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Learn How to Find More Motivated Sellers In Any Real Estate Market

Are you struggling to find wholesale real estate deals that are not on the MLS? Are you getting all your wholesale real estate offers laughed at or just rejected? Does this mean wholesaling of real estate is dead? The correct answer is NO! It is still alive and well, but you need to tap into other sources for motivated sellers than the MLS. The MLS in most markets has a lack of inventory available and a healthy supply of retail buyers. Now is that really a bad thing? Heck no, you have a sellers market. It is the best time to sell a rehabbed property to a retail buyer, but you need to find other sources to find distressed properties with motivated sellers.

Now, how do you find these motivated sellers with distressed properties that are not on the MLS? Here are some of the ways to find motives sellers of homes in any market.

  • Referrals – one of the best sources for home leads come from referrals.  I enlist an army of people in any market to refer properties to me.  It is less work that I have to do and fewer people I have to know.  Many of these people would love to make a few hundred dollars from something they come across on a regular basis, but they didn’t know that it could be worth anything.  You want to target anyone doing deliveries, anyone dealing with a regular client base, any one doing health care, anyone working on anything in the property services industry, and so on. You need to guide this group as what you are looking for and where so you get good quality property leads with suffient information ion about those leads.
  • Probate leads – The heirs of the decessed tend to me motivated sellers with a property that often needs updating and/or repairs.  There are lists you can buy.  You can associate with probate or estate attorneys.  You can associate with fumeral homes and estate planners.  Some courthouses are easier to search than others for locating probate filings.  You can locate these leads in the legal notice or public notice section of your local newspapers.
  • Divorce leads – the attorneys and legal assistants that perform uncontested divorces will be a good reliable leads for motivated sellers.
  • Bankruptcy leads – the attorneys that advertise flat fee bankruptcy filings can be a great lead source for motivated sellers.
  • For sale by owners- you should call on all for sale by owner properties.  You will want to keep track of this lead, since they may not be motivated enough now, but in the future they might be more motivated to sell.
  • For rent signs – you should call on all for rent signs.  If the property remains vacant for too long, the seller becomes more motivated.  If they are absentee owners, they can be even more motivated to sell.
  • Free and clear properties – you can have a title company or attorney do a courthouse search for any of the paid off properties in any given county.  They might look for reconveyances or satisfied mortgages.  Especially, if they are absentee owners.
  • Bandit signs – these signs are usually yellow coroplast signs with a handwritten message on it. You will put these in areas where you want to find properties.  You should write a message such as “We Buy Houses and your phone number”.

These are just a few ways that you can find motivated sellers in any real estate market.  Now, it is Tim to get up and put some of these approaches into effect, so you can keep your real estate wholesaling or real estate rehabbing business competitive, if not beating out your competition.  There are plenty of off market houses out there, you just have to be a little smarter than the average real estate investor.

December 11, 2014 / 2 Comments / by / in , ,
New Law Could Cost Investors Thousands

You may have heard of this thing called FEMA or something about flood insurance rates rising, but do you really know what that means for you and your investment properties? Today, I’m going to tell you what exactly is going on and how you should prepare yourself for the coming blows.

Recently, Congress put into effect changes to the National Flood Insurance Program through FEMA (Federal Emergency Management Agency) called the Biggert-Waters Flood Insurance Reform Act of 2012. This reform “is a law passed by Congress and signed by the President in 2012 that extends the National Flood Insurance Program (NFIP) for five years, while requiring significant program reform. The law requires changes to all major components of the program, including flood insurance, flood hazard mapping, grants, and the management of floodplains. Many of the changes are designed to make the NFIP more financially stable, and ensure that flood insurance rates more accurately reflect the real risk of flooding.” (http://www.fema.gov/media-library-data/20130726-1912-25045-9380/bw12_qa_04_2013.pdf)

flood-insuranceThis law will bring changes to your flood insurance and could cause serious increases to your policy. Now, not everyone that has flood insurance will be affected by this reform. Those most affected by it are those that own subsidized non-primary residences. Those that own these types of properties especially in a special flood hazard area will see a 25% increase annually to their insurance rates until their rates reflect true risk. Others that will see a 25% increase include owners of subsidized property that has experienced severe repetitive flood losses, owners of subsidized business properties in a special flood hazard area and owners of substantially damaged or substantially improved subsidized property.

Your policy is probably subsidized if it is in a high-risk area, is “Pre-FIRM” which means it was built before your community adopted its first Flood Insurance Rate Map, or has not been substantially improved (which means it would need to be brought up to code).

The reform also addresses grandfathering of rates. If you were in compliance with the BFE (Base Flood Elevation) before they issues any Flood Insurance Rate Maps, but were below the BFE on the 1983s latest Flood Insurance Rate Map, your premium was calculated as if you were still in compliance with the BFE. This break will no longer be available.

Consider a policy that covered $250,000 for the building and $100,000 for the contents. If you are in an “A” zone (there’s a 1 percent chance of flooding in any year) and you were rated at the BFE and now you are a foot below the BFE, your premium will increase from $1,724 to $5,225. If you are in a “V” zone (there’s a 1 percent chance of flooding in any year and/or risk of coastal storm surge and wave action) your premium will increase from $8,603 to $11,583. The increase will be phased in at 25% per year for five years. If you had a discount removed as per above, you may face double jeopardy.

Many policy holders in these high risk areas are not happy, and you can probably see why. The states most affected by these changes are California, Texas, Louisiana, Mississippi, Alabama, Georgia, Florida (being the number 1), North and South Carolina, West Virginia, Pennsylvania and New York. Protests from some of these states are already occurring. One recently would be the Mississippi lawsuit against FEMA.

But how does this really affect you? Well this impacts home owners ability to afford to stay in the home ( you’ve got your mortgage, fire and hazard insurance, taxes, now flood insurance too). Not only is there added cost but lenders will require this coverage to stay out of default on your loan.
The fact is, people simply may not be able to pay that much per month in these high risk areas now. Demand will be impacted thus resale prices are effected. Property values could go down due to affordability for the first time buyer. The same thing applies to mobile homes and those buyers who are going to live in these homes.

Also, anyone buying a property they are considering as a rental or turnkey rental without proper due diligence might get slammed in the near future with a jump in holding costs due to flood insurance increasing. Not only that but keep in mind that there are more increase to come over the next 5 years that could cause their income generating property to break even or worse yet, turn into a negative cash flow property, thus being difficult to sell that income generating property to the next sucker.

The changes are coming whether we like it or not. The best way to prepare is to know if your home and investment properties are located in flood hazard areas and by talking to your insurance agent. Your insurance agent can help you take the necessary steps to soften the blows as more changes are implemented. Going forward, make sure you do your proper due diligence when investing in mobile homes as these FEMA changes in certain states will greatly affect your costs.

January 22, 2014 / by / in , ,
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 ,
On 8/27/2013 The Trailer Park Gets Rocked!

Final STT Webinar Series

WholesaleDealMatcher.com is please to announce the official launch of our sister website www.SellThisTrailer.com!

This new site is set to go live on August 15th. As part of our excitement to share with you another investing strategy, you are invited to attend a free Mobile Home Investing Webinar on Tuesday August 27th @ 7:00 PM MDT.
Get registered today and reserve your seat in the class. It’s limited to 100 people so it will fill up fast!
Learn the Secret Sauce to investing in Mobile Homes!

Click Here to Register

August 7, 2013 / 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 , ,