Posted by Laure on March 19, 2000 at 22:11:35:
I hope I didn’t sound like you weren’t working. The post just hit a nerve. I’ve got friends here who think “hey, I need to do what you do”. LIke it’s easy!
I didn’t mean any offense at all.
Posted by Laure on March 19, 2000 at 22:11:35:
I hope I didn’t sound like you weren’t working. The post just hit a nerve. I’ve got friends here who think “hey, I need to do what you do”. LIke it’s easy!
I didn’t mean any offense at all.
FRUSTRATED WITH WHOLESALE BUYERS LIST - Posted by osirus
Posted by osirus on March 19, 2000 at 02:27:30:
I have a “handyman special” house under contract that I would like to flip to a rehabber. The target house is 3
bedroom / 1 bathroom wood frame home located in what I would describe as ?redeveloping neighborhood?.
This neighborhood has been designated as historic and a great deal of the homes, including my target home,
were built in the 1930?s.
This is my first attempt at flipping to bargain hunters and I wanted to make sure a had a list of buyers ready. As
such, I took the following measures to make sure I had buyers for my contracts:
The real estate investment club is about 1.5 hours drive from me and the target house. As a result, none of the
rehabbers in my REI club are interested in a home so far away.
I prescreened the buyers by asking them questions like:
?What areas and types houses do you buy?
?How soon can you come up with the money and close?
?Would you like me to call you I come across other homes that fit your criteria? ecetera.
Most of the buyers answered favorably to my prescreening questions. In fact, at least two said that they like to
buy houses just like my target house.
As of now , I am completely frustrated with the people on wholesale buyers list. All of them told me to give them
a call when I have a house under contract that meets their criteria. Now that have one, I have meet with
repeated unreturned phone calls, non performance and general unprofessionalism.
In particular, one in buyer is also a mortgage broker. I called his ?We Buy Houses? ad late last year. He told me
he buys homes anywhere and any condition and had unlimited access to money. I called him the 7th of March
with a home that meets his criteria. I have called several times in the intervening week and half to see if he went
out to see the home yet. He has repeatedly told me he sent his associate out to see the home and would call me
back later on in the day; but he never does. Thus far, he has been stringing me along. I understanding people get
busy and side tracked. However, is not a week and a half amble time for him to see my home and make a
decision? Why did he place ?We Buy Houses? newspaper ad then ignore people when they respond.
Another buyer is a contractor I ran into while prospecting. He told me he buys anywhere and any condition and
had could pay cash through a line of credit. I show him my target house only to have him tell me that he not
interested in wood frame houses after he previously told me otherwise.
Right now I feel that building a buyers list is an exercise in futility since I cannot take any of them at their word.
The sad thing is that the two above referenced buyers have been the more positive experiences. At least, I am
able to get in contact with them. The other people on my buyers list never return phone calls.
I am at a lost as to what to do to find bonifide rehabbers who can perform. I felt I had done an adequate job of
prescreening and building my buyers list. The most frustrating thing is I have no way of knowing if they can
perform until I give my buyers an opportunity to buy a property from me since I can not trust them for their
word. Thus far , all my buyers have turned out to be unreliable flakes.
I am advertising this home in the paper since all my buyers can not perform. I am sure I will get several calls and
I will prescreen them just like I did before. I just hope that will find real rehabbers. Also, I am thinking of writing
contractors in my ?Yellow Pages? to see if they would be interested in buying handy man specials.
What else could I do to build a buyers list of people who will perform? The target house is located in North Central Florida if that makes a difference.
Re: FRUSTRATED WITH WHOLESALE BUYERS LIST - Posted by Jim V
Posted by Jim V on March 19, 2000 at 20:18:17:
How much is a property worth?
From an investor view:
$100,000 FMV - verified, not optimistic
-$6,500 Cost of Sale - commissions,title,escrow or closing
If an investor looks for 20% return on funds, they can only pay about $70,000 for the property. That’s without anything for the person who wants to flip it.
Your numbers might be different, but I believe I have seen a general rule of thumb that you need a contract at 60-70% of FMV to be able to flip successfully.
Just my .02
Re: FRUSTRATED WITH WHOLESALE BUYERS LIST - Posted by JS
Posted by JS on March 19, 2000 at 18:44:40:
I think the lesson here is: DO NOT believe everything people tell you. There are a lot of flat out, straight faced LIARS in this business. They will tell you what you want to hear, not the truth. I even saw this guy misrepresent the Sq ft of a property he had under contract, and he is a realtor!
Just keep looking, you will find a buyer.
P.S. I know this lady that flips often. She has about 400 people on her list. But there are only 4 that she can really count on. It’s a numbers game, and if you don’t stop playing, you win!
Another aspect of the problem (long) - Posted by Eduardo (OR)
Posted by Eduardo (OR) on March 19, 2000 at 17:59:02:
Part of the problem may be related to this: You say three things that suggest to me that you may be a beginner in the business of real estate investing. If I’m wrong, please forgive, but then these comments may help someone else. The three things: 1. your “first attempt at flipping to bargain hunters”, 2. the measures you have just recently (apparently) taken (joining investment club, calling ads, collecting business cards), 3. your frustration with the people on your “wholesale” buyers list. My thoughts are not meant to be critical, but to help a beginner understand an important aspect of working with people in a particular profession. The basic premise is this: Anybody with a little experience (in this case, investors, rehabbers, contractors, etc.) can spot a beginner a mile away! By what he says, how he comes on to people, what his ideas are, what his body language is, etc. In any profession, 99% of beginners are spotted right away by others in that field. Only professional imposters sometimes develop the skills to fool the knowledgeable. Think about this. People that are successful know their business upside down and sideways (or they wouldn’t still be in the business). Chances are that you, if you are a beginner, can be spotted by most of these people you are contacting as someone that really doesn’t quite yet know what they are doing. (If you’re deal is really a good one, it would have been snapped up in an instant.) Therefore, you must understand that it is very difficult to take you seriously any more than you would take seriously someone who really didn’t know much about a subject that you are an expert in. This is not necessarily something that is a conscious decision–mostly, I think, instinct. I know that I “feel” uncomfortable when someone tries to sell me something and I don’t feel they know much about it. But, how do people overcome this problem of lack of experience so they will be taken seriously and can become successful at what they do?
I see two solutions: 1. This is the best one. Try to deal with people that are less knowledgeable and experienced than you instead of more knowledgeable and experienced. I buy mom and pop houses. Little blue-collar neighborhood houses. The ordinary person who owns a house usually has no skills regarding buying, selling, renting, fix-up and so on. I now know my business so well that I have expanded in recent years to investing in real estate “paper” and other things, but I started off trying to sell myself and my ideas to people who knew less and needed help. This way I gradually gained experience and no longer come across as a beginner, but (I hope!) as a confident expert who can fix things and solve problems for people. 2. The other choice would involve working for somebody in the business and gaining experience that way with a “mentor” showing you what to do while you work for him for peanuts doing his bidding. Or some variation on this.
Again, these ideas not meant to be hurtful, but I see so many people start out with high energy and enthusiasm and then fall by the wayside after awhile having burned themselves out or just become tired of butting their head against the wall for too long with little to show for it. You’ve got to figure out a way to gain experience and knowledge to increase your confidence and success over time. I think part of this requires understanding of the psychology involved in the process. Good luck! --Eduardo
Are you SURE it is a DEAL for the investor… - Posted by BR
Posted by BR on March 19, 2000 at 15:34:24:
or ‘tire kickers’ as Tim calls them. As an investor I have told several flippers that I will take anything they can bring me that meets my criteria and I have only had one to call me with a deal…actually it was not a deal or even close to a deal in my opinion. As for finding buyers, my phone rings off the wall when I run fixer ads similar to what Stacy runs. If it truly is a deal the ad should work for you.
Re: FRUSTRATED WITH WHOLESALE BUYERS LIST - Posted by Russ Sims
Posted by Russ Sims on March 19, 2000 at 14:04:44:
You will certainly get some leads from checking in with your friendly local title company or closing agent. These companies orchestrate closings every day with investors, and can point you to the real players in the community. Just stop by and ask if they can refer you to any cash investors/rehabbers. You’ll be surprised.
Re: I take a slightly different approach. - Posted by Stacy (AZ)
Posted by Stacy (AZ) on March 19, 2000 at 12:35:43:
The first thing I do when I get a fixer under contract, is put an ad in the paper. I want to market it to rehabbers AS WELL as owner occupants that may want to fix it up themselves and live there. Here’s my last one (closing on the sale in a couple of weeks). This one had an ARV of $90K to $95K. I got it for $65K.
FIX ME UP!
University & Dobson. 3bd 2ba needs
some TLC, but priced for QUICK SALE.
Perfect for handy person or rehabber.
Won’t last at $79,900 OBO. Open House
Sunday 1pm to 4pm. More info
(123) 546-7890 By Owner.
I run the ad on Saturday and Sunday, so people have time to plan their day to drop by the open house. When they call, they get my answering machine, and my message tells them the address, the major things that need repair (this one needed a whole new kitchen), and what kind of terms I am giving (if any).
This strategy saves me a lot of time answering the phone, calling people back, playing phone tag. Of course, I have a buyer’s list as well. But I want to get the most out of the deal, so for the first week or so I target everyone at once and let competition play a part. On this one, for example, I had well over twenty sets of people, rehabbers and Owner Occupants, show up to the open house. After the dust settled, I had two rehabbers and one Owner Occupant seriously considering buying the house. I played all of them against each other to get the best deal. After negotiating with one, I’d tell him I’d think about the offer, but that I had several more interested parties on my list to call, and that I’d get back to him if his offer turns out to be the best. Then when I find I have the highest offer, I give one last chance to the others and ask them if they’d like to beat the offer I’m about to accept.
Anyway, this is dragging out, but you get the idea. I’ve found I get the best possible deals using this method, rather than just calling my list of rehabbers and leaving it at that.
One back door approach to finding true buyers - Posted by ScottE
Posted by ScottE on March 19, 2000 at 12:17:28:
I have had the same problem finding stone-cold buyers as you have, but with a different twist. I ran several so-called ‘cash buyers’ through a lower end flip and ended up with only one guy (who quickly pulled out a contract on the spot). The problem with that situation was that I allowed him to move me off of my price because I figured if I didn’t sell to him, I might get stuck with nothing and I needed the deal too much at the time.
In order to avoid that from happening again, I did a tax/mortgage records search similar to what Tim mentioned below.
Here’s what to do:
Hopefully you have some hard money sources there in FL. Do a county clerk’s search of mortgages that these hard money sources have their names on. Many times you will see several names or business that pop up with great regularity. Contact them. (I think I learned this from Joe Kaiser’s course)
Also, one of the hard money guys here also pointed me to a rehabber. He KNEW the rehabber could buy, because HE was lending the money!
If you haven’t tried contacting realtors and property management companies, give that a shot as well.
Hope this helps
Re: FRUSTRATED WITH WHOLESALE BUYERS LIST - Posted by JPiper
Posted by JPiper on March 19, 2000 at 09:35:49:
Yesterday I looked at 3 properties from other investors. Not my norm by the way because typically I have not found this as a good source of houses. When I looked, I found the areas were terrible, they had overestimated the end value of the properties such that their deals had no incentive to do. In other words, they weren’t deals for me. Typical.
Likewise, when I have wholesaled property, I haven’t called the list out of the newspaper. My guess is that the buyers in the paper are other wholesalers for the most part. There are alot of newbies in the business these days, trying to make a quick buck.
Real estate club I couldn’t tell you about…I’ve never been the member of one.
What has typically worked for me is either an ad perhaps similar to the one mentioned below. You’ll get lots of calls…most of whom will not call you back if they are not interested. But the ad for me will typically produce a guy that buys.
Also I like the contractor idea for several reasons. Every contractor I’ve ever known wants to be in the real estate business…rehab houses. It could also be true that he’ll pay more since he will probably do his own labor and not count that as an expense.
I don’t send letters to contractors…I’ve never been convinced they can read (that’s a joke to you contractors, they just may not be sober enough to read). I call them from their ads. Keep in mind though that this contractor is the same guy who doesn’t show up on the job, and may not have two nickels to rub together…so this may be frustrating as well. You may have to make a number of calls.
Check your numbers - Posted by PBoone
Posted by PBoone on March 19, 2000 at 08:37:58:
I do agree the tire kickers are frustrating, we stopped keeping lists awhile back out of frustration. One thing (mistake) many people make in flipping is not really knowing what it takes to make the profit. We always use the contingency of “Refi and keep” if for some reason it doesn’t sell. What that means to us is the rental amount for the area has to be higher than the payment after 25% expense (for sfr)and it has to be in an area that we would drive at night in case we have to portfolio the property.
Talk to your people, ask them for future reference what it is about the deal that is keeping them from jumping on it.
Re: FRUSTRATED WITH WHOLESALE BUYERS LIST - Posted by HR
Posted by HR on March 19, 2000 at 06:56:28:
This is a great example of what I mean: it ain’t always as easy as some of the gurus (can you say Uncle Ron?) would make it sound. I don’t think your experience is all that atypical.
I have had similar experiences with my buyer’s list. After running the ad and collecting names, I found that only a few really could consumate the deal. There were a few there, though. You probably have a few good leads. You just need to figure out who they are.
I just yesterday had to back out of a flip listing that I thought could be a deal, but had no takers. I have my handyman ad running again, for a month, to see who else I can dig up.
In any case, you have hit an important fork in the road. You’ve discovered that this rei stuff ain’t as easy as it sounds. There are far more problems and hitches than the courses admit, and if you are going to make any money, you have to solve them.
You got two choices. Quit. Or ratchet down your expectations of ease, pull yourself up by your bootstraps, and begin again.
It is possible, by the way, to make the decent $$$ advertised about flips. I’ve done only two, but made 7k and 14k on both.
So, if you decide not to give up (which, by the way, is what most rei hobbiests/amateurs do at this point) than here is what I would suggest (and what I am doing):
These are contractors you are talking to. Can you talk the talk? Your problem may be your stance. They may not trust your experience or your running of the numbers. Learn the biz so well (and dress the part) so other contractors trust you.
Realize you need a bunch of guys. Not everyone can buy everything at everytime, and just because they can’t doesnt make them a flake. Drive around; collect names of bona fide rehabbers. Run your ad; do what ever you got to do to find real rehabbers. And that’s the point: you as a flipper connect real rehabbers with real gem property. This takes work (far more than just running a stupid ad). Get out there and do that work. You will be paid well if you do.
Are you asking for too much profit?
Are you flipping the right kind of property? Maybe you need to concentrate on a different type?
I know my flip died in part because I wasn’t aggressive enuf on the sale of it. I have another one now, under contract for 20 days, and I’m going to market the h#ll out of that one. I should make at least 5k and maybe 10k. I got lazy because the last ones were so easy.
Finally, I’ve found that my reia group is a great source of info, but not rehabbers. Don’t trust that.
Osirus, just remember: this is a business. You have to work, often hard. Work smart too. And hang in there. Decide not to quit. You are at a very common and predictable point in a newbie’s journey: the disillusionment stage when you realize this ain’t as easy as advertised, its gonna take work, and you begin to question whether you have been lied to up to this point. You haven’t been, but you need to take this like a business. The great part of this phase is most newbies give up here; that makes is so much easier for the rest of us in the biz.
Re: FRUSTRATED WITH WHOLESALE BUYERS LIST - Posted by Tarun_md
Posted by Tarun_md on March 19, 2000 at 03:31:26:
Placing an ad such as…Handyman special…cheap.cash! should get you calls from interested buyers.
I would also try to call some mtg brokers in the area and ask them if they work with any rehab investors. He should be happy to refer them to you cause he will lend them the money and make money on points.
Another way I have found investors is by driving around in low income areas and looking for homes that are being rehabbed. Ask the guys working there who are they working for.
YOu should also post something on this newsgroup saying that you are looking for investors in your area and you have a good deal available. Make sure you read the editor’s policy about that since that might be considered advertising.
hope this helps
You Wouldn’t Be Selling To Me… - Posted by JPiper
Posted by JPiper on March 19, 2000 at 22:30:06:
This example shows the exact problem.
You want me to enter into a transaction in which the profit YOU calculated is $13,500. One expense that you neglected to include however is carrying costs. By the time this transaction is done the rehabber will have a profit under $10K in all likelihood…and this assumes that your estimate of repairs is correct.
What happens if you have to carry the new buyer for let’s say 10% of the sale? Oops! Have fun doing a rehab for no cash in your pocket.
Not in you wildest dreams, pal.
I disagree… - Posted by David Alexander
Posted by David Alexander on March 20, 2000 at 09:55:26:
Your saying that as a newbie you should be dealing with less knowledgeable Investors?
Your saying that experienced investors will have a problem buying houses from someone with less experience, no way. They might check the deal more thorough, but a deal is a deal.
If you are dealing with people that no less than yourself as a sounding board then your process of learning will take much longer.
You have to be around, and hire people smarter than you, and also when you do that, you know longer have to know everything, you can pay other people for that.
Re: FRUSTRATED WITH WHOLESALE BUYERS LIST - Posted by Laure
Posted by Laure on March 19, 2000 at 08:07:10:
yes ! HARD WORK !! I have been “chuckled” at when I have admitted that I actually like to swing a hammer. And other investors have boasted that they NEVER get dirt under their finger nails. Well, here is the long and the short of it: It is all WORK, whether it’s with your mind, on the phone, or with a hammer in your hand. I just enjoy a rehab now and then. But WORK is the thing. IT DOES TAKE WORK, AND DARN HARD WORK, otherwise, WOULDN’T EVERYONE BE DOING IT??? Let’s face it, if the average person was willing to work AT ALL, there wouldn’t be a need for Realtors, now would there?
Re:Let me add… - Posted by Tim Jensen
Posted by Tim Jensen on March 19, 2000 at 07:47:03:
I agree with HR, but I would like to add to it.
When you run your ad attracting investors or calling on We Buy Houses ads. Pre-qualify the people. Let me explain.
If you are unsure whether or not they are for real, ask them if they just buy and sell or buy and rent? Tell them that you do the same and was wondering if they keep the properties in their name or do they use a corporation. Act like you are asking for their advice on this. Now here is the reason why.
When they say oh yeah I just buy in my name or buy in my corp name. You thank them for their advice then call up the tax office and see how many properties they own. If they only own one chances are they are not for real. If they own a number of properties then they probably are for real. That is probably the best way to screen the wholesale buyers. Now, this is not 100% accurate, but it will help weed out a bunch of tire kickers.
Possible Misinterpretation - Posted by Jim V
Posted by Jim V on March 20, 2000 at 24:19:36:
Perhaps I wasn’t as clear as I should have been. The point was supposed to be that a $100,000 house isn’t worth anything close to that for an investor who is going to re-sell. The potential $13,500 profit was based on the investor needing a 20% (approximate) return on $70,000. Nothing was allotted for the person trying to flip the property! Any pricing higher than the numbers outlined really isn’t feasible. Whether it would fly at something close to those numbers would depend on the specifics of the property and actual numbers. If you’ve got a lower percentage number you use, I can’t argue with that. That’s just the highest I can see a potential deal at.
Re: FRUSTRATED WITH WHOLESALE BUYERS LIST - Posted by Ben in Ohio
Posted by Ben in Ohio on March 19, 2000 at 10:15:46:
WORK. Thank goodness it is work, otherwise everybody and his brother would be in the way. My recent HARD WORK, of which was about 40-60 hours of negotiating, inspecting, sending letters, memos, contracts, the whole nine yards. All this in the hope that a mortgage company would accept my offer on a short sale. They called me yesterday and said yes. We are closing in two weeks.
This deal when rehabbed will net about $30, and I am using hard money to buy and rehab. So it is a true no money down deal, and I know there are more where this came from.
I have twenty years of rehab experience, it’s not like I got lucky. Like the saying goes “one must create their own luck.” And most certainly you will!
Re:Let me add… - Posted by JPiper
Posted by JPiper on March 19, 2000 at 09:13:45:
Unless they took Bronchick’s advise and have their property in individual trusts.