Real estate investing is EASY and PROFITABLE when you have motivated sellers, lenders and buyers all waiting for YOU.
In a few minutes, you'll learn about how I'm able to do this – and create a solid business foundation, raking in a consistent 5 or 6-figure income each and every month and how you can too. And no, you don't need to use your own money or credit on any anything like that.
Do I have your attention yet? Sounds interesting doesn't it?
As a multi-million-dollar real estate investor, CEO of Buyers On Fire, HomeBackers Realty, and SystemsSaturday.com, I'd like to think that I know a thing or two about investing in real estate. Of everything I've learned, the biggest lesson was that business is meant to be put into systems.
SYSTEM: that six letter magic word that turns chaos into cash.
What I've found is that, most people fail at one or some of these four particular aspects of investing: finding deals, funding deals, fixing, or flipping to end buyers. I call these:
Master this and you'll never have issues with sellers, buyers or lenders.
Just stay with me… I'm going to show you how.
The thing you've got to understand is that when it comes to real estate– there is a LOT to know. It's always changing and can get overwhelming real quick. That's why one of the biggest mistakes a new investor can make is rushing through the process. You can't read a page in each chapter and think you know the whole story.
I've put together this easy-to-understand guide to welcome the newbies, refresh the vets, and interest the intrigued.
So here it is… the go-to guide you need.
Listen. You will absolutely need to understand each of these 4 pillars inside and out. You can either stop reading this, go out there and make the mistakes yourself, OR you can take the easy way and just read this holy grail guide that will light the way for you. Your choice.
Oh good, you're still reading.
The find-fund-fix-flip idea isn't a new one. But the devil is in the details – it's HOW you find properties, HOW you fund deals, HOW you fix them up and HOW you flip them over.
That's right, we're not talking about a kindergarten puzzle here. More like one of those 800 piece puzzles of a Monet painting. Lots of different parts, but one heck of a beauty when it's done right.
Take each one of these steps as seriously as you would a $30,000 check in your hand…because…well…. this is what will help you have that $30,000 check in your hand.
So, let's get into the good stuff, shall we?
Ah, the hunt. Finding the right properties, the right sellers…vital. Absolutely VITAL to your business.
Let's think of this entire investing process as a 4x400 relay. If you have to cross the finish line in order to cash in, finding deals is your lead-off man. When you're out finding deals, you've got your feet in the blocks, eager to gun it. You're setting up the tone of your whole deal. If you move too quickly, you're eliminated. Hesitate, and you're in the dust of everyone else around you.
You've got to have the right training and proper discipline to make sure you start every deal the right way.
I'll say this now and I'll say it again – every local market is different. You have to read the area and make adjustments as you develop your game plan. However, there are a few methods that we've found to work fantastically in almost every market. The first is what we call "Mom-and-Pop Shop Marketing."
One of the biggest mistakes many investors make is going straight into the "We Buy Houses" campaigns. Now don't get me wrong; bandit signs, banners and all that – they do work. They've been around for a long time… but that's the whole point. These signs, and particularly the famous "We Buy Houses" slogan have been around for a long time.
This slogan has gained a bad reputation. When people see them, they automatically think, "Oh it's just another big brand stealing homes with low offers." That's why we always market for local motivated sellers using a "Mom-and-Pop Shop" form of marketing.
Here's a snapshot of what that looks like:
- Use "I" Instead of "We"
- Advertise as a Local Company
- Develop a Reputation for Honesty
Instead of saying "We" Buy Houses – use your name (John Buys Houses). OR don't use a name at all. Try leaving the big business out and market the idea of "Sell Your House in 5 Days."
Market yourself as a company in the area who just so happens to have liquid cash. You are someone just looking to build your portfolio. You also want people to know you will pay them a fair price.
Whenever you are talking about your business, remind people how YOU are different. Be open and honest with people the entire way.
The next method we use to find deals is called a reverse selling technique. I want you to remember this: motivated sellers only need one buyer. That needs to be YOU. How do you become that one buyer?
The Reverse Selling System goes like this:
If your seller wants a buyer – give them a buyer! Build a buyers list, then market to sellers telling them that you have X amount of dollars to spend. Market these buyers looking to buy at TOP DOLLAR in their local area. Watch how quickly these sellers call you. It's as simple as that. You're going out to market to sellers and telling them how many buyers they have at their disposal.
You have what it is that they want.
How do you do this?
You have to have a buyers list with phone number or email addresses.
You have to know how many buyers you have in every city.
You have to know what properties these buyers are interested in.
Build a Seller Website that you can send these sellers to and filter them appropriately using the information from Steps 1-3.
When the seller searches, a form will appear. This will tell the seller how many active buyers that were found in their location. This data comes from your buyers list.
A motivated seller will naturally want to fill out this form every single time because…
You have what they want.
The most important thing you need to know is that the seller doesn't get the buyer's list just from clicking around. They only get that list through YOU. Once the seller enters this information, boom – you get their number sent to you through email. Then you give them a call and run through your Motivated Seller Script.
Well, you know you at least have two: you know you are willing to buy their property, and you know I'm willing to buy their property. Two buyers means that they still get what they want.
Give them what they want and they will give you what you want.
You can market to these sellers by marketing to an entire zip code or an entire neighborhood using door hangers. So let's say you're in Dayton, Ohio. Take a door hanger with how many buyers you have in Dayton, Ohio and include your website and your phone number, and hang them around town.
So, we're all aware that you should try to be at the top of a Google search. Well, guess what? Google owns YouTube. YouTube has a search function. If you don't have a YouTube channel, you've got to stop what you're doing right now and create one. Well…actually finish reading this guide first. But make sure you write this down now so you don't forget: Create presence on YouTube. Got it? Okay, good. Let's move on.
Here's the key:
- Shoot 30-second videos
- Make these videos feature your "sweet spots" or things that you feel the most comfortable talking about.
- Don't make them professional, make them interesting. Remember the "mom-and-pop shop" image is better than looking like a big hotshot company.
- Title your videos with SEO in mind. "Cash for Houses in (your target area or location)" is how you'll show up in YouTube and how you'll show up in Google.
- The description also matters:
- "Hey my name is (name), I'm local to (location) and I'm looking to buy a few more properties in the area to add to my real estate portfolio. I buy ALL types of homes for ALL CASH and for TOP DOLLAR so you don't have to pay any costly Realtor commissions. I'm looking for a variety of homes. Homes that need a TON of repairs and homes that are already fixed up so I can pay market value for them, and put a tenant in them immediately. So if you're looking to sell your property today, please call me at 555-555-5555."
- Add a line at the bottom with (Name) buys houses CASH in (location)
There are many different aspects in every market that determine whether or not it's a hot one. It doesn't really matter though. If you're good at what you do, you'll find business in any market. If you feel like you're out of luck, you're simply out of ideas.
Good news is… I have ideas FOR you.
In fact, I have four of them. I'm going to break down four different lists that you should have in your real estate business to bring you a ton of quality motivated sellers that are actually hidden to the public. These four lists are to be used with direct mail marketing.
When everyone else is complaining that inventory is too low, here is where we have found the most motivated sellers who love to give us the keys:
Absentee owners are people who own a home but do not actually live at the property. They could potentially still live in that city or be out of state, it doesn't really matter. You can buy lists of these people who have equity of 30%. So go out and get this list.
You don't have to drive all over the place to find vacant properties. You can actually buy lists of properties that are vacant. These lists can also have equity of around 30%. Get this list too.
You might be thinking, "John, isn't this called a Probate List?" Well, no. This list is actually pre-probate. What you're going to do is buy the list of deceased where there is 30% or more equity. We find that around 70% of these properties are also free and clear. Should you get this list? Yes! Yes, you should.
This is a powerhouse list. Go to any data provider to find a list of homeowners who are over 65 and looking to downsize. They must live in a property that is over 1500 square feet and has over 30% equity. These seniors are looking to downsize into a smaller property and are highly motivated. Why wouldn't you go out and get this powerhouse list?
Do you want to know more? No problem. Check out this guide to 100 Motivated Sellers in 30 Days. In this Motivated Seller Leads System, I show you a multitude of direct mail pieces that will have leads pouring in, with motivated sellers BEGGING for you to take their house.
That should hold you over.
On to the next one. I know, I know. Nothing ever seems possible if you don't have the money for it. So let me answer that burning question every real estate investor asks:
Do you go out and look for deals OR do you need the money first?
The answer is shocking and you're about to read how you can buy real estate without cash or credit.
There are actually a lot of different ways that you can structure a deal, which we'll talk about here in just a second.
Go out and market to bring in a ton of sellers, find deals, and then you can gain the knowledge on how to structure a deal to pull everything together.
So the bottom line is this: if I chose to search for the funding first before actually finding the deals, then I would still be working on my first deal.
That's not to say you won't need money. Because eventually, you will. So here are your options:
An assignment agreement is basically when one party (assignor), assigns their contractual rights to another party (assignee). Essentially, what the assignor is trying to do is get the assignee to take over (and assume) all of their contractual obligations and rights for a fee. This is a great way to make a deal happen and make money with little to no money.
Also referred to as "owner-financing", seller financing means you're borrowing money from the seller instead of a bank, and making your monthly payments to the owner instead. This is definitely one of the easiest ways to finance a property, as well as one of the least expensive. The seller and the buyer both have to agree on the interest rate, terms, and conditions they desire. Then you have a closing attorney draw up the contract and close on the property.
Hard money lenders are organized institutional lenders who are licensed to lend money to investors and rehabbers buying homes that need renovations. Hard money can be an awesome resource. There are going to be some deals that need funding QUICKLY - especially if you're looking to buy multiple properties at the same time. Hard money funding is a great resource for situations like this.
Another no-money-down strategy is an investing method where you take ownership of properties "subject to" an existing mortgage loan that's already in place on the property without paying off the underlying loan. The homeowner stays on title until we're able to refinance and pay off the entire loan, or sell it sometime in the near future.
I bet you didn't know that you can get private mortgage loans using the funds in your retirement accounts. The only thing you need to do is make sure the account is structured as "self-directed." Self-directed IRAs and solo 401ks allow you to purchase a broader range of investments, including real estate.
Assuming the Mortgage:
Assumable mortgages, also called "assumable loans" are when you take over the seller's existing mortgage. As you've probably guessed, a lot of people get this confused with subject-to investing. The major difference is that when you acquire a property subject to an existing mortgage, you are making an informal agreement but aren't legally assuming a loan. With assumable mortgages, you are formally taking over and putting the loan in your name. This allows you to purchase a property with not only a low interest rate, but without any money down.
A private money loan is a loan given to a real estate investor, secured by real estate. Private money investors are given a first or second mortgage that secures their legal interest in the property and secures their investment. When we come across a home that is well under market value, private lenders are an excellent resource to fund the purchase and rehab of the home. Private money lenders can help make your transactions fast and efficient. Their terms are often flexible and your leverage is far greater when purchasing properties using private cash funds.
Line of Credit:
And finally, the line of credit option. This one is my personal favorite because it involves me. That's right. I offer my students a line of credit so that we can get this ball rolling! A line of credit can be a reliable option when cash flow gets tight or when unexpected expenses comes up. The amount of credit allotted depends on your positive cash flow. Keep in mind, the amount can change as time goes on. We know time is of the essence when it comes to securing a property so having this safety line of credit is definitely something to consider.
You found the property, you paid for it, now it's time to fix it up and get going making a profit. The first major detail you need to figure out (even before buying the property) is your exit strategy.
In order to avoid getting into trouble, you have to know how you plan to get out. There are three different exit strategies you can use:
- Wholesale – buying and selling to another investor
- Prehab - making the property "rental ready"
- Rehab – making the property "retail ready"
Figuring out which of these three strategies you're going to use really depends on your deal, market and your neighborhood. If you choose the wrong exit strategy, you could possibly lose money.
Hope I got your attention.
Go into your local MLS and pull the numbers of the average sold price in your entire market. In our area, the average sold price is $125,000. That tells you the median price point and where the average Joe is buying a houses.
The exit strategy for the average home is a pre-hab. Anytime you get a property in the area where the properties are an average price, you have to use this strategy. If you go above average, it may not work.
If you're in an area where the houses are below average, you're going to want to wholesale that property. These houses will be close to each other, smaller, and in worse condition.
If you find yourself in a nice neighborhood with above-average looking houses, that is your sweet spot for rehabbing. These are properties above $125,000 for our area. Make some nice updates in accordance to your comps and get that money in your pocket.
Bonus Tip: If we're in a hot market where everything is being sold instantly and for over asking price, wholesaling is the last thing on our minds. As investors, it only makes sense to focus on the other two strategies.
Once you know your exit strategy, you've got to figure out how much work needs to go in and how much it's going to cost. When I first started out, I made the big mistake of thinking I could just walk around and think, "Meh, okay this one probably needs about $10,000 worth of work." If your estimate involves the word "probably" then it's not good enough. In the end, you will pay more for repairs than you had originally budgeted.
It's true. Repair estimating can be a very confusing subject for real estate investors. Trust me…you need to spend the time to actually do this the right way. My system for repair estimates helps to make a more accurate estimate.
So here we go.
- Square footage of the house
- Comparables in the area
- Are you planning to rent this or sell it to an owner?
If it does need a roof, the sheet will help you figure out how much it is going to cost.
Go through the entire home and spend some time factoring in each and every detail that needs repairs. The goal here is to wind up with the most accurate total repair cost. I tend to go in the order that I have it listed here. They were put in this order for a reason.
Don't Forget Your Contractors
Contractors are a BIIIIG piece of the pie here. You have the wrong contractor on your property and you're in for a load of trouble. Going back to the track and field example of this 4x400 relay race, think of the contractor as that third runner. They're either going to mess up big time and make your finisher pick up the slack and possibly lose, OR… they're going to maintain speed and help bring things to the finish line.
To find your all stars, the best thing to do is simply visit your local building material stores. Go to Lowe's, Home Depot, etc. and try talking to people. Ask the person at the desk if they know any contractors who come in often. The people that are in these places all the time are the ones who get tons of jobs. Those people are in that position because they do good work for good prices, right?
Once your rehab project is complete, you've got to flip that puppy to a buyer. Depending on your exit strategy, this could mean retail or rental. Or, it could mean you didn't even do anything to the property and you just wholesaled it to another investor. Whatever the case may be, don't fall asleep on me now. We've got to get to that finish line.
First thing's first, you need someone to flip the property to.
You always want to start with the end in mind. Are you looking for an investor (wholesale), an average buyer (prehab), or a retail buyer (rehab)? Once you figure out your buyer you can figure out what they care about.
These buyers care about deals that they can make money on. Highlight the DEAL. Most get financing with hard money loans, so the numbers need to work for them to buy the deal from you.
- Average Buyers
These buyers want an average price on an average house – but they also care about the deal itself. They want to know the deal is livable and that the price is maybe just a little bit off of retail. Highlight what's new in the house (paint, carpet, etc.) and the DEAL.
- Retail Buyers
With a retail buyer, you want them to know all about the upgrades you made. Tell your buyer how gorgeous and spacious the property is. Then of course, let them know about that DEAL.
Notice anything in common?
That's right, the one thing they all have in common is the desire to have a DEAL. That's why it's so important that you include this in your property description.
3 bed, 2 bath, 2,200 square feet. Snore.
What about: 3 bed, 2 bath 2,200 square feet $40,000 less than market value!
Boom. There's your attention grabber.
Now you've got to pull this number from somewhere. You can't just make it up. But know that you have to change your focus to the major discount you're giving these people… and THAT'S when you'll change your success rate.
Bonus Tip: Don't forget to remain consistent across the board. If you advertise the same property on five different outlets, they better have the same numbers, price and same description across the board.
For more on this topic, visit my System on YouTube: 15 Steps to Sell a House in 7 Days or Less
The key to advertising your deal is knowing the deal you're actually giving them is an actual deal. In order to get that, you need your retail price. That's why what I now want to share with you are my three pricing formulas. The first thing you want to do when pricing your property is to do a comparable search on the MLS to find what similar properties have sold for. This is the best way to get the most accurate numbers.
How to Pull ACCURATE Comps:
- Go from .25 - 1 mile radius around the subject property
- Look for the properties that sold within the past 3-6 months
- Look for properties with similar bedrooms, baths, and square footage
- Shoot for 2-3 sold comparables.
As soon as you find out what the retail price is going to be, you can determine your listing price.
- If you are wholesaling, you want to market your price 50%-65% off of retail price. You have to leave a margin for investors so that they have enough spread to make money.
- If you are pre-habbing the property for rental readiness, you will price it at 10-15% off of retail value. Discounted prices always attract more buyers.
- If you are listing your property and selling it retail, 95% of the retail value.
Bonus Tip: If you have a property and you decide to price it at $90,000, DO NOT market it for $90,000. Market it for $89,900. That small $100 difference is a HUGE deal in the eyes of buyers.
Okay fine. I'll share with you ONE more thing to make sure this fourth pillar is a success. In the words of our culinary friend Emeril, let's "kick it up a notch."
My Property Launch System. Here's the main idea: you need to do EVERYTHING you can to launch a property so the public knows all about it.
Basically, there are three different goals:
#1 Get 100 Buyers To View Your Property In 7 Days Or Less
#2 Get Multiple Offers (We do this on 96% of our properties)
#3 Have The Property Under Contract In 7 Days
To achieve these goals, you've got to sit down and write up all of the marketing content:
- 15 Craigslist Ads (that are very different from each other)
- Facebook Posts
- YouTube Video Description
- eFlyer Content
- Blog Piece
- 4 Bandit Signs
Yup. It can be a daunting task to write this much copy for your marketing but THIS is what will sell the house. You might be thinking that this is near impossible for you to do in under a day, but what if I told you that you could get all of this content, and GOOD content might I add, in under five minutes?
Well my friends, I've archived over 100 of my best marketing options. Buyers On Fire automates the marketing FOR YOU in about three minutes! You've got to market like a beast and that's what Buyers on Fire does FOR YOU.
I know you want more on this. SO make sure to visit the page to get you there:
So there you have it. The basic blueprint on how I use the four essential pillars of real estate.
New videos are released every Saturday – so don't you dare miss it!