Tag: assignment

Today I’m going to show you how to flip houses quickly and repeat–creating a pattern and a rhythm so that you can flip fast and make money even faster (and repeatedly).

But….before we dive into that, quickly let me recap from my previous post. When we last met, we introduced the necessary steps to striking a deal with the seller. We talked about how to proceed with deals when the bank is the owner. Then we got into pulling comps and establishing values.

Starting to ring a bell? Good.

But that’s just a glimpse back in time, so I encourage you to rewind and start from the beginning if you need a refresher.

Okay. Ready or not, we’re moving on to tackle the art of the quick sell…

Steps to Sell

Build Your Buyers List

If you want to sell quickly to investors or rehabbers, you need to build a buyers list.

The best way to do this is to turn to the list – Craigslist that is. I know, I know – it has a bad rap for some things, and even listings in particular, but for our purposes, Craigslist is a winner. So use it to list your properties – multiple properties at a time – to attract those hungry investors.

Personally, I use my Cash Buyer Data Feed system to help build my own cash buyers list every single month. It’s fast, super affordable and hands you known cash buyers on a silver platter! In fact, if you haven’t already tried it, you can run a quick search completely FREE by clicking here! 

For instance, if I am investing in Dallas, I can log in and find all the known cash buyers for my deals just like you see above!

LinkedIn is another great online networking tool.

Oh, and don’t forget about good ‘ole bandit signs. Some consider them old school, but they work – very well, in fact – so place them strategically in high traffic areas with good visibility, where investors will see them and be sure to use strong (bold and brief) language to reel them in and get the phone ringing.

Now, if you’re freaking out about building a buyers list, don’t!

Just relax because you only need a handful of buyers to get started. (If you’re talking high volume, though, then that’s a horse of a different color for a different post). If you’re placing your ads effectively and in the right places where investors will see them, you should receive lots of calls from interested buyers.

Remember to prescreen these guys and gals to make sure they can close quickly, and use a script so you remember to ask the right questions and stay in control of the conversation. Then make sure that you are prepared with the right answers.

Being a rookie is ok, but you’ll want to make sure you don’t sound like one.

Pro Tip: The key to prescreening is to ensure your buyers can close BEFORE your contract expires.

You might be wondering, “Can you ask you seller for an extension?”

Yes. But it’s not ideal. So make sure that whenever possible, your buyers have the cash up front.

Assign the Deal

Once you prescreen your potential buyers and the right one emerges, you can assign the deal to your buyer or rehabber – assuming your contract is assignable.

When you do an assignment you’ll collect some cash now and the rest at closing.

We’ll look at what to do when an assignment is not an option in another post. This is where my “No Fee Transactional Funding” will come into play.

When we do an assignment, our buyer’s money is what funds the deal, and we sell differently than we buy. YOU always give the smallest earnest money deposit when you buy, but you want to collect the largest earnest money deposit possible when you sell.

Remember, whatever is due at closing, the title company will collect for you. Your buyer is essentially paying you to go away. And the best part? You don’t need the money to close and you don’t even need to be present at the closing!

And this is great because, as you know, your time is much better spent working on getting the next deal done.

So find the deal, flip it quickly, forget it and move on to the next!

Automate the Process

I can’t stress this enough: To build a sustainable house flipping business, automation is crucial, so you can repeat the process quickly and easily and eventually if it appeals to you, scale into other markets.

One of the ways you can “automate” is by using bird dogs. Have them find vacant properties for you. They need to be your eyes on the ground to take property photos, find estimate the square footage, and categorize properties to determine how much work is needed.

Have your bird dogs use a map that you’ve divided into sections based on your search criteria. Power through each section, then start back at the beginning. Keep the rotation going throughout the year, and work through your list of interested buyers.

The cream will eventually rise to the top.

While you’re working through the cyclical process, send an email blast to your wholesale buyers list to get them excited about your “deeply discounted” properties.

Wet their whistles but don’t get greedy.

Automation is a whole lot easier if you have a tool to help you manage and scale your business. I created and continue to use iFlip Real Estate, and I truly believe it’s the most powerful automated solution for real estate investors available today. Click here to test-drive iFlip 100% risk free today!

Now it’s all about repeating the process so you can cash checks often, and do it all over again… and again, (as often as you want).

It’s up to you to make that call based on your time, resources, and available funds but… you won’t need much.

In a Nutshell

Here’s to hoping that I’ve opened your eyes to the beauty (and profits) to the endless possibilities that vacant houses offer.

If you follow the tips and advice that I’ve shared with you along the way in this (pretty awesome, if I do say so myself) mini-series, you WILL be able to turn abandoned property (which are everywhere around you) into BIG paychecks–quickly and easily.

And those two powerful words, in short, sum up the theme of this mini-series– quickly & easily.

So… tap into those vacant properties, work the system, and keep repeating the processes that you’ve learned in this series. Want to start from the beginning? Want to start from the beginning? Click here to go back to part 1 now!

Start investing in your financial future today by investing in vacant homes.

What are you waiting for?

If you have any questions or comments about vacant properties, or anything that we have discussed throughout this mini-series, please feel free to leave any questions or comments below. I personally monitor and respond to them.

Best Regards,

Cameron Dunlap

 

 

Here we are cruising right along in my 5-step process for quickly turning abandoned property into BIG paychecks. Today, we will begin by talking about the valuable details regarding abandoned homes and the science of striking a deal with the seller.

In my previous post, I gave you a bunch of strategies for finding those elusive motivated sellers. And as you know, some of them are decent options, but I encouraged you to focus solely on skip tracing as the easiest and quickest method.

If you want to check out all of the helpful and informative information about my vacant house deal process that I’ve been sharing over the past few posts, then you can start from the beginning by clicking here.

But first, let me start by reminding you what those 5 steps to the process are:

#1. Spot or Locate the Vacant Houses

#2. Find the Seller

#3. Strike a Deal with the Seller

#4. Flip the House to Another Investor

#5. Repeat 🙂

Sound familiar? Good.

So now….on to the good stuff– striking the deal.

Show Me How to Deal

Typically, striking a good deal isn’t as difficult once you’ve found the seller of an abandoned house.

Why?

Well this is because, oftentimes, these properties are junkers in need of repairs (and that makes your negotiating process pretty easy). It’s very unlikely that the motivated seller is willing to put in the money or time for the necessary repairs – or they would have done it already.

It’s important to keep in mind that the house being ugly and in poor condition is one of any number of things that motivates the owner to sell quickly and at a discount.

So here’s how to begin this part of the process…

Steps for Striking the Deal

Contacting the Seller

First, you have to reach out to the seller of the abandoned home. If you did a skip trace, then you’ll most likely have the owner’s new address and a phone number.

You may be wondering whether you need to send a letter or just call.

Well, that’s up to you.

Personally, I feel more comfortable picking up the phone. By talking on the phone, your relationship with the seller is likely to be more personable, thus allowing you to have a better understanding of the seller’s motives. Furthermore, by building this connection or rapport, you will ultimately make the deal with the owner quick and easy.

For instance, if you’re talking on the phone with the owner and he starts talking about his dog, ‘Cujo’. By asking him or her questions about their dog (and maybe you can share a relatable story about your 4-legged friend) you are able to build a connection with them….and in this case, it’s all about building a strong rapport, as people tend to do business with people they like.

Solving the Seller’s Problem

In order to do this, you must determine what their problem is. So…you might ask them the following questions:

• What’s going on here?
• What’s the situation with the house?
• Is there some way I can help you with this?
• What will it take to better your situation?
   

You might be thinking, “But Cam, these questions are personal.” Well, believe it or not, they’re supposed to be. In fact, the better you are at determining their problem, the better you’re going to be at solving it–which means making the deal!

So… the most important thing for you to do is to listen. And remember..this is not about you – it’s about them.

Accessing the Vacant Property

If you don’t already have an estimated repair cost from your bird dog, then you’ll need to get those numbers. However, if you do have the repair estimate, you will also need to have access to the house so that the end buyer you’re going to wholesale this house to, can see it.

Pro Tip: If you’re not sure how to get an estimate of what repairs cost in your area… check with other investors or local contractors so that you can best determine the typical pricing in your area.

If the seller is local, then you can just meet them at the house. If they’re out of town, they might have a local person, like a handyman or relative, who has a key.

You might also find that the person who has a key is a landlord. Perhaps over the years, the owner rented out the property and had a local landlord manage it.

Sometimes, one of the last things the landlord does before moving on is changing the locks to secure the property. This might mean that the owner of the abandoned home doesn’t have a key.

Well, it’s super easy to change a lock. Any handyman can do it. But you must be sure to get the permission from the owner before you do so. (This would come a bit further along in the process when you’ve actually struck a deal with the seller.)

This is a great opportunity for you to continue building rapport with the owner. For instance, you might offer to change the locks for them at no cost. Normally, a locksmith or handyman would charge at least $100, so by doing this, you have just solved a problem for them. And remember, it’s all about them, so not only will they appreciate you doing this, but it’ll help make you one step closer to striking that deal!

You’ll also want to hang a lockbox on the door. I know you’re probably thinking, “Why would I do this?”

Good question. Okay so…think ahead to your end buyer. By hanging a lockbox on the door, you can easily give access to your buyer by putting the key in that lockbox for him or her… and the best part? You don’t have to meet them there to let them in.

How to Proceed If the Owner Is a Bank

We also have to consider that the abandoned home might be bank-owned. If this is the case, then the seller of the vacant house is the bank.

If you started your search off right, then you would have already known this by researching the Tax Rolls, which would have contained the name and address of the person (or entity) that is paying the taxes on the property (in this case, it’s the bank). As you know, I talked extensively about Tax Rolls in my previous post.

So once you have the name of the bank, look on the bank’s website and search for the local agent who represents them. Or you can simply call the bank and ask.

Most likely, you’ll be ahead of the game here – you already know there’s no sign in the yard of the house, and there may not even be a listing on the house yet, which means it hasn’t hit the MLS.

For example, you may reach out to that agent and say:

“Hey Mr(s). Agent, I found this vacant house at 123 Main Street. It’s in need of major repairs, and it’s something I’d like to buy. I’d like to make an offer on it as soon as you have it available.”

By saying this, you’ll impress the Realtor by knowing about it so early. And when they do get the listing agreement ready, they’ll probably come back to you before they list it on the MLS.

Here’s why it behooves them to do this…

If the Realtor submits your offer and it’s accepted – they’re not only the listing agent, they’re also the selling agent –they get paid twice. And really, I don’t know any agents out there who don’t like double paychecks. Am I right?!

By doing the deal this way, not only does it give you a leg up on the investor competition, but it also serves a dual purpose – you’re building rapport with an REO listing agent.

Relationships with these Realtors can be very valuable.

Pro Tip: You have to follow through when doing deals this way. When working with listing agents like this, do what you say you’re going to do – and you both can continue to profit from your working relationship. If you don’t follow through – they’ll cut you loose and never work with you again.

Pulling Comps and Determining Price

Your next step is to pull comps to know what the house would be worth after repairs are made. In other words, you need to determine the After Repair Value (ARV).

Personally, I use the custom comps tool that you can access through iFlip Real Estate– my business automation CRM (and it works great for determining the ARV)! Click here to try it out risk free if you haven’t yet.

Where else can you get comps?

• Your Realtor – with access to the MLS
• Tax Assessor’s office – pull local, similar, recently sold properties (not the assessed value)

In order for us to determine the value of the abandoned home, we have to pull comps. Until we do this, we can’t make an offer until we know what the house is worth (taking into account estimated repairs and our profit). And remember, you can use my 3-categories method: Bad, Really Bad, Awful to help determine those repair costs. 

Here’s where we run my Purchase Formula, which is .70 cents on the dollar, minus repairs:

ARV x .70 – Repairs = Your Likely Sell Price (when Wholesaling)

Read this part carefully please…

 

Your end buyer is going to want a good deal on this property. When you can sell the house to him/her at or above the Sell Price above and you’ve built in a profit margin you’ll make money. And by doing so, you’ll be turning those abandoned houses into pots of gold as a wholesaler. 🙂

A simple rule of thumb to factor in your profit is to take 5% of the ARV. For instance, if the house has a $200,000 ARV, that’s $10k profit for you. Or, if the house has a $500,000 ARV, that’s $25k… (You get the point).

…So deduct that from your Sell Price and that’s the price you want to pay the seller for their house. Finally, you turn around and sell it to your investor at or above your Sell Price – and that’s where your profit comes from.

Make the Offer

Now you can make an all-cash offer or pre-approved financed offer to your seller. When you are pre-approved, and my funding clients are, you can waive the mortgage contingency. You may also want to waive the appraisal, inspection, etc. contingencies too. When you do, your offers are nice and clean, and banks like that!

Pro Tip: I have a super-informative course about PSA’s, which you can – and should – check out here.  And ALWAYS have an experienced attorney review your legal documents, before you use them, to ensure you’re protected.

Don’t be concerned about making a cash offer without actually having the capital. You don’t need it (and you’ll see why in my follow-up post). Actually, all you need is a small Earnest Money Deposit. And with these types of deals, usually a $10-$100 EMD is sufficient for the seller.

You may come across some sellers saying that you don’t need an EMD at all. But you do! In order to make that PSA (Purchase & Sale Agreement) binding and legitimate, you have to put up some deposit money.

You also want to set your closing date 30 to 45 days out – this allows you time to find your end buyer.

Once you and the seller have the signed PSA, you need to have the title checked to ensure there are no liens, encumbrances  against the property that might prevent you from moving forward.

So you turn over your PSA to either your title company or closing attorney and let them open escrow. Part of the escrow process is to do a preliminary title check–the results of which you want to get in writing. It should say something like this:

“Based on a preliminary title check on [date], we have found that the title for the property at 123 Main Street is clear and marketable.”

By seeing something to the effect of ‘clear & marketable,’ you’re good to go.

Okay, so if you’re at this point in the process – you’re close to closing the deal. The finish line is in sight…

One More to Go

Can you believe we’re just about finished with my 5-step process? Most of the hard work has already been done!

You or your bird dog located the vacant house, you found the owner/motivated seller (probably with a skip trace), you worked a deal with the owner of the abandoned home, and now you’re ready to wholesale this property to another investor!

… and in my next post, that’s exactly where we’ll pick up!

Until then….

If you have any questions or comments about striking the deal with the seller of abandoned houses for sale, please leave a note below. I personally monitor and respond to them.

Best Regards,

Cameron Dunlap