Tuesday, June 22, 2010

Finding Buyers for your properties

It seems that I hear a lot of people these days who can get contracts on properties because sellers are desperate these days. However, they have problems finding good buyers with money to purchase the properties. Here are a few tips to find good buyers for your wholesale properties.

1. Go to your local housing authority and get a list of the section 8 landlords. Call the list. Yeah, I know -- calling people out of the blue is hard. But, you know what? If you are going to be a success in this creative niche of the real estate investing business where you aren't using a lot of your own cash to buy and hold properties, you're going to have to do some things that take you out of your box. Sometimes, you're going to have to cold call people. You're trading your previous comfort level for success. Get over it. Get on the phone and make the calls. Not only will you find some great cash buyers who want more rental properties, you'll find some landlords who HATE what they're doing and who will be willing to sell you their properties. GREAT situation -- finding buyers and sellers from the same list!

2. Get yourself to your local REIA meeting! Real Estate Investor association meetings and network. Talk to the president of the group. They will know who the players are and if you come across well, they will be thrilled to introduce you. Be friendly. Find out what is important to them and offer to help them with whatever it is. Follow up! I have met so many people at REIA meetings and hardly anyone actually bothers to follow up. That's great news for you. If you actually follow up, you won't just be one of the herd, you'll be unique and you'll be building yourself a good reputation.

3. Get a list from one of 3 places: Your title company, your MLS or RealQuest. Ask for a list that includes the following:
People who have purchased in your area
in the past 6-9 months.
Non-occupant owners
Loan balance = $0
Purchase price = whatever price range you want to sell it at
Get all the details that the list provider can give you
Realquest will be the most expensive of these options, but they include information that covers 97% of the properties in the U.S. If you can't get the information through your title company or your Realtor's MLS, they are a good option. And, isn't it true that it's worth paying a few dollars to get a list of solid cash buyers who are purchasing right now in your area?
Now, go buy a house!

Christy Mellott
Millionaire in Training, www.MMMChallenge.com

Monday, June 21, 2010

Do you Quit or Keep on Going?

There have been many times when I wanted to quit in life, but I just kept going -- in the final stretch to get my college degree and on my first completed wholesale deal are 2 big ones.
When I was going to college, I was also working full time while I went to college at night. I was also a leader of our Tony Robbins group in Denver and had a very active social life. Oddly enough, once I could see the end stretch, I lost the motivation to continue. I forced myself to go on & finish. It was very good for me. Just having a degree opened up job opportunities that would never have been available to me without one. And if I hadn't finished that, so close to the end, it would still be haunting me, 12 years later.
The other time that I was tempted to give up, but I knew I had to fight through was when I was doing my first wholesale deal in January. I had a motivated seller on the hook -- he had a property listed at $250,000 and after some negotiations, agreed to sell it to me for $130,000. I thought that finding a buyer would be easy! So, I called someone that I 'knew' could perform & spent over a week working with him -- and a week in wholesale time is a LOT of time! Well, for some reason, he couldn't come up with the money, so he told me to go and find another buyer. Luckily, it was just before one of the REIA meetings that I attend, so I pitched the deal there and got a ton of interest. Did I mention that I raised the price? I was going to sell it to the first buyer for $145,000 -- and when I had to go find a new buyer, I raised it to $150,000.
I showed the house and put it under contract within an hour. The somewhat new, but not totally inexperienced buyer seemed so eager & was working with a hard money lender who was thrilled to lend on the property. Well, the buyer decided that he didn't like some of the verbiage on the hard money lender's contract and backed out. 24 hours before closing. So, I scrambled and found another buyer who had the cash to close. I thought this buyer was experienced, because he lent money through the hard money lender, but it turns out that this was his first foray into buying a triplex. He freaked when he found out that the landlord pays for water and trash... and backed out 5 minutes before the deal was to close. At closing, I had to talk a very unhappy seller into extending the contract, which he did, for one week. It had started as a 3 week contract.
I put the property under contract again with another buyer, who is generally a great buyer, but the owner of the company was somewhere in Central America with spotty cell coverage and was very hard to get in touch with. They were supposed to fund through an IRA... guess what they didn't get in time? I had to ask the seller to extend again. He wouldn't do it.
So, I closed on the property myself using hard money for a week. Well, that buyer had several more problems getting their money and wouldn't pay the additional fees it was going to cost me to hold the loan longer. Therefore, I found another buyer with cash who FINALLY closed on the triplex. Because I was under the gun, I agreed to pay his closing costs as well. In order for the last buyer to close, the other buyer had to release their contract, so I had to return their non-refundable $3,000 deposit to them. On a property that should have been a slam-dunk $20,000 fee to me, I wound up making about $12,000 after all my costs.
It was hard to get that property closed, even though it had an ARV of $300,000 and fix up at the most would be $30,000, so with the price of the property and fix up costs, I was selling it at 60% of ARV, which is an unheard of value in the Denver area. Usually properties go at 75 to 80% -- sometimes more.
But, I persevered and made a nice check which I would not have done if I had not powered through all the obstacles. Wholesaling isn't that hard in most cases, so I had to deal with the worst first. I forgot to mention that the seller's Realtor kept scheduling closings, even though I didn't have the buyer's completely lined up? She definitely added an extra layer of complexity!
Now, time to go buy another house!
Christy Mellott
Millionaire in Training, MMMChallenge.com