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
www.realdealcolorado.com
Tuesday, June 22, 2010
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
www.realdealcolorado.com
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
www.realdealcolorado.com
Monday, March 8, 2010
Burn Exercise
This exercise is part of the MMM Challenge. We are in week 3 of the challenge. We wrote down some past limiting beliefs and some things around them like the people that we think contribute to them and why we haven't already achieved our goals, then burned the papers while we recited some of our affirmations.
Hope you enjoyed that and maybe you can do the same sort of thing to get past your limiting beliefs.
Danny Welsh and Rick Melero are excellent coaches. If you are interested in being a part of the MMM Challenge, go to www.mmmchallenge.com and apply for the next round. It's truly a wonderful opportunity... the only one I've seen where they actually offer to coach people for free.
Until next time...
Hope you enjoyed that and maybe you can do the same sort of thing to get past your limiting beliefs.
Danny Welsh and Rick Melero are excellent coaches. If you are interested in being a part of the MMM Challenge, go to www.mmmchallenge.com and apply for the next round. It's truly a wonderful opportunity... the only one I've seen where they actually offer to coach people for free.
Until next time...
Friday, February 12, 2010
MMM Challenge Real Estate Menternship Program
Well, I applied for this free program and I got the word this morning that I am one of the 24 Menternship Students. How exciting is that?
Saturday, January 30, 2010
Over and Out! Finally.
Now, you would have expected that the closing with the experienced investor buyers who had plenty of time to do all their due diligence and get their money together would have been a piece of cake. You, however, would have expected wrong.
On Thursday afternoon, a bit after 3:00, I hear from them that they didn't get the HUD 1 from the Title Company until 8:00 Thursday morning. Therefore, they claimed, their investor wasn't going to be able to get me any money until Tuesday. That was going to cost me an additional 2 points, plus a payment of $1,320 - so approximately $4,000. I told them that I'd extend the contract if they covered my cost. After all, I had already bent over backward to work within their time frame. Also, I had cleared out the unit that people had left full of junk, gotten the current tenants to agree to the new rent, gotten the current tenants to sign their old lease as we didn't have a signed copy & gotten them to agree to make up the security deposit that the old landlord had taken in lieu of rent.
Well, they didn't want to pay the additional $4,000, but wanted me to extend it for free. Now, I'd already paid 2 points to a private lender as well as $1,800 in closing costs, rather than calling a cash buyer to close on the 22nd, in order to be able to work with these guys. To put it in monetary terms, I'd already spent $4,400 of my profit. Now, they wanted me to eat $4,000 more? When I'd first talked to them, they told me they could close in 2 or 3 days. When I got the seller to extend the contract, they told me they could close in a week. When they went under contract, they told me they could close in 2 weeks. Suddenly, 25 hours before closing, they needed more time. I had some serious thinking to do.
What were my options?
1. Let them have an extension and eat $4,000.
2. Keep it myself, along with their non-refundable $3,000 deposit.
3. Call another buyer and sell it to him on Friday before I had to pay the extra points and payment to the lender.
So, I called the other buyer. He agreed to buy it as long as he could just wire $150,000 and I'd pay his closing costs. In order to do this, I had to get the first buyers to release the contract... which they agreed to do as long as I didn't keep their deposit. So, another $3,000 lesson. Get the money released from escrow as soon as it goes hard. And another one, make it clear up front that there will be a high cost for any extension of the contract. It needs to be built in up front.
I wound up closing with my cash buyer who unfortunately wanted his title policy held open. This cost me over $600 because I had already held open my policy, expecting to turn it over to an end buyer and not incur any additional costs on it. The total amount I made of the $20,000 that I expected after all the expenses was about $11,800. It was a very, very expensive learning experience and I felt pretty beat up last night. I know I made money and that's great, but I just didn't feel like celebrating because the cost was so high.
Well, I have 3 short sales lined up and am going to be on the hunt for more wholesale deals. I've learned a lot from this and am certain that my next deal will be so much smoother. My wonderful Realtor tells me that it would be really hard to top how difficult this one has been.
Until next time...
On Thursday afternoon, a bit after 3:00, I hear from them that they didn't get the HUD 1 from the Title Company until 8:00 Thursday morning. Therefore, they claimed, their investor wasn't going to be able to get me any money until Tuesday. That was going to cost me an additional 2 points, plus a payment of $1,320 - so approximately $4,000. I told them that I'd extend the contract if they covered my cost. After all, I had already bent over backward to work within their time frame. Also, I had cleared out the unit that people had left full of junk, gotten the current tenants to agree to the new rent, gotten the current tenants to sign their old lease as we didn't have a signed copy & gotten them to agree to make up the security deposit that the old landlord had taken in lieu of rent.
Well, they didn't want to pay the additional $4,000, but wanted me to extend it for free. Now, I'd already paid 2 points to a private lender as well as $1,800 in closing costs, rather than calling a cash buyer to close on the 22nd, in order to be able to work with these guys. To put it in monetary terms, I'd already spent $4,400 of my profit. Now, they wanted me to eat $4,000 more? When I'd first talked to them, they told me they could close in 2 or 3 days. When I got the seller to extend the contract, they told me they could close in a week. When they went under contract, they told me they could close in 2 weeks. Suddenly, 25 hours before closing, they needed more time. I had some serious thinking to do.
What were my options?
1. Let them have an extension and eat $4,000.
2. Keep it myself, along with their non-refundable $3,000 deposit.
3. Call another buyer and sell it to him on Friday before I had to pay the extra points and payment to the lender.
So, I called the other buyer. He agreed to buy it as long as he could just wire $150,000 and I'd pay his closing costs. In order to do this, I had to get the first buyers to release the contract... which they agreed to do as long as I didn't keep their deposit. So, another $3,000 lesson. Get the money released from escrow as soon as it goes hard. And another one, make it clear up front that there will be a high cost for any extension of the contract. It needs to be built in up front.
I wound up closing with my cash buyer who unfortunately wanted his title policy held open. This cost me over $600 because I had already held open my policy, expecting to turn it over to an end buyer and not incur any additional costs on it. The total amount I made of the $20,000 that I expected after all the expenses was about $11,800. It was a very, very expensive learning experience and I felt pretty beat up last night. I know I made money and that's great, but I just didn't feel like celebrating because the cost was so high.
Well, I have 3 short sales lined up and am going to be on the hunt for more wholesale deals. I've learned a lot from this and am certain that my next deal will be so much smoother. My wonderful Realtor tells me that it would be really hard to top how difficult this one has been.
Until next time...
Saturday, January 23, 2010
Proud owner of a triplex... for a week anyway
I've been very, very busy this week. I had to close on the triplex myself because my buyers needed more time to close than the seller was willing to give me.
I found a transactional funder who financed the property for a week. It's costing me 3.25 points (which I thought was 2, but when I read the loan docs, it costs an additional 1.25 points when I pay off the loan). So, with the funder who got the loan approved in 2 days - kudos to her!!! - I was able to close on the triplex on Friday afternoon.
Also, my Realtor wrote a contract between me and my end buyer and I'm paying him extra for all the work that he did to help me. He's been a rock and I'm so happy to have him on my team.
Friday night, I put a "free stuff" ad in Craigslist and spent Saturday morning giving away all the stuff people had abandoned in one of the 2 bedroom units. They literally left a houseful of stuff, as well as 9 leaf sized trash bags of trash (so far). Tomorrow someone is driving up from Colorado Springs to get much of the rest of the stuff (woohoo!).
My buyers are going to close sometime on or before the 29th - hopefully before. And I must say that not going with these buyers in the first place cost me around $5,000. This was a very expensive lesson to learn, but believe me when I say that it is well-learned. And even though it cost me money, I have made quite a few good contacts from it, including 2 more cash buyers and 2 good funders.
I'll let you know what happens next week.
Until next time...
I found a transactional funder who financed the property for a week. It's costing me 3.25 points (which I thought was 2, but when I read the loan docs, it costs an additional 1.25 points when I pay off the loan). So, with the funder who got the loan approved in 2 days - kudos to her!!! - I was able to close on the triplex on Friday afternoon.
Also, my Realtor wrote a contract between me and my end buyer and I'm paying him extra for all the work that he did to help me. He's been a rock and I'm so happy to have him on my team.
Friday night, I put a "free stuff" ad in Craigslist and spent Saturday morning giving away all the stuff people had abandoned in one of the 2 bedroom units. They literally left a houseful of stuff, as well as 9 leaf sized trash bags of trash (so far). Tomorrow someone is driving up from Colorado Springs to get much of the rest of the stuff (woohoo!).
My buyers are going to close sometime on or before the 29th - hopefully before. And I must say that not going with these buyers in the first place cost me around $5,000. This was a very expensive lesson to learn, but believe me when I say that it is well-learned. And even though it cost me money, I have made quite a few good contacts from it, including 2 more cash buyers and 2 good funders.
I'll let you know what happens next week.
Until next time...
Monday, January 18, 2010
Lessons to Learn
So, now there's a gap between when my buyer can buy and when the seller needs to close. I have put down $2,000 of my own money and am looking for the best rate on transactional funding for a week.
I had a very frank conversation with Brad of IRR and he told me that I could have avoided all of these buyer problems if I'd had a tighter process. He's absolutely right... This really is all my fault. I've let the buyers roll all over me and have been far too accommodating when they've asked me to change things in the assignment contracts. I need to get tougher. No more working with anyone until they sign the contracts and put down some money, because if they haven't done that, they aren't really a buyer... and I need to add a clause that says if a buyer defaults after their inspection (like my first buyer did), they have to pay my whole fee. That would certainly make them think a lot harder about backing out when they have money approved. I'm thinking that I need to get IRR's assignment contract.
And, I have to tell you that Bill Twyford, who I coach with on Skype, really has my back. He actually contacted the most recent buyer and chewed him out for backing out at the last minute.
So, I'll let you know how it goes. Until next time...
I had a very frank conversation with Brad of IRR and he told me that I could have avoided all of these buyer problems if I'd had a tighter process. He's absolutely right... This really is all my fault. I've let the buyers roll all over me and have been far too accommodating when they've asked me to change things in the assignment contracts. I need to get tougher. No more working with anyone until they sign the contracts and put down some money, because if they haven't done that, they aren't really a buyer... and I need to add a clause that says if a buyer defaults after their inspection (like my first buyer did), they have to pay my whole fee. That would certainly make them think a lot harder about backing out when they have money approved. I'm thinking that I need to get IRR's assignment contract.
And, I have to tell you that Bill Twyford, who I coach with on Skype, really has my back. He actually contacted the most recent buyer and chewed him out for backing out at the last minute.
So, I'll let you know how it goes. Until next time...
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