What I do is drive around my target area and write every "For Rent", and "We Buy Houses for Cash" phone number I see. After I go home and call them, and use a generic script like "Hi, I'm an investor specializing in wholesales, can I send you an email with a questioner about what properties may fit your needs?" That's mainly how I built my buyers list.
Also, drive for dollars. Look for vacant, boarded up, run down houses without real estate agent signs in the front yard. Look up the owner on the tax records and ask if he wants to sell for a quick cash price. If he says yes, use this formula, although it is grossly simplified because I don't know what area you are in:
1. Find out the tax market value of the home
2. Estimate the repairs. (What I do is find out the square footage and multiply the square footage by $20 dollars for a complete over haul)
3. Subtract the tax market value from repairs needed
4. Divide that figure by 2
5. Subtract your profit from that amount
6. Put the property under contract
7. Mark up the price to reflect your profit margin.
Here is a concrete example:
Tax records say $100,000
Square footage is 1,500
1,500 sqft x $20.00 = $30,000 in repairs
$100,000 tax record value - $30,000 in repairs = $70,000 as is
$70,000 as is value (divided by) 2 = $35,000 wholesale price
You must subtract your profit from the wholesale price, so let's say you want to make $5,000 on this deal.
You would offer the owner $30,000 cash, as-is.
Then you would put it on Craigslist for $35,000 and put that it needs $30,000 in repairs for a total investment of $65,000 and that it will be worth $100,000.
One more thing, go to www.craigslist.com, under housing, click on real estate for sale and search for real estate - by owner.
2. Find listings with titles like; motivated seller, must sell now, investor's dream, calling all investors, investors special, cheap house, 3/1 Brick, won't last long, hurry, will sell fast, 50% ARV, anyway, you get the idea.
3. Call or email the seller and ask them to call you. Don't leave voice messages. When you get to speak with them on the phone, ask if they are wholesalers, If yes? Tell them you may have buyers that might be interested in the property.
4. Ask as many questions as you can about the property. You don't have to go through a script. If you don't know what to ask tell them to give you as many information as they can and send you as many pictures as they have. The most important questions to ask if it's not in their posting are: # of bedrooms, bathrooms, garage, brick, yearly taxes and how much it will take to get it in move in condition. Then ask them this very important question "If I find a buyer for you in 48 hours, what is the least price you will be willing to accept on the house?"
5. Drive around the neighborhood where the house is located and actively find "for rent" signs and "we buy houses" signs and write down all their numbers. If you have bandit signs, put at least 10 in the area.
6. Dial all the numbers and speak to all the buyers. You could also go to craigslist and under housing, click on apts/housing and call as many landlords as possible. Most important question to ask is "how many houses do you buy in a month or a year?" Based on the number you can tell if they are actively buying right now (at least 2 a month) or justtire kickers (less then 2, or new investors)
7. Once you find a serious, hungry buyer, give him all the information you have about the house, ask for his email address and send him all the pictures you have. Tell him your asking price which is $1000 over what you negotiated it for with the wholesaler.
8. If he wants to see the house, call the wholesaler to get access to the house
9. If he likes what he sees?, Sign the necessary contracts.
10. Follow up with buyer and wholesaler till the closing date and cash your sweet $1000 check.
Things to look out for:
1. While looking for wholesalers on craigslist, find those with more than one listing first before dealing with those with only one.
2. Make sure the houses are brick or block, at least 3 bedrooms in a good neighborhood
3. As for the price, ask the wholesaler how much houses are selling for in the area. You could also do your own diligence by looking at comps. Call a Realtor, and ask him or her to send you comps for the area.
4. If you call the "we buy houses" sign and the buyer happen to be a wholesaler, thank him for his time and call the next sign.
5. Chances are you will have more than one interested buyer. Screen them. The one single question to ask is " If everything I told you about the house is true, and the price is firm, when can you close". If they say in less then 30 days, you may have found a buyer (most will be in 7-10 days)
6. After finding the buyer, tell the wholesaler this is your first deal and you will need him to help you with the contract.
7. You could add more than $1000 to your asking price, but make sure it's still a wholesale price.
8. Don't be afraid to sound naive. Ask questions.
Worst case scenario: you don't find a buyer. So what? I guarantee you that you will learn a lot from your experience, you will feel more confident talking to sellers and buyers, you will know what buyers are looking for in the area, how much they are willing to pay, plus you will add at least 10 people to your buyer's list and if it's any consolation, you are better than 95% of people who spend 1000s of dollars on seminars and courses and do nothing.
This is a perfect, no money down, no risk, no time wasted scenario to get started in real estate investing.
Goodluck, Davion Malwah
