Archive for the ‘real estate investing’ Category

How To Get Qualified Buyers For Your Houses In Real Estate Investing

Monday, February 20th, 2012

In the current depressed real estate market, selling houses has become harder than ever.  This is also true of deals that look great.   You must therefore have a game plan for selling houses fast to succeed in real estate investing.

In this article, we focus on how to identify qualified buyers with cash to buy your houses.  Specifically, we focus on how to market and successfully sell wholesale deals.

To successfully flip wholesale deals, you must identify qualified buyers for your properties. Identifying the buyers involves the following steps:

1) Build a buyers list
This is a primary golden rule in real estate investing.   If you sell houses, you must build a list of potential buyers of your properties.

In order to build a good buyers list, you must have a real estate investor website that is fully equipped with the ability to automatically build your buyers list as you sell your houses.

When you get your next deal, the first thing you do is to email it to your buyers list.  Chances are you will get a buyer from that list.  I have found buyers within hours of sending deals to my buyers list many times.

A good source of real estate investor websites is recommended at the bottom of this article.

2) Market aggressively
Most real estate investors do not adequately market their properties.   It is necessary to run a marketing campaign for every property you get even if you have a buyers list.

Of course, always make sure you include your website address where they can view the properties, and sign up to your buyers list.

I make sure I run ads on Craigslist and other real estate websites.   You can run ads in your local papers for $200 to $500.

Avoid providing a phone number, instead give them your website address to view the properties.   If you do provide a phone number, it must be a voice mail that re-directs them to your website for full details.

I like to make sure they provide their contact information before they can access full property details.

you can end up with hundreds of potential buyers this way.

3) Pre-qualify potential buyers
Most real estate investors get excited when they get a potential buyer.  They are just potential buyers until I know they have money to close.

Once a potential buyer calls, I will take down their full contact information and either give them the lockbox code or show them the property.  I then ask them their source of cash if they express interest to buy it.

“Cash” is not enough.  Is this cash in their bank account? Did they just sell a property?   Are they working with a line of credit?  Do they have a private money lender or a hard money lender?

In other words, proof of funds is a must.

Do not rely on sellers who are hoping to get a mortgage from a bank.  They must have cash, and the ability to close quickly.

4) Follow through to closing
Once I identify a potential buyer, we then sign a contract.   I must collect a cashier’s check for the earnest money.  I take a minimum of $500 which they stand to lose if they do not close, but which is credited to them at closing.

Be sure to keep up with the closing process and ensure the money is available when expected.  As always, time is of the essence in closing wholesale real estate deals.

Learn how you can buy and sell houses from an automated real estate investor website that both pre-educates potential motivated sellers and house buyers, while automatically building buyers lists for future properties you may have for sale.

How To Build A Responsive Buyers List In Real Estate Investing

Monday, February 13th, 2012

Successful real estate investing largely depends on selling the houses you acquire quickly.   This applies to most business models such as wholesaling, or selling on terms such as lease options.

Building relationships with people looking to buy the houses you sell is the biggest asset in real estate investing.

In this article, we look at how to build and maintain a responsive list of potential buyers.

Your buyers list is your most valuable asset and should be tended very gently.  The more responsive it is, the higher the chances that you will sell your houses to members of your buyers list.

There are two types of buyers lists:

1) Wholesale Buyers List
This is a list of people looking to buy properties at wholesale prices, usually real estate investors.   You must build a wholesale buyers list if you flip houses at wholesale prices.

2) Home buyers list
This is a list of buyers looking to buy houses to live in.  In most cases they are not looking to buy investment properties.

People looking for creative financing like lease options fall in this category.

Obviously, a list of buyers in your local market is the most responsive.   A list of nationwide buyers is less response.

The size of your list may not be so important as long as the list of buyers in your list are people who are currently buying properties where you live.

Someone who is not currently buying houses has little to no value in your list.

How to build a responsive buyers list

The following things are mandatory to building  a buyers list:

1) Get a real estate investor website
Your buyers must have a place to sign up to your list.  For this reason, a website is a must.

The website must be integrated with a buyers lists or the capability to create mailing lists as you wish.  Then they can sign up to this list as you want.

Ideally, the website should also allow you to create squeeze pages or landing pages that ask for their name and email (maybe also phone number) before they can access your properties.

Alternatively, it should allow asking for contact information before they can view full property details.

2) Advertise your properties
Your ads must prominently feature your website address no matter what type of advertising you run.  A phone number is not enough; it will not collect a buyer list for you.

This is the work of a real estate investor website. Whether you advertise through bandit signs, radio, newspapers, Craigslist, etc, you must provide your website address.

I built my first buyers list by advertising my wholesale deals on our local newspaper, Dallas Morning News.  Instead of a phone number, I gave them a web address with a list of houses for sale.

To access full property details, they had to provide their contact information.  I ended building a list of around 200 wholesale buyers in my local market.  These buyers used to buy every wholesale deal I found.   In most cases I had a buyer the same day is sent out an email for a wholesale deal.

Find out how you can run your business from an automated real estate investor website for both buying and selling houses increasing the efficiency with which you close deals. Specifically, find out how a website for selling houses can help you sell your houses fast by automatically building a buyers list for you as you sell, among other features.

How To Buy Houses From Motivated Sellers In Real Estate Investing

Monday, February 6th, 2012

No matter what your real estate business model is, motivated sellers remain the most profitable source of good deals.   Efficiently locating good deals from motivated sellers and closing them must therefore be a part of successful real estate investing.

In this article, we point out important areas you must focus on in your business.

The key sources of attracting motivated sellers are covered in a separate article.   As soon as you identify a good deal, you must then secure and close the deal.

In my business, all my deals come through my real estate investor website.  Approximately half of them are  submitted directly by the motivated sellers.   The other half chooses to use the phone, and my virtual assistant pre-screens them for me and submits this information on my website.

All the deals I receive are therefore pre-screened and pre-negotiated.  I can therefore easily identity a good deal in a few minutes.

Once you find a good deal, you must set up an appointment to see the house. The main reason you need to see the house is to estimate repairs.  If you have bought a few houses, then you know you need about 10 minutes to come up with a fair ball-park repair estimate.

You do not have to get it detailed down to the nail, you just need a safe rough estimate, preferably higher than normal to be safe.

You must make sure you sign the contract when you go to see the house – do not forget to take one with you.

You can always cancel the sale later if the numbers no longer look good.

If the deal works, fax the contract to the title company so they start title work.  Remember to deliver or mail the earnest money so the contract becomes binding. Make sure that you deposit any earnest money with the title company, not with the seller.

depending on your exit strategy, the next steps are determined by your business model:

1) Wholesale the deal
If your exit strategy is to wholesale the deal to other real estate investors, this is when you market the deal to them.   A good real estate investing website should also help you build a list of potential buyers automatically – then you just email your deal to them.

If you plan do a simultaneous closing, you then sign a contract with you as the seller.  You can also assign the contract for an assignment fee.

The title company will then do the closing and disburse all the money as agreed.

2) Lease option / Lease to own
If your exit strategy involves taking over existing payments, then your title company should conduct the closing.

This is why it is important that you select a title company that works with real estate investors and understands various real estate investing business models.

3) Straight buy
If you plan to buy fix and sell, or keep as a rental property, then this is a straight traditional transaction that any title company can close.

Of course these are the main business models; others would follow similar steps.

When all is said and done, your success in real estate investing, largely depends on the efficiency with which you pre-screen your leads, follow up with them to tie up the deal, and efficiently close the deal.

Find out how you can run your real estate investing business from an interactive real estate investor website that automates most aspects of your business delivering pre-screened and pre-negotiated deals so you spend less money, time and effort while you close more deals.

How To Sell Houses Fast On Autopilot

Monday, January 23rd, 2012

To be successful in real estate investing, you must sell your houses fast.   This is quite important in a slow market where houses can sit for months with no buyers, increasing your holding costs.

Having a means to accelerate this process is therefore important, and whenever possible, employing every tool at your disposal to sell your houses fast is a must.

In this article, we look at how to automate the process of getting potential buyers for your houses.

You must first remember that real estate is a face to face game.  A buyer must come to see the house before they buy it.

But the process of acquiring those buyers can be automated, and the end result is that you can sell your houses much faster.

I highly recommend and use squeeze pages.  A squeeze page requests your name and email in exchange for something you need.

In general do not ask for more than name and email; the more information you request, the less the response you will get from your squeeze page.

You end up creating a list of buyers who have money and buy in your local market.   These people are likely to buy your next deals without more advertising.

Let us look at some simple examples:

Squeeze Page Example 1:
When wholesaling my properties, I set up a squeeze page that asks for name and email to access a list of highly discounted properties.

In order for them to view those properties, they must provide their name and email, and they are instantly redirected to the page with property listings.

This is how I built my first buyers list.  I advertised my properties on the local newspapers and gave them a website address instead of a phone number.  The website address had a squeeze page.

I ended up with a list of about 200 very responsive buyers.

They ended up buying a few properties from me.

Squeeze Page Example 2:
This type of squeeze page must be built into your real estate investor website.

Properties listed on your website show a summary page with a list of properties with the estimated market value, sale price, equity, etc.
The information is just enough to build their interest.  They must click “More Details” to see more information.  A squeeze form in a lightbox then pops up requesting for name and email to access full details.

This is my favorite and consistently gives me more potential buyers than the first squeeze page.

Autoresponders
Automation is never complete without autoresponders.   An autoresponder sends previously written email messages at pre-timed intervals.

For instant once they sign up, an instant email is sent saying something like “Thank you for joining our buyers list. We will be sending you deals that meet your needs as soon as we get them.”

Over the next few days, they will be getting helpful messages automatically.   This helps build rapport and provide more information such as phone number, areas they buy from, types of properties, etc.

This information helps you in your marketing, so that potential buyers keep getting the exact type of properties they need.

Learn how you can automate your real estate investing business with a real estate investor website fully equipped with all the tools necessary for selling your houses fast, as well as buying houses. The end result is that you close more deals using less time, money and effort.

How To Buy Houses At The Right Price For Real Estate Investing

Monday, January 2nd, 2012

In real estate investing, buy low sell high is a very common expression.   Though it sounds quite obvious, it is not always easy to buy houses at the right price.

Your buying price must be low enough to make you profits whether you sell them right away or keep them as cash flow properties.

So how do you determine the best price for your property?

A few years ago, it was not un-usual to buy a house at 80 cents on the dollar and wholesale it for a tidy profit because the market supported it.  In fact, you always expected the price of the house to go up within a few months.

In the current market, when you buy a house, you expect the price to go down.   Almost every home owner has lost some equity in the home in the last one year.

When buying a house, you must consider this fact.  Today, the regular price for wholesale properties is 60 to 65 cents on the dollar minus repairs.

Also, tenants have become more choosy since there are more houses to chose from, and are likely to go for a house with a pristine rehab job.

This has made rental prices more competitive.

When you are buying houses, it is necessary to make sure you let the seller know these facts.

So I always let a seller know that even though it seems like they are giving me a deep discount on their property, I have to fix it, then sell it, probably hold it for months and eventually sell it at a deep discount.

And probably I’ll not be able to sell it at all!

I explain that I might lose most of my profits when I hold it.  When most sellers understand these facts, most  of them relax.

I like to make this clear before I can make an offer.  I have come to learn that even though motivated sellers really need to get rid of their properties, they do not like to feel like they are being taken advantage of.

Once they understand the current market conditions, then I can make my offer – and it offer does not look too low-ball and the seller is likely to accept it.

Why do you need to explain all this?

In the current market, it means you must buy houses much cheaper than we used to just a few years ago since you also must sell low in order to sell it at all.

If you buy properties on terms such as lease options, it is also necessary to do this. You must remember that even though the price for properties that you buy on terms is usually higher, it must still be low enough to cater for the facts above.

This way, in a year or two when you try to sell it, the price at that price will support the sale.

When buying houses, it is necessary to to pre-educate motivated sellers so they understand how you buy houses. It is also important to generate leads and follow up with them automatically to convert them to motivated sellers automatically. Find out how an automated real estate investing website can attract, pre-educate and deliver motivated sellers fully pre-screened and pre-negotiated so you close more deals using less time, money and effort.

 

Wholesale Real Estate Investing: Contract Assignment

Saturday, December 17th, 2011

Wholesale real estate investing is an integral part of a real estate investors business when they buy  properties from motivated sellers.  This means that they buy them at a price low enough that they can sell them at wholesale prices to other real estate investors.

Contract assignment means that you assign the right to buy the property from yourself to another buyer, usually a real estate investor.

In other words, you simply change the name of the buyer to the real estate investor for an assignment fee.

Everything else on the contract remains the same.

How does it work?
The following simple steps describe the process of assigning a contract

1) Get the property under contract
Once you identify a property from a motivated seller, you put it under contract.  The contract must explicitly allow you to assign it.

The easiest way to do this is put the buyer with “and or assigns”, e.g. “My Company Name and or assigns”.
Without this little clause you might be unable to assign the contract.   It is very important that you let the seller know that you can assign the contract to another investor.

I also tell them that I could partner with another real estate investor.   They must understand that the contract and closing will not be changed, and that at the end of the day, you will make some profit out of it.

2) Get title work done
The closing agent is usually a title company or closing attorney.

3)  Sign the assignment contract
Once you have identified a real estate investor buyer, you then sign a simple contract for them to take over your contract.

You must collect earnest money when you sign the contract.   The title company usually keeps the earnest money.  Usually I credit the earnest money to the deal at closing; if they do not close the deal they stand to lose it.

4) Close the deal
The new buyer then goes through the process of funding the transaction for closing.   You walk home with your assignment fee at closing.

Advantages and disadvantages of contract assignment
In contract assignment, the need to close two transactions with two closing costs is eliminated.

The assignment fee stated in the contract is what you walk home with.
You must show the assignment fee in the contract.

The final closing statement also includes the assignment fee, meaning that all parties know what you make in the deal.

Be careful not to lose the deal because some seller or buyers could develop cold feet when they see how much you are making. To eliminate this risk, I only do assignment of contract when I stand to make little money.   I use simultaneous closing when I stand to make $5000 or more in the deal.

Some deals also cannot be assigned, such as those involving a Realtor or REOs. Such contracts usually specifically disallow contract assignment.

The biggest advantage is that even with little to no money, you can make a deal happen and walk away with a profit.

Wholesale real estate investing requires that you sell your houses fast to keep it successful . Learn how an interactive real estate investing website can help you sell your properties faster by building your buyers list and using the power of social media to reach more buyers.

How To Overcome Objections By Motivated Sellers In Real Estate Investing

Tuesday, December 13th, 2011

In real estate investing, having all the numbers is crucial to evaluating a deal and making a good offer that gets accepted and makes you a profit.  Most often when I talk to motivated sellers, I find they are not willing to provide some of the information I need to evaluate the deal accurately. Usually they do not want to discuss the mortgage balance among other issues.

So how do you overcome these objections and get all the information you need?

In my real estate investing business, I only deal with sellers who are motivated. By being motivated, they must be willing to provide most of the information I need without pressure. Generally I am not interested with sellers who are luke-warm and are just shopping to see if they can let you buy their house.

Most of my motivated sellers submit their information through my real estate investor website. In this case, the website does the job of pre-screening them and pre-negotiating with them, so I just need a few minutes to tell whether it is a deal or not.

Here are a few common objections and how to overcome them:

Mortgage balance:
Once in a while when you talk to motivated sellers and ask them their mortgage balance, they might tell you it’s none of your business, or if they are polite “why do you need to know?”. So I have come up with a simple statement:

“In order for me to able to evaluate the deal and make a fair offer that makes sense both to you and me and pay off the outstanding mortgage when I buy it, I must know the mortgage balance owed on it.”

Then I go completely silent… say nothing!

Usually they will consider it and give the information.

You must let them know that without mortgage balance, you will be unable to make any offer. If they are really motivated, they will provide this information. If they do not provide it, you have no business talking to them.
A motivated seller will tell you anything in the world to sell you their house.

Repairs:
Do not be surprised that their estimation of repairs is always on the lower side. In my business, I always assume that I will need to do paint, carpet, bathrooms and kitchen.

Before I ask for repairs my conversation goes something like this:

“How long have you lived in the house?”

“Have you done any remodeling on it?”

“So what repairs does the house need?”

Usually I will ask about carpet, paint, kitchen and bathrooms. When you take your conversation like this, you are likely to get more accurate answers that you can rely on.

Asking price:
This is usually the toughest part to negotiate. Of course, you must know the mortgage balance before you can ask this question, or even make an offer.

My question goes something like this:

“If I can buy your house all cash and close quickly, what is the least you can take for it?”

Once they give an answer, I usually just say, “Hmm…”.

Then I go silent.

Not a word until they speak.  In most cases, they will talk themselves down without me saying another word. Sometimes I will still follow up with “Is that the best you can do?”.

In most cases, this technique works like a charm. Good luck in your next real estate investing deal.

Simon Macharia is a real estate investor in Dallas Texas, and uses the an interactive real estate investor website to pre-screen and pre-negotiate with motivated sellers.  Learn how you can close more deals using less money, time and effort with a real estate investing website.

How To Identify Motivated Sellers For Real Estate Investing

Monday, November 21st, 2011

One of the most important things that determine the success of real estate investing business is availability of good deals. Unless you can buy properties cheaply, you are unlikely to make profits with most real estate investing business models.

Motivated sellers are my best source of great deals. When you are buying houses, you will come across all types of sellers. You must be able to identify the motivated sellers who drive your business.
Of course the more targeted your marketing is, the more motivated sellers you will attract in your business. I am particularly fond of targeting people with legal trouble who own real estate. These are most likely to be motivated sellers.

If you also do general advertising such a classified ads, bandit signs, and so on, you are likely to attract all kinds of people looking to sell their houses.

So how do you identify the motivated sellers? The easiest way to do this is to divide them into categories.

1) Unmotivated seller
This is the person that thinks their house is the best in the sub-division. They have taken great trouble to make sure it’s perfect for the next owner occupier.

They have probably tried to list it with their Realtor, or even for sale by owner, but have not been successful. In most cases they are looking the the full market price.

They will not be willing to discuss details and numbers, such as their mortgage balance.

Of course, you will never make money from these type of deal, so you are better off forgetting it.

2) Luke-warm seller
This is the type of person who calls you and says he might be willing to let you buy his house, and asks you to explain how you work.

He will listen keenly, maybe ask questions, but again is not very forth-coming with necessary information such as mortgage balance.

He will probably tell you he has been trying to sell it for say, $150,000 and ask you to make him an offer. He will probably ask you to go see the house first before you even know the numbers.

Even though he will show the interest to be flexible enough to negotiate, you are unlikely to get a good deal from him.

Of course if you are a savvy real estate investor, you never make an offer unless you have all the numbers such as the fair market value, repairs, mortgage balance and so on.

You could end up wasting a lot of time driving to see many such properties and not get any deals out of it.

Usually I ask him to give me a call with all the numbers before I can make him an offer.

3) Motivated seller
This is the person who really needs to sell their house. Maybe they are behind on their mortgage payments or even facing foreclosure.

Probably they have tried to sell and see no other way out. They will give you all the information you need without hesitation. Most of them just want to get out of the mortgage.

In my business, most motivated sellers submit their information through my real estate investor website, so by the time I call them, I already know whether I can make the deal happen or not.

If I pre-screen such a seller on the phone, the conversation is likely to take less than 5 minutes and they provide all the information I need.

This is the only type of seller I deal with in my business. This is the only type of seller where you are likely to get great deals that can make you a lot of money.

Successful real estate investing requires that you pre-educate potential motivated sellers about how you do business to close more deals. Learn how an interactive real estate investor website can pre-educated motivated sellers for you, pre-screen them and pre-negotiate deals for you saving you time, money and effort allowing you to close more deals.

Importance of clean title in real estate investing

Saturday, November 5th, 2011

I recently made a novice mistake that cost me over a thousand dollars even though it sounds very basic. Generally I only do a short sale if I see the potential of creating a lot of equity to justify spending all the time and effort involved in negotiating a short sale.

I am particularly fond of properties which have more than one mortgage, because the holder of the junior lien mostly stands to lose everything in the event of a foreclosure. For this reason, they can negotiate pennies on the dollar in a short sale.

It is not unusual to negotiate 20 cents on the dollar on a second lien. If you can also negotiate the first mortgage, it means you can end up creating a lot of equity and potential for a good profit in your deal.

This is the type of deal I got a few months ago, and instantly identified it as a having high potential. The first mortgage balance was low enough, almost 50% of the value of the house,  but there was also a small second mortgage. Even if I had to pay off both mortgages, I would still have had a good deal.

All the owner wanted was to get rid of the property without foreclosure. We did all the necessary paper work for both short sales and within a few weeks had both my offers accepted.

The house needed some repair, but no structural damage like foundation or roof. There was also a lot of junk to remove and touch-ups I had to clear before I could wholesale it to another real estate investor. The yard was overgrown; there was tons of trash to haul off, and general cleanup. I ended up spending over $1000 cleaning things up and got it ready for wholesale.

I was pretty sure I was going to flip it easily and quickly lined up a buyer with cash.

In the meantime my title company started the closing process including title work. It turned out there were two other liens the seller did not disclose!

Both were mechanic liens attached to the property. One of the liens was easy to track down, but the other one had been sold twice and none of the contact information on the lien was working. In short, we had no way of negotiating one of the liens.

This means I could not own the property free and clear unless contacted all lien holders and agreed on a pay-off. Those liens could only be wiped off through foreclosure.

I ended up giving up on the short sale after spending weeks negotiating both short sales and spending over $1000 getting the property more marketable.

This experience can serve as a word of caution if you buy houses directly from motivated sellers. Even though motivated sellers have probably the most profitable deals on the market, they are also more likely to have multiple liens and judgments on their properties or other title related issues.

Make a point of checking the title before spending money to make sure the property is marketable. In my business, I do not pay for any title work because I have closed many deals with my title company. Even if you have to pay for title work, it is likely it is not as expensive as the time and money you would lose without checking the title.

Simon Macharia is a real estate investor in Dallas Texas, and specializes in buying and selling houses. Learn how you can automate most aspects of your real estate business with a database-driven real estate investing website saving you time, money and effort, while closing more deals by increasing your efficiency.

How To Identify A Good Deal For Real Estate Investing

Tuesday, October 18th, 2011

The current real estate market continues to deteriorate and house prices continue to go down.  More and more people need to sell their houses or lose them to an already saturated market.

We are likely to continue seeing this trend for a while, which means house prices will continue going down.

So how do you identify a good deal that will hold its value until you sell?

Most home owners looking to sell their houses now understand that the value of their house is quite unstable.

They understand that their houses are losing value every day, and that they cannot rely on prices just 2 months old.

They also know that they can no longer sell their house at market value any more.

Too many houses are sitting in the market that you can almost certainly negotiate the price down on most properties even if the asking price is well below market value.

Motivated sellers know that you must also give a discount when you sell your properties, so they do understand the discount they give you will be passed on.

If you buy, fix and sell for instances, you can end up holding your houses for as long as 6 months.

How much value will the house lose in this time?

If you do not answer this question before you buy, you are likely to end up paying too much for your investment properties.

Even if you wholesale houses, you still need to answer this question.   How much will your buyer need to discount the property when they sell?   As a general rule, you can only wholesale houses if you leave enough money for the wholesale buyer to make money also.

Lots of investors have previously been quite comfortable buying houses at 70 cents on the dollar less repairs.  Some real estate investors still use these numbers.   In this market, 60% minus repairs is barely enough.

If you buy properties to hold as rentals, then these numbers can work perfectly.

If you fix properties to sell them on retail, then your numbers must cater for long holding costs and associated price drop.  Naturally you should cater for the discount you will give when you sell!

These days, a discount of as much as 15% to 20% is not uncommon.   Is that enough to make you a profit?

Motivated sellers understand this quite perfectly, and I find it easy to use it to negotiate my prices.   Of course, the discounted dollar figures they give you might look big.  Any good real estate investor knows that we work with percentages, not dollar figures.

Once I explain my numbers in percentages, they can easily see how it small my margin really is.  Once they realize you are not taking advantage of them, they will sell their house to you at a price that makes you a profit.

Have you seen a drop in profits in the current market because you see to be out-priced by the drop in house prices?  Get more in-depth articles in our real estate blog and find out how you can run your business from an interactive real estate investor website that automates most of your business so you make more while spending less time, money and effort.