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

Patience Is The Greatest Virtue

Years of abuse flipping houses.  This lockbox caused me to become very impatient.

Give life time.

Have you ever started exercising at the beginning of the year with grandiose thoughts of being completely ripped by summer? Have you given up early on because you didn’t see the results you wanted happen fast enough?

Here’s the real crappy part of the whole thing: Have you looked at yourself in the mirror when summer started and wished you had stuck with it? By now you would have likely been ripped. Ok…maybe not ripped, just a thinner, cooler version of your self.

The same exact thing happens to a lot of investors when getting started flipping houses.

This post is going to cover some of the places you are likely to struggle with impatience in the house flipping game.

One of the hardest things for all investors is having patience. It takes time for things to start to fall into place and for some of the work to produce results.

I’m very guilty of being just as impatient as the next guy. There are projects that I’ve worked on in the past that I eventually just left unfinished because I became too impatient. It just wasn’t happening fast enough.

Sometimes its because something shinier ended up getting my attention and I wanted instant gratification. I guess this is what they call being a squirrel.

Anyway, I was struggling a little with getting motivated this last week to work on some projects and it occurred to me that this impatience is the reason why a lot of new investors end up getting frustrated. And a lot of them get frustrated to the point of just quitting.

Most of us know that flipping houses is not usually a get rich quick (and easy) business. But, I think a lot of us fail to realize the amount of work involved in getting it started. Once you push through the ‘getting started’ phase, it becomes much, much easier.

That’s good news. That’s exactly why I wanted to talk about patience this week. If we can just be patient and not force things when they don’t happen fast enough, everything will start to fall into place.

Here’s where I’ve experienced impatience that affected the growth of my business.

1. When Getting Started Flipping Houses

There are a lot of times that impatience causes tragic mistakes when new investors are just getting started flipping. The biggest one being jumping in and buying a house that is the furthest thing from being a good deal.

There is a learning curve and it can be tempting to learn some of the techniques and just go out and start looking for that first deal so that you can ‘get it under your belt’.

Don’t let your emotions affect your decisions.

You might find a house that needs a lot of repairs that appears to be for sale for a good price. This desire to do the deal may cause you to make excuses why you should buy the house regardless of whether the numbers fit the formulas you’ve learned for a successful house flip.

You may overlook some problems the house may have that aren’t apparent. Or, someone may be trying to pressure you to do the deal because they will benefit in some way.

Don’t let impatience tempt you into these traps.

2. When Marketing For Those First Flip Deals

There are a lot of people asking me about how to find their first deal. There are many places on the blog that discuss exactly that. Here are some in case you are wondering: Everything I did flipping houses for 34 weeks (all marketing, analysis, rehabs, etc. documented) and here: 57 Ways to Market to Motivated Sellers

I don’t mind people asking, but sometimes they tell me that they’ve heard about or tried several of the techniques already. The questions I always want to ask is, “Did you actually do it?” and “Did you do it enough?”

That’s usually where the problem lies.

Give your marketing a chance to work.

You’ve got to actually try the marketing. Do the marketing, give it enough time to start to produce results (at least several months), adjust it and try to produce better results.

Please don’t mail out 20 letters and give up because you didn’t get any calls. I’ve been discouraged many times after rolling out a good sized campaign that didn’t produce any results. Most of the time I didn’t give up. I changed things, but I didn’t give up.

Mailings depend a lot of the quality of your list. Your list being who you are mailing to. But, with any mailing, I feel you should be sending at least several hundred and mailing the same people with a series of postcards and letters (ideally 7). Now, I will admit that I have a hard time mailing people multiple times because I end up getting too busy…usually from working deals that were generated.

When using bandit signs, you should be putting up at least 25-50 at a time.

As with anything, the more the better.

3. When Negotiating A Deal

Don’t be so impatient when trying to make a deal with a seller that you lose the deal or lose out on saving thousands of dollars on the purchase.

You’ve got to be willing to walk away.

It’s best when you are absolutely willing to walk away. The person that feels he’s got to do the deal will likely lose the negotiation. This isn’t to say that you could still end up with a good deal, it’s just that it won’t be as a good a deal as it could have been.

When you find yourself in the middle of a negotiation to purchase a house to flip, and you are only several thousand apart, it will be very tempting to just give in and take it.

I remember very clearly this one time my wife, Melissa, saved me from paying too much. We were looking at a house that was only 4 or 5 years old. I think it only needed carpet cleaning and some painting. We could have this place ready for sale within a week of buying it. I love those.

I really wanted this house. The seller was from out of town and needed to get back to where she lived. We had been negotiating for about an hour (this is not typical for me – it’s usually 5-10 minutes, if at all) and were only about $5,000 apart (I can’t remember the exact details). It wouldn’t have been as good a deal at this price and wouldn’t have fit my buying criteria. But…I was quickly justifying it in my head by telling myself how new the house was and how little work was needed.

I was being impatient.

Melissa convinced me to let her think our offer over and get back to us. Even after we had driven a couple miles down the road, I pulled into a parking lot. I was starting to turn around and go back.

Melissa asked what I thought I was doing. :)

We went home. Several hours went by and the phone rang. Yep, she ended up taking our offer.
Guys, you need to listen to your wives.

4. When Looking For The Right [Insert Person Here]

People to insert: Contractor/Cash Buyer/Realtor/Tenant/Attorney/Accountant/Any other team member

When you are looking for people for your house flipping team, you should realize you are looking for a person that you are willing to have a long term, business relationship with.

Don’t make the mistakes a lot of us make when we are going down our to-do list everyday. You know, doing something half-assed just to mark it off your list. You’re marking it off your list but not really accomplishing what you should be.

The first contractor you talk to is not likely going to be the one you will end up working with for years, so don’t stop looking after you’ve talked to one. The same goes for everyone else that will be on your team.

Don’t let impatience lead to frustration and, ultimately, quitting.

Success in this business is not going to happen over night. A lot of hard work is necessary. A healthy dose of patience will go a long way in making sure that you stick with it so that you can look back a year or two from now and be able thank God that you didn’t give up.

Coincidentally, the lockbox in the picture for this post was on one of the houses we were working on. I had to take it off yesterday. It should have only taken a second…but it tried my patience. Our typical codes were not working and you can tell some of those buttons have been busted off completely. This thing has been through hell.

I was just about to break it open with a screwdriver and brick, when Melissa called me. She got the correct code for me and it opened right up.

As far as my initial comment regarding exercising and losing weight goes, I’m tempted to say that this business is far easier than exercising…

What do you think? What areas have you been impatient with that have caused you some grief? Please share your thoughts in the comments below.

Also, I like it when people thank me by clicking the ‘like’ button for this post. Thanks.

Danny
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How To Flip Houses With Almost No Money

How To Flip Houses With Almost No Money

Can you flip houses without a dime to your name? Not likely.

But you can with very little money. I’m talking about getting started when all you have is a couple hundred dollars to invest. That is realistic and I’m going to show you how.

Time and Effort Can Replace Money

What’s going to be more of an asset for you in the beginning is time. You will have to spend more time to make things happen and make it work when you don’t have much money. So, if you’re not willing to put in a lot of time and you don’t have much money, you might as well stop reading here.

My wife and I didn’t start with much money and we’ve managed to do pretty well for ourselves. :) We did have to put in a lot of work in the beginning though. But we did it and I’m glad we did. It is possible for you to do the same.

All it takes is for you to get that first deal that generates at least several thousand to get you really going on the fast track. It’s not so overwhelming when you just focus on getting that first one. Don’t worry about what comes after that until you get there.

5 Ways To Flip Houses Without Much Money

Flipping houses is not just about buying a fixer-upper, rehabbing it and selling it retail to someone that is going to live in it. This is what is shown on all of the TV shows, but it’s not the only way to do it.

The first three of these are ways to flip houses that way, but the last two are ways to flip without actually taking ownership of a house. This should interest you as it allows you to make money flipping without the risk and without having to fix up the houses. You probably won’t make as much, but for the effort they really can’t be beat.

1. Partner and Split the Profits

You could find a money partner that would be willing to put up the money for the flip and take a portion (usually 50%) of the profit. This person normally is a mentor and can help you through the deal.

Investors willing to do this are everywhere but are not always easy to find. Nor are they usually easy to convince to work with you, especially if you are new. A great place to look for investors willing to do this is at your local Real Estate Investor Association (REIA) meeting.

Now you will want to show that you’ve done most of the preliminary work and learned the basics. Most will also want to see that you’ve found some leads and are actively working toward landing a deal. You need to show that you are willing to do whatever it takes to make this business work. They want to see that you have a burning desire and that nothing is going to stop you. Try very hard to not seem that you are begging them to work with you or are needy. Do not go around complaining about the problems you are having. Please don’t do that.

You will likely be expected to find the deals (don’t worry, I’m going to show you some inexpensive marketing tactics later in this post) and handle the rehab and resell. Usually, the money partner/mentor will walk you through all of this, which is priceless.

I highly recommend trying to get in the business this way. You don’t have to start here. You can work some of the other methods first and then be in a better position to attract a great mentor that is willing to put up the money or help you find it.

2. Use Hard Money

Hard money lenders are everywhere as well and are willing to lend money on investment properties. Many will fund the entire purchase and cost of repairs if the numbers work. The terms just depend on the lender. Never ever go with the first one that says yes to you for a deal. You need to find the one with the best terms.

Hard money is called ‘hard’ because of the cost of the loan. It’s usually quite a bit more than a normal loan from a bank. It’s not unlikely to find lenders wanting 5 or more points (a point being 1% of the loan amount paid up front) and 18% interest. Of course you could also probably find 1 point and 12% interest, which isn’t that bad.

Some will want you to have skin in the game, but not all of them. This is a great way to get started even if it does cost more. Once you have a track record, a lot more doors will open.

3. Use Private Money

Private money is where you get loans from private individuals. These can be friends or relatives or just other people wanting a better return on their money than they are getting in the stock market.

Private money is a method best approached after you’ve gained some experience. It can be very difficult to convince someone to let you borrow ten or hundreds of thousands of dollars when you don’t have a track record. It’s not impossible though. Nothing is.

I’ve written an article about private lenders more in depth here: Find and Working With Private Money Lenders: The Ultimate Guide

4. Birddog

This method is one of my favorites. With just a few phone calls, you can make several thousand dollars. Who wouldn’t like that?

The process is simple. You get a lead on a deal (usually directly from motivated sellers) that has potential and you birddog this lead to another investor. The other investor contacts the seller and attempts to strike a deal. If they buy the house, they will pay you whatever you requested as your ‘finder’s fee’.

The fee is usually a thousand dollars, but you can ask whatever you want, within reason. Some people have offered as much as 3k-5k for birddog leads that they’ve bought.

You will need to find experienced investors that do a lot of deals. You don’t want someone that will not likely be able to put together deals or get overwhelmed with just a couple. I just have a few that I send all of my birddogs leads to. I trust them and they make a deal when a deal is possible. They act quickly and keep me informed as to what is happening.

I keep a simple spreadsheet of the property address and who I told about the lead, along with the sellers name and phone number and the amount I requested for the lead. On occasion, I call sellers of properties that didn’t go anywhere and find out if they sold them. This is to make sure I’m always being paid when I am supposed to be.

If the investor buys the house, they will send you a check for your fee. Not bad for so little work.

You’ll want to make sure that there is motivation from the seller to sell at a discounted price and that they have some equity. If they can’t sell it for as low as an investor would need to buy it for, it would just be a waste of time.

Be aware though, that some people consider this acting as an agent without a license. They view it this way because you are bringing a seller and a buyer together. You can view it that way if you want.

I haven’t heard of anybody having any trouble birddogging before. I’m merely selling leads. So whatever.

5. Wholesale

Wholesaling houses is one of my favorites. This is where you take it one step further than birddogging. This is where you find the leads, make an offer and actually put the house under contract.

You then assign your contract to another investor for an assignment fee. You can download an assignment contract on the house flipping resources page. Once assigned, the new buyer is then obligated to perform under the terms of the contract.

All you do is wait for them to close and receive your check.

Because you are doing more work, as you are actually negotiating and putting the house under contract, assignment fees are generally a lot bigger than birddog fees. Typical wholesale fees go from $3,000 to $8,000. Many people are consistently getting $10,000 to $20,000 and some are even landing $50,000 or more on a wholesale deal. :) I like those numbers!

Inexpensive Marketing Ideas

I’ve written a list of 57 Motivated Seller Marketing Ideas which covers a lot of ideas for marketing. To help in narrowing down the list, I’ve mentioned some methods here that can be done on the cheap.

  • Flyers Place in laundromats, gas stations, payday loan counters, etc. You can even deliver them door to door.
  • Business Cards Business cards are so inexpensive, it doesn’t make much sense to not have them. Make sure to mention that you pay referral fees for any leads people tell you about that you close.
  • Networking Network with other professionals like attorneys, city officials (code compliance), landlords, etc. Basically you need to make sure that people that deal with motivated sellers all the time know that you buy houses.
  • Wholesalers These guys are marketing all day long to find great deals to sell to people like you. Why not get to know some?
  • Birddogs See what I wrote for wholesalers above. Same thing.
  • Bandit Signs I love bandit signs. Best bang for your buck and for your time. Gotta use bandits. (caution though as they are illegal in a lot of places though many people see this the same way they do speeding. your choice)
  • Driving For Dollars Also one of my favorites. Find vacant houses. Find the owners (see where tax bill is being sent from your county appraisal district website or office). Send them a letter telling them you want to buy the house you saw.

Also, be sure to check out the book, Guerrilla Marketing – by Jay Conrad Levinson for some more great guerrilla marketing tactics that won’t break the bank.

Now that you don’t have the excuse you’ve been using that you don’t have any money, get out there and start making it happen. Nobody else is going to do it for you.

Danny
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