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Have You Ever Heard This From A Cash Buyer, ” If The Numbers Make Sense, I’m Interested”
Retirement Account Cash Buyers

Cash Buyers

Most real estate wholesalers will receive the following reply from a cash buyer at least once in their career ” if the numbers make sense, I am interested”.  In fact , Moore times than not cash buyers will offer this reply to a real estate wholesaler to get them off the phone quickly or simply to receive first dibs whammy properties the real estate wholesaler comes across.  The reality is that any cash buyer does have very specific investment criteria that they use to determine if a deal does make sense to stem or not.  Real estate wholesalers should gather the following information from their cash buyers:

  • Where they want to invest? -zip codes, cities, school districts, portions of the city, or even subdivisions
  • What they want to buy? – property type, beds, baths, parking, type of structure, house style, etc.
  • How much are they willing to spend? – aka price range they like to buy in typically
  • How many deals a month are they interested in buying? – if they buy 3 or more houses a month they are pretty heavy hitters and serious cash buyers
  • Which repairs are they not willing to do?
  • How much net profit do they need to see per deal? – it could be a dollar amount, a percent return, cents on the dollar, or even percent of ARV
  • What their exit strategy is? – do they fix and sell, rent, or lease option or seller finance their properties

These are the core questions to get any cash buyer to answer, so you can find, negotiate and pass on deals that make sense for the cash buyer.  Otherwise, you will be wasting a lot of time and effort looking at properties that do not meet the cash buyers criteria.  If this occurs, they will not buy and you will not make any money.  Get the information you need and look for those deals.  It is just another successful business model to apply to real estate investing.

August 9, 2013 / 6 Comments / by / in ,
Even Cash Buyers Should Maintain A Cash Buyers List
Cash Buyers Dream

Cash Buyers Dream

Many seasoned real estate investors also known as cash buyers forget to keep up their cash buyers list.  What do I mean?  Any business at any time will be receiving leads from their marketing that do not fit their business model.  What do they do with this excess?  They should refer it to other businesses that have a different business focus and make some money from those referrals.  It keeps them networking in the business with like minded business associates and it helps out customers get their needs met.  It is a win-win-win.  So, if you are a seasoned real estate investor, it would be in your best interest to always maintain a list of fellow cash buyers who have a different (business model) set of investment criteria than you.  You will be able to recoup more of your marketing dollars than you would if you did not and you get the opportunity to make money from real estate leads that you normally would not have seen any money from.

It is a great way to receive additional real estate leads too, because your colleagues in the industry cannot take down every real estate deal they come across nor would they.  Your fellow colleagues are cash buyers too who have very specific investment criteria that they stick to as well.

One last thought on cash buyers maintaining their own cash buyers list, if you are a landlord for example and you become cash strapped, how will you continue making money in real estate while you are resolving your cash issue?  Most cash buyers, who are landlords, will have to sit on the sideline while they wait for that refinance or to acquire more cash options.  Why do that when you can have a cash buyers list that you continue to pass properties onto and make money that can help you cash flow problem and strengthen your place in the local real estate market as someone who is the go to person for buying a selling of great properties.

by maintaining your own cash buyers list, you are building a successful business model by which to continue to build and grow a very successful real estate investing career.  It has worked for many other industries as a successful business model, why can’t it work for you in the real estate industry.

August 7, 2013 / by / in ,
Part 1: Pass Wholesale Properties To Cash Buyers Faster Using This Wholesaling Technique

If you are a real estate wholesaler, who has a list of cash buyers ready to buy, you need to get your wholesale properties to your cash buyers quickly.  In some cases, you will run into some obstacles such as not being able to assign your contract when the property is owned by the bank or a short sale.  In some cases, you might find that there is not enough money in deal wholesale deal to do a double close in those situations.  What if there is enough money in your wholesale deal, but there is a deed restriction that prohibits you from selling the property in under 90 days for more than 120% of the 1st closing sales price.  In many vases, there is much more profit you could pull from a really well negotiated wholesale deal,so now what do you do?

One alternative wholesaling property approach you might consider is to close with the cash buyer on title with you and then quit claim the property to them after you are paid your wholesaling fee.  What you would need to do is lock up the contract on the property, pinpoint the cash buyer for that wholesale deal, ask title or attorney to modify contract to include money source on buyer field and new deed, then after closing quit claim property over to cash buyer in exchange for cash.

I will go through a few other ways to wholesale properties to your cash buyers list in a follow up post that will be parts 2 and 3  to this post.  Happy wholesaling….it won’t happen for you unless you take action.

July 25, 2013 / 1 Comment / by / in ,
Retirement Account Cash Buyers – The New Breed Of Cash Buyers
Retirement Account Cash Buyers

Retirement Account Cash Buyers

Over the next few months and into the next year or so, you will see more people jumping into the real estate market.  The new breed of cash buyers are retirement account buyers who have decided to direct their funds toward real estate investments.  The problem is that this new group of investors are not seasoned real estate investors who have bought and sold in that market for any period of time.  Most of these retirement account cash buyers will know that they want a particular rate of return or a certain cashflow per month, but they might not have any more investment criteria defined beyond that point.

If you are going to wholesale properties to these newer real estate investors, you will have difficult time identifying what they want to buy, therefore you wont be able to bring them properties that they  can successfully add to their portfolio.  After all, if they make a mistake and lose money, you now have one less real estate investor to buy your properties.  In many cases, real estate wholesalers will have to take time and help this new breed of cash buyer to define their investment criteria.  It will take some time and some patience, but in the future these new cash buyers will be a real estate wholesalers main source of cash buyers in most real estate markets.

I travel nationwide, therefore I see a lot of different real estate markets in any given month.  For instance, in the month of July, I have already been in the Denver, Minneapolis/ST. Paul, Salt Lake City, San Francisco, Inland Empire, Philadelphia, Newark, Central New Jersey real estate markets.  I have seen appreciation in a lot of markets and with that you will see a different breed of cash buyer rise to the top of the real estate food chain as the key buyer.  We are entering that portion of the real estate cycle in most metro real estate markets.  You will find more retirement account cash buyers popping up in the market.  So, if you call a cash buyer and they tell you ” If the numbers make sense, I will buy it”, you might be getting the ultimate blow off from a savvy cash buyer or you might be speaking with a retirement account cash buyer entering the market.  If so, get the retirement account cash buyers desired return and start finding them properties and see what sticks.  In most cases, you will be able to arrive at some solid investment criteria in due time.  Just don’t discredit this new breed of cash buyer, because you will be missing out on many more opportunities to make money wholesaling real estate as the real estate market shifts.  Plus, if they start making a good return in real estate investing, they know other people with retirement accounts that they might be able to refer to you.  In some cases, these people become great sources for private money loans that you can use to acquire homes for your own portfolio.  The possibilities are endless.

July 22, 2013 / by / in , , ,
Which Repairs Do You Make On A Newly Purchased Rental Property?
Rental Property Repairs

Rental Property Repairs

There are many schools of thought on this subject.  In some cases, you are going to have some landlords that will completely gut and remodel the property and then rent it out to tenants.  You have another school of thought that states that you clean it up to liveable condition and then rent it out to a new tenant.  Some will fix up and replace the areas that tend to result in more maintenance calls and help to preserve the rental property and then rent it out.  None of these are wrong, but I do believe there are some general guideline that you should follow when deciding what to repair in your newly acquired rental property.

  • Stop leaks and make sure faucets and drains operable – I want to avoid toilet calls for as long as I can.  I prefer to replace toilets with new equipment to make sure they operate correctly and all leaks are stoppe in each rental.  I make sure all faucets and drains are operating correctly and not leaking.
  • New middle grade appliances – I dont want calls for broken appliances.  I will usually start a new rental off with new middle grade appliance with self cleaning or easy to clean features.  I want low maintenance appliances, so I stay away from smooth surface ovens and stainless steal appliances in my rentals.
  • No moving parts – I will remove anything that could be a hazard, a maintenance call, or easily broken.  I will remove ceiling fans, garbage disposals, and in door ice and water dispensors in refridgerators.  In most cases, you are going to limit the amount of maintenance calls and remove the items that could break more easily than other items.  If the norm is to include these items in your rental in order to get maximum rent amounts or rent the property faster, then I will include them.  However, I will make sure the rent amount will cover the additional maitenance calls I will receive.
  • Protect and Preserve – I will make sure that exterior maintenance is done initially and continues on a semi annual basis to make sure the whole structure is preserved and reduce major repairs.  If the roof needs to be replaced right now, you should do it right now.  If you can hold off a year or two without it resulting in water damage, then I recommend delaying the roof replacement until you need a capital improvement to off set your taxes.  I look at the exterior as the same way.

Besides these items, I will make sure that I clean up those items that are still functional .  I will do this even if the item may not be the most up to date, if it is still functional then we are going to keep it in place.  An example is a bath tub that is from the 60’s that still has some life left in it, eventhough it may not be the same size as modern day tubs.  If the kitchen cabinets are in descent shape, ut they might need to be painted with new hardware, I will do that over complete replacement.  A good rule of thumb is that I will usually spend half of my fix and flip budget estimate for a home I decide to rent.  Remember, the properties that we fix and sell to retail buyers will need more modern touches and updates, where as my rentals will be clean and functional.  If I am going to sell the property to a retail buyer, I will usually remodel the bathroom and kitchen, paint the interior, and install new flooring.  For these types of repairs in my area, we will normally be into our projects for about $15,000 to$25,000.  If I was going to rent this same property out, I would bank on a rehab budget of about $8,000 to $15,000, because I would keep and clean what I could and make sure the rest is functional .  You do need to see your rental properties and their respective repairs through a different set of eyes than you would with your buy fix and sell properties.  If you budget for a buy, fix, and sell type rehab, you will have plenty of room to go either direction with that property.  I always plan for the worst case scenario, so I can preserve my profit

April 26, 2013 / by / in , ,
Cash Buyers Will Most Likely Give You The Following Responses When You Ask Them About The Profit They Need.
Cash Buyers Profit

Cash Buyers Profit

When you are qualifying your cash buyers, you will be gathering their investment criteria.  You will be asking your cash buyers what profit they are looking to make on each deal.  They will respond in one of the following ways:If they are a rehabber, they are a cash buyer who will be looking for a fixer upper property to rehab and resale to a retail buyer.  They might have one of three ways that they will say they need to profit from each property.

  • a percentage of After Repair Value
  • a percentage of After Repair Value minus repairs
  • a net profit dollar range amount

If they are a landlord, they are a cash buyer who will buy the property and hold onto it as a rental property with a tenant who is willing to rent it for a period of time.  They are typically looking for tax benefits and cash flow over time on this property.  They might say that they require the following types of profit.

  • net dollare amount of cashflow per month
  • % return on cash invested

If you can gather this information, you can run the numbers for the wholesale deals you are passing onto them in the correct manner and make sure you have their desired profit built in.  The fact is this, if your deal does not meet their criteria,  they will not buy it.  It is a business decision.  It is not emotional.  Bring the cash buyers what they want and they will buy from you again and again.

 

April 6, 2013 / by / in , ,
Are You Building A Cash Buyers List? Know What To Expect When You Call.

If you are a real estate investor or a real estate wholesaler, you will probably be building a cash buyers list at some point in time in your career.  Do you know what to expect from that conversation?  Do you know what information you need to acquire from that conversation?  I want to help you make sure your conversations are effective and that you are not thrown off by the responses you receive.

The core information you must gather is the following:

  • Where do they want to invest?
  • What do they want to invest in?
  • What price point do they want to buy at?
  • How many are they buying a month?
  • What is their exit strategy?
  • What types of repairs are they not willing to do?
  • How much profit do they want?

You will know what their perfect deals looks like and feels like.  You will know what they will buy.  Anyone who runs their real estate investing business like an actual business will be able to tell you very specific criteria for the properties they typically buy.  If the conversation becomes awkward or seems to not be going anywhere, then you probably are speaking with someone who does not have clearly defined investment criteria or is new to the real estate investment business.  In this case, you need to move on and not waste your time with this person, who will waste your time.

April 4, 2013 / 5 Comments / by / in , ,
Do You Know What To Look For When Evaluating The Gutters & Downspouts on Your Investment Properties?

Gutters and downspouts protect the walls of an investment property from water, which would ordinarily run off the roof. This water can damage the wall surfaces and cause localized erosion at ground level and allow water to go back into the foundation, house, or basement.

The most important function of gutters and downspouts, however, is to help ensure a dry basement or foundation. Regardless of the type of foundation wall, there is always the possibility for water penetration. Therefore, the less water there is in the soil near the foundation, the less likelihood of water penetration into the basement. Gutters should collect all water runoff, and downspouts should discharge the water into proper drains or onto the ground a good distance away from the foundation walls.

Most investment properties have gutters attached to the fascia board at the edge of the eaves. In some of these investment properties, gutters are integral to the design of the eaves. The two most common sizes of gutters are four-inch and five-inch widths. Four-inch gutters are acceptable for controlling the run-off from relatively small roof areas. However, five-inch gutters are preferred because of their additional capacity. Five-inch gutters are also less likely to allow water to overshoot the gutters when the water is draining off a steeply pitched roof. The design and slope of the gutter system is crucial to adequate run off and prevention of water running back into the investment property.

Common Problems With Gutters

  • The most common problem with most gutters is that they leak. Leakage will occur with galvanized gutters as they rust through. Eventually, holes can develop in copper gutters as well. All types of gutters are prone to leakage at the joints. Missing end caps are another common source of leakage. Leakage can cause considerable damage to fascias, soffits and walls below.  Seamless gutters have become more common to limit the amount of leakage that can occur over time on any investment property.
  • Gutters often become loose and require resecuring. This is normally due to improper fastening during original installation or damage caused by ice during winter months.
  •  Gutters and downspouts suffer from mechanical damage due to ladders, tree limbs and the like. Gutters should slope towards downspouts so as not to hold water.
  • Gutters often clog with debris. Sometimes, screens are installed to prevent leaves and twigs from getting into the troughs. These can become loose and fall out, and they also make proper cleaning difficult.

Common Problems with Downspouts

  • Downspouts are sometimes not secured correctly to the fascia. They also tend to split open at the seams (from freezing). The seam is usually on the same side as the wall.
  • Downspouts along driveways or sidewalks are sometimes crimped and cause blockages.
  • Galvanized steel downspouts often rust near grade level or where blockages have occurred
  • On many houses, the number of downspouts is inadequate. As a general rule, a downspout should be provided for every 40 feet of gutters.
  • Downspouts become disconnected from gutters, or get plugged with debris. Special screens are available for the top of downspouts to keep debris out. These screens must be cleaned regularly.
March 20, 2013 / by / in , , ,
What are the different types of roofing material that can be found on a roof of a home?
Roofing Material Types

Roofing Materials

There are a variety of different types of roofing materials that can be used to protect the roof a home.  Some materials are better suited for certain climates over others, such as clay tiles perform and last a lot longer in hot, dry climates than cold, icy climates.  The lifespan for some of these materials is longer than others.  The longer the material will last typically the more expensive the roofing material will cost to purchase and install.  In most cases, the natural roofing materials will last longer and cost more to buy and install.  Here is a list of some of the typical roofing materials you will come across installed on properties you consider buying:Composition shingles – Composition shingles are used on homes all over the country and are one of the most popular roofing materials because of their affordability, durability, and ease of installation. The most common types of composite shingles used today are made from asphalt and fiberglass and have an average lifespan of 15 to 30 years; however, prices and lifespans vary depending on the grade of shingle.

Additionally, they are low-maintenance, easy to repair, and typically offer Class A fire protection. On the downside, composite shingles can blow off during high winds and can be damaged from ice. Also, they do not offer as much insulation as some other materials and are the least eco-friendly of all shingles (especially those made with asphalt).

Recycled synthetic composite shingles – synthetic varieties made with a combination of recycled materials, such as plastic, rubber, fiberglass and wood. Many resemble slate, clay, or cedar shakes and can last as long as 50 years with little upkeep. Synthetic shingles are tolerant of foot traffic, are relatively easy to install, and lightweight.

Also, depending on the style and installation, some can cost nearly as much as premium materials like slate and clay.

Wood shingles and shakes – Wood shingles and shakes are generally made of cedar, redwood, or southern pine. Cedar is the most expensive of the available wood materials, but it is often preferred for its rot and decay resistance. Wood shingles offer some energy benefits as they insulate the attic, and the small openings under the rows allow air to circulate.

One of the disadvantages of wood shingles is many have no fire rating or only a class C, so it’s important to check with your local building codes before choosing this roofing material. That said, there are a few companies providing wood shingles that meet national fire safety standards as they are pressure treated with a fire retardant.

Another negative aspect of a wood roof is it requires a high level of maintenance to keep mold, rot, and insects at bay. When properly maintained quality wood shingles can last 30 to 50 years; however, this can be much shorter if the roof is neglected.

Metal roofing -Metal roofing is able to withstand extreme weather, which makes them well suited to hurricane zones and areas with heavy snow (snow slides off instead of piling up and denting or collapsing the roof). Also, they are fire retardant, need little to no maintenance, and are extremely energy efficient as the metal reflects the sun’s rays and reduces the amount of heat absorbed into the attic. Modern metal roofs come in all styles and colors and some even resemble other materials, such as wood shakes, clay, and shingles.

Similar to wood, metal roofs are more complex to install than composite shingles and require a skilled contractor, but the price of a metal roof is its main drawback. Generally, they cost at least two or three times more than basic composite shingles, and the price can go up even more if you choose copper or specially coated steel. However, with lifespans of 50 to 100 years, they can easily outlast other roof materials and end up saving you money over time.

Slate roofing – Slate is a roofing material that can be laid out in various different patterns. Like metal, it is exceptionally durable and can easily last 50 to 100 years as it is nearly impervious to fire, rot, insects, and demands very little maintenance. Although the colors of slate are limited to what’s found in nature, it comes in a range of greens, grays, and browns.

The major cons of slate are its high price (more than nearly any other material) and its weight (often extra roofing support is necessary). Also, it can break when walked on (makes maintenance a challenge) and it is less suitable for hot climates as the dark color absorbs heat.

Clay and concrete tiles – Clay and concrete are also durable roof materials that have great fire protection and are resistant to rot and insects. Clay tiles are usually lighter in color (ideal for hot weather) and are commonly seen on southwestern, Spanish, and Italian style homes. Alternatively, concrete tiles come in all shapes, colors, and sizes and are often designed to mimic other materials.

Clay and concrete tiles have many of the same advantages of slate, including low maintenance, a distinctive look, and a 50+ year lifespan. However, also like slate, they are delicate and can break when walked on, are heavy (need extra support), and are very expensive.

Flat Roofs- applied to flat or semi-flat residential roofs that have good access and proper drainage. It can be done in asphalt roll, tar & gravel, or rubber membrane, These materials are less expensive than other roofing materials and hold up fairly well when properly applied.

March 15, 2013 / by / in , ,
Find Cash Buyers Using Your Linkedin Account

I have used Linkedin to build my real estate investing and real estate wholesaling business.  It has become an amazing opportunity to network with private money lender sources, hard money lender sources, hedge fund sources, investor friendly real estate agent sources, other cash buyers, real estate wholesalers,  asset managers, and contractors.  I wanted to share some of the techniques I have used to find cash buyers and building your network on LinkedIn.

You must make sure your profile stands out.  You should upload a professional picture and make sure your profile clearly states some of the following:   We buy houses, real estate wholesaler, real estate investor, your business name, cash for houses, etc.  The purpose of this approach is to let people know clearly what you do and why they should connect with you.

You should join a few real estate geared groups on LinkedIn.  The reason why you join these groups is to make yourself visible and connected to a like minded group of people.

In the group, look for members who are actively posting in the discussion section that they are looking or properties to buy or they are responding to others who have properties listed for sale.  Check out their profile and make sure they are someone who is an active investor in our target areas.  We are looking for cash buyers, so we want to build our network to be full of cash buyers who are looking for properties to rehab and sell or investment properties.  Many of the serious cash buyers in your area will be actively posting and responding to discussion threads and readily offering contact information for the poster to get information back to them quickly, even if they are not part of each others network.  It is another great way to gain access to an ever growing and active list of cash buyers on linkedin.

Next, you will reach out to people associated with the group.  The way that you reach out to them should go like this:  Hi, I am a fellow member of “group name here”.  I see that you are involved in real estate.  I would like to learn how we can help each other.  Please accept my network request.  I look forward to working together.

An additional way to build your cash buyers list on linkedin is to post in the group discussions that you have wholesale properties or investment properties for sale in a respective area.  You will have the local cash buyers responding to your post asking for more information.

I have found that linkedin is an amazing source of cash buyers nationwide, if you will build your cash buyers list and network correctly.  If you don’t follow some o the guidelines that I have outlined here, you stand the chance of your account on linkedin being locked down or shut down for abuse and spam.

 

March 1, 2013 / by / in , , ,