Posts Tagged ‘Real estate investors’

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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.

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How To Buy Houses With Equity In Real Estate Investing

Sunday, January 15th, 2012

To be successful in real estate investing, you must but low and sell high in your real estate deals. Specifically, you need to buy houses with equity. Generally this applies to all real estate investing business models.

So how do you know that a house has enough equity to make a profit for you?

When I bought my very first real estate investing deal, I simply gambled with numbers. At the time, the real estate market was such that all properties appreciated with time, so you could still make a profit even with marginal deals.

I did not think my effort justified the little money I made at the end of the day, so I almost gave up pursuing more deals. The numbers had looked so good I did not think there was any way I could lose.

Let us take an example:

Suppose you are buying a $200,000 house for $160,000. At first glance, it may seem to you like you have an equity of $40,000.

Let us take a deeper look at these numbers.

We will assume the house just needs a new carpet and paint plus a few touch-ups before you can sell it. Your monthly mortgage payment will be $1300.

We will assume that you will complete repairs within 30 days, and that houses are sitting an average of 90 days on the market before you can sell them.

Your numbers will look something like this:

1) Holding costs for 4 months: $5200
2) 2% closing costs when buying at $160,000: $3200
3) 2% closing costs when selling at $200,000: $4000
4) 6% Realtor’s commissions when selling the house: $12,000
5) Carpet, paint and minor touch-ups: $10,000
6) Property taxes prorated for 4 months (approximate): $1050

This is a total of $35,450 assuming nothing goes wrong.

In other words, your total expense in this deal is $160,000 plus $35,450, or $195,450.

This is a meager profit of $4550!

If anything goes wrong and you end up spending more in repairs, or it takes two more months before you can sell it, you are end up making a loss in the deal.

Scenarios like these are very common with real estate investors.

You should only work with numbers are PERCENTAGES not dollar figures.

As a wholesale rear estate investor, I acquire my properties at 65% minus repairs or lower.

Remember you also need to sell your properties at a discount to get them sold.

In order to get noticed, your house also needs to be quite attractive both in the asking price and overall condition. Buyers today are more picky because they have more houses to choose from.

You might therefore have to spend more on repairs to make them more appealing.

You must also remember that the holding costs could be much higher because it can take as much as 6 months or more to sell a perfect looking house.

You are more likely to remain profitable in your real estate investing business if you work with percentages that give you a good return on investment for your business model.

Successful investing in real estate requires that you acquire your deals cheaply and sustain a continuos flow of good deals that make you a profit. Learn how an automated, interactive real estate investing website can help you acquire more deals using less time, money and effort.

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Where To Buy Houses For Real Estate Investing

Sunday, January 8th, 2012

In order to make a profit in real estate investing, you must have a continuous flow of good deals.  This means you must buy houses at low prices and turn around and make a profit, regardless of your business model.

So where do you find these houses at below the market prices?

1) Motivated sellers
This is my most preferred method of getting great deals.  It still remains the most profitable way of getting the best deals that never find their way into the open market.

A motivated seller is someone who badly needs to get rid of their house.   In most cases they are behind on their mortgage, facing foreclosure, divorced, burned by bad tenants, have inherited property, and so on.  They can do anything to get rid of these properties which have become a big bother in their lives.

So how do you find motivated sellers?

Simply targeting home owners facing some legal trouble is enough.  In my local area, I get a listing of all filings in the county court system every day.  If they own real estate, they get into my mailing list.

These people are ready to do business once they call.

2) Wholesalers
Other real estate investors that sell houses at wholesale prices form an alternative source of cheap houses.

I usually have a lot of good deals, most of which I cannot pursue.    I sell them at wholesale prices to other real estate investors who put them back on the market.

When you buy a wholesale deal, you can buy the house in a simultaneous closing or take over the contract to buy the house.  Check our other articles for details of these transactions.

3) Local REI meetings
I can bet that right near where you live, there  is a group of real estate investors that meet close by. These are people who buy and sell real estate actively in your local market.

This is a place where you can find good deals.

4) REOs and the MLS
These are not the most profitable deals you can find unfortunately.  The asking price is usually too high for most real estate investors even though thousands of properties are sitting out there with no buyers.

This is because they are too over-shopped and price breaks are not that high.

These are the deals I recommend the least for investment purposes.

5) Courthouse auctions
You might need to do a lot of home work to get good deals in courthouse auctions.   I do not recommend this method unless you know what you are doing.

6) Craigslist and other online sources
This is another source that is too over-shopped, and most Realtors and FSBO owners market here.   It is not easy to get a good deal from Craigslist.

Most successful real estate investors close more deals using less effort, time and money by leveraging the power of technology to make their work easier. Learn how you can run your business from an interactive website for real estate investing that automates most of your tasks increasing profits for you.

 

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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.

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New Designs For Real Estate Investing Websites Released

Wednesday, November 30th, 2011

A real estate investing company, www.RealEstateInvestorsWebsites.net has unveiled new designs for real estate investor websites. These new designs give real estate investors numerous options to customize their websites to fully adapt to their business models.

Real estate investors can run their business without any restrictions as to what they can do with the websites whether they buy houses, sell, rent or wholesale houses, or even if they are looking for private money. The websites can also be adapted to support any real estate business models.

The websites are run from a simple virtual back office that controls all aspects of the real estate investing. They come pre-loaded with over 140 designs. Any design can be loaded at any time with a single click of the mouse, while preserving the content.

They also come equipped with pre-loaded sales oriented content written to convert visitors to closed deals. A life-like video speaking model instantly captures attention delivering a down to earth, believable message that relates to the visitors needs, increasing conversion.

With pre-loaded follow-up autoresponder messages, the websites automatically follow up with leads delivering pre-timed helpful information that they find useful. These messages are written to convert cold leads to motivated sellers who are ready to sell their houses.

A real estate investing business must be fuelled by a constant supply of responsive leads. That is why the websites are delivered optimized for search engines targeting the local market. Real estate investors therefore get leads right where they do business.

For more information, visit http://www.realestateinvestorswebsites.net/ or call 214-227-8718.

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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.

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How To Sell Your House Faster With Owner Financing

Sunday, August 28th, 2011

In today’s real estate market, we are seeing more and more properties for sale flooding the market, but fewer and fewer buyers for these properties.  The result is that the house prices keep going down every month.

Real estate investors therefore find it harder and harder to sell their properties like they use to.
Likewise, if you are looking to sell your house even if you are not a real estate investor, you find yourself stuck with properties that generate little or no interest from buyers.

In this article, we look at how seller financing can generate interest from buyers resulting to a quick sale even at a higher price.

What is seller financing?
In seller financing, the seller agrees to carry part or whole of the financing for his property.   The seller probably has no mortgage, or probably owes a mortgage on it.

In either case, you may need advice on how to structure the deal and close it properly.   Make sure you talk to your CPA and real estate attorney.

When the seller accepts to owner finance the property, the buyer pays a down payment.   The seller then receives monthly payments just like a bank.

Why seller financing?
The days  when just staging your property was enough to sell it are long gone.   Why should a buyer choose your property when there are numerous other properties in the neighborhood  are selling for a lower price?

Before a buyer ever comes to see your house, they will have to be attracted to it by the terms you have set for the sale.  seller financing attracts a lot of attention for your properties.

With the banks tightening their lending procedures, most people can no longer qualify for a conventional mortgage.   Lots of people have also ended up with bruised credit.  These buyers can only own properties through owner financing.

As a seller, this makes owner financing a great way to generate a lot of interest and possibly even end up selling it at a higher price.

The best price is estimated from comparable sales in the area.

It is important to be careful which properties you use as comparable sales.  Properties that have been sold with seller financing carry a higher price than others sold in the conventional way.  Therefore, its price may not reflect the true value of similar properties.

With seller financing, you end up selling your house faster, even at a higher price.

In a market with so many properties for sale and few buyers, real estate investors that adapt to changing trends are the ones that continue to make profits.   seller financing allows them sell their properties faster where others cannot.

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How To Keep Your Real Estate Investing Mailing Lists Clean

Sunday, June 26th, 2011

Successful real estate investors run direct mail campaigns to keep the leads coming in..  I send out post cards and letters to potential motivated sellers in my business. Motivated sellers are people who need to sell their houses, probably because they are in trouble that can be relieved by selling their property.

 There are so many motivated sellers in today’s real estate market that you cannot handle all of them.  To save money and be more effective in your direct mail campaigns, you must therefore clean up your mailing lists.
 Here is how to get a good return on investment in your direct mail.

 People in trouble who own real estate form my mailing lists, such as people going through divorce, people with liens, bankruptcy, etc. Most likely these people are looking to get rid of their houses or they end up in foreclosure.

I also look for people who have inherited properties.    Sometimes they inherit the mortgage and if there is no mortgage, they need to cash out.   The beneficiaries usually cannot fix them up and find it hard to sell them in the open market.  These probate properties can be very profitable.

 Absentee owners also form part of my mailing lists. Usually these are land lords, and sometimes people who either divorced or work out of town.   Most land lords are looking to get out after having being burned by bad tenants.   Usually they own several properties which can all be good deals.

Expired listings from the MLS also form a big part of my target properties.  Of course these people have been looking to sell, but have not been successful.

This means I sometimes end up with 1500 to 2000 new leads every week. All this means I can have 1500 to 2000 new leads a week.   I must therefore clean them up and target them better.

1) Geographical area
 Since I live in a big metro area, I can only buy houses from a small area.  This means I only target certain zip codes.   No matter where you live, avoid war zones.

 I avoid houses more than 30 minutes drive away.

2) Price range
Since I wholesale most of my properties, I avoid the very low end properties and the very high end properties.   The middle range properties are better for me because there are more buyers.

3) Recording date
If a property was last recoded less than 10 years ago, it’s out of my mailing list.   Sometimes inherited properties can have exceptions.

 This is because they could have some equity.   If they have refinanced they may not have as much equity.

4) Return mail
I send 2 post cards and if sending direct mail to probate leads, I send several of them over a few months.   Some of these addresses are undeliverable and bounce back.   You must get rid of these  addresses in your next mail sequence to save money.

Simon macharia invests in real estate in the Dallas Fort Worth metroplex. His real estate investing business is fuelled by leads generated by direct mail and through his real estate website. Learn how a good real estate investor website can help you close more deals while spending less money, time and effort.

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Should real estate investors buy properties in a specified target market?

Wednesday, March 2nd, 2011

One thing that most real estate investors waste a lot of time on is not focusing on a specific target market. However, some schools of thought argue you can buy houses nationwide and that you do not have to be limited by the market.

This article seeks to address both scenarios and hopefully allow you to focus on what works best for maximum profits.

When I started investing, my very first deal was almost one and a half hours away. In my inexperience, I just sent out letters without regard to geographical location. The Dallas Fort Worth metroplex is big so I figured that was a good target market.

Since this was a wholesale deal, I had to go and show the house to other real estate investors. I could not give a lockbox code because it was not vacated yet.

 I ended up driving there a total of 9 times until it was closed, spending about 40 hours of commuting or being physically present at the house.  Yes, I was relieved when it was over!

No matter which market you look at, there are always deals around you. It does not matter how many real estate investors are in your local area. Once you target a specific geographical area and price range and focus your marketing there, you will be surprised how many deals you can do in that area.

In my market, I do not look at deals more than 20 minutes away unless they are pretty good.

I recommend you focus on a target market area where you can manage any deal from start to finish with little stress associated with travelling. It does not matter if you are wholesaling, retailing, rentals, etc.

Just target a specific farm area that you are comfortable with and stick to it. You can expand with time once all your systems are in place.

What about virtual real estate investing?

Sometimes you may think it’s possible and even convenient to buy properties you have not seen. This could probably work in partnership with other real estate investors, and probably enable you to buy properties nationwide.

Personally I do not buy properties I have not seen and would not recommend this to anyone. Stick with the simple deals you can handle and grow with the times as you gain more experience in real estate investing.

One more thing about focus – as you target your market, target the type of properties, such as wholesale deals, rentals, lease to own, subject-tos,  etc. This helps you decide the price range and the best neighborhoods that have your kind of properties.

You also need to target your marketing method both on the internet and direct mail like letters, post cards, etc. Whichever method you use, it is important to have a real estate investing website that tells your story and runs your business.

Your real estate investing business will succeed more because you will be able to do more deals spending less effort, time and money when you focus.

In order to run a success real estate investing business, it is necessary to automate most aspects of your business, increase efficiency so you spend less time, money and effort while closing more deals. A lot of real estate investors have achieved this with database driven real estate investing web sites that also automate most tasks of real estate investing.

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How to negotiate a lower price in real estate investing

Thursday, February 10th, 2011

Making offers that get accepted is the first and most important step of real estate investing. Unless you can negotiate a price that makes you profit, you cannot succeed as a real estate investor.

These tips will help you make offers that get accepted when buying houses.

If you are a home owner looking for your dream home, these tips will also help you.

Obviously, the way you negotiate depends on who the seller is. If you are buying directly from a motivated seller, you negotiate differently than when buying from a bank, or through a Realtor.

Let’s look at each scenario.

1)      Buying from motivated sellers

This is the one I find easiest. As a real estate investor, before making any offer, you must know the fair market price after repairs, repair costs, mortgage balance and the asking price.

Your offer is determined by these four factors.

Assuming the mortgage balance allows it, your offer may not necessarily be what the seller is looking to get. Of course before I can talk to motivated seller, I already have all the numbers and have determined the deal can work.

I prefer to do it on the phone whenever possible. Say they want $65,000 on a $100,000 house that needs repairs. Even though I have the asking price already, I will ask:

 “What is the lowest price you can accept for this house?”

“$65,000 dollars?? Hmm”

I can pause for at least 1 minute. This works like magic.

Then I’ll ask “is that the best you can do?”

I will then listen as the motivated seller talks his way down. Never sound excited even when it sounds too good. By the end of the conversation, I will still tell them I need to look at my numbers and will get back to them later.

Then I will call them back and make my offer. Or I can make my offer in writing. If their asking price is still too high for me, I will still make a lower offer, while still looking at the needs of the seller.

Most of these offers will get accepted.

2)      If motivated seller has a Realtor

Sometimes motivated sellers may have properties listed with a real estate agent.  As a real estate investor, I never make offers through a Realtor. I tell the motivated seller I can buy the house, but due to real estate commissions, my offer may not work for them. I ask them to give me a call when the listing expires.

Usually they will call their Realtor and ask them to cancel the listing. Then my offer would work like a motivated seller.

If you are a home owner buying a listed property, then you must make your offers through your Realtor. Unfortunately you don’t have clear information such as mortgage balance, etc.

3)      Buying REOs

When buying REOs, it is important to make sure your contract says you are buying “as is, where is” and you have a clause that covers inspection.

Once you make an offer, the bank is likely to make a counter offer. You can justify a lower price after inspection. Remember that all offers have to be written and go through your Realtor to the listing agent, who then submits it to the bank.

Successful real estate investing not only demands buying houses efficiently, but also selling them quickly. Learn how you can quickly sell your houses even in a poor market using a real estate investor website for selling houses.

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