The NEW Rich Real Estate Wholesaler

Transcription

1 The NEW Rich Real Estate Wholesaler Escape the Rat Race, Become Financially FREE and Live the Life of Your Dreams By Christopher Seder

2 Copyright 2013 by: Christopher Seder Big Sky Property Solutions LLC P.O. Box 475 Hardin, MT Copyright 2013 Christopherseder.com and Big Sky Property Solutions LLC All rights reserved. No part of this book may be reproduced, transmitted by any means, electronic, mechanical, photocopy, and recording or otherwise without written permission from the author. You cannot give this book away for free You cannot give it away as a bonus You do not have the rights to resell this book Any unauthorized reproduction of these materials in whole or part will result in legal action against you or your company. If you would like to participate in our affiliate program, go to for details. You can also sign up for our mini course and get the rights to give that course away for free. Legal Disclaimer: All the information presented herein is based upon the author s research and experience. The author is not responsible for errors or omissions. Laws and legal practices vary from state to state, and from municipality to municipality. Furthermore, laws can, and often do change over time. The author does not vouch for the legality of his opinions, nor is there any intent to supply legal advice. The author strongly encourages the reader to consult with an attorney prior to entering any real estate transaction and contract and before taking any action on the material written or presented by the author.

3 Table of Contents Introduction... 4 Why Most Real Estate Wholesalers are BROKE!... 5 What is real estate wholesaling? Benefits of Wholesaling Real Estate Finding Wholesale Deals: The Art of Marketing Evaluating Deals How to Find Buyers Hour Wholesale Case Study Flipping REO s and the art of the Double Close Potential Mistakes Wholesalers Make Action Steps How to Automate Your Wholesaling Business Appendix Real Estate Flipping Riches FREE Video Course... 57

4 Introduction Right now we are in the mist of the hottest real estate market in centuries. This is what I heard on the news in June of Just two years ago the news was saying something very different, they were saying how the real estate market was at an all-time low and it would take years and years for us to recover. And just five years earlier in 2006 we were once again in the hottest real estate market the world had ever seen. If you watch the news you will never make a dime in real estate investing because they are always creating FEAR in people. Every real estate market moves in cycles, it moves from a buyers market and then in a few years goes to a sellers market. But the great thing is that there are deals and money to be made no matter what kind of market we are in. Do not let the media, realtors and other (scared) investors tell you different. My father has been a real estate investor for over 30 years now and has seen every type of market imaginable. He has proven that with the right knowledge you can be successful in real estate investing no matter what. The reason most people do not succeed is because they go about real estate investing the wrong way. 99% of people think that you need to rely on appreciation to make money in real estate investing. But this could not be farther from the truth. The key to making money in real estate investing is having the ability to buy a property at a steep discount, i.e. buy real estate at wholesale prices. I have created this real estate investing ebook to show you how you can flip wholesale houses and make $2,000 to $100,000 doing it. Whether you want to just focus on wholesaling or you want to become the Donald Trump of your area I recommend everyone starting out to focus on

5 wholesaling real estate. Wholesaling real estate will give help you create quick cash and can help you create the real estate investing business of your dreams. Sincerely, Christopher $eder Why Most Real Estate Wholesalers are BROKE! Before we dive into real estate wholesaling I want to discuss with you how you need to become the NEW breed of real estate investor. The old ways of doing things are Dead Wrong. In order to become successful in real estate investing TODAY you need to radically change your thinking. The majority of the world thinks that to be successful you need to spend countless years getting degree after degree and racking up hundreds of thousands in student loans. Once you get all of this education you then go to work in a dead end job you HATE. Or to become rich you have to be born into a rich family. I am here to share with you that fact that you do not have to conform to the norm. The accepted system of go to school, get a job and you will be secure is broken. No job is secure and I know several of newly college graduates that are working for less than $15 per hour working 8 hour days and stuck in a dead end job. They are trapped paying over $1000 per month in student loans. This is not the American dream they thought they were going to be living before they attended college. This has been happening in the real estate investing industry for many years now.

6 Most real estate investors are being taught techniques and strategies that take hundreds of hours to complete and after the dust settles they are making $15 per hour working in their real estate investing business. Real estate investors have become accustom to doing everything in their business from doing all of the marketing themselves, all of the work, and even wasting time taking to unmotivated sellers. The old real estate investing model is DEAD. There is a better way to live. Do you know there is a select group of Real Estate Investors who have discovered a new way to live? These new real estate investors think differently, and run their businesses differently. The NEW breed of real estate investor #1 goal is FREEDOM. They want to have a business that runs on autopilot and gives them the freedom to pursue anything and everything they want in life. The old philosophy of real estate investing was to buy a property and you will get rich in 20 or 30 years when the market goes up. Today the new real estate investor realizes there is a better way to do things. They have a sense of urgency and implement their ideas in nano seconds. The new real estate investor is are saying to themselves aha I have a great idea and acting on those ideas right away. Average real estate investors get an idea and say aha I have a great idea but you know what they do? They analyze, then a week or so goes by and they forget all about it. The new real estate investor looks at the idea and implements it immediately. They might not have a clear plan on how they are going to accomplish the idea but they get it doing. The number #1 key to success is just getting started

7 When writing this book I could have sat around and thought about. But instead I said Screw it and I Just started writing. I decided that if I did not get this started right that very second I would never get it done. Ready Fire Aim Make it happen right now and adjust course later. No one ever became a billionaire by just sitting around thinking about ideas. They thought about ideas and then took massive action. Remember that fortune favors the bold. If you want something you cannot just sit around and wait for it to happen. You need to make it happen. I know you are thinking to yourself that is just plain reckless. What happens if I Fail? What if my ideas suck the big one? What will everyone think? I have a better question you should ask yourself? What will happen if you do not take a shot? You will be stuck where you are; you will be sucking in a DEAD life. Guess what? If you fail once you can always try again. Average real estate investors think they have all the time in the world to accomplish their goals. They just think everything will fall into place. Screw that, the new real estate investor does not want to wait 20 years for their goals to fall into place. We want them right the heck now. Realize that the longer you wait to take action, the easier it gets to forget about your goals. Working Virtually The NEW breed of real estate investor works virtually. I personally work most of my time from my home office. The new real estate investor is a mobile machine; he can work out of a coffee shop, in a hotel room or even in a BAR. The key to doing business like this is to have a team of amazing people working for you. Not just employees but people who have similar goals. Your team should have a clear vision on what you want to accomplish.

8 When your team has a clear vision it s easy to manage everyone. You really don t have to worry. I currently have several VA s from all over the world working in my business every single day. We have developed an easy to follow paint by numbers system that allows are VA s (who live all across the country), to easily have success working for us. To find these amazing VA s we go to odesk.com, and post a simple ad. Once VA I have is currently working for me for 36 cents per hour. Yes cents. He works a few hours a week just sorting excel data and looking up property owner addresses. I also have a VA that returns all of my phone calls. If a seller calls me looking to sell a house, my VA calls them back and pre-screens them. This VA I pay $3 per hour. I use Skype to keep in touch with my VA and they use my FreedomSoft account to keep track of all of my real estate leads. I highly recommend everyone get a VA as soon as they can. Learn the business first but once you have it down, start creating the life you want. I don t want to answer the phone all of the time or call people back, So I have outsourced this part of my life. And guess what, I am a lot less stressed. Why we Outsource? The number one reason why we outsource our business is Time! Everyone needs to spend their time focuses on what is most important in our lives. We need to focus our time on growing our business and working on our business and not in it. The more small tasks we outsource the more time we have to do other more important tasks. The small tasks are very important and they must be done.

9 Every day we must manage our time. How do you manage your time? Do you have a schedule you follow? If you are not actively scheduling out your days and weeks you may find yourself never getting anything done. Usually during the day we get caught up running errands, and reacting to whatever comes up. Pretty soon we realize nothing truly important was accomplished that day. When nothing gets done in a day you then spend your whole night thinking about what needs to be done the next day. Before you end your work day start making a schedule of what you want to accomplish the following day. Keep your list pretty short 4 to 6 items, this way you know you can accomplish all of them. Remember to start outsourcing the smaller items on your list that a $3 per hour VA can do regularly and easily. Always be thinking to yourself what is going to bring in the most money right now. If the item on your to do list is not going to bring in money then outsource that task. That is a good way to prioritize your tasks. Do whatever is going to make you the most money first. Because we are now talking about time management I want to touch on a few time wasters everyone does. Facebook and are two of the biggest time wasters on the planet. I find myself wasting countless hours on facebook. Has facebook ever made me any money? Not really. I have never made a dime when I was surfing my friends Caribbean vacation pictures. Get your Ass off of facebook, when there is important work to be accomplished. Once you are done with your work, by all means creep on facebook hotties. Get Things Done or Die I want to make sure you understand that in order to succeed in this business you need to get a lot done. If not, your competition will kill you.

10 Your competition does not care if you become successful or now. To make it in real estate investing you need to be in several places at once. You cannot do a little bit of marketing this week, maybe take next week off. NO you need to be consistent with everything you do and get business done every single week. One of the biggest mistakes a lot of new real estate investors make is they try something for example send out 50 letters to sellers and they do not get a deal out of it. So they get discouraged with mailing. Then they think they need a new letter because that letter didn t work so they hum ha around for months and never send another mailing. Then they wonder why they are not finding any deals. Get your mailings and marketing our consistently. Just Do it! I am consistently creating more products, launching new marketing campaigns and have several different things going on. Nothing I create or do is perfect. But guess what, I just get going and adjust on the fly. Develop this habit. For instant this book is not perfect, there are spelling errors and mistakes. Most Authors would go back and correct every little thing, spend 8 months perfecting it. Frankly, I would rather just get it on the market and correct it later on. I can always go back and spell check everything. The type of people I attract and you should to do not get hung up on the small details, they are big picture people. People that can t look past a spelling error in a book or in an article are focusing on the wrong thing. They are critiquing the author for spelling when they should be taking in the author s message.

11 The Story of Vacant House Riches Take Action I had plans to do a Vacant House home study course for a long time. This was one of those ideas I had come up with because we started realizing that 80% of our real estate deals where coming from vacant houses. At first it was just an idea and I did nothing with it. One day out of nowhere the idea came back to me and I decided that day I was just going to make it happen and put the course together. So over 1 weeks time I wrote a whole book and shot and recorded like 7 videos for the course each around 45 minutes long. Within 1 week the course was put together and I launched the course. Yes 1 week to implement an idea. And I really did not spend that long putting the course together; it took me maybe a day to write the book and then each day I made a video for an hour or so. The course has sold thousands of copies and is loved with everyone that buys it. Not one person complained that there where spelling errors (I know there are). And not one person has ever asked for a refund with the vacant house riches course. Why? Because I give you awesome material that is straight to the point and works. It s not perfect but it works. It s better to take action and have not be perfect than to never create something because you want it to be perfect. The people that never take action are the people that are usually broke right?

12 Just go and flip a house already Let s apply this to real estate investing. Most people I know even some of my students want to plan things out for like 30 days, 90 days or more before they ever do anything. I tell all of my students you don t have to understand everything right away. Just get the phone ringing, get some leads coming in and flip a dam house. If you have any questions as you go it s not rocket science you can figure it out or just ask. When I tell my students this some of them have a major breakthrough and realize your right, all I have to do is just take action, if I need anything I can call you. So what I want to do is encourage you to do that same thing. Do not worry, just get out and get your phone to ring. I know it s scary and its hard but believe me once you take that initial step and take action your life will change. Once you start getting that phone ringing you then need to always be closer. Whenever you start something you need to finish the task. In real estate starting is getting the phone ringing and having leads coming in. But you need to make sure to close the leads. Turn your real estate investing leads into deals. It s not acceptable to just put off calling back sellers until the last minute or a week later. You need to get the job done right away. It s that simple. Become the Entrepreneur What I mean by become the entrepreneur is that I want you to focus on building your business and focus on growing your business. Most business owners focus their time working on their business. For example in real estate investing they focus on things like posting classified ads, sending out mailers, talking to sellers

13 and making offers. All of these tasks are absolutely necessary for your real estate investing business but they do not help you expand and grow your business. You can easily outsource these tasks to a VA for $3 per hour. Everyone needs to get in the mindset of becoming a business owner and not an employee of your business. Now it s fine to doing all of these things yourself when you are first starting out, I still do several of the things but I am constantly outsourcing more and more of my business and focusing on growing the business. Here s the deal You can t live FREE working 9 to 5 What I am saying is that you cannot become totally free working 9 to 5 for anyone even for your own business. You need a business that will make money even if you decide to take a month long vacation to the Cayman Islands. The new breed of real estate investors set up their business so they can run it with just a lap top and cell phone. Shoot with skype you might not even need a cell phone anymore. If you think this is not possible then go buy Carleton sheets outdated course. The rules of real estate investing are changing. And the NEW breed real estate investors are taking over the world. I encourage you to do the same. Don t follow what others are doing, because most people are working 10 hour days working in their business. It brings me 1000 X more joy working on my business than it does working in my business. Follow your passion! Everyone was put on this earth for a reason. Once you find that reason you will be happy every single day of your life. In order to find that passion we first must conquer the game of money and the best way to do that is with real estate investing. Now let s dive into real estate wholesaling and then get you on your path to financial freedom.

14 What is real estate wholesaling? Real estate wholesaling is a real estate investing strategy that you can use to cash fat checks in doing just a few hours of work. Wholesaling real estate is a lot like being a middle man. You seek out a Product to purchase at a low price and then sell that product to someone at a little higher price. When wholesaling real estate you are often times wholesaling to rehab (fix and flip investors) or land lords. You seek out cheap houses and put them in the hand of cash buying real estate investors. For your Job of finding the houses you get paid a nice profit/ assignment fee. Here is a quick overview of wholesaling. 1. Find a motivated seller and negotiate a sales price around 50% percent of the after repair value (the value of the house if it were in perfect condition). Sometimes less. The lower the better (duh). Last year I put a house under contract for $100,000 and it was worth $260,000. Put the house under contract with an inspection period of around 10 to 30 days, the longer you can get, the better. On average we get a 15 day inspection period. 2. Take the price that you agreed on and mark it up anywhere from $2,000 to $100,000 (it will take a while for you to get the feel for what you think it will sell quickly for). 3. Market the property to your community s group of real estate investors (more on that later). 4. Once you find your buyer, simply assign the contract to them with your profit documented as an assignment fee. All you are doing is simply flipping a contract, or selling your right to purchase that property to someone else.

15 I know you a probably thinking WHY don t investors just find the deals themselves and cut out the middle man? It may seem like that is a viable option and a lot of investors do find their own deals but most full time land lords and rehabbers and busy running their real estate investing businesses and do not always have the time to look for deals. They rely on wholesalers to bring them good solid deals. I personally have great relationships with land lords and rehabbers in my area. I know exactly what other investors are looking for and what they are willing to pay. When wholesaling, make sure you always give your rehabber or landlord a great deal. Is Real Estate Wholesaling Legal? Real Estate wholesaling is totally legal and not a scam. Know that you know that you can relax and start flipping houses. There are thousands of people across the United States Wholesaling houses every single month. There are some real estate investors that do give us good ones a bad name. These are the people you hear about that are preying on home owners who are in distress Why are wholesalers good for Motivated Sellers? You and I both know that you are not taking advantage of a seller when you are buying a property at a deep discount. In fact you are offering a win-win situation for you and the seller. I personally have never bought a house for anyone that was angry or upset at me. Every one of them where so happy to get the burden of a house off of their backs. The homeowner gets to unload a house that is costing them time, money, and energy. Always make sure you do what you feel is right and never take advantage of a homeowner. Always disclose everything to the homeowner and let them know that you are there to help them.

16 Benefits of Wholesaling Real Estate The number one reason my people get into wholesaling is for quick cash. Wholesaling real estate is by far the best and easiest way to make quick cash with real estate investing. With other real estate investing strategies like rehabbing and buying rental property you need to have cash, a loan or a private lender to fund your deals. For most new real estate investors they are starting out with a limited amount of cash or credit. Wholesaling allows you to do real estate deals with very little money. Here is a short list of benefits: Make a Profit in 1 to 4 weeks on average Work when you want and where you want Each wholesale deal can take as little as 4 hours of work to complete Don t need Credit Little Money to Get started Start making money NOW! Automate 90% of the process Quick Cash LOW RISK As a real estate wholesaler you are a Middle man whose goal is to find Deals for other investors. Once you really get your wholesaling business up and going you will realize there are more buyers willing to pay you for your services than you ever thought possible.

17 Finding Wholesale Deals: The Art of Marketing Marketing is the foundation of a good wholesaling business. If you are not marketing then you are not finding deals it s as simple as that. If you really want to be SHARK and not a minnow you need to start marketing your business. But you also need to market your business the right way. Most courses teach NEW wholesalers to go out and do 1000 things to market their business when in all actuality there is usually 1 or 2 marketing tasks that will bring in 90% of your leads. I feel that you should work smarter and not harder and focus your efforts on the tasks that actually bring in deals. There are several things that will bring in leads over time, such as networking. I think that networking and letter other people know what you do is one of the most important aspects of a successful real estate wholesaler. But the problem with networking is that it takes a lot of time for it to start paying off. Because we want to focus our efforts on what will bring in deals right away we need to focus on 2 main strategies. The first and what I feel is the very best way to find deals is Direct Mail. Direct mail consists of sending letters to sellers who may be motivated. A motivated seller is someone who either really wants/needs to sell because of some sort of financial distress or they are motivated because they have a property in physical distress. The key in actually finding real estate deals is finding a motivated seller. Who do we send letters to: Absentee Owners Probate

18 Vacant Houses Absentee owners are people that own property but do not live in the property. These are people that are most likely land lords or sometimes people that have inherited property. Tired land lords and one of our best sources of deals. These are people that after years and years of owning a property get tired with the process of fixing the property up, finding a renter, evicting the renter, and then fixing up the property again. To send letters to absentee owners you will need to compile a list. The best list we have found has come from a web site called Listsource.com. I have also heard that you can get a list of absentee owners from local title companies. The title company in my area does not do this but check with them in your area. Probate is the first step in the legal process of administering the estate of a deceased person, resolving all claims and distributing the deceased person's property under a will. A lot of times when an heir inherits a property they do not want that property, they cannot afford it, or they need to pay creditors to settle the estate. We send the heirs a letter simply saying that if they have a property they want to sell to let us know. Vacant houses are my very favorite source of deals. My best deals have come from vacant houses that I have found while driving around neighborhoods. What I do is write down the address and then look up who owns the property on the tax assessor s web site and send them a letter. If you would like more information on finding vacant houses go to VacantHouseRiches.Net. The Yellow Letter Once you have choose a list to send to you will need to create a letter. Most direct mail letters get around a 3% response rate. That means that if you send out 100 letters you will get 3 phone calls. I know you re probably thinking wow that kind of sucks. Well do not worry we have figured out a direct mail letter that is proven to get between a 10 to 20% response rate which is way better than the industry average. This letter is so good that in one mailing campaign where

19 we sent out 100 letters we received 52 calls back. This was not a typical mailing but the results where amazing. Our letters are pretty simple they are Hand Written on yellow paper lined paper. The Letter says Dear Homeowner Name Hi, My Name is Christopher Seder and I would like to $ Buy $ Your Property at 1234 Seller Lane Please Call (555) Thanks Chris It s pretty simple, but because its hand written people seem to want to call. Use this letter and you will receive more call than any other letter you have ever sent before, guaranteed. Evaluating Deals Once You have your marketing in action calls and leads should be pouring in like crazy. You will be getting several calls/voice mails that say hello I received your letter and I am looking to sell my house, give me a call back at 555-SELL. Being able to quickly and accurately evaluate leads and deals is one of the most important skills a wholesaler can acquire. If you are getting hundreds of leads in per week you need to be able to spot and deal and a time waster. Being able to

20 know the difference will save you hours and hours of talking with un-motivated sellers. What I want to do is give you a simple process you can follow and have success evaluating deals. Step 1: Pre-screen the lead. Once the calls come into voice mail you will need to call the seller back and go through some basic information with them. I have provided you with all of the information we will need in order to properly evaluate the deal. Call the back and ask them all of the questions below. Lead Sheet Contact Information: (What s the name of the owner on title?, is there more than one person on title?) Phone Number: Is the Phone number you called with the Best way to reach you? Do you have an where I could send you a contract? Address: What s the Address? City? Zip? Bed and Bath: How many bed rooms and Bath rooms does the house have? Square footage: How big is the house? Square feet? Year Built: What year was the house built in? Construction type: Is the house a Block or Frame house? Property type: Single Family? Condo, Mobile, Duplex, commercial, Etc Garage: Is there a Garage? Any Special Features? Pool, Hot Tub, Etc? Is there a Particular reason you are looking to sell? (I will explain the importance of this below this lead sheet, this is the most important question)

21 Repairs Needed? What are all the repairs needed? (Most sellers will not tell you really what needs to be done) I will usually estimate $15,000, until I do a full scope of work. Occupancy? Is the house currently occupied? Who? If tenant: What is the Rent and when does the lease expire? How quickly do you need to sell? What do you Currently Owe on the Property? (If the Seller refuses, stop and Say Mam or Sir, I cannot make you an offer on your property unless I know this, for me to properly evaluate everything, I need to know otherwise I cannot help you) Are your Payments Current? If not: How Far behind are you? Who is the Loan with? Has a foreclosure been filed? (Only ask if they are late on payments) What are you looking to get for the property? (If the sellers will not give you a price, simply say Ok no problem, could you at least give me a general range of where I need to be so that I do not insult you with ) ***If I can offer you cash and pay all your closing cost, what is the least you will accept? (This is the money statement, always use this)

22 Once you are done with all of the questions simply say Thank You I will run some numbers and let you know ASAP what I can pay for your property. Now we can get into looking dissecting the deal and determining if it s a good one. But let s talk a little about the Sellers Motivation first and why it s the most important thing. I always ask sellers Is there a particular reason you are looking to sell? You really need to find what the seller s motivation is. If the reason for selling is not a very motivated reason, then the deal is usually not going to be a good one. For Example, We are just looking to upgrade our house is not a motivated reason A Motivated Reason: We are going to Lose our house to foreclosure in a month if we do not get it sold is a motivated reason Another Motivated Season: Property needs lots of work and I do not have the money to fix it up We Need to Get the Sellers Motivation because if a seller is really motivated then you know you can deal with them and possibly get the property at a discount. As you may or may not have figured out, we as investors do not pay retail price for a property, we buy houses at a 50% discount or more. When a Seller is not motivated to sell his property, he or she is less likely to offer discounts as there is no pressure on them to get the house sold. Step 2: Research the property I like to do about 5 minutes of research on the property. First I pull up the house on my counties tax assessors web site. This way to can verify the address, owner, beds, bath, sq ft and taxes. Once I do that I then run comparable sales. These are houses that are near the property, similar in size that have sold in the last 3 to 5 months.

23 In order to run comparable sales you can either have a realtor pull recent sales from the MLS. This means you have to call up/ and realtor and have them send you the information. Inside the main course I do show you how you easily run comparable sales from the MLS in about 2 minutes with a little NINJA trick I discovered. I have created a video all about this. The MLS is the most accurate source for comparable sales but there are other sources you can use. Another thing you can do is use FREEDOMSOFT, which is a software where you can enter in an address and it will show you comparable sales. Below is a screen shot of the software. I highly recommend freedomsoft. I personally use freedomsoft in my business every single day. There are other places to run comparable sales but these are the resources I personally use. Here is how I Run Comps. 1. Do a Quick Search in the MLS data Base 2. In the map area I draw a Circle ½ mile around the Subject house 3. I then enter in my search criteria. (ie, 3 bed, 2 bath, 1800 sq ft) 4. I then do a search for sold houses within the past 90 days. 5. Then I pick out 3 to 5 comps that I feel are the best fit

24 6. Print them out. To find the Value I simply estimate from the couple houses that are the most similar in size and style. Once I figure that out I then have an idea of what the After Repair Value is. Step 3: Estimating Repair Cost Estimating Repairs Because we usually make all of our initial offers over the phone, we never really know exactly how much work the property will actually need. Here is what I usually estimate Seller Says No work = around $5,000 Seller Says minor paint and carpet = $10,000 Seller Says Needs work = $15,000 Seller Says Needs a lot of work = $25,000 Seller says need to be torn down = go look at the property In the back of this book, I have included a repair estimate sheet that you can use to better determine repairs. DO NOT get too hung up on figuring out repairs. The best strategy is to use general estimates until you can actually go and look at the property. Step 4: Determining Your Offer The Next step is to determine what you re going offer. Generally speaking, we want to make offers anywhere from 40 to 60% of the ARV. If the house seems like it needs lots of work, you definitely want it to be lower than that. Use the Little formula that I have provided you with. It usually comes out to pretty close to 50%

25 Example: ARV = $100,000 x 70% = $70,000 Minus Repairs $15,000 (estimate) = $55,000 Minus Closing Cost: $4,000 = $51,000 Minus Holding Cost: $2,000 = $49,000 Minus Selling Cost: $5,000 = $44,000 So $44,000 would be my offer on a property that is valued around $100,000. My holding and closing cost should be around what you would normally pay, they might be a little high but better to be safe than sorry. All of these expenses are examples and estimates; they could be higher or lower. The selling cost could be nothing but the cost of a few signs put in the front yard or they could be $5,000 for a realtor. If you are going to wholesale the property, I would take off another $5,000 or whatever your wholesale fee is going to be. Note: The Reason to multiply the property by 70% is because that 30% is the rehabbers or your profit and you would always want to give rehabbers a nice profit. When you are planning on wholesaling or flipping the property to another investor, it is important to keep the property under 65% of the ARV. This is because lots of rehabbers use hard money lenders. Hard money lenders will not loan more than 65% of the ARV. Step 5: Call Back the Seller Once you have determined what exactly you are willing to offer on the property you will want to call the seller back right away and simply tell them Hello Seller, After running my numbers I can offer XXX amount for your property. If your offer is close to what they want for the property or if you have agreed on a price you then will put the offer in writing and put the property under contract.

26 Putting a property under Contract Putting a property under contract is not difficult, but when starting out it can be confusing. When buying from individual sellers we use a simple 2 page real estate purchase and sale agreement. When buying through realtors we use the state approved real estate contract with is a little more complicated. If you have any questions about filling out your states contract as a realtor to help you out and show you how. I have come to realize that the most important part of real estate investing is actually submitting offers and putting property under contract. Because if you do not make offers you will not get any deals. Below is a simple explanation on how to fill out a purchase and sale agreement. Remember some contracts will be different so use this as a template and an outline, it s not exact. Instructions for filling out the Purchase and Sale Agreement Parties: Owner of Record, in the first blank Seller s address in second blank Your Name/Business and or assigns Last blank leave empty Subject Property Legal Description Sale Price: Subject To Equity Payable Expenses Acceptance Deposit Closing Title Company Other Agreement Buyer Seller put in the subject property s address Find on the Counties Tax assessors site Put in your Purchase Price leave blank leave blank leave blank List if you are paying for anything date 3 to 7 days in future $100, $500, $1,000, whatever you feel like you need to put put date 30 days in future, leave second part blank at Title Put in the title company you will be closing at Buyer is a real estate investor who buys and sells for profit Should buyer cancel this contract his liability is limited to the earnest money deposit. you sign and date Sign and Date

27 How to Find Buyers Once you have found a good wholesale deal and put the property under contract you will need to find a buyer for that property. Whenever we put a property under contract we include a 15 day inspection period. This gives us 15 days to find a buyer to assign our contact to or we can cancel our contract and walk away. Right now finding a buyer is very easy, there are more buyers looking for cheap rentals and fixer uppers than ever before. Over time you will want to grow a list of buyers who are looking to buy cheap houses, fixer upper and rentals. The more people you have on your buyers list the easier it will be to sell a wholesale deal when you get it. I can easily make 2 or 3 phone calls and send out 1 and have a house sold. But before you become known as the go to guy/girl for cheap houses in your real estate you will need to put in some work and market for buyers. When starting out I suggest you focus most of your time on finding Deals and not as much time on finding buyers. I believe that when you have a good solid deal buyers will flock to you and you will not have to spend a tone of time searching for them. But if you really start to market for buyers without having deals then you are wasting your time because most buyers don t care unless you have deals. There are several different ways to find a buyer Networking, Sending out mailers, Posting online Classified ads, Bandit Signs, Flyers, and contacting contractors. Below I have created a simple outline that you can follow and will have buyers beating down your door to get your leads. What to do when you have a house under contract. Step 1 is to put out bandit signs. Bandit signs are little 18x24 corrugated plastic signs that I had talked about you can use to market for sellers. We also use these signs to find buyers when selling wholesale houses and also when selling retail houses. We have found that hand

28 written white bandit signs with either BLUE ink or a yellow bandit sign with Black ink work the best. A word of caution because we are wholesaling the property we do not post a sign in the front yard. We don t really want to seller to exactly know that we are reselling his property right away. In our contract we do say that we have the right to market the property but most sellers get a little mad when they find out you are selling their property before you have even purchased the house. But I will also say that when you sign a contract to purchase the property you are acquiring equitable interest in the property which does give you the right to market the property. Ok I got a little off topic there but let s get back on track before my ADD kicks in again. Your Signs should read something like Handy Man Special Distress Sale Cheap House Need to Sell Call Must Sell my House I only put my phone number and never leave a web site or the address of the property. The reason is because I want people to call and get them on the phone so that I can talk to them and get all of their information. When people call you need to always try to sell them the house and also get their phone number and address so that you can add them to your buyers list and notify them when you get other houses.

29 When someone calls and ask if you own the property just say that you have an interest in the property and are looking to sell it to a cash buyer at a huge discount. Bandit signs are my number one way for finding buyers. Step 2: Advertise on craigslist.org Why advertise here? Because it s free and it s effective. Craigslist is one of the top searched places for real estate. Just post an add saying that you have a cheap fixer upper for sale and to give you a call. That s really all you need to do and you should have lots of buyers calling you. Give the price and maybe the after repair value. Step 3: Present the Deal to your Local Real Estate Investors Association A great place to find buyers for your wholesale deals is at your local real estate investors association. Make it a plan to attend the next meeting and meet everyone you can. If you have a wholesale deal, call up the president of your local REIA and tell them about it, ask if they know of anyone who would buy it and if they could send it to their members. One way that I stay connected with my buyers and let them get a feel for who I am is by putting out a weekly newsletter. Newsletters are a great way to advertise your houses for sale and also build rapport with your buyers. A newsletter is a great way to start building yourself up as the go to real estate wholesaler in your area. I use what is called Aweber.com to send out my newsletters, and also use it to store my buyers addresses. Check out aweber.com. If you would like to learn about more ways to find buyers for your wholesale deals pick up my Best Selling Book Real Estate Flipping Riches The Ultimate NO B.S. Guide to real estate investing for the average JOE. You can purchase a copy on amazon or by going to my site

30 Assigning your contract Assigning your contract simply means that you are assigning your right to purchase the property that you have under contract to another investor. They then take on the risk and are required to close on the property. Assigning a contract is pretty simple. We use a 1 page assignment of contract with pretty much just says that we are assigning our right to purchase the property to another person for a fee. We always get between a $1,000 and $2,000 non-refundable deposit when signing the contract. This is because in order for us to assign it we want to know that our buyers are serious. Most investors will not put up 2 grand if they are not serious. Once you have your assignment of contract filled out all you do is scan and your contract and assignment to the title company and say to them here is a new deal, please start the title work asap. Give them the sellers and the buyers contact info so they can contact them with any questions. All you need to do from here on out is to check in with the title company every once in a while to make sure the closing is going smoothly and to see if there is anything you need to do. You job is now done and the title company will send you a check in the mail or wire it to your checking account.

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32 4 Hour Wholesale Case Study How to make $1, per hour I want to tell you a little story about a recent wholesale deal I completed. This Deal took me a total of around 4 HOURS to complete. Yes 4 hours of work. Let s start from the beginning... A few weeks ago I was driving around a few neighborhoods. Looking for Vacant Houses, and looking for fixer uppers. This day I had compiled a list of about 50 or so vacant houses that I would sent a Letter too. Over the next few days I had sent out several letters and my phone rang like crazy. One call was from a lady who had a rental property that she said was a DUMP! Over the phone I negotiated with her (she was a tough negotiator). But we finally settled on a price of $55,000 CA$H. Which I though was fair, I ran comparable sales on the property and fixed up it would be worth around $140,000. The seller s husband who was on title was out of the country but she gave me his and I sent him a contract for $55,000. The next day he ed me back a signed contract. I had a deal... I then went and looked at the property, my over the phone estimate of about 25,000 to 30,000 in repairs was spot on...

33 I then called an investor (cash buyer), who came over and looked at the property. I offered the property to him for $63,000, he said he would take and the next day I had him sign an assignment of contract for $8,000. I took the contract and the assignment to the title company and my work was pretty much done. The title company then handled all of the closing and sent me a check. One small thing that the title company had to do was to get the Seller (who was out of the country), to go to the US embassy and have all of the closing documents notarized (I paid for this for the seller; I know I am a nice guy). Once all of that was complete, which only took 1 week. The property ended up closing in less than 3 weeks after I put the house under contract. As you can see I really did not do a lot of work and cashed a Check for $7, plus a $500 earnest money deposit paid by the buyer This all started with my going out and finding a Vacant House...

34 Flipping REO s and the art of the Double Close An REO is a property that is owned by a bank or government agency. Over the past few years REO have become more and more frequent. With REO s there are a lot of amazing bargains real estate investors can take advantage of. Most REO s are listed for sale by realtors on the MLS. Banks usually do not sell REO s directly they hire real estate brokers to sell the houses for them. Here is a Quick Process for Wholesaling REO s 1. Find a Good REO listed on the MLS a. Hudhomestore.com b. Homepath.com c. Realtor.com 2. Submit an offer to the Realtor a. What is Required to Submit an offer on an REO i. Proof of Funds, Bank Statement ii. Earnest money deposit ($1,000 to $2,000 depending on area) iii. Purchase and Sales Contract iv. Banks Addendum (if Required) 3. Offer is Accepted a. Typically you will have a 10 day inspection period (hud no inspection) 4. Market the Property and Find a buyer 5. Sign a new contract with that buyer for them to purchase the property 6. Find a transactional funder to fun your deal (you will have to pay cash) 7. You will close on the property in the morning with transactional funders money 8. Sell the property later that afternoon to your buyer 9. Collect your check.

35 Wholesaling reos is a little more complicated because you cannot just assign your contract. Banks will not allow this to happen, they want to know that you will be the buyer on the property. But you can turn around and sell the property that same day or in a few days for a profit. There are several great courses on wholesaling REO s that go in depth and can help you out a lot. I recommend preston ELys REO rock Star. Double Closing The double closing method is the strategy investors use to wholesale a property when the property is bank owner, they are making a HUGE wholesale fee or when there is a realtor involved (sometimes). Here are the steps 1. Find a Cheap REO (hudhomestore.com, Fanniemae.com, Realtor.com, etc) 2. Put the Property Under Contract with a buy sell agreement 3. Find a buyer (bandit signs, your list, etc) 4. Get the buyer to sign a buy sell agreement to purchase the property at a higher price ($5,000 to $100,000 more) 5. Set up the closing and submit your new contract to the title company 6. Have a Private lender or transactional funder send funds to the title companies escrow account or your account. 7. Close on the property with your transactional funding funds 8. Your buyer then closes on the property with his own money a few hours later 9. You receive a check! Boom! You flipped an REO. Make sure that you find a good title company that is willing to complete a double closing. Some title companies will not do them.

36 Potential Mistakes Wholesalers Make The goal in wholesaling real estate is simply finding motivated sellers and matching them with motivated buyers for a profit. We have made hundreds of mistakes in our business and have been around long enough to see other wholesalers make a lot of mistakes. One of the keys to our success has been our ability to learn from our mistakes and not repeat them. Everyone is going to make mistakes and it s important that you do make a mistake from time to time because it helps keep you learning and growing. Here are a few mistakes that we have made and that other wholesalers we know have made. One of the biggest mistakes I see most wholesalers make and I have made (several times) is putting a property under contract for more than I can wholesale it for. Most investors buy property around 40 to 60% of the ARV at least in my area. Some areas investors are buying houses for 70 or 80% of the ARV. In my area there has been several times where I thought a property was worth around $90,000 fixed up and in great condition when in fact the property might only sell for around $75,000 to $80,000. Sometimes the block that the house is on is not as good as you had thought or there just were not enough comps in that area. When this happens you will either have to go back to your seller and negotiate a lower purchase price or just cancel the contract and move on. I usually go back and try to negotiate a lower price but if they are not willing to then send them a cancelation of contract and walk away. The next mistake I want to touch on is wholesalers putting property under contract without an inspection period or without any clause that would allow