Well, real estate markets are heating up as the economy improves. And that means more and more people are becoming real estate investors. The competition for leads and deals is increasing.
If you’re having trouble finding those elusive leads and closing lucrative deals, it may be time for a new approach – one that actually works…
Don’t Advertise and Wait – Attack and Get Paid!
Most investors like to sit around and wait. Don’t get me wrong… they advertise and do all of their marketing strategies – put out their bandit signs, do a little cold calling, give out fliers or send direct mails – and then they wait.
They have been so inundated and bogged down with strategies, theories and formulas that they forget the basics of being an investor. Rather than sitting around and letting technology take over… get in, get out and get paid.
Here’s how you do it:
- Start at ground zero.
- Identify your market. By market, I mean the city you’re looking at. (i.e. Memphis, Bakersville or anywhere in the US)
- Grade the market. Identify particular neighborhoods and find out where the cheapest properties are located. The reason why you want to find the cheapest segments of the market is that most of your buying and selling will occur at the lower price points in the market. It’s literally just grabbing and extrapolating available data to determine where the game is being played.
- Catalog your inventory and find the cheapest properties available in your chosen market – specifically single-family.
- Get a list of cash buyers.
- Make offers.
- Get deals.
Finding Cash Buyers
The cheapest properties are going to lead you to a lot of cash buyers. Many people who flip properties and pay cash like to stay on the lower end. It’s easier to recover from 1 or 2 bad deals. Identifying the cheaper neighborhoods means you are identifying properties your kind of buyer will be interested in. Plus, you can scan the public records of those properties to find your cash buyers. Chances are those buyers have already bought some properties in those areas.
It’s hard to make a sensible offer if you don’t know the value of the home. But here are 2 fool-proof strategies to help you determine the value of different types of properties:
1. “As it Sits” Formula
The “As It Sits” formula helps you quickly determine the value of a property in minutes. You’ll be able to determine the worth of the property as it sits in this condition. All you have to do is look at the property and grade it. It’s either good, bad or ugly – there is no in between.
- Good Property: A property is considered ‘good’ if it’s been completely rehabbed – when it’s been renovated and it looks good It’s a property that can be lived in or is being lived in.
- Bad property : This type of house can be lived in and sometimes it is being lived in. However, it’s in obvious need of cosmetic repair. A ‘bad’ property is when something has to be done to maximize the full potential of the house.
- Ugly House: An ‘ugly’ house is a house that cannot be lived in. There’s no electricity, it has been vandalized and it’s usually abandoned.
Once you’ve determined whether the house is good, bad or ugly, you’ll be able to compute its worth. And since you scaled the market and the neighborhood beforehand, you’ll know what a good, bad or ugly house sells for in a particular neighborhood.
In addition to that, this strategy enables you to make offers on the property without actually seeing it in person. If someone calls you and says,
I’ve heard of this property you’re calling about, where my dad was a landlord. It worked well for a while, but the property has been vandalized. It’s been torn up. The city is on my back.
You immediately know that the property is not a good property, and it’s not a bad property either. It’s an ugly property. You can now easily make an offer even if you’re not in front of the house.
Most investors will take their time to drive to go look at the house before they make an offer. But knowing the value of the property off the bat will help you save money, time and effort from driving to the properties and seeing it for yourself.
2. Signs on Vacant Houses
If the property is vacant and in need of work, you have 2 options for the opportunity:
1. Buy it
2. Use it as an advertising platform
If you can’t buy the house, put up a sign that says you are buying properties…
In today’s market, 70% to 80% of the calls you’re going to get are from people who want to buy the house from you – not someone who’s trying to sell you a house. So, this strategy is also a great way to build cash buyers in real time.
When people call you and ask for the price of the house (remember that you don’t own the house, you’re just trying to get the value of the homes and to advertise off of it), you can say,
I’m not sure I even want to sell the house right now. But if I decided
I wanted to sell, how much could you pay for it on a cash basis?
Then, you’ll start to know all these prices. After, you’ll be able to skip trace the owner of the vacant house and you’ll know exactly what you need to offer them based on the prices callers have been telling you.
Types of Wholesale Buyers to Target with this Approach
You have your cash buyers – people who have the money and are actively doing deals.
Cash buyers fall into 2 categories:
1. fix and rent
2. fix and sell
These types of investors used to make up the majority of the market. But since the markets have changed, it gave way to the rise of another class of cash buyers that only a few people are aware of – the sweat equity buyer.
A sweat equity buyer is an immigrant buyer, regardless of the nationality, who has mattress money. They pay cash for houses not as an investment vehicle to generate income, but rather to fix and move into.
These buyers can be a great opportunity for you.
If you’re one of those investors who is struggling to find deals, don’t wait for the apple to fall from the tree. Hit the streets and build a consistent scalable machine by going back to the basics… and start growing your business from the ground up.
No matter where you’re at in your investing career, get out on the streets. Find the cheapest properties you can find and try to work your way up. Cut yourself some slack if you don’t see results right away. Just trust in the process.
And, if you want to upgrade your market and wholesale in high volumes, make sure to start with plenty of inventory. Properties that are boarded, vacant, abandoned and rundown. Go to marginalized areas because that’s where all the deals are.
Remember, even if you’re successful, continue to attack and get paid. Mix things up a little bit as you go, and you’ll be pleasantly surprised with the results.
Just imagine what would happen to your business if you followed this system on every market you enter. If you use it well, you could be finding and converting deals much faster than your competition.
What are some of your tactics and strategies for high-volume wholesaling? Share below.