All Forum Posts by: Keith Goodwine

Off-market deals are exactly where you want to be. He can't see a deal if it's not on the MLS or in an auction. Send out some direct mail, post on Craigslist, reply to Craigslist postings, drive for dollars and look for FSBO signs, etc. Once you get a contract on a house with profit built for you and a potential buyer, wholesale it to the guy.

Don't market a property before it's under contract.  That is agent activity, and if you're not an agent, you're breaking the law, and subject to being reported.  I've found that just about every educational resource on wholesaling completely forgot to mention this VERY IMPORTANT fact.  Even well-meaning wholesalers may not realize they are breaking the law.

Don't give away your lead lists.  That is your proprietary data.  You've paid very good money through all of your marketing channels to get this data, so why give it away?  Anyone can take 2 minutes to either skiptrace an address, or find the owner's information with the tax office.  Another 2 minutes on Google and they've got owner's address and phone number.  It takes you months of hard work and serious investment to develop highly qualified leads.  Don't give them away for free.  Your non-compete agreement doesn't mean jack unless you have the funds to hire a lawyer, and months to prove they actually violated your agreement.  Even then, what sort of compensation do you expect to get from a lawsuit like that?  Hold on to your data!!!

You can investors them know of upcoming deals that may sound interesting.  "I've primarily been marketing in areas X, Y, and Z.  I may have an opportunity in Z neighborhood that I'm working on getting under contract.  If it works out, we'd be looking at a purchase price around $ABC,DEF.  But it's not under contract yet.  Want me to give you a shout when I'm able to lock it down?"

 People who owe lots on their house and have very sudden changes in life.  They may have lost a job, just went through a divorce, have to pay a huge child support payment, and might be looking at foreclosure or bankruptcy soon if they can't figure something out quick.

 Four times a year?  Why not once a month?  Once a week?

Your list should be going out to homes with the highest probability of motivated sellers.  If someone is only thinking about selling their home four times a year, they're probably not motivated.  You should increase your frequency and/or refine your list!

Pre-foreclosure should be getting a postcard once a week if possible.  They'd rather sell to you than go into foreclosure.

Some options to consider might be owner financing or lease option.

I would still make an offer to wholesale, and gauge her reaction.

If you don't have the cash for owner financing, and must wholesale or nothing at all, I would call her in a month or two to gauge her desire to sell.

In my opinion, she would like to sell, but she doesn't feel like she must sell.  If selling were a must, she would have considered any of the offers she received while it was on the market.  She likely received a lot of investor offers like the one you should offer.  She's also OK with letting the house sit vacant for over a year as well.  

This is a numbers game.  You'll talk to a lot of people who would like to sell, but don't feel like they must sell.  If the pain isn't high enough, they won't change.  You can either work on building your value, and how that solution solves their pain, or realize that they aren't feeling pain at all.  It's OK to pass and move on to the next lead.  There will be many more in your future.

 eBook is an excellent idea.  Thanks for sharing!

 Have you tried targeting your mail with a message that makes more sense?  Try to predict their motivation to sell, and create a more meaningful call to action.

Absentee owner - (Header - YOUR RENTAL FOR SALE) Are your tenants behind on rent?  Are you looking to liquidate your rental properties today for cash?  You can sell your rental in as-is condition, and close in 30 days or less.  Call me now to find out how!

You can further target absentee owner by comparing with recent eviction notices, which are public record.

Owner occupied - (Header - SELL YOUR HOME TODAY)  Looking to sell but your home needs expensive repairs? Do you keep putting off repairs and remodels, hoping you'll have the cash later?  You can sell your home today in as-is condition.  No realtor commissions or escrow fees.  Call me now to find out how!

You can further target owner occupied by narrowing your list to mortgages that are 10 years or older.  You want to talk to high equity sellers that need to move or repair their home quickly.

Code violations - (Header - CODE VIOLATION NOTICE)  Your home is in violation of building code, and if you don't make repairs soon, you'll be facing huge liens and ugly disclosures when you try to sell.  We can buy your home today with no repairs.  Call me now if you'd like to know how!

 Depends more on the comps and less on Zestimates.  I don't see how a house in a new subdivision could command a premium over other new builds which are cheaper.  When presented between these two options, I think any buyer would choose the same thing:  a brand new house for $250k, or an existing year-old house that has been occupied by non-owner tenants for $265k?  The brand new house wins all day.

I wouldn't be so quick to assume A neighborhoods attract A tenants.  It may attract tenants with good income and credit, but then you find out they throw a lot of parties, never change the air filter, never clean the dryer lint filter, have 4 dogs (especially once they see your big fenced-in back yard), and feed black mold infestations in the bathrooms because they don't have the good sense to turn the fan on or leave the door open after showering.

There are certainly worse investments.  However, stretching cash thin to buy a brand new house for rental investment isn't the best option.  Cashing out a 401(k) to buy a new build for rental investment is the worst option of all.  If rental investment is the end game, I would recommend using liquid cash and buying a lower-priced property.

Hey Jamarr,

Congrats on your first lead!  If you're like me, you're hungry to get that first deal done, and getting leads is a huge step forward.

You could use either number as a legitimate comp.  The important part is that you calculate your figures based on a number that reflects today's retail price (not tomorrow's speculative price).  You could split the difference and say $145k if you want.

What is the owner's motivation to sell?  Despite the condition of the home, and despite the fact that her house has been on the market for a year, does she have any motivating factors to put any urgency on selling the home?  She could just be seeing if she can get top dollar for her 100% equity house without having to spend a penny on updates.  (Wouldn't you want to do the same?)  

If she hasn't told you any motivations, ask her why she put her house in the market a year ago, and why she is responding to your marketing now after a year.  Does she need to move out and in with family members, or into an assisted living home?   Does she need cash to pay off a debt or lien against the property?  Is her family pushing her to sell so they can get the cash for something?  

Education might be empowering here too.  You want to be a valuable source of information, not just a guy trying to buy her house at a discount. Instruct her on what the property tax appraisal really is (used to calculate property taxes, not market value). Instruct her that property tax appraisal is really a meaningless number to her, because there is no penalty or fee for selling beneath that value. Find some absurdly inaccurate numbers in the area if you feel like it might help tell the story that property tax appraisal does not reflect market value.  Also, instruct her on what your repair estimates are (line by line), and how repair costs have inhibited her from selling her home.  She may not know a new HVAC system costs $8,000, or kitchen updates might cost $12,000, or bathroom updates might cost $6,500.

After knowing her motivations, and informing her, you'll know what would make her agreeable to selling to you. 

"(name), I'd love to help you meet (motivation).  You've seen what selling your home with a realtor has gotten you -- after a year, your home is still on the market and nobody has bought.  Your realtor may have pushed you to make repairs to find a buyer, and with all the repairs and updates your house needs (list them off), I estimate the total to be around (repair amount).  I totally understand why you wouldn't want to pour (repair amount) into a home that you're just going to move out of anyways.

"Here's the service I can offer you -- I work with cash buyers in the area, and we can buy your house today, in as-is condition, and close in 30 days or less.  In order to make that happen though, we'll have to make an offer about 30-35% below what you've been listing it at, and minus repairs.  Would you like to sell your house quickly, in as-is condition, for (Retail value - 30% - repairs - assignment fee)?"

After giving the offer, wait for her response.

If she's not very motivated, there's likely no price short of full retail that would make her sell.  In that case, it might be better to move on to the next lead.

Best of luck!

Rafiq - I am not your financial advisor, but we're trying to coach you to make the best decision possible.  Buying a second new build would not be a good use of your money either.  Let's examine your first buy.

$235k purchase price

$50k down payment

$185k loan amount

Assuming today's market interest rate of 3.92%, your monthly payment is approximately $875.

$1900-875 = $1,025 cash flow per month
($1900-875)*12 months / 235k purchase price = 5.2% ROI

Let's use your $50k cash in a different way.

$150k purchase price

$30k down payment

$120k loan amount

Assuming today's market interest rate of 3.92%, your monthly payment is approximately $567.

$20k improvement to bring rent up to $1900 a month

$1900-567 = $1,333 cash flow per month

($1900-567)*12 months / 150k purchase = 10.7% ROI

Additionally, cashing out your 401(k) to buy a property that won't appreciate in value is not a good play at all.  At best, if you leave your cash in your 401(k), it will earn a modest 4-8% return.  If you use it to buy a new build house, you'll likely get under 2% return.

I don't mean to be obtuse here, but I don't think anyone here will convince you that what you're planning on doing is a sound or low-risk investment.  All real estate comes with some risk, but there are ways to minimize that risk to your comfort level.