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Wholesaling Houses is All about Your Credibility

One of the more popular posts on this site is about having a Real Estate Investor Credibility Kit. In my upcoming book, Wholesaling for Cash, I discuss the need for and how to start to build your Credibility Kit even if you have never bought or sold a home before.

Here is an excerpt from the book…

When negotiating with sellers you should have a credibility kit with you. What is a credibility kit, you may ask? The credibility kit is some “just in case” information that at times can make the difference between a deal happening or not.

A seller can be truly motivated but on occasion he/she may want to have just a little bit more reassurance that you can do what you propose on paper. What I’m talking about here is getting testimonials from sources you’ve done business with in the past, preferably on real estate transactions most. On EVERY real estate deal I close on I ask the parties of interest in the transaction to write me a letter of recommendation in their own handwriting of my integrity and how I fulfilled our agreed-upon contract.

For example the type of short one paragraph sentence may state:

I was recently involved in a real estate transaction with Mr./Mrs.Doe concerning my property at 123 Main. Mr./Mrs. Doe was very professional from our initial contact to when our deal closed. I find Mr./Mrs. Doe to have high integrity and followed through on every condition of our contract.

If you are first starting out wholesaling properties you may not have a lot of deals under your belt or quite frankly, no deals. So what do you do now? Seek out individuals who have a personal affiliation with you and would write a letter about you concerning your integrity: attorneys, bankers, pastor/religious leaders, past or current professors/educators. Try to stay away from direct relatives but use reputable sources that know you and who can vouch for your personal. This recommendation may look something like:

I have known Mr./Mrs. Doe for over eight years and I have
personally facilitated many business transactions for him/her here at First National Bank. I consider Mr./Mrs. Doe to be of high moral integrity. If you would like to speak further about my recommendation then please give me a call at 555-1212.

There are critics out there that may even think this is going a little overboard, but absolutely nothing could be further from the truth. If someone were applying for the position Chief of Staff of Cardiology at a hospital, do you think it necessary to mention that he/she graduated from medical school? Of course it is, so when you’re wholesaling houses don’t be afraid to show your credentials and experience as they relate to your character and your ability to follow through with what you say you can do on paper in a real estate transaction.

Here is my whole reason for mentioning a credibility kit and this is what it comes down to. Making real estate deals is serious business and can affect people’s lives for the better if you follow through per your contract or can have serious financial implications to an individual if you do not follow through. Even the most motivated seller would like a little bit of assurance sometimes and that assurance in the form of your credibility kit adds merit to your offer and in return a signed solid contract that is of financial beneficial interest for you. Now isn’t that what you’re really after: A Solid, Can’t Lose Deal!

If you found this information useful then feel free to sign up for early notification when the book comes out and get the other 300 pages of awesome information to help you buy, sell and market real estate in today’s market without putting your own money at risk.

Often times we talk about flashy real estate deals that make big bucks. You might find a beat up foreclosure for $30,000 put $15,000 into it and sell it for $85,000. Not a bad day at the office from my perspective.

To be honest those types of stories while true, also sell.

But let’s talk a little bit about real estate investments instead of real estate transactions. It was only a couple of years ago that everyone wanted out of their day job to make it big in real estate. Fast Forward to late 2008 and early 2009 and all of a sudden most folks were just happy to have that day job and hunkered back down.

It was one of those markets about 15 years ago that my friend Steve made his first purchase in real estate. He bought a duplex. I remember being mesmerized by the deal. He paid full retail value, I believe $115,000 (which was a large investment in real estate at the time.) It wasn’t a foreclosure, nothing special by all rights. It was just a retail property.

I remember Steve telling me how he was going to live in one side and rent out the other. He figured up his numbers like this:

Mortgage = $1,200 (forgot to mention he got a 15 year loan)

Rent Received = $700

Out of Pocket = $500

This is a pretty boring deal! Yeh great he was able to pay for his house with some rent from another house and it only cost him $500 for his mortgage. Big whoop!

Here are a couple of things to keep in mind.

Read more…

We thought we would bring this video out of retirement to answer the question most people have. What type of real estate investing is good today? The answer is the one that makes you money!

But seriously it really depends on your goals and who you are. Watch this video to learn more about great real estate investing opportunities.

The Dow hit 13,000 today. People are dancing at their trading desks. From the doom and gloom media for once it was pure optimism. That in itself scares me. So why is it getting to be too late to invest in real estate? Finally, the economy is getting better, housing is going to heat up and I you can make money in real estate again. Huh?

Ok on occasion I have been accused of being too Pollyanna about my view on real estate investing. (Pollyanna it turns out means to be always optimistic, came from a book of the same name where the main character was always looking at the bright side, didn’t know that? me neither, till I just wikipedia’d it!)

Anyways, literature lesson aside, I have spent a lot of my time telling people that the down market is the perfect time to invest in real estate. Some listened, most didn’t, next.

I started investing in real estate about 7 years ago and about 5 years ago started informing and educating others about it. When the market was hot (read: prices were going up) I had no problem getting others to invest. Heck they didn’t even care if it was a good sound investment. Folks threw good money after bad, after money they didn’t have into any structure with four walls and some with three. It was great times but then, well you know, a funny thing happened to the real estate market.

Back to the original question, why is getting to be too late to invest in real estate?

Read more…

We know that all of the gurus will spout off to you crap like, “you need to get out of your comfort zone” or “no one ever makes money unless they take action.” While that is true you and I know it doesn’t make  a hill of beans difference for any of that unless you have tools and knowledge to make a good decision.

Check out this video for a quick and simple 7 minute explanation of how to calculate the accurate after repair value of a foreclosed home or one you are just buying on the open market that needs a little sprucing up before re-selling or renting the home.

Real estate investing can be intimidating but once you start to learn the tricks of the trade and can make an informed decision you will be on your way to taking action every single day.

If you want more information on how to find and analyze real life real estate deals then enroll in our 4 week online course, Finding and Analyzing Deals

The first reaction to most people when you tell them that you are a real estate investor is to look at you with a bit of suspicion and wonder. They wonder if “real estate investor” really means “freelancer” or “doesn’t really have a job.” Then, once they realize that you really do have a profitable business venture going, they start to wonder what exactly it is that you do and how you know how to do it.

With your friends and family it’s fine for them to wonder a bit about your business and even have some suspicions. However, when you are looking to transact business with someone you want them to have enough information about you, your skills, and your experience for them to decide that they want to do business with you. One way you can show prospective clients and business partners that you know what you are doing is to create a small investor’s credibility kit for yourself.

Your investor’s credibility kit doesn’t have to be something you pay a fortune to have created. It doesn’t need to be professionally printed on glossy paper. It simply has to show people your experience, and to help them to decide to work with you. It needs to show people that you can do what you say that you can do.

The first thing you credibility kit needs Read more…

Property investment is a numbers business. As a real estate investor you’ll need to pay close attention to your numbers when purchasing a property in order to make money. Every investor develops their own basic plan for purchasing property to make a profit.

Those just starting out can get confused with all the suggested rates of return that you need to aim for, but each property purchase needs its own specific discount for you to make a good profit.

Start with the Minimum
A basic plan is to start by taking 10% off the asking price or the mortgage of a property you are working with the homeowner to purchase. This can be called your profits or your basic earnings.

From there you’ll continue to lower the amount of money you are willing to pay for that property based on certain negative factors associated with the home. This can be fact that the property doesn’t have a basement or it needs a new roof. You can negotiate a discount for many different problem areas with the bank. Just calculate the costs of these repairs or how much less a buyer would be willing to pay for it and you’ll get the additional discount you need to ask for on the sale price of this property.

Examples of negative issues associated with a property;

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You’ve found a great real estate investment to purchase, signed on with the homeowners and gotten all of your information in order. All that’s needed is to approach the bank with a short sale offer and close the deal right? Maybe not.

There is an art to negotiation in the real estate investment industry. Negotiating a short sale isn’t simply approaching the bank with your packet of paperwork and your best offer to close the deal.

You’ll need to endure at least two rounds of negotiation with the banks most of the time. So, don’t approach them with your final offer right off. It’s probably best if your first offer to the bank is a price that’s lower than what you are willing to pay.

Send a Cover Letter
Submit to the bank an offer cover letter filled will all of your points to justify the discounted offer you are making on the bank. The banks you usually end up negotiating with get tons of offers for their properties. This submitted cover letter helps you stand out and makes you look a little more professional as a real estate investor.

The cover letter can outline your interest in the property, certain negative aspects you’ve noticed to the default property and your first offer on the property. Don’t be afraid to make a low offer on the property when negotiating short sales. You can always up your offers, but you can never lower them. So, if you start out by giving them the most you are willing to pay for the foreclosure property you are interested in the bidding could quickly enter a price range you aren’t able to afford.

Make it Personal Read more…

I have always been an early adopter of technologies to help me in my business.  I usually am keeping an eye out for the next new thing that will help me market my real estate investing business better than others working in my market.  In turn I have always said that Realtors and real estate investors alike are technophobic.  Social Media has proved me wrong.

Realtors are taking to sites like Twitter and Facebook like well, Realtors take to commissions.  If a Realtor isn’t currently using these sites to build business then they are asking everyone in their office about how to do it and what are the results.  Social Media is a very cost effective way to add to your marketing campaign for buyers and sellers but there are three things you should consider before pulling the trigger.

Number 1 – What is your end goal.  As a Realtor or real estate investor what do you want to get out of social media.  Don’t just do it because everyone else is, know what you want and define what success will mean to you. By beginning with the end in mind, as Stephen Covey puts it, you can craft your social media presence to focus on your market and niche.  Do you work the distressed property market?  Are you looking to build your buyers list? Are you trying to increase listings?

Number 2 – Read more…

You are bombarded by it in the news, “Foreclosed Homes hit all time highs.” Around the water cooler you hear your co-workers talking about finding a great deal on a foreclosed home they are going to make a mint off of. Then you trudge back to your desk and jump on the net looking for foreclosed homes. Quickly you start to think that finding a real foreclosed home let along a sweet deal on one is a task better suited for Sherlock Holmes than for you.

If you are like most newer investors or home buyer’s looking to get an awesome deal a foreclosed home you are probably thinking the bank must be hiding them all behind those foreclosure listing services where all you see is the street name and the city of the listing but have shell out $30 a month to get, “more details.” Come along for the ride for a minute with me, it is not as hard as it seems.

Easy Way 1 – Read more…

If you have been thinking about jumping on the foreclosed homes bandwagon and making some pretty good money off of these homes then it may seem like a simple process.  Get a foreclosed home listing, make an offer close to the listed price and cash in.

Unfortunately as with anything in life it is not quite that simple.  The great news is that while you probably won’t make big money all that easily with some hard work and a little knowledge you can cash in on one of the hottest foreclosed homes markets we have ever seen. The key is to avoid 3 of the big mistakes many new investors make when setting out on making their fortune in real estate investing.

Mistake 1 – Using the bank’s sale price. Many new investors often use the bank’s price on a foreclosure listing as a method to decide what they will offer for the home.  Here is a common scenario, take the banks listing price on the foreclosure and reduce it 30% to make an offer. While this is a simple method and appears you are sure to get a deal there is one problem. The bank’s listing price may or may not have anything to do with the value of the home.

I recommend that you completely ignore what the foreclosed home is listed for and only use your own due diligence to analyze the deal.  First you should calculate the market value, then take into account any repairs needed and lastly build in your profit.  This should be the only offer you should make on a bank owned home, or any other home for investing purposes for that matter.

Mistake 2 – Read more…

Financial Advisor, Scott Cramer, joined me to discuss how the individual real estate investor can diversify their portfolio into markets never imagined. If you think now is a great time to own real estate but you are afraid of getting out there and buying and flipping houses then you might want to consider REITs (Real Estate Investment Trusts) A REIT is basically a professionally managed group of assets that all fall within a specific charter, or more plainly, are similar properties/activities.

As you will find out from Scott, REITs encompass a wide range of property types and geographic areas. If you want to invest in other states or other countries even, REITs make it possible. As with any type of investing though it is important to understand your personal investing goals and risk tolerance.

If you would like to find out more make sure you visit Scott’s site http://www.cramerandrauchegger.com

Remember: Andy Heller is still offering a silly cheap deal on his REO Fortunes course offered online, check it out

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