NEED TO MAKE MONEY QUICKLY?
I get this at every seminar. Seems it’s everyone. Every beginner really needs to make money quickly. Although, I like to teach people to buy and hold and take the full advantage of real estate, I do have ways to make money quick in real estate investing. Ways that don’t require your money, virtually no risk and without using your credit.
Here are some steps you could do in the next couple of weeks.
If you’re going to make money fast, you have to decide to do it. I’ve set $20K, $50K and $100K goals in the last several years, attached short time periods to them and seem to always hit them. A mindset of not being denied is needed.
Most of you will need money to run your real estate business. Look, you can buy houses with no money and no credit. But if you want to find houses without money you are limited to manual labor. That’s ok if you have no money. You can call ads, drive around looking for vacant houses, and look on a number of internet sites. Having a small amount of money available to get a website going or to do some marketing will always help.
Internet Marketing reduces your advertising budget significantly, but there will still be some expenses with some of the other marketing strategies.
What can you expect? First, let’s say you want to make $15,000 in the next 30 days. I know, that might seem like a lot, or it might not, but let’s say you’re going to go for that. Or, let’s even say you want $90,000 in 6 months. That’s $15,000 per month for six months. Now, how do we get that?
#1 – if you’re going to use no cash, no credit, what strategies should we use?
#2 – how can we find deals for little to no money?
#3 – what kind of sale will we make, or exit strategy will we use if we don’t have much money to advertise?
Okay, #1, let’s get an index card out and write $90,000 in 6 months on it and post it where you’ll see it every day. The bathroom mirror, above your computer, in your pocket, or put them in all those places. It has got to be foremost in your thoughts — everyday.
Then we’ll need to set the steps needed to get there and commit to those: offers, appointments, and calls to motivated sellers.
Example: “My goal is to buy 1 house each month for the next 6 months and assign them all for a minimum of $15,000.”
That’s a start.
However, if you need 10 offers to buy 1 house and to make 10 offers you need 100 leads and to get 100 leads you need to spend $300 then you might have something more along these lines.
See, if you know what it takes as far as the steps are involved, you can concentrate on the little things that will get you there, the step by step, daily actions. I don’t normally set goals on a per house basis. My goals are that I usually want to net $50,000 in a month. I don’t care if it comes from just one short sale, as long as it comes in.
3 strategies for quick cash
Wholesaling, of course, is your #1 top strategy to bring in cash quickly.
See Jim Fleck
Wholesaling is a way to get cash. I use it for cash flow. I use it to fund things such as, business growth, bonuses, toys, etc. I also have long-term investments that can build long-term wealth.
You however, need some good quick deals that don’t take cash to buy, or need refinancing which might need credit. Unless you have some generous private lenders, you need an exit, which doesn’t require cash. For the sake of this newsletter and this plan, I’m going to assume you’re not going to use your credit either, for whatever reason.
You need deals you can flip quickly without having to close first. Likely, assigning the contract will be the best option. The beauty of this, is when you’re looking for investors to assign a contract to, you’re building a buyer’s list for the next transaction.
Get cash from a new or existing deal is strategy #2. Many investors never think of this. All of my private clients do, I’ve taught them over and over to watch this. If they need cash, they get it at closing. It’s easy… get a good deal at, say, 50% LTV, then finance 70% on a first mortgage, and put the difference in Hip National Bank. Buy property for $50,000, $5,000 in repairs, refi at $70,000 and $15,000 goes in your pocket. This money can be used for holding costs while you’re trying to sell, when you’ll make another $1-$20,000. Yes, it might take cash and credit, but not necessarily… more in a moment.
Put a 2nd mortgage on a new or existing deal. Like the previous strategy, we take money out of a deal. We can put a 2nd mortgage on a property and take the LTV all the way up to 85%. In the case above, that would be another $15,000. You can borrow a higher LTV on a 2nd mortgage. Never over finance the property. 85% is the highest I’ll ever go with a 2nd.
Ok, so now you’re saying wait, he said no money and no credit. Don’t get your underwear in a bunch; I’m getting to it.
So, you can’t get bank money, especially in these credit challenged times (although banks are showing signs of loosening). I have a couple things to say:
1. Try multiple banks. Your local town bank may be the best if they’re in business. Still try the big ones. If your credit is shot this won’t work.
2. DON’T USE BANKS! I hate using banks anyway. My investors almost always flip houses using private lenders or hard money lenders. I consider hard money, traditional ones that are in business to lend, and private, someone you got set up to lend. You need some solid private money lenders anyway. This is a great way to use them.
Ok, so, we’re finding the deals, building our buyer’s list while trying to sell it, selling it, then closing and getting a check. Eazy, peazy, rice and cheesy as my daughter says.
Finding the Deals
The thing I see beginners do most often is get a few leads and then start chasing them. They never even think that when I’m done chasing these deals and it either goes through or flops, I won’t have any leads left. You must keep generating leads every single day.
You have to generate a HUGE pool of leads and then you get to pre-screen them and pick the best and most profitable deals.
That’s why I get deals that might make me $17,000 cash when I flip it, or even $35,000. Because I’m generating so many leads I get to pick and choose.
I’ll admit, real estate is a numbers game, but you do want those numbers to be good numbers. I don’t subscribe to the old school mantra of just calling 100 ads, make 10 offers, see 3 properties and buy 1. It would work, but most will quit long before they call 100 people.
It is a numbers game in regards to simply generating enough qualified sellers (those with enough equity to do a deal if properly motivated).
There are those that will sell at a HUGE discount.
Those that will do this are few and far between. That’s why you have to generate qualified leads so you can pick the ones that will do it.
Thus, you need to get REALLY GOOD at pre-screening, because you don’t want to waste time on un-motivated sellers. That will kill your business and your enthusiasm.
Then you’ll say, aw real estate sucks. It doesn’t work, I tried it.
Finding Flips
1. Area with lots of ugly houses. They’re UGLY, the grass (or snow) is up to your knees, no furniture or window coverings, and maybe broken windows.
2. Mailing lists of properties 15-25% below median sales price for the zip code (melissadata.com).
3. Use Birddogs, if it is legal in your state. Have someone drive around looking for vacant properties. Pay them $5 for an address and $10 if they get the address where the owner is now and a phone number.
4. Stick with starter homes. 3-4 bedroom houses, with 1-2 bathrooms, at least 850 square feet on the main level, and a garage – plus or minus about 10-20% of median sales price.
Build Your Buyers List
You won’t get a check unless you can sell the property. You’ll need a buyer. You’ll need a buyer that can close quickly. This used to be just landlords, rehabbers, and basically other investors. These days, you can get buyers who will take the house even if it needs work. They can get financing to buy it and a 203C loan to fix it up. This is nice because you make more money, you sell closer to retail. You also get a retail buyers list built, as well as, your investor buyers list.
Ads – running ads online is the fastest way for building a buyers list. You need to make sure you make the ad short, to the point, and it must benefit the buyers.
Email lists – As you’re building your buyers lists, these days, you want to ask for an email address. I’ve sold 4 properties once in 23 minutes by sending just one email. Also, get on other people’s buyers list. Very often investors just copy everyone on the list and you can see everyone’s email address. You can then send those people an email also to see if they want your deal.
Signs – admittedly, I don’t use bandit signs, but we do put signs in yards right away. We usually use two different types of signs. We try to get that first time home buyer and a wholesale investor buyer.
We usually put them in the yard, right when our agreement is signed.
Direct mail / Email – we use direct mail to build our wholesale AND retail buyers list, and these are our most productive strategies.
When building your list, quantity is good in the beginning. From that, you’ll get the quality buyers.
You’ll often end up with just a small group of buyers that will buy from you over and over again. With sellers, you want quality though. You don’t want to be wasting your time with a large quantity of unqualified sellers. You want them to be pre-screened. The best way to do all this is with automated tools. In other words, build a team around you, whether live humans or technology, so you can live a life while investing and it doesn’t consume your world. We use:
http://patlivenow.com to answer our calls and prescreen our leads. We also use websites that can do the same thing. Sign up for a patlivenow account and tell them you want the Jim Fleck script. You’ll thank me later.
Promote and Sell Your Deal
If you’re going to get a check, you’ll actually need to sell the deal. The best way to get bigger checks from selling your properties is to add value to the deal, and then you won’t have to cut the price. This advice, if you heed it, will make you tens of thousands of dollars a year or more depending on your volume.
How To Add Value
Don’t just wholesale the property. Repackage your product as something more than what others are selling.
Make it easy to do business with you. Make sure all the title work has been handled; possibly have the property cleaned out. Do the due diligence for the buyers; provide credible valuable information around the deal that they can use to make their decision, for example, estimate of repairs and appraisals.
Give wholesale buyers what they want, and make it easy for them to decide and make money.
How do we add value? One way could be what I do for my Automatic Wealth Building clients. For them, I’ve created a “deal done for them” or “Investment-in-a-Box”. Chrissy and I have done everything for them. We provide all the necessary due diligence in an easy format, and then we market it with proven marketing strategies.
Experts – we show that we know what we’re doing. We’re investors. We’re an authority. We can make them lots of money and make it easy if they do business with us. People like to do business with those that make it easy and show they are in charge.
Social Proof – We always let our investors know that other people are buying from us and profiting. This causes them to want to do the same thing. We tend to look to the crowd to know how to react. It’s the herd mentality. This is why even in real estate, we use testimonials. People like to see others making money, and succeeding. It’s proof. By seeing lots of other people interested in a house, people can jump to the conclusion that it’s a good deal and they should make a decision quickly. This is also why we do group showings of the properties and not one at a time.
Scarcity – when I email a property out to my buyers list, they know I only have a few and that it’s going fast. People put more value on something when there is less of it. This is important if you want to sell faster and for a higher dollar amount. This is why our round-robin auctions work so well. Others are bidding against each other for just one property.
So, this is more or less a primer to get you off the old rump and do something. I didn’t go into detail but there’s enough to get you started. Some good ideas for how you can sell faster and for more than the average investor would.
Close Your Deal – lastly, pick up a check. Keep the deal moving until this happens. Don’t count your chickens before they hatch.
All kinds of things can happen before you get your check. Chrissy knows I don’t get excited until the check is in my hand, and then I bank it. Not until.
Nobody wants that check as much as you do. The lawyer has $350 at risk, the title company $1,000, the agent $3,000, or whatever. You might have $25,000 or $35,000 to lose. Keep following up until the day you cash the check.
During the time between getting a deal on paper and closing it, you’ll want to make sure:
Everybody is doing their part to keep things moving. We never assume they are. We follow up on everyone.
Double check on seasoning issues. Since you might be doing a double close, just check with everyone or have your lawyer do so. Stay on your lawyer until he answers.
Double check that funds are lined up and will be there on time.
We like to use checklists to make sure nothing is forgotten or missed. We have a closing checklist just for this purpose.
Remember this; there is no set time it takes to close on a real estate transaction. It can be done as fast as the parties are willing to act, as fast as the title can be insured, and as fast as the funds can be secured and transferred.
This can be a couple days to a couple weeks or even months, if you let it. If I had to put an average we’re talking 3-4 weeks to close, 30-60 days if we’re retailing. If wholesaling, we close the same day we close on our buy.
Try not to wait until the last minute, and then try to rush everybody. Just follow up, keep a checklist of things you need to do, cross them off when you know they’re done.
So, I hope this will inspire you to start taking some steps each day.
And if you need some details, get the wholesaling course at:
To Summarize
1. Set a goal with a specific amount and target date.
2. Create an “actionable” plan with steps.
3. Start working your plan, as often as your time allows, but don’t stop it. EVER.
Buying “Subject to”
There are different meanings to the phrase `’subject to”, such as a clause in a real estate agreement: “subject to buyer’s inspection“, or “subject to partner’s approval“. Most are familiar with these phrases.
But in this particular scenario we are referring to a low to no money down and no credit strategy. For real estate investors, the most common use of the term “subject-to” or “Sub-2” refers to purchasing a property “subject to the existing financing”.
This strategy leaves the existing financing in place and the investor just takes over the original owner’s payments.
YOU ARE NOT ASSUMING THE LOAN. This is where people get hung up. You are not assuming a loan.
Look, I haven’t seen a loan that’s assumable in I don’t know how long. Anyway, even if you find one that is, it would also have to be non-qualifying for you to just assume it without your credit and qualifying for it to assume the loan. So to be clear, you are not assuming anything. You are simply agreeing to make the seller’s existing mortgage payments. The seller’s name stays on the loan, you just pay it.
Please don’t tell me it’s illegal. Take a look at line 203 on the HUD1 form, which says “Existing Loans Taken Subject To.”
Anyone can make a private contract to buy or sell a property. You will have the deed in your name; the seller will still have the loan in theirs.
This type of strategy does have some nuances depending on the state you’re in. Nothing a hundred dollars and a lunch with a lawyer won’t take care of. Always send the question to the lawyer first though…then buy lunch only if he has the answer.
