have a very successful career as a Real Estate Investor. Finding these 6-10 buyers is the challenge.
If anyone has any additional questions regarding the creation of their buyers list, please feel free to post them on this thread.
Hope this helps,
Matt Gerchow
Currently In S. America for 4-Months...Next Stop, Thailand for 6-Months
www.Real-Estate-Investing.com - Learn to Invest, set your business on auto-pilot and start traveling the world full-time. Your lifestyle could completely change, in a lot less time than you think.
Sign up to receive a list of real estate for sale.
Bookmark this page:
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