These are text conversions of one of thenewest htp://www.REI-TV.com episodes. Feel free to go to the links below for loads of of videos about real estate, training, and income opportunities. Welcome to www.realestateinvestormachine.com , the real estate investor network, and host of www.REI-TV.com , where new and experienced investors can find training, networking chances, and more info about creative real estate investing. Today is Newbie Tuesday, and we’re talking about various types of deals, real estate investor tips you can use to flip a house, and various strategies. We do all kinds of deals, we do bird dog deals, wholesaling, retail flips, auctions, and I’ve even bought and flipped houses on Ebay! When you first are getting started though, I highly suggest you choose one technique and stay with it. Become a bird dog, become a wholesaler, whatever it might be, and when you are ok at it, you can go to the best thing. In the past, I’ve repeated many times “I’m just going to wholesale”, or “I’m just going to be an option investor”. It seems right after that, a perfect sub-to or rehab comes across my list, so I tend to do it all… but in many cases, if you’re new, just bird dogging or wholesaling alone might be the best strategy for a new real estate investor starting her career. Some investors, all they do is bird dogging… or in other words become a “house scout”. Bird dogs seek properties for other investors for a fee instead of actually doing the deals themselves. Many have jobs that take them through neighborhoods as they work, (a perfect opportunity to find houses) and they have no intention of doing it full-time. Perfect jobs for a bird dog include pizza drivers, gas meter readers and mail-men. These are excellent because they are busy coming and going. The best reason to start your real estate investing career as a bird dog is there is no. As a bird dog, all you have to do is scout the house, get the sellers phone number, the address, pictures of the house, the seller’s name and selling price. That’s why it is called a “bird dog”… just like when someone hunts, the dog runs ahead of the hunter (or investor) and flushes out the birds… or houses, in this case! My first deal was as a bird dog… I made an offer myself to buy the house… I offered $19,500, and they turned me away. The investor I then gave it to offered $15,000 and they took it! (go figger, eh?!) In any case, I made a quick $500. It was my 1st money in the business, and I framed the check, (er, a copy of it, that is!) and hung it on my wall! I’ll never forget that 1st deal… and my 1st check! When you want to find an investor to work with as a bird dog, you can simply look for “We Buy Houses” signs as you drive, look in newspapers for “We Buy Houses” ads, or go to Google and type “sell my house” and you’ll discover lots of pages of investors, many who would love to have you work with him… and if none of that works, contact me with the deal and we’ll see what I can do! The average bird dog makes around $500 to $1000 per deal, while some investors pay their bird dogs on a “per-lead” basis. This is typically determined by a combination of the closing ratio of leads to closed deals by that particular investor, and the real estate license laws in that state. The next step for some investors is wholesaling. Many investors stop at this point and make a full-time career out of wholesaling houses… huge careers, with seven figure income… yes seven figures, as in “millions” wholesaling. Wholesaling is almost the same as a bird dog, but instead of turning it over to another investor, you agree to buy the house yourself. When wholesaling houses, just like anything else, you get something cheap and resell it to someone for more… easy, eh? Wholesalers negotiate the best price he can on a house, then put it under contract to buy. Once you have a contract to buy, you go to another investor who intends to rehab the property, and you sell, or “assign” the contract to the other investor. Instead of turning it over to some other investor entirely (like a bird dog would) the wholesaler remains with the “deal” until it is closed upon… or when your “buyer” closes and buys the property from your “seller”. Wholesaling is some of the simplest money I have EVER made in my real estate investing career… and there is no risk when you wholesale, as long as you do it properly. The best part, is a wholesaler simply finds the seller, and the buyer, then walks out of the process… earning his income on the “spread”… and NEVER owns the house! The “spread”, which is the profit, is the difference between how much your seller gets for the property, and your buyer pays for it. Another type of deal is what we call a retail flip. Retail flip deals are quite similar to wholesale deals, yet a lot of people call it a type of wholesale deal too. I call it retail flip because we deal with “pretty houses” and are selling to the end user… a homeowner who will live in the property, who’s buying it “retail”,thus we call it a retail flip. In a retail flip deal, an investor gets a “option” to buy the house at a discounted price, or puts the house under contract… not unlike a wholesale deal. He then finds a homeowner to buy the property from him, and again, earns “the spread”. The house is of course, promoted differently, since you’re selling to an end user. We market these properties with yard signs, newspaper ads, as well as the MLS, and it’s not unusual to use an auction sale to sell these properties. There is HUGE profit potential doing this type of a deal, and many deals have been known to be “six-figure deals”, in profit alone. In a retail flip deal, again, there’s no risk besides the marketing money to find a house and find the buyer. A more “risky” type of a project, but one that in these times is very easy to find, as well as easy to fill is a sub-to deal. In this type of a project, you buy the house “subject to the sellers mortgage”. In other words, you own the house, but the seller leaves his mortgage STAY on the house until you refinance or sell it later. This is like “assuming” the mortgage. The common exit strategy for a sub-to deal, is to get a buyer who needs some time to get their credit or down payment in place, and is willing to give you a deposit, and rent the house until they are approved for a loan. This is more commonly known as a “rent to own” property. The buyer leases the house from you, until he can get financed, and “cash us out”. The nice thing about a sub-to deal, is it’s normally “no money down” to the investor. We simply get the property for the amount the seller owes, she signs the property over to us, and we pay the payments until our “rent to own” buyer gets a mortgage. A subject-to investor makes money a few ways: 1- He makes some money from the deposit the “rent to own” tenant gives when he moves in. We generally charge $5,000 to $15,000… this is technically an “option fee”. The buyer gives this to us in advance, to secure the ability to buy the house in the future at a locked-in price. 2- He earns some cash monthly. For instance, if the mortgage payments, with taxes, interest, and insurance equal $1,200.00, we would usually charge that buyer $1,400.00-$1,500.00 a month. 3- The “big payday” is when the buyer gets his financing and “closes”, buying the house from the investor. If the investor pays $150.000 for a house, and the buying tenant eventually pays $185,000 for it, at the final closing, the investor makes $35,000. (minus the deposit, in #1) But keep in mind, if the rent to own buyer doesn’t make the payments, you’re going to have to make them, as the investor! Another kind of deal, is “buy and hold”. It is what more common investors do… they buy the properties over a long period of time, rent it out, and eventually acquire a LOT of equity, as the renters payoff the investors mortgage over time. Many years from now you sell the house, which may be huge money if you have the patience to deal with tenants. This is how old time real estate investors have typically “done the business”, and is one of the absolute best ways to become very rich in real estate!
Article Source: http://www.articlecontentprovider.com/articlesubmit
These are text conversions of one of thenewest htp://www.REI-TV.com episodes. Feel free to go to the links below for loads of of videos about real estate, training, and income opportunities.
For a more detailed look at these tips and more, please go to http://www.realestateinvestormachine.com , or http://www.rei-tv.com , and take advantage the hours of free real estate training and education videos. Nick Cifonie is a real estate investor, speaker, mentor, and coach.
Please Rate this Article
5 out of 5 4 out of 5 3 out of 5 2 out of 5 1 out of 5
