Think and Grow Rich
Think and Grow Rich
The Science of Getting Rich
The Science of Getting Rich

Shock and Awe House Flipping

Shock and Awe House Flipping Yeah

Shock and awe is known as a military doctrine based on the use of overwhelming power for rapid dominance. The way I see it is that shock and awe relates to successful house flipping in two ways.

One relates to having a burning desire to take massive action and succeed in this business.

The other relates to something that isn’t discussed much, if at all. Real estate investors probably don’t even consider it when getting started. It’s not until those first few leads and visits to houses that they become aware of it.

This second one I thought about after looking at a house this week. The house made me think back to when I got started and how this made an impression on me. Could I be more vague? Don’t worry, I’ve even included pictures below (but don’t scroll just yet…you don’t want to ruin the surprise).

I’ll get to it in a minute.

Shock and Awe Your Self-Doubt and Your Competition

Most people don’t make it in this business because they don’t start out with enough of a burning desire to succeed. They think they do, but they don’t. It really is as simple as that.

With the strong willingness to do whatever takes, you will be able to put in the work necessary to get your phone ringing. You’ll have to make it ring enough with leads that you can have that good deal land in your lap.

In the beginning, you won’t be as good at determining what is a real deal and could lose some because of inaction. This is very common.

If you have enough leads though, it will allow you to succeed in spite of this.

Getting these leads will show you that this business is absolutely possible for you. This will erode your self-doubt and give you the willingness to take more action.

Be in as many places as possible.

In the beginning, you should try to have your marketing message in as many places as possible. This should be done at least until you figure out which marketing to motivated sellers method works best for you.

It’s hard to keep up with doing a lot of different marketing methods. You don’t have to keep up with it. The key is to find what works best for you based on the time and money required for each. Some things might have a lower cost per lead and cost per deal, but they could be time consuming. Only you can figure out what balance you want to have.

Your competition will take notice and you could build some good relationships, especially if you are wholesaling houses. Buyers will want you calling them with deals and sellers will want you to buy their properties. You can have the best of both worlds.

You Will Probably Be Shocked and Awed

This is what I was alluding to earlier. This is the one that isn’t thought of until you are face to face with it. It makes a lot of new real estate investors feel uneasy and question whether they really want to do this.

This will shock and awe you.

What I am referring to is the level of disrepair, squalor, filth and destitution of many of the houses you will be looking to buy (or wholesale)..

You’ve probably seen plenty of before pictures, but they never do the real thing justice. The combination of the assault on all of the senses can be overwhelming.

Some of these houses are downright disgusting. On occasion you will be tempted to throw up. Other times you will want to cry as you can’t believe how people can live the way they do…especially when there are kids living there.

Yes, not all of the houses will be vacant. Some of them should be, but they’re not.

When getting started, you may well believe that there is no way in hell anyone would possibly want to buy a house like this…including investors. You would be amazed.

At the right price, anything is a deal.

The fact of the matter is that somebody will buy anything for the right price. This goes along with the post I wrote about making an offer anyway.

Many new investors have a hard time thinking that a house that needs as many repairs as some of these appear to need would work for a successful house flip. Notice I mentioned ‘appear’ to need. Sometimes the repairs seem like serious repairs, but are in fact nothing major. Spending time looking at vacant houses that need a lot of repairs with contractors that have worked with other investors (read more about how to find and work with contractors) is a great way to understand what is serious and what is not. Scheduling appointments to see fixer-upper, bank-owed properties is a good place to start.

This is a great way to gain experience with what repair costs are as well.

Sometimes the area the houses are in will not be to your taste. It’s hard for some people to understand that it doesn’t matter what your taste is. These houses are a commodity. Nothing more. Just because you wouldn’t dare live there, doesn’t mean that others wouldn’t be happy to. Many people grow up in these areas and it’s all they know. They don’t know what it’s like to live in nicer areas. To many of them, there is nothing wrong with the area.

After you see enough of these derelict houses, you will start to detach yourself from your emotions and understand that there is serious money to be made by bringing them up to respectable standards.

So when you get that lead and you go to visit the house, don’t let the state of disrepair cause you to shy away from it. These can be the best deals. Keep that in mind.

We as real estate investors should always just be looking at potential. That’s what I tell sellers when they are embarrassed to show me their house. I’m not there to knock the place or show disgust. I’m there to see what potential there is.

Just so you can get an idea of what some of these houses may look like, take a look at some of the ones we’ve bought:

ugly house before picture 1

ugly house before picture 2

ugly house before picture 3

ugly house before picture 4

ugly house before picture 5

ugly house before picture 6

ugly house before picture 7

ugly house before picture 8

ugly house before picture 9

ugly house before picture 10

ugly house before picture 11

ugly house before picture 12

Hope you enjoyed the ugly house buffet. If you are so inclined, you can leave a tip by hitting the ‘like’ button. Thanks.

Danny
Google+

Explosion Photo: Public-Domain-Images
















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$14,456 Wholesale House Flip and Other Goings On

I love wholesaling houses!

$14,456.38 to be exact.

That was the net amount to us. Not bad for about 3 hours worth of work.

I’m going to be sharing the details of this recent wholesale deal as well as what we’ve been up to lately. It’s strange to think that I haven’t shared much in the way of what we’ve been doing. Especially after sharing everything we did for 34 weeks in our house flipping business a while back.

What day is it?

2013. Already?

Time certainly flies much faster when you are busy. And busy doesn’t even begin to describe Melissa and my 2012. It was more of a flash.

The joy of fatherhood was given to me again last December. Weston is now a year old and I couldn’t be happier. He is 100% boy (our first and only boy). Which is a good thing considering we have 4 girls! He is a climber and wants to scale anything he can get his hands on. Guess he likes to get altitude like his dad. :)

If we can run this business with everything we have going on, you can too.

And you thought all I did was write this blog…

In addition to family, we’ve been wrapping up 4 simultaneous rehabs and have 4 more awaiting rehab. (It’s a good thing I decided to add that up because it reminded me of a house that I’ve been forgetting. Oops! Yes, that happens.) Some were recently vacated rental houses (which is why I forgot it).

The last house we finished rehabbing is being sold after only a couple days on market and multiple offers. That’s how the one before it went as well. I hope that is a long term trend.

The deals have been mostly from my we buy houses San Antonio house buying website. A couple from probate and driving for dollars mailings and a couple were rentals that became vacant.

Leads have been pretty steady. Just today I think I had 8 leads. Probably people waiting until after the holidays to take care of their house problems. I hope that trend continues as well. :)

We are continuing to buy houses to rehab and wholesale. Birddogging has also been a good source of quick $1,000 here, $2,000 there checks. I’d like to do more wholesaling this year as it is less time consuming.

I’ve also been working on something that I’ll let you know about pretty soon. It’s something that will help a lot of people finally get off the starting line and really take off in this business. My subscribers will be the first (and will probably be the only ones) to find out about it when it’s ready. You probably should subscribe to this blog if you haven’t already. You can at the top of the main page, or on the top right side of each page, or at the end of this post. No time like the present.

Goals, Schmoals

I’m sure a lot of you have already heard everybody under the sun talking about writing your goals for the new year, so I’ll save my breath on that. You already know how important that is.

Equally important, however, is that you focus on what you are grateful for. That’s not just for Thanksgiving. Really try to make this a year that you consider often what you have and are thankful for. You get more of what you focus on, so it’s best to focus on what you’re glad you have. Why not make it a point to think about these things every morning during breakfast?

$14,456.38 Net From A Recent Wholesale House Flip

That’s a great profit for very little ‘work’. Not quite the $50,000 that another wholesale house flip made us, but I’m not going to complain.

I recently did a live (and free) webinar for my subscribers that talked more in depth about this deal. If you didn’t know about it, I’m sorry. (yet another reason to go ahead and subscribe…)

I’ll go over much of the details here for those of you that did not make it or even know about it.

Here’s a picture of the house:
wholesaled house flip before and after

Not that bad. Looks can be deceiving though.

Repairs Needed

The house needed about $25,000 in repairs. The general list of repairs needed (main items) is here:

  • Foundation Leveling
  • Convert Garage Back To Garage
  • Gut Kitchen and Both Bathrooms
  • Refinish Hardwoods and Install New Carpet and Tile
  • Replace doors and hardware
  • Install new lights, plugs and switches
  • Repair drywall and paint interior and exterior
  • Replace HVAC System
  • Repair Siding
  • Landscaping

Lead Source: Website

This lead came from my website, the one mentioned earlier in this post.

The sellers didn’t appear too motivated just from their answers to the questions on the website. For the asking price, they entered, “Make An Offer.” For the ‘least they would take’ question, they put, “You First.”

Motivated Seller?

That doesn’t really sound like a motivated seller.

The reason for selling was that it was an estate. I liked that. They also didn’t owe anything on it. I also liked that.

Even though they didn’t seem motivated, there was potential. I went to meet them at the house.

I looked the house over and didn’t really care for it. The sellers were great people though and we talked for a long time about a lot of different subjects. One of the subjects was about the house and how much of a drain it was on them, time and money-wise.

Made An Offer Anyway

Being that I didn’t really care for the house, or the neighbors’ houses (trashy neighbors – junk in the yards), the bad addition on the back of the house, the amount of repairs needed and just the number of other rehabs I already had going, I decided to offer an amount that would make sense for me. An amount that would allow us to wholesale the house. Always remember to make an offer anyway.

Offer Calculation

After Repaired Value (ARV) $130,000
65% of ARV -$84,500
Repair Estimate -$25,000
———————————————————
Maximum Allowable Offer $59,500
My Offer $43,000
Difference $16,500

So the difference between what I could have offered had I wanted to buy, fix up and retail the house, and what I offered, was $16,500. That was the amount of room I had for negotiations and for my eventual wholesale fee.

They told me they wanted to think about it and talk it over with the rest of the family. At this point, I honestly thought my competition would get this one.

It’s Not Strictly About The Money

The next day they accepted my offer! They told me they liked me so much that they didn’t even bother calling anybody else. This just goes to show you that it’s not always about how much money you are offering.

Sold

I had purchase costs of $44,491.06 (Title Policy, Doc Prep, Escrow, Insurance, Taxes) and selling costs of $1,052.56.

I ended up selling it to the second person I told about the deal. They paid $60,000 and closed within 2 weeks.

I chose to close on this one first and then resell, instead of assigning the contractor for a couple reasons.

  1. The sellers had stuff in the house and wouldn’t let me put a lockbox on it to allow others to come through. This would make it more difficult to wholesale as I would have to schedule with the sellers to bring potential buyers by the house. Of course, the buyers would have to be business associates or contractors.
  2. The spread on this one was going to be decent. Some buyers don’t like to buy when they know you are making a good profit on an assignment. This alone doesn’t really concern me much as real buyers don’t worry about how much the wholesaler is making.
  3. I was going back and forth on whether to rehab and resell it.

When all was said and done, I ended up pocketing $14,456.38.

$60,000 (final sale price) – 44,491.06 (buying costs) – $1,052.56 (selling costs) = $14,456.38.

Not bad. Gotta love wholesale deals.

Thanks for visiting the blog and reading along.

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Danny
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