How To Make Money Wholesaling Bank Owned Properties!

Question

I just wanted to say THANK YOU BP! If it weren't for this forum I would not be attending this course "How To Make Money Wholesaling Bank Owned Properties!" given by a local Real Estate investors group. This board is a wealth of knowledge and I look forward to taking the plunge very very soon in this thing we call Real Estate Investing!

I will be back tonight to share my notes with you all!

Mike Hill · Answer

Hi BP,

A few things I'd like to comment on here and give a 100% non-biased review of. First off, I have attended the above mentioned bootcamp and I am one of Lex Levinrad's (yes, not Levingrad) mentoring students. I am not sponsored, incentivized or affiliated in any way, just found this thread and wanted to post my honest review.

When I took the bootcamp years ago, I personally found it very enlightening and learned quite a bit on the trip (especially on the bus trip where we boarded a bus and Lex physically took us to, and walked us through some bank owned houses).

Now it is also true that some of the information taught during the course can be found online or on site's like BP. The request for new information, or a new technique or strategy is a common one, especially among newer investors.

Now hear me out for a moment...

I have often made the analogy with wholesaling and fitness. Every week there is a new fad diet. Every month, men's health (or women's health) has a "new" fitness routine for rock hard abs. Most people are looking for the "new" strategy and secret technique and spend hours on fitness blogs trying to figure out what works best. Then, they will go with a low-fat diet for one week, then low carb for another week... lift heavy weights with low reps one week, then the next week it's off to High Intensity Interval Training, etc.

They search for the "trick" and then try each technique for a few weeks before deciding "this doesn't work" and jump to the next best thing (reverse wholesaling, wholesaling lease options, etc - and don't get me wrong, these strategies can work, but you can't keep jumping from one to the next).

And still, if you stick with the most basic plan - eat healthy, natural foods and exercise a few days a week - and actually stick with it for a few months, it doesn't need to be the BEST program - it will still work!

Can you find all of the information you need to lose weight online? Absolutely! Would you see better results if you hired a chef and personal trainer - assuming the trainer is qualified, then I would imagine that you would. I would also imagine they would deserve to promote their services and be compensated for them.

To my next point, during the event you will get 3 solid days of information, some of it new and some of it you may already know. It's funny because the people who are doing deals at my local REIA, are the ones that keep coming back to the same bootcamp. I've been to this particular boot camp several times and while I stopped take copious notes, there were times where I might listen to information I knew for say an hour, and of the 60 minutes, there was inevitable those 2 minutes with some tweak that I was able to walk away with, that made a huge change in my business.

Now, Lex will absolutely promote his services and ask for partners simply because it is a win/win. He is a licensed Realtor, investor and lender. When you sign up for his programs, you don't just pay to learn materials (as I said, you CAN learn the material elsewhere) but you are partnering with him to do deals.

I've done many deals with Lex and here's an example of an early one: I found the deal and got it under contract. Lex put the deal on his email blast to his database of cash buyers that he's been actively building for over a decade. He found me a buyer. Then he provided transactional funding so I could purchase the deal. He also put me in contact with his Title company (Independence Title in Ft Lauderdale) who has been taking amazing care of me ever since. Then, he instructed me on how to mitigate some liens and overcome other obstacles in order to close. I was more than happy to split the profits.

On another deal we did together, I found my own buyer. He still provided me with transactional funding for a 1% fee and I got to keep all of the profit. I actually sold the property to a buddy of mine. A few months later, my buddy used Lex as a listing agent to put the same property on the MLS and sell it. Did Lex make commission? Absolutely. But my buddy and I also made generous profits as well.

My point here is that "knowing" and learning how to do something is not enough. I highly recommend working with someone who is in the business. You are not paying and partnering just to learn, but assuming the person is legit, you also get to take advantage of all of their resources and network. Working with Lex I had (and still have) access to his knowledge, his buyers (again, over a decade's worth of work), his funding partners, his title company, etc. Has he made money from me? Absolutely... but I have no problem with that because I've had 10x the return on my investments with Lex, and the returns grow each and every day.

While wholesalers get the bad wrap of being sneaky or "weasels" - it's clearly a discriminatory comment that should be rethought or at least rephrased. Wholesaling is merely a profession. There are ethical and unethical lawyers, moral and immoral doctors, and teachers and car salesmen. Integrity is a reflection of the individual and not his/her profession. While some abuse the system, they will inevitable fail in the long term. There are those of us out here making lifelong partnerships, helping families out of impossible situations, creating profits for investors, profits for ourselves, providing for our families, giving to worthy causes, and doing it all ethically.

I know this has seemed like an endorsement, and as I said, I'm not incentivized in any way, but here's is why my experience has been so positive - I'm going to get very personal with you BP.... not something I usually share....

When I got to South Florida several years ago, I had nothing... no car, no job only a few hundred dollars in savings AND I had a family to support. I moved my family in with my Grandmother until I found a job that paid a decent wage ($50k a year plus bonuses) but kept me working over 12 hours a day (plus  a long commute) and spending very little time with my daughter.

Within months of meeting Lex, I took the bootcamp, made two deals, used the profits to invest in his mentoring program and have been doing deals ever since. I was able to quit my job, work from home, and provide an amazing life for my little girl while doing the things I love to do.

Here's where it gets personal - a few years ago my daughters mother decided to leave and I had to fight for custody for my five year old daughter - something I could not do living paycheck to paycheck. I was able to retain an attorney, present my case in court, demonstrate that I had the financial means to provide a better lifestyle, and show that I was not bound to a job (more flexibility). In the end, I was awarded full custody of my daughter - the most priceless gift in the world!!

And while I give myself credit for being diligent and persevering through some rough times, I feel indebted to Lex, knowing that I could not be in the position I am (or at least it would have taken many many more years) without his help.

I advise readers to network and partner with individuals who are doing business in their market. Networking can be far more crucial to your success than simply "knowing the information." If you go to Lex's website, you will find countless testimonials of current and former students that are doing deals on a regular basis. Remember that just because someone is going to profit from a relationship, it does not mean that they should automatically be written off. If they can deliver the goods, I believe they deserve to profit.

And, on a final note, while I love BP, it seems that so many of the wholesaling posts boil down to "be wary of the guru's." And while it is absolutely true that there are those who seek to profit by simply selling a dream, there are those who are ethical teachers. Rather than write the post myself, I've quoted Joe McCall from another post where he expressed my feelings perfectly. On that thread, fellow members were discussing how to get low cost and free leads for motivated sellers. The general consensus was that there is no low cost leads and this is falsified info from evil gurus looking to sell you a product. Then, Joe responded with the post below. Please read, be open-minded, stay positive, stay persistent and good luck. God Bless

- Mike -the longest BP comment writer in the world- Hill

From Joe McCall - "Now hold on... Permission to speak my mind?

That’s such a typical BP response… Blame everything on all those evil gurus. Don’t listen to the “guru garbage that wholesaling is a path to big paydays even without any cash, time or effort.”

Name one guru who has ever taught that you can wholesale deals without any “time or effort”. Please, be specific, with quotes and references. Who teaches that? Honestly… I’ve never heard one. Even the worst gurus will admit that you need to put at least a little “time and effort” into the business.

I just think these kinds of blanket statements and generalities are not helpful, and often just plain silly.  Let's stop the guru bashing, and let's offer more helpful advice.

I didn't have any money when I got started. I 100% bootstrapped it. Yeah - the gurus make it sound too easy sometimes. But I believed the ones who told me I could do it. (I thank God for these “gurus”. If it wasn’t for them, I wouldn’t be where I am today.)

I know tons of people - many on this forum - who got started in REI with little to no money. Yes, it does take a lot of time and effort. But you CAN DO IT.

Yes, it’s easier if you have money for marketing. But you don’t have to have money to start marketing for sellers. And again… I am speaking from personal experience.

Anyway, sorry for my rant… I know I just opened a can of worms.

You CAN wholesale properties with little to no money for marketing when you are just getting started. But you need to put a lot of time and creative effort into it. Let me tell you how I did it.

1) Find Other Active Wholesalers In Your Market

These are people who are already wholesaling 5+ deals a month. They do a lot of deals, but they don't like sitting behind a desk, sending postcards, taking calls, prescreening sellers, etc. They would rather be in their trucks, driving around town looking at deals, meeting with sellers, sitting at the seller’s kitchen table, making offers, chasing the deal. These guys hate the admin stuff. They just like the chase of the deal. And guess what? Most of their leads come from referrals and the MLS. They don't do much marketing.

You're going to do the marketing for them and be their birddog.

How do you find them? Drive around town & look for bandit signs. Google things like "we buy houses" & "sell house fast". Look on Craigslist and Backpage for ads. Network with local REIA's. Find them here in BP. Flap your lips. Ask around...

Make a list of at least 100 investors in your market. Call them all.

Most of these wholesalers will be beginners and won’t call you back. You will find that maybe 5% of them will be legitimate. You are looking for someone who is experienced, who answers their phone, and promptly returns their calls.

2) Talk To These Wholesalers - Find Out What They Are Looking For

Tell them that you are new in the market and you are hungry. Tell them you want to help them grow their business & help them make more money. Don't ask them if you can sit down with them over coffee and pick their brain. Your sole goal is to help them do more deals, and help THEM make more money.

Tell them you want to do some marketing for them and bring them pre-screened seller leads. Ask them what areas are they buying in.

Ask them if they would be open to you bringing them warm seller leads, wholesaling the property, and then splitting the profits with you? Maybe they can pay you a "marketing fee" after the deal closes. (Let them figure out how to best pay you. Don't worry about these details yet. You will just be an Independent Contractor / Marketing Consultant.)

3) Ask Them How They Want To See The Leads Presented To Them

Keep this simple.  Make this easy for them.  Give them enough information on each lead so they can see everything they want to see, quickly and easily.

• Give them the three lowest “active comps” of similar properties nearby.
• Give them the three lowest “sold comps”.
• Give them the zillow link of the property.
• And if you can get property information from the county assessor’s office, print that into a PDF.

(By the way, I recommend using Podio to keep track of all this. The basic version is free. You could also use Google Drive.)

Ask each seller lead the basic 5-6 questions:

• Seller contact information
• Property information - address, bedrooms, etc
• What’s your situation? Why are you selling?
• What would you like to see happen?
• If I can make that happen, how quickly would you like to sell?
• How much cash do you want to walk away with at closing?

4) Start Marketing For Sellers / Deals

This is where the rubber meets the road, right? There are tons of different things you can do that don’t cost much money. Here are my top recommendations:

A) Drive for dollars… Look for vacant properties. Call all the “For Rent” signs. Call the “For Sale” signs on properties that look like they need work.

B) Call Realtors of pending listings.

Look up all the properties online in your wholesalers favorite zip codes that are listed as “under contract” or “pending” in the MLS. Look for the properties that need work - properties that only an investor would buy.

Some markets have this information in Redfin, sometimes you can find it in Zillow. The best way - find a realtor to send these to you (as a daily automatic email alert).

Call the listing agents of these “pending” properties, and say something like this: “Hi, My name is Joe, and I saw that you have a property listed at 123 Main St. Is it still under contract / pending? Well, the reason I am calling is because I am an investor and we are looking to buy more properties in this area. If your buyer falls thru, would you mind calling me so I can make an offer on it? You can represent me and double dip the commissions. Great! What is your email so I can send you my contact information?”

Almost every Realtor will thank you for calling them. If the deal does fall thru, and many times they do, you will be their hero. That Realtor has already spent their commission in their mind. You will help them save face, make their client happy, and they will actually get more commission bring the deal to you.

The really cool thing about this strategy is that it helps you come into contact with the Realtors who are willing to list these kinds of properties. They are really valuable to know.

You will need to collect all the emails of every Realtor you talk to. More on this in a minute. Ask everyone, “Can I send you my contact information so you don’t have to write it down?”

C) Call all the Zillow rental ads in your target markets.

Tell them that you are an investor looking for rental properties in the area to buy. Ask them if they would consider selling their rental property. Or, ask them if they are in the market to buy any more properties (to build your buyer’s list).

If it is an agent or a property manager, ask them if their client would be interested in selling the property. They can represent you and get both sides of the commission. Ask them if they have any other clients who might have a rental property that they would like to sell. Almost every property manager has clients who would love to sell their properties.

Ask everyone if you can send them your contact information, so they can call you if they find a deal in the future, or change their minds.

The goal is to get their email addresses.

D) Text & email Craigslist For Rent ads

Look up rental properties in Craigslist every day. Send texts and emails to each ad, asking them if they would consider selling their rental property. Get them on the phone. Talk to them. Tell them you are an active investor, looking for properties to buy in the area. Ask them to think of you if they ever find a deal. You will pay them a commission / referral fee if they bring you any deals.

E) Text / email Craigslist FSBO’s

Send a text / email to these sellers and ask them something like this: “Hi. I am an investor and I saw your property on Craigslist. Is your price negotiable? My wife and I am looking for an investment property in the area. Call me. Thanks”

This next thing is REALLY important...  Don't gloss over it.  This is where the power is...

F) Email everyone on your list once a week, asking them if they have any deals.

This is where the real power of this strategy comes in. Most of these people that you call and talk to are going to forget who you are the next day. But you are going to send them an email every week, asking them if they have any deals. These are going to be simple, non-spammy emails. Something like this…

“Hi - just checking in… We talked a little while ago. I am an investor, looking for hard-to-sell properties. Do you have anything I can look at?”

“I’m an investor looking for fixer-uppers. Do you have any deals I can look at?”

“Hey John… Hope you’re doing well. Do you have any investor specials? I am looking for any hard-to-sell properties. Call me or reply if you have anything.”

Be creative with the emails. Keep them short and sweet. No links - just a simple email, one or two sentences, looking for a reply or phone call.

To learn a cool trick to email all these people every week...

Go to YouTube, and do a search for “Yet another mail merge tutorial”. You will find videos there on how to send these emails thru your gmail account from a Google Spreadsheet.  Check it out right now...  It's awesome.

G) Super ninja trick - Find other birddogs to do all of this for you.

Once you get this figured all this out, and you’re starting to get lots of leads (and you will, I promise), put ads in Craigslist for birddogs to do all this marketing for you. They will send the leads to you, you will prescreen them, and then send them to your wholesaler partner.

5) Send All The Leads To Your Wholesaler

Now, what do you do when you get a lead? You prescreen the lead and send it to your wholesaling partner. Simple as that. You don’t have to worry about steps 7-8 just yet… All you’re focused on is steps 1-2, which is marketing and talking to sellers.

You don’t have to worry about estimating repairs, getting comps, finding buyers, finding cash to close these deals, working with title companies, etc. Your wholesaler will take care of all that for you.  You will learn that stuff as you go.

Again, track all these leads in a tool like Podio, or Google Spreadsheets.

6) Reinvest Your Profits Into Marketing

Now that you have done a couple deals, reinvest all your profits into marketing. Start doing postcards and yellow letters as soon as possible.

Summary - I am speaking from experience. I am doing this in 4 different markets right now. I closed 20 deals the last couple months doing this - doing the marketing and partnering with other wholesalers - while I was traveling in my RV. This stuff works.?

I had a stay-at-home mom that I was coaching a couple years ago. She had three screaming, crying, playful, energetic kids at home. She could NOT talk to sellers if she wanted to. And she didn’t have any money to do marketing. So she did the only thing she could do… She emailed landlords and sellers in Craigslist every day. She did all her deals, from beginning to end, with only craigslist and emails. Every week, she would pick a new city. She made it happen because she knew no other way. She didn’t believe anyone who told her she couldn’t do it.

So where there's a will, there's a way. How bad do you want it? Make it happen. Don't let anyone tell you that you can’t.

There is a ton of great free information out there. You don’t have to buy a course to get started (although a good course does help get you faster results.) Stay on this BP site, keep on asking questions, check out all the awesome free podcasts out there, get some books on Amazon, etc.

And when you do have some money to invest in your education, find a good recommended course, and buy it.

Hope that helps!"

Carlos Coppin Jr · Answer

Bill Gulley

I know the know people on the forum always say avoid the so called Gurus the problem is I didn't know I was going to be  pitched a "boot camp course" otherwise I would have never attended.  I know with hard work, integrity and honesty I will be a successful investor.  Thanks for checking in!

Wayne Brooks · Answer

Yep, you'll find most of the mentoring/partnering type groups are run by someone with a RE license.  They make a commission when you buy, they make a commission when you sell, they make a commission on the HML loan, then they get half the profit on the sale, and you did all the work, took all the risk.

Carlos Coppin Jr · Answer

@Mike Hill

Thanks for checking in.  It's always a pleasure to read about a fellow investors success.  Your story is a true inspiration to us all.

Carlos

Bill Gulley · Answer

Carlos, good to hear your business ethic, the issue is trying to do something very difficult, can be worked very hard with little reward. Working REOs means a bank accepting an assignment, likely not, means a Realtor will be involved, that can be the kiss of death for any wholesaler, unless they are willing to work with you. If you're finding buyers for bank owned properties be careful, interfering with bank operations is a federal issue and they don't like straw man deals. Now, if you get financing for a clean but from the bank, you'll have few issues with your cash buyer, but if your buyer is getting financing, that lender will question the recent sale and what you added to the property to justify a higher price.

Just working hard isn't going to make that easy, glad to hear the ethical side, but deceiving a bank in a RE transaction is another federal violation. So, what these guys probably have to pitch is how they have done in in the past, doesn't mean it can be done in the future.

Eyes open! Good luck.

Carlos Coppin Jr · Answer

@Wayne Brooks

that's exactly how they operate,  I have no interest in doing all the work then splitting everything, I'd much rather go at it alone.

Bill Gulley · Answer

Well, obviously you didn't read enough of the threads on BP..... LOL.....or you wouldn't have signed up! I don't know those guys (I stay away from gurus) but my money is betting they will tell you stuff that will get you in trouble, betting 2 to 1.

But, I do wish you luck and it will be a learning experience, even if what you learn needs to be relearned.

No, I have nothing against wholesaling, did one last year, it's the way wholesalers go about conducting business and the weasel ways used. Just remember, be up front with people and don't leave a seller hanging and you can do fine. Good luck  :)

Carlos Coppin Jr · Answer

@John M.

Well I was hoping that I would come back with some "NEW" information or strategy but to be honest there was nothing really new that I learned.  The speaker suggested "partnering" with his company to purchase homes.  He's an investor and talked about "partnering: with his company he would loan the investor the money to purchase the house and then when the home sells he would split the profit with you.  Don't get me wrong he was a good speaker but I learn more on this board daily than I do in most of these lectures.  I was able to network and meet really nice people.

Carlos Coppin Jr · Answer

@Wayne Brooks

You were right the course was given by Lex Levingard.

Wayne Brooks · Answer

Sounds like Dweck and Levingrad's course.  Good luck with that.