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It was very interesting to hear Jim Ingersol talk about how he moved from full-time job to full-time RE investor. The most interesting thing to me was the fact that it started out as very difficult to find the deals but now he finds it very easy. That’s the transition I’m trying to make. How do you get started actually finding and making your first few deals, before you have all the contacts and other things going?
BTW, I like the new forum arrangement and you REALLY moved fast to re-organize.
– danThat is a great question. It was easier to get deals closed a year ago than it is today. The key is always in the financing. Sometimes I feel like we are really just selling mortgages rather than houses because people will buy as much as stuff as I can help them get financed.
You do have some options:
1. Buy with seller financing, sell with wrap around financing
2. Build very strong relationships with private lenders and hard money lenders. If you completely understand their lending guidelines, products and programs you can help get people the financing. I work very closely with strong hard money lenders, depending on the strength of the borrower I decide which one to send the buyer to use. My lenders communicate very well with me so I can try to know early on if there is a problem.
The other thing that helps your deals not fall through is to conservatively estimate your repairs and after repair value. If you under-estimate repairs or over estimate comps just to get a contract – you are in danger of the deal falling through.
Agreed. Last night’s call was an exceptional one for starters. I still am hamstrung with a full time job I can’t leave yet, and the call helped show me yet again that it can be done.
I wanted to ask a question but was unable:
What do you do to ensure that your wholesale deals close? The first few times you sell contracts to other investors, how do you make sure that the deal is closed? You have told the seller that you will buy their house, so if the investor falls through, I don’t see any other choice than buying the house yourself. I just want to avoid dreamers and those that can’t pull the trigger.
Greg,
You never tell the seller that YOU will buy the house. The option says you have the right to buy the house within generally 30 days…but you do NOT have to nor should you.
I always tell the seller that I have a large list of buyers for houses and I will be contacting them about purchasing it. I tell the seller that if one wants to buy it that I will assign my option to buy to the buyer. BTW, you collect a few thousand dollars ($3000-$10,000) from the buyer to sell the option to them.
You sell your option to an investor. The investor writes a contract to purchase with the seller. You are the intermediary bringing buyer and seller together (just don’t get involved in negotiations, financing, closing issues, etc. since you are NOT a REALTOR).
Patrick Slota
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