Assinging Contracts – How to Wholesale – Real Estate Investing Training Video

Enjoy,

Mike

http://www.localmentor.com

How To Estimate Repairs Quickly – Real Estate Investing Training Video for Wholesalers and Rehabbers

Enjoy!

Michael Jake

http://www.localmentor.com

P.S. – free real estate training goodies on my site if you haven’t gotten them yet.

7 FREE Ways to Build Your Wholesale Buyers List

Everyone seems to freak out about “what if” I can’t find a buyer for my wholesale deal.  No worries, because here’s your evergreen list of ways to build your wholesale buyer’s list from scratch without investing a dime of your own money.

Let’s get started:

1.  Call Ads.  Call the ads in the newspaper (look online – it’s free), penny-saver classifieds, and craigslist  offering a “we buy houses” message.  If they are advertising, they are looking for deals.  Not all are serious investors.  Some might be looking for a wholesale deal themselves so ask a few questions to determine how “real” they are.

2. Call Phone Directory Ads.  Phone directories (online and offline) aren’t cheap to advertise in, so you’re likely going to find a higher caliber buyer there.  Again, look for the we buy houses ads.

3. Run your own Free ad in craigslist.com, backpage.com and any other free classified posting.

4. Call all the Bandit Signs, Billboards and other “We Buy Houses” signs around your town.

5. Network at your local real estate investing club.

6. Look for active rehabbers.  Any agent can run a search on the MLS (multiple listing service) for specific keywords.  Look for “rehabbed” or “renovated” keywords in the listings.  Track down the owners from the tax rolls.

7.  Attend the foreclosure auctions.  These are real cash buyers.  Think of the sale as your “power networking” session.  In my county they last maybe 15-20 minutes.  get there early, meet the buyers, get there “criteria” and their contact information.

8.  (I know I only said, 7, but consider this a bonus)  Don’t QUIT.  Keep building your buyers list!  Once you start doing deals you can reinvest into some systems to do this for you, but I’ll tell you, dealing with regular buyers is RELATIONSHIP.  Time spent building relationships with regular buyers is time well spent.  The better your relationship with your buyers, the easier and easier being a wholesaler will be for you.

Now get after it!  No whining, no complaining, just do it!

Mike

http://www.localmentor.com – more free real estate investing tools here!

7.

How to Quickly Estimate Repairs on a Wholesale Deal

Here’s a winner!  I love a good trashed house.  I guess psycologically I associate a nasty mess of a house with a huge check. 

Here’s a condemned house I tied up and will wholesale by assigning my contract.  I met the seller there on Wednesday and within 20 minutes or so had a contract. 

One of biggest fears new investors tell me is they don’t feel confortable knowing whether or not they are going to be accurate on estimating the repairs.  Get that number wrong and you’ll either leave too much money on the table or you won’t find a buyer because they’ll think your delirious on your repair numbers.

Here’s how I do it for a trashed house, and how I did it on the spot to get this offer accepted.  20 minutes to sign the deal = 7,000 check a week later!  Schweeeet!

Wholesaling Houses by Assignment of Contract

Hey,

I shot a quick video to explain how a contract assignment works when wholesaling a house.  let me know what you think!  Cheers!

Clarify yesterday’s post on Wholesaling REO’s

Let me clarify a bit on yesterday’s post.  I referred to a trust as an “entity” and in reality that implies it’s a “corporation” or the like.  It’s NOT.

What is a trust?  Many folks have a hard time understanding trusts and often confuse them with a corporation of some sort – (sometimes me too when I’m writing). 

A corporation is a distinct legal entity that is separate and stands apart from it’s owners (if I own GE stock and GE gets sued, I am not Personally liable in the suit) – A TRUST is a not a corporate entity – it is a legal arrangement;  a contractual agreement by which a party holds title to something for the benefit of another in a fiduciary capacity – meaning one person is responsible for dealing with another persons asset(s).

Land trusts are what we deal with to hold title to Real Estate.  Land trusts are Revocable, Intervivos trusts.  Let’s define the legal gobbledy-gook: 

Revocable means it can be cancelled, changed, terminated. 

Intervivos means literally “between the living” – or in people talk, it means it’s a trust used while we’re still alive.  Not to be used beyond our lifetime or created as a result of our death.  That’s no fun.

And PLEASE understand, I am NOT an attorney.  I may not get the “exact” definition right by uptight legal standards, but hopefully, I can help you see through some of the “muddy waters”.

4 important parts of a Land Trust:

Grantor – giver

Grantee – receiver

Trustee – someone you trust – they sign on any paperwork for the trust.

Beneficiary – person who benefits now or in the future from the assets in the trust

If we go to contract on an REO as a trust, the Grantor is the Lender – the bank that owns title currently and will deed it to us at the title company as a part of the closing (purchase).

The grantee may not be in the trust document, but it’s on the deed.  The grantee in Colorado is the trust name.  In other states it could be the Trustee of the trust.

example, Countrywide deeds to 123 Main Street Trust or Countrywide (grantor) deeds to Tom The Trustee or the 123 Main Street Trust (grantee).

The Trustee is the person who would sign all the documents at a closing to first acquire the property and or to sell the property.

The beneficiary is the person(s) who get the benefits of the asset (real estate) owned by the trust.

 

To boil it down the simplest – a Trust is just a piece of paper – an agreement.  So and so will do this and so and so will do that and so and so can’t do anything unless the right someone tells them to.

In the case of real estate, atrust takes Real Property and by placing in the trust, the beneficial interest becomes Personal Property. 

We create a personal property transaction (sell the beneificail interest) and then the same trust closes per the contract.

Clear as Mud!

Michael Jake

www.localmentor.com

Great wholesaling REOs question from Joe

Joe sent me this e-mail today with a great question, so I thought I’s share.  I’ll applogize in advance, there’s a bit of a shameless plug at the end, but oh well.

 

“Dear Mike,

Thanks for all the great emails, and instruction you give us.  It’s Joe from Phoenix, and I have a few quick questions.  How do you feel about “Virtual Wholesaling”?  That is in essence wholesaling properties across the country using your computer.  I have access to REOs – is it possible to wholesale those?  I hear that banks generally refuse assignments – is there a way around that?  What if I used an open ended option – just to lock up a price and make myself a principle in the transaction – would I then be too vulnerable to being possibly cut out of the deal? 

If wholesaling REO’s is possible – how should I do it?

Sincerely,

Joe “

Here’s my Reply:

 

Joe,

 

I am a big believer in “buy in your own backyard”.  There are several 30 and 40 year investors I pay attention to, and back in the day, they where pitched the idea of “you’re not a “REAL” investor if you don’t own property in at least 7 states”.  They bought into it, did it and all stated they lost money on some, did ok on others, but the best deals they did were right where they lived because they were in it every day, they knew what was going on in the market and worst case, could easily get over to take a look at it.

 

I know some investors who travel up to 2 hours to their “farm” area which has better opportunities than the neighborhood they live, but they still are “local” to the investment.  I would say if you can’t figure out how to make “it” work where you live, you’re not likely going to make it work outside your own market.

 

To answer your question, banks as a general rule, do not allow assignment clauses in their agreements.  I know a lot of big names still teach that crap, but it hasn’t worked in years.  You can “double close” them as an alternative.  Simultaneous or back to back closings are synonymous.  You have a buy-sell agreement with the bank then instead of finding an assignee, you find a buyer and sign a buy-sell agreement with them.  You take it to the title company and use funds in escrow from your buyer to fund the sale with the lender.

Some title companies will say “that’s illegal”, and it’s B.S.  ask them the page, chapter and verse of the code that says it’s illegal.  They can’t because it doesn’t exist.

Another way is use a trust or LLC to go to contract with then sell the beneficial interest in the trust or sell the LLC (personal property transfer) and then the same entity closes on the agreement – it’s just a different owner of that entity.

 

Doing it my also eliminates a “new” problem the banks added by changing their addendums.  Now they often force the title company to have “guaranteed funds” for your transaction.  Even though you may have a buyer in the other room and funds in escrow, the banks addendum states you still need your own cash to close.  You could get “flash cash” from a private or hard money lender, but typically you’ll pay 1-3 points (same as a percent) on the money you need – even if it’s for a few minutes.  On a smaller $5,000 wholesale, that could eat half (or more of your profits), and that sucks!

 

If you want all the agreements I use to accomplish this and audios and videos of a 9 hour workshop I held recently, I have a couple extra copies my assistant printed up.  They aren’t available on my website, but if you call my assistant, Kim, she can get you taken care of.  (see office number below)

It’s $197 for the course or $297 if you want 3 months of e-mail coaching with it.  If you don’t like it for any reason I’ll refund you no questions asked.  Everyone who attended had nothing but great things to say about it.

 

Sincerely,

 

Michael Jake

Swift Results, Inc.

www.SwiftResults.com

719-548-4755

719-548-4756 Fax

 

 

The Wholesaling “2-Step” – Building in More Profit Centers

Let’s call this a Wholesale-sale, Lease Back-Sub-Lease (with a lemon twist).  Ok there’s not really a lemon twist, but I like to quote from “LA Story” every time I have a ‘complicated’ order so to say.

I think (assuming you’ve read this blog from the beginning posts) you understand the concept of wholesaling a house for an immediate cash payday.  You can tie it up with no money, without need for credit and be able to make several thousands of dollars for your efforts.

Now, let’s make it more profitable.  Let’s still keep you away from the banks; protecting your credit, and still avoid the need for cash.

Here we go…

Lets start with the wholesale.  We first go find a deal to wholesale.  Instead of our atypical buyer who will fix-n-flip the property or buy, fix and hold – both of these guys know the game – we’re going to sell this to a more “passive” real estate investor.  Someone who lets say, works the 9-5er (or likely more), they have income from a job, they have credit and they own a home, but that home is really the only write-off they have.  Give Uncle Sam a dollar and he gives you back 30 cents.  What a deal for our corporate slave.

Being a corporate slave is hard work, and the last thing they may want to do after leaving the grind-stone is “working” a second job.

Here’s how a deal might look…

You find a wholesale deal.  You wholesale it to the W-2 wage earner.  You then Lease-Option the property from them and offer them a guaranteed lease payment (below market value, but completely covering debt service).

By taking an active roll in the “management” of the property our wage earner can deduct all the tax benefits of rental property (unlike hiring a managment company).  They can depreciate the property (a paper loss) plus the mortgage deductions and they effectively have no management hassles.

For the investor – YOU – you get an up-front flip profit!  Cha-Ching! And you get monthly passive income from the spread in what payment you make to cover the debt (in the form of a lease payment to the owner) and what you get from the sub-tenant, and you can line up a future payday when your sub-tenant buyer exercises their option to purchase.

You build in many paydays for yourself – wholesale cash profit, escalating passive monthly income, up-front non-refundable option consideration from your sub-tenant buyer, back end payday when you tenant buyer buys AND you have an investor who you can show how to “reinvest” tax free into ANOTHER of your wholesale deals.

For your investor – they would get the tax benefits – the ability to write off up to $25,000 off their earned income (this would likely take several deals/houses to get them to that limit – nudge, nudge, wink, wink – sell one passive investor and get many deals out of that one individual), you offer them a “back-end” profit as well when the house gets sold, and you can show them how to 1031 (tax free exchange) into anther wholesale deal you find for them (or 2) so you can make them alot of wealth over time, allow them to have more spending money today without begging the boss for a pay raise and you help them become wealthy.   All the while, you avoid banks, avoid using your credit and create many pay-days per deal and many more pay-days by building a relationship with someone trapped in the rat-race.

Everyone wins!  The way business should be!

Right now our wage earner can likely get 3-6 deals done with you before the traditional financing market shuts them down.  There are other financing avenues for them, but at 6 (married couple – likely has one primary shared in both names, then 3 more in our wage earner, and maybe 3 more in the wage earners’ spouses’ name) they will likely cap out at the max deduction anyway.  If you get the houses re-sold after a year or more in title, then by showing them how to exchange (1031) you can actually increase the velocity of their wealth, and build in more cash paydays for yourself.  Once they sell one, you go find another wholesale deal, wholesale it to them for cash now and still have a property to make future passive income on and future back-end paydays on.

Who do you know right now that would benefit from you doing a deal like this for them?

Michael Jake, 

Your wholesaling houses mentor – and your host on www.localmentor.com

It’s not just about Wholesaling Houses!

So if you found yourself somehow on this blog, you must have some interest in wholesaling houses or wholesaling some type of properties, REOs, foreclosures, whatever. I have one student who took my techniques and started flipping Lexus’s for 5-6k – regardless – wholesaling is a means to an end. It’s not the end all be all.

If I haven’t come right out and told you previously, here’s some more free real estate investing training you can immediately. I have 5 audios and an entire mini-course on how to succeed in today’s real estate market.

Claim yours right now at my main website http://www.localmentor.com .

Let me know what you think!

Secrets to Finding the Best Bank Owned Properties to Wholesale

Ok, bad headline, let’s stop right there, because the headline itself refers to the Secrets.

Before I forget, don’t forget to read: http://wholesalinghousesmentor.wordpress.com/2008/11/10/wholesaling-bank-owned-properties-reos/ on wholesaling bank owned properties.

One of my secrets is DON’T look specifically for REO’s or Bank Owned Properties or HUD/VA foreclosures.  Just because it’s a foreclosure, an REO, a HUD or VA property doesn’t mean it’s a deal.

In fact, in my market, many foreclosures/REO’s may sell at 11% below market value.  Frankly, that’s a turd deal in my world!

I want a DEAL, not a coupon discount.  Two for one.  Half off.  Something that gets me excited to go after.  So how do we find them and how do we focus ONLY on the best prospects?

Here’s what NOT to do.  When I started, I had some rookie agent, who spent all his time adding new initials after his name, but not actually learning how to be a salesperson, but he provided me a “list” of foreclosures that he spent hours compiling each week.  I had to then spend HOURS weeding through this huge list to realize most of them were not deals.  I spent countless hours doing research on comps, or comparable sales to see what each could be worth, to see if it had deal potential.  Ugh!

Nowdays – and probably back then as well, you can do a search on the MLS to extract those foreclosures by “type” (probably labeled differently in different MLS systems) such as “foreclosure”, “real estate owned”, “short sale”, “estate”, “HUD”, etc.  You get the picture.  Great, that’s somewhat a timesaver but still not enough.  Let’s start over.

Start first with a “point of entry” neighborhood in your “farm” area.  Get in the ball park of what do those houses sell for in top condition – After Repaired Value (ARV).  Here’s an example.  One part of my town has pretty much exclusively 2-3 Bedroom, 1-1 and 3/4 bath ranch style (one level) houses.  They sell in top condition, for about $120,000 in some parts to 145,000 in other parts.  Same basic style, size, lot, etc, some streets/locations are more desirable, thus the range of value.

Let’s start at the upper number, so we don’t miss anything, and work backward to find what the house needs to be listed at for it to be close to deal potential for us.  For example purposes, I’m using 70% of ARV – Repairs.  Well, you may be asking, “Mike, how’m I supposed to know what the heck the repairs are on a ficticious deal?”

We don’t, but typically, 5-10,000 in repairs is minimal based on how cheap we want to buy them, so let’s factor that as a minimum.

145,000 x .70 – 5,000 = 96,500

Now we can create a search in the MLS (translated, have an agent do it for you) that doesn’t specifically look for REO’s, but looks for houses in that AREA, +/- 10% in square footage that are listed at or just above 96,500.

Anything that shows up sub 100k may have potential.  Our goal is to identify ANY property that is cheap enough based on the potential and find it before the bank dumps the price and creates a feeding frenzy – which often gets buyers to overbid.

Most MLS systems can create this as an ongoing search for you.  Every day I get new listings that show up that are in my “cheap houses” search category.  I have several, based on size and part of town – some areas the square footage sells a bit more than in others, but most all are blue-collar neighborhoods.

Some of the best wholesale deals I’ve done this year are not REO’s or foreclosures.  They were ugly, and they were priced right to start with which is how I identified them out of 10,000 actives, but they were not foreclosures.  The problem for the owners was, the competition for ugly houses is exclusively the foreclosures – the worst ones – the lowest comps.

I’m quite certain I did those deals on the MLS that no one else found because I spent a little more time setting up my searches in the first place – and now I look at less potential deals, make less offers yet get more deals signed and cash more checks.

It’s all about setting up systems to replace your time.  I constantly tell my mentoring students, I’ll work hard to be lazy.  What I mean is, I’ll invest a lot of time into creating some system that replaces my efforts whenever, whereever possible to Do Less and Make More.

Go make the life you want happen,

Michael Jake

www.localmentor.com

My New Blog is also up and regularly updated at http://www.michaeljake.com Get 2 Free Videos and over an hour of Pure Wholesaling Content now!