These are rough transcriptions of one of thenewest htp://www.REI-TV.com episodes. Please go to the links below for dozens of videos about investing, training, and income opportunities. Welcome to www.realestateinvestormachine.com , the real estate investor network, and host of www.REI-TV.com , where beginning and experienced investors can find tips, networking opportunities, and other 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 types 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 pick one technique and stick with it. Become a bird dog, become a wholesaler, whatever it is, 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 soon after that, a perfect sub-to or rehab comes across my list, so I tend to do it all… but in most cases, if you’re new, just bird dogging or wholesaling alone might be the best strategy for a new real estate investor beginning his career. Some investors, all they like is bird dogging… or in other words become a “house scout”. Bird dogs find properties for other investors for a fee rather than actually doing the deals themselves. Some have jobs that take them through neighborhoods as they work, (a perfect opportunity to find houses) and they have no intention of going full-time. Perfect jobs for a bird dog include pizza drivers, gas meter readers and postal workers. These are ideal because they are always 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 find the house, get the sellers telephone number, the address, pictures of the house, the seller’s name and selling price. That’s why it is called bird dogging… just like when someone is hunting, 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 on my own to buy the property… I offered $19,500, and they turned me down. 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 deal 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 payday! When you want to find an investor to work with as a bird dog, you can just look for “We Buy Houses” signs as you drive, look in newspapers for “We Buy Houses” advertisements, 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 her… and if none of that works, contact me with the deal and we’ll see what I can do! The typical bird dog makes between $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 for that state. The next step for most 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 buy something cheap and resell it to someone for more… easy, eh? Wholesalers negotiate the best price he can on a property, 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 stays 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 easiest money I have EVER made in my real estate investing career… and there is little risk when you wholesale, as long as you do it correctly. The best part, is a wholesaler simply finds the seller, and the buyer, then steps out of the process… earning his income on the “spread”… and NEVER buys 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 sort of deal is what we call a retail flip. Retail flip deals are quite similar to wholesale deals, but a lot of people call it a type of wholesale deal as well. We 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”,so we call it a retail flip. In a retail flip deal, an investor gets a “option” to buy the property at a good 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 property is of course, promoted differently, since you’re selling to an end buyer. We promote these properties with bandit signs, newspaper advertisements, as well as the MLS, and it’s not unusual to use an auction exit strategy to sell these houses. There is HUGE profit potential flipping this type of a deal, and many deals have been known to be “six-figure deals”, in equity alone. In a retail flip deal, again, there’s little risk except the marketing investment 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 sell is a sub-to deal. In this type of a project, you buy the property “subject to the sellers mortgage”. In other words, you buy the house, but the seller leaves his mortgage REMAIN on the house until you refinance or sell it later. This is similar to “assuming” the mortgage. The common exit strategy for a sub-to deal, is to get a buyer who needs some time to get their finances or down payment ready, and is willing to give you a deposit, and lease the property until they qualify for a mortgage. This is more typically known as a “rent to own” property. The buyer leases the property from you, until he can get financing, and “cash us out”. The nice thing about a sub-to deal, is it’s usually “no money down” to the investor. We just buy 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 financed. 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 typically 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 property in the future at a locked-in price. 2- He earns some money monthly. For instance, if the mortgage payments, with taxes, interest, and insurance total $1,200.00, we would typically charge that buyer $1,400.00-$1,500.00 per month. 3- The “big payday” is when the buyer gets his mortgage and “closes”, buying the property from the investor. If the investor pays $150.000 for a house, and the buying tenant then 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 tenant 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, lease it out, and eventually earn a LOT of equity, as the renters payoff the investors mortgage over the years. 10 or 15 years from now you sell the house, which may be huge money if you have the ability 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 get filthy rich in real estate!
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These are rough transcriptions of one of thenewest htp://www.REI-TV.com episodes. Please go to the links below for dozens of videos about investing, training, and income opportunities.
For a more detailed look at these tips and then some, please go to http://www.realestateinvestormachine.com , or http://www.rei-tv.com , and check out the dozens of complimentary real estate coaching and education videos. Nick Cifonie is a real estate investor, speaker, teacher, and coach.
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