The Complete Guide For Selling Your Home Today

This guide will prepare you to sell your home.

When it comes time for selling your home there are so many options. This actually makes selling your home very hard.

This is why we decided to put this guide together. After reading it, you will have all of the necessary knowledge to sell your home. Even if that means doing it yourself without a real estate agent.

What we will cover:

WHAT IS YOUR HOME WORTH?

The biggest question you must answer when selling your home is, what's it worth?

As a homeowner determining your homes TRUE value can be tough. This is usually why many people hire a realtor.

We will talk about the PROs and CONs of hiring a realtor later.

For now, let's figure out how to do this correctly.

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Perceived Value vs Appraised Value

This is something that usually disappoints many homeowners. Especially, if you have done any considerable work to the home.

Appraised Value

This is what your house is ACTUALLY worth. This is the value that an appraiser will give the home. This is then used for the buyer to get a loan. While an appraisal is an opinion and can be disputed, they're usually pretty accurate. This can really hurt if you have over improved your home and it is not reflected in the appraised amount.

How an appraisal works

An appraiser looks at your home and then compares it to "similar" homes that have SOLD in your neighborhood.

Similar homes are:

If they find plenty of similar homes, usually 3-5, then they can determine a value. Now, they will make some adjustments. The issue is that these comps will usually be done through PICTURES. If the homes look updated they will be considered comps. It won’t matter that you have more expensive cabinets or countertops or high-end paint.

If the other homes in that neighborhood are selling for $180,000 then your home is worth $180,000.

This is why we always explain what updates make sense for your home. We help homeowners determine their home’s value and what repairs they need to make. We have seen many houses where the homeowners have over improved their home. Then when it came time to sell they couldn't get their money back. So, when thinking about doing any work before selling your home, make sure to NOT over-improve.

Perceived Value

This is usually what you as the homeowner feel your home is worth. This also comes in to play when a buyer is looking at your home.

Keeping in mind what we just talked about above. However, some over improvement might actually help you when selling your home. If all of the homes similar to yours are selling for $180,000 with say a standard style of updates. You can now come in and add a few extra features and sell faster! Of course, keep in mind that the features you add will NOT raise the value. But, it will help in the speed of sell. Also, if it's that nice then maybe someone is willing to pay more.

Now you're probably wondering how can they pay more if the value is appraised at $180,000. Just because the value of the home is $180,000, which is what the bank will lend. Doesn't mean the homeowner can't bring more money to the table at closing.

We understand this might get you excited. But, keep in mind this rarely happens. You need to be an extremely HOT market with almost no houses for sale.

Why is perceived value important?

Even though an appraiser says that similar homes to yours are worth $180,000 doesn't mean a buyer will pay it.

If, when you're selling your home you don't do the necessary updates then it will not sell for $180,000. The reason for this is, no one will pay for it.

So even it though it did appraise at that value, it doesn't mean someone is willing to pay that much.

Summing Up Perceived vs Appraised Value

Just because the house appraises for $180,00 doesn't mean:

Also, just because you did all of these amazing updates doesn't mean it'll appraise.

So, what do you when selling your house?

DETERMINE TRUE VALUE

The best way to determine what the approximate appraised value will be to run comps.

Comps is short for comparables. These are the same houses the appraiser will use to determine your home's value.

The tricky part is that you will need access to the MLS (Multiple Listing Service) in your area. Only real estate agents have access to these.

You can hire a realtor. Or, you can reach out to an investment company like PRYME Homes and ask for a free evaluation.

With either option, you will have to listen to their sales pitch. This is fine because this is their business, not yours. You should always ask for experts opinions so you can determine the proper value.

Getting the right comps

So, now you have access to comps. You should look at houses that are very similar to yours. Look at the ones that sold for the highest amounts.

NOTE: If one house sold for $195,000 and the 3 other ones sold for $180,000. Don't think yours will be worth $195,000. There are many different factors to why just ONE property sold for significantly higher.

No matter who is pulling this info for you, make sure that they're looking for SOLDS, not Active properties.

The reason for this is, Active properties reflect a price that someone wants NOT what they'll get. SOLDs on the other hand, reflect what someone got for it.

So hopefully you have about 3-5 properties that have the same beds and baths as yours. With similar square footage and year built. Are also in the same neighborhood.

Now, you start to see what they all have when they sold.

What to look at:

Now you simply compare what you have or need to those houses.

THAT'S IT!

Don't get creative or start trying to do what you saw on HGTV. This when people get into trouble. They start adding barn doors and subway tiles to a house that doesn't need it. That material is a lot more expensive than you would think.

DEALING WITH REPAIRS/UPDATES

Now you have your homes worth and what types of repairs/updates you need.

Time to get to work.

Hiring a contractor

A few things to keep in mind:

1- A friend recommended them. Just because they did a good job before doesn't mean they will now. Many people get hire a contractor because they did work on their friend's house. Nothing wrong with this. But don't give them a really big job all at once. Section it off so if you see they're not doing something right you can correct it or fire them.

2- Hiring just on price. We know that you want to make as much money possible. But, if you hire purely because they are the cheapest you might actually spend more. The reason many end up spending more is because the cheaper contractor cut too many corners. Or maybe they use really cheap materials. Or they may have even done it all wrong and now you have to pay someone else to fix it. Fixing bad jobs sometimes cost more than doing right from the beginning.

3- Have a scope ready. The reason you did all of the research above is to know what work your home needs. Asking a contractor what you should do is the wrong way to go. The contractor doesn't know what you need for your home to sell in that area for top dollar. This is why you do the value research. We go over this in one of our podcast episodes.

4- Be clear with what you want. Make sure to explain very thoroughly want it is you expect. Don't just say wall tile in the showers. Tell them "I want these long tiles that I saw at Home Depot". They may recommend similar material for a cheaper price which is good. But you want to make sure you OK all materials before they're installed.

Should you hire a GC?

Many homeowners, for big jobs, hire one General Contractor(GC) to handle the whole job. This is fine. Just keep in mind that with GCs there is always a markup in price.

If you hire a GC, we would recommend you hire one that will be there working in the project. There are many GCs that send their guys there and you don't see him until the end of the project. This is a big red flag because the workers they brought may not have clear instructions which will cause problems. Also, in order for GCs to make more money, they hire cheaper help. This means that those guys need to be watched over to make sure they do things right.

Another option is to hire individual tradesmen. If you need a roof, call a roofer. If you need floors, call a floor guy. You get the point. This helps keep prices low because usually, the guy you're calling is the one doing the job.

Where to find good contractors?

The easiest way to find contractors is at the places they sell the materials they will need. Go to a tile place to find a tile guy and so on.

When you're there you simply ask someone that works there. Don't just ask for one person. Ask them for multiple contacts. This way you can call them all and compare.

Multiple estimates.

Always get more than one bid for a job. The reason for this is obviously price, but also to learn. What we mean by "learn" is, you can see what's different about each one. You may get one contractor that says you need this while another says you need that. When that happens ask each of them, "why this and not that?". This way you can see which one really knows their craft and which is just selling.

WORKING WITH A REALTOR

When selling your home, many decide to go with the help of a realtor. This is a great choice for many reasons.

PROs

  1. This is their job! This is what they do every single day. Like hiring a tile guy to install your tile, you hire a realtor to sell your house.
  2. They know the market. A good realtor knows their market very well. This is crucial for knowing what your house is missing.
  3. They watch out for you. A realtor needs to have your best interest first. By being a realtor they must always be completely transparent with you.

But, there are also downsides to hiring a realtor.

CONs

  1. Fees. Hiring a realtor costs money. It usually costs you 3% of the sells price plus any concessions the other realtor negotiated for their buyer.
  2. Lack of experience. We're seeing so many people becoming agents now. This is making harder for homeowners to find savvy agents.
  3. Starving for money. Sometimes homeowners think getting a realtor that's hungry for money is good. Not at all! If a realtor needs to convince you to take $20,000 less to sell your home, this only hurts you. A $20K price drop is less than $600 to the agent!

There are exceptions to both sides. Let's cover how to hire the RIGHT realtor.

Hiring the right realtor

Yes, you can hire the wrong realtor. There are over 1.3 million real estate agents in the US. With less than 5% selling more than 15 homes per month. This means the majority may not be even able to cover their bills.

Like we spoke about above in "2. Lack of experience." Sometimes new agents can cause more problems than they solve.

Qualities you want to look for:

5 Questions to ask your realtor when selling your home

  1. What is my home worth in its current condition? The reason for this question is, to see if you need to do anything else. Many times because of lack of inventory you can sell a home in As-Is conditions. This means no repairs or updates.
  2. How fast do homes sell here? This will help you determine price if you need to sell faster. When selling your home sometimes you need to drop the price to sell quickly.
  3. What would I need to do to sell for a higher price? Here you want to see their knowledge and honesty. If they're telling you that you can sell for higher than every other house that's sold, its a red flag.
  4. Can you recommend anyone to do the work? If they're a good realtor they will have a large network they can reach out too.
  5. How many houses do you have listed? Here you want to see if they can handle yours. Too busy is an issue and zero houses is an issue. A good realtor should always have at least 1-2 houses on the market. But, if they have too many, you want to make sure they have the team. This way yours gets the necessary attention.

WARNING: You want to make sure you watch out for is hiring your "friend" the realtor. Many people make this mistake because they're thinking it might save them money. IF your "friend" is a good realtor then there's no issue with this. But, if they're not, now you have a problem.

Hiring the wrong realtor can actually end up costing you thousands of dollars more!

When selling your home, having the right person representing you means a lot. A friend or family member while might not have the necessary knowledge or skills.

WORKING WITH AN INVESTOR

When selling your home working with an investor may be by far your best option. Realtors can only list your property on the open market. This also costs you money. Many times working with an investor can be FREE!

The PROs:

The CONs:

We have seen many, many times when a homeowners only option is to sell to an investor. This is an issue if you go with a realtor because your house won't sell.

Here are some of the options you have available to you.

  1. Selling As-Is. They're many times your home wouldn't qualify for traditional financing. This is a problem when working with an agent because it excludes most retail buyers. While investors do buy from agents, you're now paying for the realtor fees on top of the discount the investor needs.
  2. Take over payments. Sometimes you owe to much for a quick CASH sale. But, you also can't afford your house anymore. So an investor can structure a way where they take over your payments. This protects your credit and can sometimes put money in your pocket.
  3. Leaseback. Many times you need the proceeds from selling your home to move out. An investor can buy the house from you and give you the time you need to move out.
  4. Partnership. There are times where you have a lot of equity in your home but it needs A LOT of repairs. You can partner with the investor and essentially flip your house!
  5. Full-service. Many investors (like yours truly) that can not just buy your house but get you your next one. This makes the transition from selling your home to buying your next one easy!

Finding the right investor

Like realtors, there are right and wrong investors. If you think that when selling your home having someone agree to your price is enough... listen up.

There are many investors that will agree with your price at first just to get you under contract. They then wait you out and lower the price last minute.

There are also wholesalers, who call themselves investors. Wholesalers pretty much negotiate a price with you and they sell it for more to an investor. There's nothing wrong with this if it solves your problem. But this does become an issue when they don't have a network of buyers.

Always reach out to multiple investors to average out the truth.

5 Questions to ask an investor when selling your home.

  1. Do you offer a report? This helps weed out the experienced investors from the new ones. Also, you can compare reports with not just other investors but realtors too.
  2. What are my options? If they look confused or can't think of any chances are they're new. Or, maybe they just don't know anything other than one strategy.
  3. What are your goals for the house? You want to again, test their knowledge. If they fumble with the answer they may not be the actual buyers.
  4. Will you be wholesaling my house? You want to know if there's a risk that it won't sell.
  5. How fast can you close? If they need 30-45 days without giving you a real reason, chances are they're wholesaling it. A true investor should be able to close in a week or two.

As you see both working with realtors and investors have their pros and cons. We recommend reaching out to both to get the full story. A good realtor or investor will tell you when they can't help you.

SELLING YOUR HOME YOURSELF

For Sale By Owner (FSBO) is something many homeowners try in order to save money.

There's nothing wrong with trying to save money. But, you must understand that there's a reason we talk a lot about experience.

Besides the fact that most FSBO sell for 23% less than what they would sell with an agent. There are a lot of risks when selling on your own.

The Risks

There are more but we think you get the point. While you're more than welcomed to try, we don't think it EVER makes sense. Unless if you already have the buyer and your house is in perfect conditions. Even then, you should get an agent to assist for a very reduced fee.

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CONCLUSION

We know you may feel overwhelmed with all of the information in this guide. But, use it as a guide!

Feel free to scroll to the parts that you care about and read that part.

Of course, PRYME Homes is always here to help. So, feel free to reach out to us for any questions or concerns. When it comes time for selling your home PRYME Homes is here to help!

The Ultimate Guide To Flipping Houses Successfully

Learn how to really flipping houses really works from real investors.

We hold nothing back! We cover everything we have learned while flipping houses and growing our investment business.

The Ultimate Guide To Flipping Houses SuccessfullyWhat We'll Cover

MINDSET

We like to start by stressing how important mindset is when flipping houses. Many people underestimate the mindset that is required to succeed in flipping houses. This usually leads them to losing a lot of money and failing in their journey.

Who is flipping houses for.

Flipping houses is for someone that loves real estate!

Flipping houses is a FULL-TIME job. This is why you need to love it. You should love everything you do in life. After all we only get one to live. Flipping is not an exception.

This business is very hard and extremely stressful. Please don't think for one moment that this is not a business. You MUST run it like one at all times. As a business, there are a lot of parts of it that are extremely boring but must be done. This is why loving what you do matters.

The musts:

We will break down all of these musts as we go through this guide.

Who is flipping houses NOT for

This is not for people that think this is easy money. We see many people get into flipping because they think they will be rich! If you're getting into this business because of money, trust us, there are easier ways.

This not for people who already have a full-time job. You need to be ready to go put out any fire at any given time of day. We mean metaphorical fires, real fires should be handled by the fire department.

This not for you to live your HGTV fantasies! We get that you watch the shows and they make it seem like it's easy. That even though everything goes wrong they still make money.

Real life doesn't work like that. Sometimes things go wrong and you can lose tens of thousands of dollars.

GETTING STARTED

There are 3 main parts to every deal.

  1. The experience. Being able to make that deal profitable.
  2. The money. Having the money to fund the deal.
  3. The deal. Finding the property the will be perfect for a flip.

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The Experience

If you're new to flipping then you MUST get an experienced partner. By experienced we mean someone who has actually flipped houses successfully.

Many people think that all they need is a contractor. This is wrong.

Being that the partner you need has experience in flipping houses you have two things to offer.

  1. Money. Here you have to money to either buy the house, do the rehab, or maybe both.
  2. The Deal. Here you found a great deal to partner with someone that has the experience.

If you can't offer one of the two then no one will want to partner with you.

The difference between a contractor and an investor.

A contractor, even a great one, is only good at being a contractor. This means that they know HOW to fix things.

The investor on the other hand knows WHAT and WHY certain things need to get fixed. We've seen many investors get in trouble for doing what the contractor thought needed to be done.

You should only hire a contractor to do the work. An investor should determine what that work is.

The Money

Once you found the experience to be able to handle a flip you need money.

This does not mean the money needs to be yours.

We built PRYME Homes by partnering with a lot of investors that have money. We would combine our knowledge and resources with their money to get deals done. Now, we have many investors willing to lend to us for any deal we want to do.

Lets go over the different sources of money you may be able to use.

1. Hard Money Loans(HML)

This is a very common and popular route for many first-time investors. HML are usually a business that lends money based on the deal.

This is great choice when you have very little money and a great deal.

How HML typically work is they will verify that you have a good deal, usually 70% of ARV minus repairs. Then they will lend based on those risks. These are usually short-term loans 6-12 months and the property is used as collateral.

Here is the downside with this, it's expensive. As we have seen the market get hotter, at least here in Texas, we've seen HML drop their fees. But this is only for investors that have done a certain amount of deals with them.

Usually their fees are 2-4 points and 10%-14% interest.

What does this mean?

2-4 points is 2%-4% of the loan amount. So say you're borrowing $100K you would need to pay $2K-$4K upfront.

10%-14% interest is applied to the rest of the loan. Usually this interest is per annum. So, you would pay $10K-$14K over the course of however long you had the loan.

Using the $100K loan it'll break down like this...

$100K Loan

$2K-$4K (2-4 points upfront)

$833-$1166/month(10%-14% interest) if it takes you 6 months to flip it then it'll be

$4,998- $6,996 ($833 X 6 - $1166 X 6)

So, why is HML so bad? In this example you're spending 7%-10% of the total loan just on the money costs. This is not including the 6 months of monthly reserves some require as well as other fees that are incurred.

We're not trying to scare you from using HML. We just want to make sure you take into account all of the real costs.

2. Individual Investors

We used to refer to them as Private Money Lenders but HML started using this term too. They justify it by simply saying that they are also PML.

So what's the difference between a HML and an Individual Investor?

An Individual Investor is 100% negotiable. This means you can borrow money at any terms you can negotiate.

When we first started we developed a relationship with someone that had money. He started lending to us at 2 points and 12% interest. Now, we're borrowing money at 8% interest only paid all on the backend.

What does that mean?

All of the monthly payments accrue and once we sell we pay them off! This is great because it leaves more working capital in our pockets for the project. We are essentially paying them using the profit that's generated rather than coming out of pocket during.

If the investor wants money payments you can factor that into the loan. So you can actually borrow your monthly payments. Yes, you will be paying interest on that money. But, 8% or even 10% on say $5k in payments is less than $50/mo! Well worth it!

While this option sounds great, you need the credibility for this. People aren't willing to lend to someone they've never met or can't prove experience. All of our Individual Investor have to come to us because of our credibility.

3. Partnership

The last way to get money is through a partnership. Like we said above, our first lender was actually a partner. We had found a great deal. He had already bought a couple wholesale properties from us in the past. This had helped him know that we are very transparent and know what we're doing.

But, this didn't prove flipping experience. But because both of us have extensive construction experience he felt comfortable enough to do 50/50 on it. Now, this is VERY expensive money. We could have gone through the HML route but we really wanted to build a relationship with him.

He was more than happy to split the deal 50/50 when all he had to do was lend money. Of course his money is 100% protected by the property which we bought for 50% of value.

After he saw what we're capable of and we negotiated a 2 point and 12% loan for the next one. After this his friend heard about and he came in at 1 point and 12%. Then another investor found out and so on. Now we borrow money at 8% interest only paid in the back end!

NOTE: When borrowing money we rather do more interest and less points. Here's why, interest payments are spread over 12 months. Points are paid upfront. So when we negotiate with a lender we try to go up on interest and down on points.

The Deal

Finding the deal is the last part to the 3 things needed to flip a property.

You can do this 3 different ways.

1. Through an agent.

This is the most popular way. Which is why it sucks! The reason this typically "sucks" is because everyone does this. When everyone goes after one thing the price goes up!

Trying to buy properties through the MLS is very competitive. Sometimes you end up overpaying for house because so many people are bidding the price up.

You have to be careful with overpaying. We know this may seem common sense but many people have a fear of missing out. This causes them to overpay for properties.

Another downside to buying off the MLS is because it's open to everyone there are investors that move faster. We typically have an offer out to a property the same day it comes on the market! So, unless you know what you're numbers are and can move that fast, we will beat you every time.

All said and done, we're not saying this can't be done. We're simply saying this is harder.

2. Find it yourself.

This option is by far the best one. If you can find the deals yourself through marketing you eliminate a lot of competition. This means you can get much favorable prices and terms

The downside to this is, it takes time and money to execute. Marketing isn't cheap nor is it is to automate.

You also face a large level of competition if you're in a hot market like the one in San Antonio, TX.

3. Wholesalers.

Buying from wholesaler maybe your best bet if you don't have the time and money for marketing. Wholesalers are people that all they do is generate deals. If you can find yourself a few great wholesalers you can generate all the deals you will ever need.

The issue with wholesaler nowadays is that they tend to shop the deals for the highest offer. This like buying of the MLS may cause you to pay too much. If you can show them that you're a dependable buyer they may be more inclined to bring the deals first.

When buying from wholesalers never go off the values and repairs they say a property needs. Always run your own numbers. Get your contractor's out to verify the renovation cost.

Wholesalers have brought us deals where "their contractor" quoted was off by $15K or more. Being this far off can really hurt you when flipping houses.

THE RENOVATION

Now that we have covered the 3 things needed to start a flip let's cover the actual flip.

When flipping houses the biggest most important part is making sure you have a detailed Scope Of Work.

Scope Of Work (SOW)

The SOW is crucial for the following reasons:

  1. Helps get detailed bids from contractors.
  2. Helps keep the project on track.
  3. Helps when paying contractors.
  4. Helps with the budget and time.

Let's break these down further.

1. Helps get detailed bids from contractors.

When hiring a contractor, GC (General Contractor) or a tradesmen, they need to clearly understand what must be done.

Many contractors will give you a low bid and say yes I can do a new kitchen. But then the change orders come when that bid didn't include the installation of the appliances. Or maybe they "forgot" to include the install of the hardware on the doors.

You may think that we're kidding. We're NOT! We're not trying to say that all contractors are terrible people. The problem is that many people claim to be contractors when they're really not. They're simply overpaid handyman.

A detailed bid can help you prevent this headache. This is where having an experienced rehabber can help tremendously. You must go through every room and clearly detail what must be done. You have almost be redundant. If the blinds need to be removed you need to specifically say "the blinds and any hardware". If not they will only remove the blinds!

2. Helps keep the project on track.

Sometimes these projects can take 6+ months. If you have multiple projects going on it's very easy to forget some details. You may be at the end of a project and realized that you didn't order a shower door that takes 3 weeks to get here! True story.

3. Helps when paying contractors.

A detailed SOW is very useful when determining pay schedules. All of our contractors get paid when a particular scope has been completed. This also helps for to go in an check their work. You never want a contractor to either bounce around or get too ahead of themselves.

It also helps you keep track of what you're paying for certain SOW so you know for next time.

4. Helps with the budget and time.

On every project, you MUST keep a close eye on your budget. It's very easy to lose track of the budget towards the end. Many investors only think about the big-ticket items. But they forget the little things towards the end.

We've spent over $1000 at times buying little finish touches at Home Depot. These little things can add up to $10K very quickly.

With time and experience, if you tracked everything, you will get more efficient at estimating SOW and timelines. This helps tremendously when borrowing money and bidding projects.

NOTE: Don't forget to factor in holding costs. This includes but it's not limited too money cost, insurance, taxes, utilities, and lawn maintenance.

Hiring A Contractor

Now, that you have a very detailed SOW, you can proceed to hiring your contractor(s).

You have two options here.

  1. Hire a GC
  2. Hire individual tradesmen

There are times when you want one over the other. Let's go over that now.

1. Hire a GC

When flipping houses hiring a GC is one the preferred method for many new investors. They believe because it's just one person they need to deal with it'll be easier. We understand why this is appealing but there's a very big issues with this.

When you're hiring a GC you're essentially hiring someone to manage your renovation. This can cost you north of 20% of the rehab budget. To us that's A LOT of money. Especially when you working with tight deals.

Most GC's now-a-days don't actually work. They instead hire the people that do the job and add on their management fee to the price.

Other than being expensive, some GCs tend to jump around the project a lot. They start something in one room then jump and do something else in another room. The issue here is that many times they miss little things because they're jumping everywhere.

We've also seen that many GCs actually rarely go to the projects. When your flipping houses a project must be visited on a daily basis. This keeps the subs from messing something up that will now cost more to fix because they covered it up.

2. Hire individual tradesmen

At PRYME Homes we do this 98% of the time. There are a couple reasons why we like this so much:

When flipping houses speed is everything. For many investors, you have money you've borrowed and are paying interest on. If you hired a GC that has a small crew this can delay your project a lot. In a small crew everyone does everything. This makes it really hard to do more than one scope at a time.

The downside. Hiring individual tradesmen requires more work.

You have to find them. This means calling around, asking for referrals, going to other peoples projects.

Even after you found some "good" tradesmen, you have to keep looking because they may not last. Ever since we have been renovating houses we have needed new tradesmen after each project. Sometimes they only last one project. Other times, we need a different skill level.

There's no "one size fits all" tradesmen. If you have a great worker for high-end tile jobs they may be too expensive for lower-end. We don't use the same workers for a $500K house as we do for $150K house.

Once you find them, now you have to manage them!

Managing Contractors

There are two areas to managing contractors. This is the same for either GC's or tradesmen.

1. Managing Expectations

This is big! Many investors are not clear on what they expect from a contractor when they're flipping houses.

What we mean by this is, being clear on what you expect the finish product to look like. We know, you're probably thinking, "I want the finished product to be finished!".

We get it. But you can't assume that they're interpretation of "finish" is the same as yours.

We're more demanding of our contractors than other people are. We expect the corners of every trim piece to be even. We expect that all flooring go under the door jams. We expect our tubs to be covered so they don't get scratched or dented and much more.

You have to eliminate all guessing from their heads. You want to make sure you both see the same finished product.

2. Managing the SOW

It's not enough to just give them the SOW and "hope" they do it right. We go to our projects daily! This helps us make sure that they're not jumping around.

We also can check on quality this way. If you go daily you can see something that just got done wrong but can be fixed. If you're like so many investors we've met and go once a week, it may cost a lot more to fix things.

Managing the SOW also helps in determining if you're ahead or behind schedule. Again, remember staying on schedule is important because of holding costs.

THE FLIP

Hopefully by now everything went great and you're getting ready to sell this amazing renovation!

This part is NOT the easy part. Many investors overlook this part when flipping houses.

There are a lot of things that must be done in order to sell for the most and the quickest.

Let's start with the right price.

Pricing To Sell

There are two things to consider when pricing a house.

1. Appraised Value

Appraised value is what will the home appraise for when a lender sends an appraiser to your home. This is very important because, if it doesn't appraise it may not sell.

An appraiser will look at similar homes to yours and start comparing apples to apples. They will make adjustments if things don't match up exactly. Like an extra bedroom or bathroom or maybe updated cabinets. Once they have made all of their adjustments they come up with a value to your home.

This is very important. If your house is similar to other renovated homes but you price it $10K higher, it won't appraise. Updated cabinets are updated cabinets. It doesn't matter if theirs is off the shelf from Home Depot and your's are custom. When appraiser looks at other properties he looks at pictures. So they can't tell if the quality is cheap.

2. Perceived Value

This is the value that a new homeowner will put on your house.

If they go to a house and feel like they're getting a deal that's great. If they go and feel like it's overpriced that's bad.

A higher perceived value from your buyers will help sell faster, not necessarily for more. This is why you don't want to over-improve the house.

Typically what we do when deciding finish out materials is look at the COMPS. Here we determine the Appraised Value first. Once we did this we now look closely at all of the SOLDS. Here, we're looking for minor updates we can do to stand out. We know that by doing XYZ we will appraise for max ARV. But, what do we need to do to sell for max ARV and fast? That's where you make little tweaks that a homeowner will love.

The Details That Sell

Appraisers don't look at the details. They look at pictures. If you have new cabinets and the comp appears to have new cabinets then that's it. It doesn't matter if your cabinets are custom.

But, custom cabinets may help sell it faster. You obviously need to keep cost in mind.

Finishing touches

The details that sell are for the homeowner not the appraiser. Now, you need to walk through the house and look at it as a homeowner. Do you need to put blinds on the windows? Do you need nicer landscaping? Should you stage it?

A homeowner will walk in and picture themselves living there. If they see they still need to do more stuff to finish it out they may not like it. The majority of buyers don't know how to install blinds. So now they're thinking they need to hire someone to do it.

Staging is so important when flipping houses. Good staging will make the buyer feel right at home. They can see where the couches go. They can visualize their furniture there.

We stage every house we flip. The reason for this is speed of sell. The house looks completed and therefore sells faster.

The pictures

When you're going to sell you will list it with an agent. Please spend the extra $100 or so to get professional pictures taken. Buyers shop for houses online. If they come across yours and your pictures are from a phone that won't look good.

We seen beautiful rehabs with terrible pictures. The issue with this is it gives the house a bad feel. They usually look darker and smaller.

Professional pictures makes your $50K rehab look like a $100K rehab. I brightens the home up. Makes every room look huge. It really grabs their attention.

If you grab their attention online then when they show up to the house they're more excited. Now, if you don't do this and they see dark pictures they may feel different. Now, they're going to the house curious to see what's wrong with it.

Multiple Offers

Many investors think that when flipping houses you go for the highest offer. This really depends on the offer.

You may get an over asking price offer but it's FHA or VA. This means that if the house doesn't appraise for that extra amount they won't get the loan. This is an issue because by the time they are notified they can't afford it you have lost weeks.

Always look at the terms. Is the offer contingent on anything?

Many times they submit an offer contingent on their home selling. This isn't a big problem if they are already under contract to sell. But, if they haven't even begun to sell their home then it could take months. You don't want to go under contract for months. Also, what if it doesn't sell? Now you have a BOM (Back On Market) on your listing.

A listing that went from ACT (Active) to AO (Active Option) to BOM doesn't look good. To most buyers they're thinking, "what's wrong with the house?". This is terrible for you.

We have sometimes taken a lower offer because the terms were better.

Concessions

When you're flipping houses you will realize that everything is negotiable. Even concessions.

Many time buyers will ask for concessions. This is money from YOU!

Now, this may be because they're an FHA buyer and can't afford the closing costs. In this case what we've done is the following.

Asking $230K

Offer $230K with $4K in concessions

Our Counter $234K with $4K in concessions

So we went up in price so they can get the $4K they need to close. This way the $4K comes from the bank, not us!

Another reason for concessions is, repairs.

We did a quick flip once and the inspector said we need to update the plugs to GFCI. So the buyers got a bid for $3,500 to do this and asked for that amount in concessions. They also threw in a couple of other silly things that brought it to $4,500.

Our counter, NO to the other things and we will get the GFCIs to code. It cost us $500 to do this!

We went from $4,500 down to a $500 fix. But this is something your agent needs to be able to negotiate.

Choosing The Right Agent

Many investors flipping houses try to go for the cheapest agent. This is NOT the time to save money. A good agent can not only sell your house fast but also solve any problems that come up.

There have been so many times when we have had to teach the buyers agent how to close a deal! If not they would have lost their buyer which means we lose too!

Nowadays everyone wants to be a real estate agent. Most agencies will add any new agent to their team. So if you thought that because it's a big name realty you're good, think again.

The best way to find a great agent is to go to local investors and see who they use. Then interview a couple of them to see which one you feel more comfortable with.

You also want to make sure they are familiar with that area of town. In San Antonio, we have many different areas of town. This means that there may be different issues that arise.

You don't want an agent that deals in high-end homes selling a starter home. The commission isn't the same for and sometimes they're not as motivated.

There are really good agents that can adapt to any area, but they're not easy to find.

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The Wrap-Up

We hope we've given you enough to succeed with flipping houses.

Keep in mind this is not easy nor is it for anyone. But if done right, it can be very fun and rewarding.

Please keep checking back with us as we continue to add more articles. We will continue to expand on many of these topics even further.

Good luck on your journey and hope you share your success stories with us.

Wholesaling Strategies: The Advance How-To Guide 301

Time to learn the different ways to sell a deal by using different Wholesaling Strategies.

Wholesaling Strategies: The Advance How-To Guide 301THE ROAD SO FAR

In our previous guides, we have covered a lot. Before we get into Wholesaling Strategies: The Advance How-To Guide 301, let’s look back.

In Guide To Wholesaling Real Estate 101 we covered:

In Wholesale Everything: The Intermediate How-to Guide 201 we expanded on many areas. We also added:

In Wholesaling Strategies: The Advance How-To Guide 301 we are going to expand even further.

We will cover:

Before we get into the meat of this guide, we want to share something else with you.

How to do this regardless of your career path

Like we said in Guide To Wholesaling Real Estate 101, wholesaling is like driving for Uber. It won’t replace your day job but, it can supplement your income very nicely.

Learning to wholesale can help you monetize at any time. It will amaze you how many times you come across people in your network that needs to sell their homes. These leads can come from friends, family, or even co-workers.

Even though at PRYME Homes we buy most houses, we do sometimes come across deals that we simply can't buy. Sometimes deals just are not right for us.

So, we turn to wholesaling.

And because of our large network, we can do this very easily and quickly. This typically will put $2K to sometimes $10K+ in our pockets rather quickly (we’ve even made over $50,000! Tell you about this later).

We've worked with investors that have done over 15 deals while having a full-time job. Most of those were houses he kept personally as rentals. But, some of those were wholesales that he did just because he had the right network.

LEARNING THE LINGO

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In Guide To Wholesaling Real Estate 101, we covered some popular terms.

We wanted to expand a little more here.

Financing Terms

In the last two guides, you learned about marketing and generating leads.

The reason we haven't gone deeper into negotiations is that you need to be really good at generating profitable deals first.

Many new investors get caught up on trying to be awesome negotiators without ever getting a lead. If you become awesome at lead-gen, then you will have time to perfect negotiations.

Also, we still strongly recommend partnering with savvy investors at first to learn quickly.

That being said. Let's get into negotiations.

NEVER NEGOTIATE

Q: So, how do you negotiate without negotiating?

A: By not being a salesman!

A salesman doesn't care about the person they're selling too. All they care about is closing the deal. Even though we know that's why your there. You have to be ready to walk away if necessary.

By being prepared to walk away, it's hard to come off like a salesman.

Why be prepared to walk away?

If you're always willing to walk away then you can focus on making sure you not only get a great deal but also give the homeowner the best option.

How to NOT be a salesman

The best way to not be a salesman is to think about the customer (seller) first.

You want to put their needs first. If you do this, they will see it and choose you over your competitor every day of the week.

You have to understand that homeowners have A LOT of options nowadays when it comes to selling their homes. So, high-pressure sales just don't work anymore. They need to feel comfortable with who they're doing business with.

The best negotiators that we've seen are the people that build rapport with the seller.

If you do this, then everything after becomes extremely easy.

Here are the 5 things we recommend you do:

  1. Work together. The reason homeowners typically go with realtors is that they’re not negotiating against them. So you need to provide the same reassurance by NOT negotiating. Instead, work with them on a solution.
  2. Talk numbers last. Investors usually want to get right to the price. Stop! Get to know them. Build rapport. Once you have walked through the whole house and have gotten to know their real needs then you talk price.
  3. Learn what it is they NEED. Every investor thinks that the homeowner needs money. This is so far from the truth. No one EVER has needed money. What everyone NEEDS is what that money can get them. Why do we frame it this way? If you need $100 to get something but I can get it for you for $50. You no longer need $100. It's the same with a homeowner.
  4. Always offer them the best option. There are so many wholesaling strategies. You can afford to offer them the strategy that will help them out. Try to remember that many times this is their livelihood. So don't rob them just so you can make a couple of extra bucks.
  5. Be honest. We tell the homeowners what our strategy is going to be. The reason for this is you don't want to look like a liar later. If you're going to wholesale it simply tell them, "I have a partner of mine that will love to buy your house". This way, when you bring other investors to look at it there aren't any issues.

Other benefits of not negotiating

Many investors, especially when they're new hate filling out contracts. Well, the good news is that when you build awesome rapport and don't just try to negotiate filling out contracts becomes easy. Because we've formed a good relationship and are transparent with the homeowner they’ve come to trust us and are happy to sign a contract.

It's never over 'til it's over

So you think just because it's under contract that the "hard part" with the homeowner is over?

WRONG!

Getting the property under contract is just the beginning. You still have to make sure it clears title and closes.

This again, is why we say build rapport!

Many times the homeowner is very stressed when selling their house. This could be because they are struggling financially or because they have to deal with the move. Either way, they called you because they wanted an easy sale.

The issue is sometimes problems come up and if you didn't build enough rapport then the issues may be harder to resolve. You may need them to gather more documents, or maybe even have to change the terms of the contract. Sometimes we discover things in the title process that forces us to change our wholesaling strategy altogether.

We've seen many investors lose a great deal because they just negotiated a great price but never built rapport. Then, when an unexpected issue came up the homeowner got very upset and decided to go with another investor.

You wouldn't believe how many times we have bought houses where our offer was the lowest. But the homeowners felt much more comfortable with us than they did with the other investor offering more money.

Of course, this is not to say that price doesn't matter at all. Just don't go into a meeting thinking just about the numbers.

Think, problem solver.

That's what we are. We are problem solvers. If the homeowner didn't have any problems 9 out of 10 times they would just call up a local realtor and list it.

But, if they are calling you then they are looking for something a realtor can't offer and that's options!

DIFFERENT WHOLESALING STRATEGIES

Let's cover some of the different wholesaling strategies you can use when wholesaling a house.

These wholesaling strategies break down into two main options.

Option 1: CASH

This is your most typical wholesaling strategy because it's the simplest.

I'm sure you can assume that CASH means exactly what it says. You're buying it CASH. This means no traditional financing.

This doesn't mean a suitcase with $100 bills.

You can by "CASH" by using an investment account, private money, or even hard money. We covered some of these terms in "Financing Terms" under "Learning the Lingo".

Option 2: TERMS

This where it gets fun.

Buying with terms can mean a lot of different things depending on the wholesaling strategy you’re using.

Let's cover the most popular "terms".

Wholesaling with Subject To

Buying a property "subject to" means you're buying it subject to its current financing.

What does this mean?

There are many times when a homeowner can't sell below a certain price because they have a bank loan. But, if the investor was to take over that loan then there might be a deal to be made.

When does this make sense?

Say the homeowner needs to sell fast! They owe $150,000 on the home to the bank.

The house is only worth $220,000 and it needs $15,000 in repairs. Now factor in 15% closing costs. This leaves the investor with a $13,750 profit after they pay for their money fees.

The majority of investors DO NOT use their own money. They borrow money from either private investors or hard money lenders.

In this scenario we're using 10% interest only loan for the $165,000 that they will need to buy it and fix it up.

$220,000 ARV (After Repair Value)

- 15% (closing costs)

- $15,000 (repairs)

- $8,250 (money borrowed at 10%)

- $150,000 (purchase price)

=$13,750 Profit.

This is a lot of risk for very little potential profit.

But if you can shrink that $8250 to say to justify the monthly mortgage payments of $750. Plus only bring the $15,000 in repairs instead of the full $165,000. Now you're investing $19,500 to make $17,500!

That's a much more attractive deal. At least to us.

Of course, keep in mind there are other fees and not all the numbers will be this even. But this is to simply give you an idea.

Wholesaling With Owner Financing

Similar to buying with Subject To but in this scenario the "bank" is the owner.

This works best when they own it free and clear. This way there is no underlying mortgage payment that they can't go below. You can essentially set it up where the buyer will put $5,000 down. They will then pay the remaining $120,000 at a 6% interest over the next 15 years.

Now you open it up for your buyer to come in and essentially buy this house for $5,000. Plus your wholesale fee of course.

This again is very attractive to many buyers.

It is also attractive to many homeowners. This pretty much becomes an investment for them that pays them monthly.

Wholesaling For Wrap

Either of the above scenarios can help a buyer do a wrap.

In Texas, WRAPS are very popular.

This means that you buy a house for either Subject To or Owner Finance. Then you turn around and WRAP it with a bigger loan and sell that to a retail buyer.

This works when you have many buyers that have the money, want a house, but can't qualify for a loan. So the investor steps in and becomes the bank for them. This is just like Owner Financing. The difference here is that the owner is the investor.

Regardless of which of these wholesaling strategies you use to contract it. Your buyer can WRAP it and make it a great deal.

This is very useful when you're dealing with sometimes lower price homes or low equity deals.

Sometimes you get a deal that doesn't have much of a profit spread but the homeowner is paying $600 per month. Then you see the rents are $1,100 per month. An Owner Finance Buyer will want to take those payments over. Then, sell it for a little higher but with financing. Capturing a $500 per month cash flow!

BECOMING A MAD SCIENTIST WITH DIFFERENT WHOLESALING STRATEGIES

As a wholesaler, you need to become a mad scientist by understanding how to use different wholesaling strategies.

As times change and markets change so will the wholesaling strategies you use.

If you only stick to one wholesaling strategy and the market changes you will lose.

Like we said in the Guide To Wholesaling Real Estate 101 you don't become a wholesaler because of the money. You do it because it will lead you to become the best investor you can ever be.

Wholesaling is a gateway into the world of real estate investing. But, you must use it as one and NOT as a destination.

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NEXT STEPS

We hope that you have been taking action while reading these guides.

Don't be afraid to fail.

Success consists of going from failure to failure without loss of enthusiasm. -Winston Churchill

Don't suffer from analysis paralysis. Instead, get out there and take MASSIVE ACTION. This will give you MASSIVE RESULTS. Which, will lead to a stronger belief in yourself and abilities.

We also extremely encourage you to ask for help from all of the investors you have met. While we do understand that this may mean you having to split deals. The experience and knowledge you get will be priceless!

Wholesale Everything: The Intermediate How to Guide 201

Wholesale Everything: The Intermediate How to Guide 201 is an expansion to "Guide To Wholesaling Real Estate 101"

In Wholesale Everything: The Intermediate How to Guide 201 we will dig deeper into:

What is Wholesaling?

In Wholesale Everything: The Intermediate How to Guide 201, we expand on our previous guide. In Guide To Wholesaling Real Estate 101, we covered

THE DIFFICULTIES WITH WHOLESALING

In case you haven't noticed by now, trying to wholesale a deal is not as easy as you thought. If you want to do it right, make money, and really learn real estate, then you will have to put in a lot of work.

You can go full-time as a wholesaler. Understand that it’s very likely that you do NOT get a deal in your first 6 months.

So, you must have enough money put away to take care of your bills for at least a year.

Why a year?

Say you start working really hard by implementing the techniques we are sharing with you. But, it’s been a couple months and you finally get to wholesale a deal.

Say that deal makes you $5,000.

Now, what are you going to do with the money?

  1. Will you spend it on bills?
  2. Payoff bad debt?
  3. Go on vacation?
  4. Go shopping?
  5. Reinvest it so your next deal takes half the time to come to you?

While options 1-4 may seem very appealing. You want to look at this as a business. If you start pulling every dime your business generates from day one it will never grow.

The issue is, people make $3K when they wholesale a deal and immediately go on vacation! Only to come back and realize they’re broke again and have to start back from ZERO.

By reinvesting it you start to cut down the amount of legwork you put in to generate your deals. It won't be by a large amount at first but it will definitely start compounding more and more. Best yet, your business starts to grow.

Dealing with being overwhelmed

Because this business requires personal accountability and responsibility it can leave you feeling OVERWHELMED.

So, why would you feel overwhelmed?

Well, back when we started investing in real estate there really wasn’t too much competition for deals. So you didn’t need to get too creative with trying to generate a deal.

But now, there are so many new people coming and going that it has forced everyone to become a lot more creative and strategic with their marketing in order to stand out from everyone else.

In the MARKETING section, you will learn how to still wholesale a deal and NOT lose your mind.

The biggest way to overcome feelings of being overwhelmed is to stop overthinking and start doing. By doing, you will realize what works and what doesn’t and how to move forward. But, you can’t do this if you’re paralyzed.

HOW TO GET STARTED

In Guide To Wholesaling Real Estate 101, we covered overcoming the "what ifs", as well as being careful with gurus and "mentors". We also went over some of the languages you need to know.

In Wholesale Everything: The Intermediate How to Guide 201 we'll expand more on the networking side.

Step 2: Networking for success (expanded)

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First, let's review the tools you will need.

The ONLY thing you need to get started is business cards. All they need to say is your Name, Email, Phone Number, and the title of Real Estate Investor. The title helps the person that received your card to remember what you do. On this note, you also want to make sure that the back of the card is white and blank. We used this a lot when starting off. This allows for your (or them) to make a note of what you talked about on the back of the card so they can remember why they should reach out to you.

Keep it Simple. You don’t need a business domain so your email looks “cool”, you don’t need a website, or a mailing address.

How to hand out your business cards

We know. You read this and said, "Really?! What's so hard about handing out a business card?"

Let us explain.

When handing out your business card don’t just give them to anyone, that’s just throwing them away.

Instead, make it a point to build up some form of a connection with the person. If you did a good enough job THEY will ask you for your card.

Remember, the goal is not to get rid of your business cards, it’s to build your network.

You want a dependable network when it's time to wholesale a deal.

You do this by building relationships.

Stay away from new wholesalers

One mistake many new investors make is they hang out with other new investors.

This is so WRONG.

Now, we get it. It's easier to connect with someone like you that doesn't know anything and/or hasn't done anything. But this does not help you reach your goals.

You need to level up. So, to do this you must network with people that are where you want to be. When you do this enough you will see that eventually, you start reaching their level.

When you wholesale a deal you want it to take you closer to your goal. You don't want it to just keep you as a wholesaler.

Working the room

Many people go to a networking event, find a chair or corner and never move from there until they leave!

We get it, you’re nervous. GET OVER IT!

Everyone that goes to a networking event, guess what, they are there to network.

Everyone is there to talk to people they don’t know. So, if you don’t know everyone in the room then start talking to everyone.

If you know everyone in the room go to another room.

Stop being shy. This business revolves around networking. The sooner you get used to it the better you will get at it, the more success you will achieve.

Don't talk to people you know

Eventually, when you have attended enough of these events you will have people you know attending the same events. This is great but, don’t spend the whole time you’re there talking to them.

Even if they have something "REALLY" interesting to say simply tell them, "I would love to talk to you further about this, can we get together for coffee or a drink tomorrow?"

If they keep trying to hold you back to talk, which many do, we come out and just say "Hey, I don’t mean to be rude but I have a few people I need to meet tonight. So, is it cool if we catch up later?"

Most investors understand and will want to be doing the same thing.

Who to approach

Why are you in real estate?

Besides money, what is it about real estate that gets you excited?

Is it:

  1. Buying, renovating, and flipping houses?
  2. Buying rentals?
  3. Owning Notes?

The reason these questions are important is that they will help you in determining who to approach.

Say you want to flip a house. The best course of action is to find the most successful flippers in your market. We're talking about flippers that are regularly buying, renovating, and selling houses. This way when you wholesale a deal to them you'll also learn how to determine if it’s a good deal.

When you find the right people, you want to learn from them. But, it’s not that easy. You have to bring them value.

While we are all really nice people, you must understand our time is valuable. If you want it, what will you bring of value?

This is where being able to find great wholesale deals comes in to play. If you can bring a flipper a great deal, they will teach you A TON about flipping. The best part is all of these lessons will be learned while you're making money!

How do we approach possible buyers/partners/lenders?

The best way to start up a conversation with someone you're interested in learning from is by getting them to talk about themselves. This is a great way to get them to share a lot.

The truth is, everyone likes to brag about themselves at these events. Use that to your advantage.

By having people talk about themselves we can determine if they truly know what they’re talking about or they’re pretending. The more you do this the better you will get at asking them questions that will show their expertise.

You essentially become an interviewer. You’re interviewing them to see if they fit in your network of buyers/partners/lenders etc.

Questions to ask:

Now that you are equipped to eliminate the “What ifs” let's build our buyers list.

Which should you do first? Find a deal or build a buyers list? A lot of gurus out there that have a preference depending on what they're selling. But to us, it doesn’t matter. They are both equally important and should be done at the same time. So for the purpose of needing to put them in order, we will start with building a list.

BUYERS LIST

Now that you know how to network, the next thing is to build a list with all of the contacts that you get. After all, these are going to be the people you wholesale too.

Next, we qualify our buyers. The following is how we have built our list along with our belief system.

Pre-qualifying your buyers

We know that if you’re new you may not know how to do this. This will come with time. Many investors ask to be in our buyers' list but we don’t add just anyone.

We add only the people that we know can actually take on a deal.

This is how we qualify our buyers:

Selling the contract to your buyers

Once we gathered this info, we add them to our contacts list along with their information.

We tell each of our buyers the following, “We will never blast a property out to everyone. If it meets your criteria we will bring it directly to you. But, if you don’t buy because you lied to us and can’t actually afford it. We will move you to the bottom of the list for our future properties. If you do this again we will remove you!”

The reason we do this is that we are not like most wholesalers. All they’re looking for is the highest offer and they move on to the next one. Not that there’s anything wrong with that, but it’s just not us. We want to actually build relationships and help our investors grow.

We need our investors to be able to buy when we bring them deals that meet all of their criteria.

The investors we work with appreciate this so much that we have never lost a single investor!

Non-refundable deposits

If you don’t know or trust your buyers most wholesalers ask for a non-refundable deposit. This can be whatever amount makes you feel like they wouldn’t walk away. If they did, it would reimburse you for wasted time. Now, you may need to go find another buyer. You may even lose the deal because the seller is upset with you for not delivering.

But, if you qualify your buyers correctly you don’t need to ask for these fees. It makes it easier for buyers to work with you.

We don't like non-refundable deposits. We've never bought from a wholesaler that is asking for a non-refundable deposit. A non-refundable deposit forces us to put money down on a property that we haven’t done enough due diligence on. You should never be pressured into buying a house you haven't done proper due diligence on. Especially if you don’t have the experience. This is why we don’t rush any of our buyers and recommend you don't either.

Another thing we recommend doing is making sure the house is clean of any title issues. We will cover this later on in this guide.

You want to make sure your buyers are not buying a house that has liens or judgments on it.

We know many people claim ignorance but that really should not be your out.

Again, partnering with the right investor for your first couple of deals should make this process easier.

Now that we have covered the basics with language and building a Buyers List. Let's go over how to actually generate a lead.

Direct Mail (DM)

In the Guide To Wholesaling Real Estate 101, we covered some basic DM marketing. We also went over potential List you can mail too.

In Wholesale Everything: The Intermediate How to Guide 201 we'll expand on doing this regardless of your budget.

Working With A Budget

Having a budget that you can stick to for 12-18 months is the most important thing.

Many people spend it all in the first 2-3 months and then their real estate career is over!

So, first thing’s first. Is there a certain amount of money you can count on every month?

You can do this one of two ways.

  1. You know for a fact that every single month you will have $100,$200,$500+ to put into a marketing.
  2. You have $1000, $2000, $5000+ saved for marketing.

Option #1

Say you know you can set aside $100 every month for marketing. That’ll probably get somewhere between 250 postcards or close to 175 letters per month.

Obviously the more you can spend the more homes you can target.

Bulk buying.

You can get better pricing when you buy in bulk. We would suggest your first month’s marketing budget be spent on just buying material. This way one month of marketing capital can get you 3-4 months worth of marketing materials. Now you know that in 4 months you will need another month's budget to buy another 3-4 months worth of materials for the next 3-4 months. Make sure you always project ahead. You NEVER want to stop marketing.

Option #2

If you’re doing $1000 budget then do the same. But, in this case, you can afford to buy your years worth of marketing up front to save money.

Cost break down.

We buy roughly 2000 postcards from Vistaprint for about $0.05 each. They are in full-color front and back.

Then you add $0.35 for postcard stamps or $0.49 for letter stamps.

Now, we add $0.0083 for every 100 address labels which we buy a box of 3000 for roughly $25.

This equals roughly $0.40 per postcard mailed out.

Or

$0.57 for every letter. The extra pennies here are for a pen, paper, and envelopes.

The only thing we don’t buy in bulk are the stamps because it doesn’t really matter.

There's a reason for doing marketing for 12-18 months. This is so you make sure to at least get one deal that you can use to replenish your marketing. This will help to extend from 12 months to indefinite. Of course, this is IF you didn't use the money to vacation!

You should never, ever, ever, ever, ever, stop your marketing. The only time to stop is if you’re throwing in the towel and you’re done with real estate.

There are so many times we have received calls from a marketing campaign we ran over a year ago!

NOTE: Oh, before we move on you have to include the cost of the list you’re using also. This is usually a one time cost and doesn't amount to much.

EXERCISE: Before you keep reading, set your budget. Even if it’s zero go through the process to understand it better. Pick a number like $100/mo and go to different sites like Vistaprint and start seeing how much everything will cost. Stop reading now and set your budget! You better not have read this line until you set your budget!!

DOOR KNOCKING (DK)

There's not much more to add to DK other than what was mentioned in Guide To Wholesaling Real Estate 101

You can go over to our Podcast and listen to the episode on DK. We cover how we do it.

WORKING THE LEADS

In the Guide To Wholesaling Real Estate 101, we talked about getting an appointment.

First, you also want to make sure the homeowner is motivated to sell. Simply ask, "What's your reason for wanting to sell?"

The following reasons usually indicate they have a real need to sell:

What you don't want to hear is, "I’m just looking to see what I could get for my home". Not that these can’t turn out to be deals, but there’s a small chance since they don’t really need to sell their home.

If they mentioned one of the top reasons, then set the appointment. Now you can now reach out to an investor to help you.

CONTRACT THE DEAL

In Texas, you should use the TREC One to Four Family Residential Contract (Resale).

This a very standard contract that is understood by any title company.

If you choose to do this on your own make sure you've reviewed it beforehand. Filling out a contract is easy. You read it and fill out the blanks. It's that simple. Now, the biggest fear people have is, "what if I screw it up?". It’s fine. There are addendums you can use to correct/change anything on a contract. Once you have the contract filled out, you send it to title. At title you will find out of there are any liens or judgments on the property.

But, in Guide To Wholesaling Real Estate 101, we recommended going with someone at first.

SELLING THE DEAL

In Guide To Wholesaling Real Estate 101, we went over tapping into your buyers' list.

When you reach out to a potential buyer make sure you have the deal ready.

You need the following info:

Your wholesale fee

This fee is the difference between what the homeowner is getting and what makes sense for the buyer. If it's $20,000 or $200 then that's what it is.

Do NOT always add a minimum of $5K or $10K just because that's what you want. You will either screw someone over or lose the deal. Neither is a good business model.

Do you want to make more money? Get better deals!

CLOSING THE DEAL

The contract has been reviewed at the title company to make sure everything is fine. Once you have your buyer ready you proceed with closing. The title company will tell you when and where to get everyone will meet to close.

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Now What?

This was the Intermediate Guide to Wholesaling. Next up, will be the Wholesaling Strategies: The Advance How-To Guide 301.