In your last lesson, I talked about how important it is to be able to make a quick decision when doing real estate deals. Are you in or are you out?
If you delay in making a quick decision, you could lose the deal.
While you are waiting to make a decision, your competition could talk to the seller or listing agent and that could start a bidding war that will make the price to go UP!
You snooze, you lose!
To make a quick decision, you must to be able to gather all the facts as quickly as possible. You can get some of the information by asking the seller. The property tax records will tell you when the house was built, how big it is and when it was bought. There are plenty of services you can subscribe to for property comps or you can work with a real estate agent to supply accurate comparables. What will repairs cost…
Without all the facts, it’s impossible to make a quick decision.
When a motivated seller calls, you need to allow time to do your due diligence before you go see the house. It should not take more than 10 minutes if you have the right tools. Then when you see the house and talk to the seller, you’ll be able to make an intelligent decision ON THE SPOT.
That is really important!
You should not go see the house then tell the seller “I want to think about it, I’ll let you know”
If you can’t make a quick decision on the spot you will lose many deals.
Making a quick decision to buy ….knowing the maximum price you can afford to pay …is only part of the equation.
You also need to be PREPARED to buy. Always take contracts with you, understanding what they say and know how to fill it out. Sometimes, it’s necessary to create all new terms and conditions from scratch. Or you may need to write the contract on a blank sheet of paper. You need to be prepared for anything.
And you need to know how to negotiate the deal so the seller feels like they get what they want and you get what you need.
Some sellers are motivated to sell at any price and will take a deep discount – which allows you to get the PRICE you want.
Some sellers are more interested in getting the price they want. And there’s a way to make that work if you can get TERMS that will allow the house to cash flow or make it possible for you to wrap those terms when you sell to another buyer.
Price or terms? You need to be able to negotiate either way, be able to document the deal, and be FLEXIBLE enough to be happy with either decision.
But you can’t do either until you find out what is most important to the seller. So, you need to ask some probing questions to discover the answer.
Don’t be stuck on getting the lowest price. Sometimes it’s better to pay more if you can get no or low interest rates and low low monthly payments.
Here’s an example.
The house is worth $150,000 in perfect condition. But it needs $25,000 – $30,000 in repairs.
You’d like to get a contract for $65,000 so you can wholesale it for $75,000. You know your wholesale buyers won’t pay more than that if they have to pay cash or get a hard money lender loan.
But the sellers are stuck on $80,000 for their purchase price. They won’t go lower on the price but they are open to seller financing.
It’s QUICK decision time. Are you going to walk away from the deal or make a seller finance offer?
You could offer $80,000 with no interest. But what if they say no? Offer 3% interest (which is TWICE what they would get on the money if they put it in the bank).
As a high volume wholesaler, you’ll also talk to seller who will be price sensitive and you need to adjust your “offer” to make it work for them and work for you.
At $80,000 the sellers have bragging rights! They can tell all their friends and family that they sold the house for the price they wanted to get.
So how can you wholesale that deal?
Contact all the wholesale buyers on your buyer’s list (you do have one right?) offer the house at $90,000 with $5,000 down and the balance at 9%. You could even charge points or a prepayment penalty. You may need to lower your price to $85,000 to make the deal work.
Wholesale buyers will pay more when you are providing the financing.
You payment to the seller would be $337.28 per month with a 30 year note.
The payment you receive from the buyer (at $85,000 financed) would be $683.93 with a 30 year note
Your Cash Flow would be $346 per month ($4,150 per year)
But what if the loan for your buyer was a 15 year note? The payment would be $862 and you’d have a monthly cash flow of $500+
Do about 10 of those deals and we're talking financial freedom!
Of course the buyer would pay for insurance and taxes.
Now, hopefully, you understand why it’s so important to learn a variety of ways to solve real estate problems. The more solutions you can provide to sellers, the more deals you will do.
You can learn everything you need to know at CashFlowDepot.com. in the members section. Unlike other “gurus” you don't have to pay a fortune to learn how to make one when you're a CashFlowDepot.com member
You can learn to be a HIGH Volume Wholesaler too!
You’ll get another lesson in a few days….
Until then, you need to practice that part about making a QUICK decision. And learn as much as you can about deal structuring. There are hundreds of lessons at CashFlowDepot.com to help you learn!
To YOUR Extreme Success,
Jackie Lange
P.S. You're invited to a conference call on Tuesday, July 17th. Jack Shea will discuss the many advantages of having a CHECKBOOK IRA. This allows you to have total control of your IRA and Roth funds so you can make QUICK DECISIONS.
The call starts at 7 pm Central
Call 206-402-0100
Access Code 929815#
P.P.S. Panama Story. Today is my birthday so I treated myself to a haircut, manicure, pedicure, highlights and low lights. In Texas I would pay $200- $250 to get all that done. My total price here was $70! And that included a tip.
On the drive home, I had all the windows down and Spanish guitar music playing. It was just a beautiful drive up the mountain with flowers alongside the road and the smell of fresh air. Life is good… in Panama!
