Building Your Team, Tracking Leads, Analyzing Deals
Building Your Team:
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What does the “Boots On The Ground” person do?
– Put Out I BUY HOUSES Signs
– Put Out FOR SALE Signs
– Put Lock Boxes On The Door
– Show Properties
– Take Pictures Of Properties
– Be The Local Point Of Contact
Sample Boots On The Ground Ad:
– Investor Seeks Apprentice
– I need someone in the local market of _____ that I can train to help me in my real estate investing business. You can earn while you learn. PT, FT or spare time.
Where To Find People To Help You:
– Realtor Referral
– Craigslist
– Property Manager Referral
Tracking Your Leads:
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Analyzing Deals:
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Filthyriches.com – webinar you watch anytime on how to buy and sell cheap houses
Wlobook.com – free book on Wholesaling Lease Options
When you’re talking to a seller, you’re not going into the deal with one specific strategy in mind. You’re not in the lease option business. You’re not in the seller financing business. You’re not in the wholesaling business. You’re in the marketing business and you’re just looking for motivated sellers. Talk to sellers about their situation. Find the solution that fits their situation.
WHOLESALING DEALS: How to figure your maximum offer.
Option 1: Using ARV(After Repair Value)
-Your maximum offer
-Multiple ARV by .7
-Subtract Repairs
-Subtract Wholesale Fee
-(Optional: subtract closing costs and insurance)
Example:
-ARV = $100k
-Repairs = $10k
-Wholesale Fee = $10k
-$100,000 x .70 = $70,000
-$70,000 – $10,000= $60,000
-$60,000 – $10,000 = $50,000
-Your Maximum Offer is $50k
Option 2: Using Comps
-Multiply the average of the 3 lowest sold comps by .8
Option 3: Using Comps
-Use lowest comps and subtract repairs
RENTALS: How to figure your maximum offer.
Based on the current rent not what the person tells you that you could rent it for.
If the house is vacant with no tenant, use the wholesaling ARV formula listed above. If the rental has a paying tenant, the maximum offer price is 50 times the monthly rent. So, rent is 2% the maximum offer. Ask to see if there are any major repairs to take into account.
Example:
-Current rent: $1,000
-Multiply rent by 50
-Your maximum offer price is $50,000
SELLER FINANCING
Price of House
-Get the rent range (use low end)
-9% interest for 20 years (240 months)
-Add down payment ($5k)
Loan Value
-Price of the house minus the down payment
SELLING THE NOTE
-Compute the present value with 12% or 15% yield
-The higher rate of yield you could sell it at, the quicker you can sell it.
-You can make more money with seller financing than selling the note, but seller financing
is a longer process.
LEASE OPTIONS
-Lease options allow you to control a property without owning it
Option 1: WHOLESALING LEASE OPTIONS
-Give the seller whatever price they want as long as they are willing to wait for it.
-Deal with nicer homes
Example:
-House worth $150,000
-Seller owes 145000
-Do a lease option contract at $135,000 and 1,200 a month in rent
-Sell the contract to a tenant buyer for $5,000 and then you’re out of the deal
Option 2: LEASE OPTIONS (when there is more equity and a little bit of cash flow)
Example:
-House worth $150,000
-Offer 85% of the ARV – $127,500.
-For rent, I want at least 25% of the rent for cash flow.
-Stay in the middle of the deal.