You, too, can start living the life of financial freedom by starting your real estate investing career the quick and easy way: Wholesaling single family houses. It was said to me many years ago by one of my many real estate investing coaches that, "Any brain-dead moron can wholesale single family houses and make a boatload of money doing it." You know what? He was exactly right. I'll admit it; I was the brain-dead moron that he was referring to, and yes, I make a boatload of money doing it. Here's how to get cash for houses:
- Find the deal. You're looking for vacant, UGLY houses...the uglier, the better. You can drive around looking for these houses or you can pay a kid $5 per house for every picture he brings you with an address. Make sure you stay out of the war zones! Also, it's much easier to prospect an area within a 30-mile radius of your home.
- Find the owner. Once you find the vacant, ugly house, you need to find out who owns it. Obviously, they're not living there now so how do you find them? There are several ways you can use. You can hire a skip tracer who will find the owner for a fee. You can ask the neighbors. Or my personal favorite; you can check the tax records. Go to your local county tax assessor and they will let you use their computer to search by address and find the seller.
- Contact the owner. Now that you've found the owner, you can contact him in one of two ways. First, you can call him. I personally don't like this method; it's too much like "cold calling" and no one likes to be called at home. I prefer to send a letter. You already have his personal residence from the tax roll, so mail him a simple handwritten letter telling him that you want to buy his house and asking him to call you. Don't use a window envelope (it looks too much like a bill!). Just a standard envelope (handwritten) so it looks like a letter from Grandma (it guarantees that he'll open it).
- Follow-up. Wait for him to call you. If he doesn't call within two weeks, send another letter. It's a proven fact that most transactions take place within the 2nd to 7th contact with the seller. Don't give up!
- Do your homework. While you are waiting for the seller to call you, find out what the house is worth in good condition. To do this, you may need the help of a real estate agent who can do a quick market analysis. You'll need an agent as part of your dream team until you get a good idea of the values in your market area. Get an idea of how much repair is needed to get this house in good condition. (A contractor can give you an estimate.)
- Take the call from the seller. When the seller calls, be prepared. There are several questions that you'll want answered by the seller to help you determine whether this is a money-maker or not. Let him answer your questions. Don't let him put you on the spot. Be prepared with a list of question like: How much is the house worth in good condition? (Not the condition that it's in now!) How much are you asking for the house? How much repair is needed? Do you owe anything on the house? If so, how much? If I were to pay you all cash and close quickly, what is the least amount you will accept? Is that the best you can do?
- Determine from the seller's answers whether he is a suspect or a prospect. In my business, I only deal with prospects, and so should you. Here's what I mean. A suspect wants to sell. A prospect needs to sell. Only work with prospects who need to sell and your business will be so much easier. If you spend your time dealing with suspects, they will run you out of the business quicker than you came in. Don't let anyone tell you how to run your business. If you encounter a suspect who wants to sell and gives you grief, politely get rid of 'em immediately.
- Negotiate sales price. In wholesaling, you are buying bargains and selling them to bargain hunters. This means you gotta buy 'em cheap. Make sure the sales price that you pay is on the low end.
- Put the house under contract. When you find a deal and the seller agrees to your price, don't hesitate. Tie it up ASAP. Meet with the seller and have him sign the Standard Purchase and Sale Agreement. My normal binder deposit for this deal is $10, company policy. (It's my company; I wrote the policy.) Set closing for no less than 30 days.
- Check the title. Never, ever buy a house without checking the title. Find a good title attorney and fax her the agreement. Within 2-3 days, she will tell you whether there are any liens against the property (mortgages, judgments, levies, etc.). If not, you're ready to close.
- Find a buyer. If you're new in the business, put an ad in the paper. This ad should say: Handyman Special, Cheap, Cash, and Phone Number. Run this ad for no more than one week. When potential buyers call, take calls personally and keep the caller's information for future reference. Why? Because the secret to selling ugly houses FAST is your Buyer's List. Once you create this list, you may never need to run another ad to sell your ugly house. This list is a goldmine, so don't lose it!
- Determine your selling price. In wholesaling, you want to make at least $3,000 profit on every deal, sometimes more. That's why it's so important to buy your houses cheap.
- Take calls from buyers. When potential buyers call, let them know how much you're asking, then send them to the house. Don't meet them at the house! We're not realtors! More than likely, the caller is a contractor so he/she does this everyday and knows how to get in if he needs to. Let buyers know that you have several buyers and the house will go quickly so they need to call you back ASAP if they want it.
- Meet with buyer and have him sign an Assignment of Contract. Don't meet the buyer at the house. He's already seen the house. He knows what he's buying. Just have him sign. The "Assignment of Contract" form is assigning the original contract with your seller to your buyer. It will dictate how much you get out of the deal. Set closing for 10 days. Don't give your buyer a chance to wholesale your house. That's your job. After all, your title agent has already done the title work.
- Get a binder deposit from your buyer. Your buyer is buying under your terms. Buyers are familiar with binder deposits. I ask $500 and so should you because occasionally buyers back out.
- Set up closing. Send all the paperwork (Agreement and Assignment) to your Title Attorney/Agent and she will take care of this for you.
- Collect your check. I don't go to closing; you don't need to, either. Your Title Agent/Attorney has all the paperwork. Your seller and your buyer will go to closing. Have the title company send you your check for selling a house.
- Go find another deal!
This house selling stuff is pretty simple huh? It really is! Check out my website: www.6sInternational.com and I'll teach you more tips about selling a house and how to do this step-by-step. Just click on the "Products" tab to get started.