A great fear that people who are venturing into the Wholesaling business have is whether or not they are going to be able to sell the homes that they put under contract. “Find the Deals and the Money will Come” is a popular phrase amongst investors. But when you have never done a wholesale deal, it is a very difficult phrase to grasp and to put faith into. Consequently some Wholesalers refuse to get started until they have the buyers and the money lined up. Then they want to know how to put together a wholesale buyers list without anything to sell.
The first thing a Wholesaler should consider when building a Buyers List is how he or she is going to get a wide array of buyers. By this I mean, you want to have low-end property landlords, high-end property landlords, multi unit buyers, contractor/rehabbers, newbies, seasoned cash buyers etc… You should have someone lined up for every scenario of property. It does not do you any good to have a list of seasoned cash buyers who all like high end rehabs if you are not able to locate properties that suit their criteria. What are you going to do with all of the other opportunities that you find?
How do you put your list together? Start out by running ads in the local classifieds. I started out by running ads such as the following:
Fixer Uppers- Deep Discounts- Financing Available XXX-555-1214.
An ad like this will get the phone ringing. Then talk to the investors who called about their experiences, where they like to invest, how they pay for their homes, what their exit plans are, and so on. I always want to know the investor I am dealing with. I did not want to talk about property because I had nothing to offer. When our discussion finished, I told them that I did not have anything available for them at the moment, but I would call them when I found something that suited their needs.
As I built up my buyers list, I had a potential buyer for every property that I put under contract. I never bought in the war zones when I first started Wholesaling; I did not know to whom I would sell them. However, once I found a few buyers who were experienced in the war zones and who were interested in buying more if I found the right deal, I started making offers on war zone properties as I learned about them. NOTE: I did so, only because I had buyers lined up to take them from me.
“Bread and butter” properties are never a problem to move if you get a good deal. A majority of your buyers will be interested in most of the properties that you find in these neighborhoods. They are typically very easy to sell.
YOU DON’T NEED ALL CASH BUYERS!
By locating hard-money lenders in your area, you can turn newbies and contractors into your best buyers. Bring the deals that need a lot of work to a contractor, get them the loan to do the deal, and they will keep coming back. Show newbies how to get their first deal done, line them up with the property and the money, and most likely you will have earned a customer for life.
I talk about Contractors and Newbies as your best buyers simply because this is where I have had my most success. A hard-money lender, a good deal, and a newbie that needs your guidance is a payday just waiting for you to put it together.
Another very successful method that I have used to find buyers is to call “for sale” ads; particularly ads that say “newly renovated”. In most cases this will be an investor who has just purchased a home and fixed it up. I call the ad and ask the seller if he or she is an investor. If so, I begin the same rapport as if he or she called on one of my ads. The fact that he or she has a home that is newly renovated, lets you know that you have a real buyer to ad to your list for the area that he or she is selling in.
I frequently teach my students that they can learn more from the “for sale” ads then they can anywhere else. If you study the ads and get to know the players in your area, then you can see the trends and the areas they invest in. If you investigate further you can find out what they pay for homes and what they sell them for.
There are buyers everywhere, in every market. You just need to dig them up, and with a little effort you can have The Ultimate Wholesale Buyers List.
Steve CookSince 1998 Steve Cook has flipped many hundreds of houses as an active Baltimore-area real estate investor. Steve's unique specialty is the "flipping homes 1-2 punch", a proven system of real estate investing that powerfully combines wholesaling and rehabbing houses. Steve Cook is dedicated to helping others succeed through understanding and aggressively applying his time-tested, step-by-step approach to flipping real estate.
The first thing a Wholesaler should consider when building a Buyers List is how he or she is going to get a wide array of buyers. By this I mean, you want to have low-end property landlords, high-end property landlords, multi unit buyers, contractor/rehabbers, newbies, seasoned cash buyers etc… You should have someone lined up for every scenario of property. It does not do you any good to have a list of seasoned cash buyers who all like high end rehabs if you are not able to locate properties that suit their criteria. What are you going to do with all of the other opportunities that you find?
How do you put your list together? Start out by running ads in the local classifieds. I started out by running ads such as the following:
Fixer Uppers- Deep Discounts- Financing Available XXX-555-1214.
An ad like this will get the phone ringing. Then talk to the investors who called about their experiences, where they like to invest, how they pay for their homes, what their exit plans are, and so on. I always want to know the investor I am dealing with. I did not want to talk about property because I had nothing to offer. When our discussion finished, I told them that I did not have anything available for them at the moment, but I would call them when I found something that suited their needs.
As I built up my buyers list, I had a potential buyer for every property that I put under contract. I never bought in the war zones when I first started Wholesaling; I did not know to whom I would sell them. However, once I found a few buyers who were experienced in the war zones and who were interested in buying more if I found the right deal, I started making offers on war zone properties as I learned about them. NOTE: I did so, only because I had buyers lined up to take them from me.
“Bread and butter” properties are never a problem to move if you get a good deal. A majority of your buyers will be interested in most of the properties that you find in these neighborhoods. They are typically very easy to sell.
YOU DON’T NEED ALL CASH BUYERS!
By locating hard-money lenders in your area, you can turn newbies and contractors into your best buyers. Bring the deals that need a lot of work to a contractor, get them the loan to do the deal, and they will keep coming back. Show newbies how to get their first deal done, line them up with the property and the money, and most likely you will have earned a customer for life.
I talk about Contractors and Newbies as your best buyers simply because this is where I have had my most success. A hard-money lender, a good deal, and a newbie that needs your guidance is a payday just waiting for you to put it together.
Another very successful method that I have used to find buyers is to call “for sale” ads; particularly ads that say “newly renovated”. In most cases this will be an investor who has just purchased a home and fixed it up. I call the ad and ask the seller if he or she is an investor. If so, I begin the same rapport as if he or she called on one of my ads. The fact that he or she has a home that is newly renovated, lets you know that you have a real buyer to ad to your list for the area that he or she is selling in.
I frequently teach my students that they can learn more from the “for sale” ads then they can anywhere else. If you study the ads and get to know the players in your area, then you can see the trends and the areas they invest in. If you investigate further you can find out what they pay for homes and what they sell them for.
There are buyers everywhere, in every market. You just need to dig them up, and with a little effort you can have The Ultimate Wholesale Buyers List.
Steve CookSince 1998 Steve Cook has flipped many hundreds of houses as an active Baltimore-area real estate investor. Steve's unique specialty is the "flipping homes 1-2 punch", a proven system of real estate investing that powerfully combines wholesaling and rehabbing houses. Steve Cook is dedicated to helping others succeed through understanding and aggressively applying his time-tested, step-by-step approach to flipping real estate.
The most common question asked by wholesalers is, "How & where do you find real estate investors or buyers?"
Unless you have already been marketing your self as a wholesaler a really long time you probably don't have a strong buyer's list. Investors and real estate agents generally show some awed respect for this seemingly impossible task. In fact, having a active and large buyer's list or investor pool is not as mysterious or as difficult as you might imagine, although it does require some organization and concentration.
Here are 17 easy ways to build a buyers list to use in your wholesaling and flipping properties real estate investing business:
Building A Wholesale Buyers List
1. Call the "For Rent", "Lease Option" "Renovated" ads in the newspaper, craigslist, backpage, kijiji, etc.
2. Call the "For Rent" signs that are handwritten that you see hiding behind the bushes :)
3. Call the "We Buy Houses" people. Yes, the majority are wholesalers..which we all need.
4. Market for another wholesaler by using a "Flex Option". This will put money in your pocket, and build your buyers list. Market the property using Bandit Signs, online ads, newspaper, social media, etc.. When the investor calls, spend a few minutes discussing what they are specifically looking for.
5. Have a property under contract!! Nothing speaks louder than real deals, and if the numbers are good, your responses should be high.
6. Go to a real estate Auction. In Honolulu, every business day there is an auction downtown. Find the investors that are making offers and introduce yourself to them. For the most part, these auctions require all cash.
7. Call the Section 8 office or Housing Authority in your city, and property managers. Ask them who they know who is actively looking for more real estate investments, or needing to sell quickly. Start schmoozing with them and try and get a list.
8. Hard Money Lenders all know cash buyers and most are very willing to spread the word. Get a deal under contract, make sure your hard money lenders know about it. They are motivated because they might get the points and interest for funding 30-40% of the deal.
9. Your local REIA meetings. Nothing takes the place of talking and shaking hands. But beware, many are tire kickers so proceed with wisdom.
10. Use Social Media!! Linkedin, Twitter, Facebook, REIClub.com, BiggerPockets, or RealEstateInvestor.Com. Sign up to be a part of a group for your target city. Make sure you read the profiles, and connect with those people.
11. Post an ad in Craigslist saying you have properties 30%-50% of retail value. Send them to your site or squeeze page.
12. Make a solid contact with a realtor that will search the MLS for cash buyers within the last 6 months.
13. Go to events that are geared towards real estate, hard money, financing.
14. Search in Google, Yahoo, Bing, Facebook, Twitter "Sell houses fast", "We Buy Houses". Typically in Google you will get the first page of national wholesalers or lead capture services. Page 2 is where you will start seeing genuine sites that are typically real deal investors.
15. Contact you're power team members such as your title agent, attorney, insurance agent, buyers real estate agents, bird dogs. Just start talking away, and the word can spread quick.
16. Become internet savvy. Create a website with a squeeze page on it. Work on making your site SEO friendly. If you use WordPress, there are SEO plugins that are awesome. Just search SEO plugins for WordPress. A couple that I like are SEO smart links, and SEO friendly images.
17. You can purchase a list of landlords and absentee owners from Listsource or Realquest. Contact them via direct mail or call them. I personally have not used this approach but heard it works.
Create A Marketing Plan
Since a strategy is at the core of your plan, you need to develop a strategy that best positions your property in the marketplace. Your marketing strategies should be supported by capitalizing on your properties strengths and minimizing its weaknesses.
Spend some time conducting a complete evaluation of the local market, areas comps and your properties strengths, weaknesses, and the wants, needs and desires of your potential buyers.
Unless you have already been marketing your self as a wholesaler a really long time you probably don't have a strong buyer's list. Investors and real estate agents generally show some awed respect for this seemingly impossible task. In fact, having a active and large buyer's list or investor pool is not as mysterious or as difficult as you might imagine, although it does require some organization and concentration.
Here are 17 easy ways to build a buyers list to use in your wholesaling and flipping properties real estate investing business:
Building A Wholesale Buyers List
1. Call the "For Rent", "Lease Option" "Renovated" ads in the newspaper, craigslist, backpage, kijiji, etc.
2. Call the "For Rent" signs that are handwritten that you see hiding behind the bushes :)
3. Call the "We Buy Houses" people. Yes, the majority are wholesalers..which we all need.
4. Market for another wholesaler by using a "Flex Option". This will put money in your pocket, and build your buyers list. Market the property using Bandit Signs, online ads, newspaper, social media, etc.. When the investor calls, spend a few minutes discussing what they are specifically looking for.
5. Have a property under contract!! Nothing speaks louder than real deals, and if the numbers are good, your responses should be high.
6. Go to a real estate Auction. In Honolulu, every business day there is an auction downtown. Find the investors that are making offers and introduce yourself to them. For the most part, these auctions require all cash.
7. Call the Section 8 office or Housing Authority in your city, and property managers. Ask them who they know who is actively looking for more real estate investments, or needing to sell quickly. Start schmoozing with them and try and get a list.
8. Hard Money Lenders all know cash buyers and most are very willing to spread the word. Get a deal under contract, make sure your hard money lenders know about it. They are motivated because they might get the points and interest for funding 30-40% of the deal.
9. Your local REIA meetings. Nothing takes the place of talking and shaking hands. But beware, many are tire kickers so proceed with wisdom.
10. Use Social Media!! Linkedin, Twitter, Facebook, REIClub.com, BiggerPockets, or RealEstateInvestor.Com. Sign up to be a part of a group for your target city. Make sure you read the profiles, and connect with those people.
11. Post an ad in Craigslist saying you have properties 30%-50% of retail value. Send them to your site or squeeze page.
12. Make a solid contact with a realtor that will search the MLS for cash buyers within the last 6 months.
13. Go to events that are geared towards real estate, hard money, financing.
14. Search in Google, Yahoo, Bing, Facebook, Twitter "Sell houses fast", "We Buy Houses". Typically in Google you will get the first page of national wholesalers or lead capture services. Page 2 is where you will start seeing genuine sites that are typically real deal investors.
15. Contact you're power team members such as your title agent, attorney, insurance agent, buyers real estate agents, bird dogs. Just start talking away, and the word can spread quick.
16. Become internet savvy. Create a website with a squeeze page on it. Work on making your site SEO friendly. If you use WordPress, there are SEO plugins that are awesome. Just search SEO plugins for WordPress. A couple that I like are SEO smart links, and SEO friendly images.
17. You can purchase a list of landlords and absentee owners from Listsource or Realquest. Contact them via direct mail or call them. I personally have not used this approach but heard it works.
Create A Marketing Plan
Since a strategy is at the core of your plan, you need to develop a strategy that best positions your property in the marketplace. Your marketing strategies should be supported by capitalizing on your properties strengths and minimizing its weaknesses.
Spend some time conducting a complete evaluation of the local market, areas comps and your properties strengths, weaknesses, and the wants, needs and desires of your potential buyers.
For years, hot-shot speculators made huge profits flipping condos in Florida and Vegas before they were even constructed. All the while, the naysayers in the ivory towers of Wall Street and academia warned of a "housing bubble" that was sure to burst as all bubbles do. When Fed chairman Alan Greenspan said that national real estate market was "frothy," the writing was really on the wall, and anyone with half a brain could see that we were in for a "cooling" of the housing market, at best. And yet still, speculators continued to profit, and the real estate bull market marched on...
But the bulls aren't marching now. Greenspan handed his matador's cape to the new Fed chairman, Ben Bernanke, who continued the policy of interest rate hikes designed to deflate housing. No longer accelerating at a break-neck pace, home prices have flattened like a pancake in many markets, and new the condo speculators who got in late are in for a world of hurt. Clearly, the housing "boom" is over in many parts of the Country. But contrary to the media hype, this is great news for flippers!
Flipping vs. Speculating
It should be made clear that there is a difference between flipping and speculating. While speculators may be a sub-set of flippers, they are, at best, the amateurs of the real estate investing family. Flippers who have consistent success are more conservative and have a fundamental approach to real estate investing. While it may not be as exciting as speculating, the rewards of more conservative flipping are nearly as generous, and they are paired with far less risk.
The biggest difference between flipping and speculating is that flipping works in any market, whereas speculating only works in certain places at certain times. Las Vegas from 2002 to 2004 was a great time and place to be a speculator, but if you were still in the market in 2006, chances are you got burned by more than the hot desert sun. Basically, speculating often works on the "greater fool" thesis - that you can always find a greater fool than yourself to take a property off your hands in the expectation that he will be able to find yet a greater fool. Eventually, someone is left holding the bag and that's when the party is over.
Flipping, by contrast, relies on fundamentals. The idea is not to catch a shooting star in a rapidly appreciating market. Rather, the plan is to find undervalued properties, rehab them, present them in an attractive manner, and sell them for a reasonable profit. Not only is a rising market not a requirement of flipping success, it may even be a mild detriment! After all, it is a bit harder to find bargain properties in booming areas. Sure, it can still be done, but the point is that even falling markets are prime for flipping since the holding period is often too short for the value of the property to decline beyond the deep discount at which it is purchased. Assuming that you add value through rehabbing, you almost can't lose!
Exit Strategies - Always Have a Plan B
While speculators often rely on the "greater fool" strategy, flippers tend to have one of two exit plans: 1) Quickly flip the title to another investor, or 2) Rehab and sell the property at the retail level. While the lion's share of the profits go to the retailer, a quick wholesale deal can free up your cash (and energy) for the next deal. But what if neither strategy works? What if the market really crashes and the buyers disappear? Is all lost? Of course not!
For complex economic reasons, the rental property market does not always correlate with the housing market. In fact, they are often countercyclical. Although most flippers aren't terribly interested in being landlords, generating rental income from a botched deal is a solid backup plan. Better yet, you can usually refinance the property after rehabbing it to get all of your money out. From that point forward, the bulk of your rental income will be pure profit, and when the market improves, you can make the sale. Even better, you can offer your tenants a lease with an option to buy, which is attractive to many young families looking for their first home.
The media portrays real estate flippers as the investment world's answer to Wild West gunslingers, but in reality, nothing could be further from the truth. Compare the "worst case" rental income scenario of real estate flipping with the "worst case" Enron scenario of stock market investing. There really is no comparison! If you take a fundamental approach to real estate rehabbing and flipping, your risk is limited and your profits are virtually limitless. It really is the best of all worlds.
But the bulls aren't marching now. Greenspan handed his matador's cape to the new Fed chairman, Ben Bernanke, who continued the policy of interest rate hikes designed to deflate housing. No longer accelerating at a break-neck pace, home prices have flattened like a pancake in many markets, and new the condo speculators who got in late are in for a world of hurt. Clearly, the housing "boom" is over in many parts of the Country. But contrary to the media hype, this is great news for flippers!
Flipping vs. Speculating
It should be made clear that there is a difference between flipping and speculating. While speculators may be a sub-set of flippers, they are, at best, the amateurs of the real estate investing family. Flippers who have consistent success are more conservative and have a fundamental approach to real estate investing. While it may not be as exciting as speculating, the rewards of more conservative flipping are nearly as generous, and they are paired with far less risk.
The biggest difference between flipping and speculating is that flipping works in any market, whereas speculating only works in certain places at certain times. Las Vegas from 2002 to 2004 was a great time and place to be a speculator, but if you were still in the market in 2006, chances are you got burned by more than the hot desert sun. Basically, speculating often works on the "greater fool" thesis - that you can always find a greater fool than yourself to take a property off your hands in the expectation that he will be able to find yet a greater fool. Eventually, someone is left holding the bag and that's when the party is over.
Flipping, by contrast, relies on fundamentals. The idea is not to catch a shooting star in a rapidly appreciating market. Rather, the plan is to find undervalued properties, rehab them, present them in an attractive manner, and sell them for a reasonable profit. Not only is a rising market not a requirement of flipping success, it may even be a mild detriment! After all, it is a bit harder to find bargain properties in booming areas. Sure, it can still be done, but the point is that even falling markets are prime for flipping since the holding period is often too short for the value of the property to decline beyond the deep discount at which it is purchased. Assuming that you add value through rehabbing, you almost can't lose!
Exit Strategies - Always Have a Plan B
While speculators often rely on the "greater fool" strategy, flippers tend to have one of two exit plans: 1) Quickly flip the title to another investor, or 2) Rehab and sell the property at the retail level. While the lion's share of the profits go to the retailer, a quick wholesale deal can free up your cash (and energy) for the next deal. But what if neither strategy works? What if the market really crashes and the buyers disappear? Is all lost? Of course not!
For complex economic reasons, the rental property market does not always correlate with the housing market. In fact, they are often countercyclical. Although most flippers aren't terribly interested in being landlords, generating rental income from a botched deal is a solid backup plan. Better yet, you can usually refinance the property after rehabbing it to get all of your money out. From that point forward, the bulk of your rental income will be pure profit, and when the market improves, you can make the sale. Even better, you can offer your tenants a lease with an option to buy, which is attractive to many young families looking for their first home.
The media portrays real estate flippers as the investment world's answer to Wild West gunslingers, but in reality, nothing could be further from the truth. Compare the "worst case" rental income scenario of real estate flipping with the "worst case" Enron scenario of stock market investing. There really is no comparison! If you take a fundamental approach to real estate rehabbing and flipping, your risk is limited and your profits are virtually limitless. It really is the best of all worlds.
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