How to Find Wholesale Real Estate Deals – Including Short Sales
Category : Hard Money Loans , Real Estate Loans
Wholesaling Defined
Acquiring a contract
Selling or assigning the contract
The assignment
You have to have brains, guts, and willingness to succeed in any business in life. Especially real estate investing. Now over thinking, making decisions that don’t make sense, and willingness with no actions will sink you as fast as anything else. The biggest part of real estate investing is absolutely taking action. Just studying or looking at numbers will not ever get you money.
Action is required to become successful in real estate investing. Offers – hundreds of offers. Yes, the average deal makes a person ,000, but you have to make more than ,000 per year to become successful.
Success goals for most people starting out is defined as ,000 per month. That is an average deal every month. If you don’t have 100 leads coming through your lead systems every month, you will probably not make k a month.
Why?
Numbers. Its all about the numbers. These numbers are taken from long term averages. Sometimes it takes more leads and sometimes less leads to become successful. Check out our findings based upon hundreds of thousands of leads:
100 Leads = 10 Quality Leads with Potential = 5 Contracts = 1 or 2 closings
Again, these numbers are our success numbers over the past 6 years. Everyone is different. Over the long term, you will find numbers similar to these.
What does all this mean?
You need more leads. Plain and simple. More leads = greater chance for closings. You don’t get paid until there is a closing.
Now my first wholesale deal ever was from the 3rd lead I came across. The numbers were great. 40% of the After Repair Value ARV was the number on the contract. The seller was an appraiser that needed to move fast.
The next deal took over 200 leads. It all averages out over time.
If you do not have enough leads, you need to get more.
I have used pre-foreclosure leads for the past 6 years as my main source of investment leads. I only dealt with people that enough equity to deal with straight up. I hated trying to work with banks. Just 3 years ago, banks would rather take the house back and repair it then sell it for top dollar than complete a short sale. Appreciation was the banks friend.
With the real estate crash and the banks owning too many properties, short sale deals are much easier to negotiate today.
Short sale deals make pre-foreclosure leads even more valuable. Banks have too many properties on their books and they actually save money by cutting their losses before they take the property back in foreclosure.
Rather than look for property owners that have 60% of their equity available, I look for properties that fit my criteria that are on the pre-foreclosure list. The banks general y will not negotiate a short sale unless the property owner is a few months behind.
A few months behind is where the foreclosure process begins. Pre-foreclosures are the cutting edge.
Many people will reach out before they hit foreclosure to sell their house. They realize they will not be able to save their house. You have to wait often times until they are far enough behind for the banks to accept a short sale. DO NOT advise a seller to stop paying their mortgage payments. If the banks find you doing this, they have the right to come after you.
I simply tell the seller that I can not help them due to their equity position, and since they are only ____ days late I cant help them either. If they were 90 days late I could…
No matter how you approach letting the property owners on the pre-foreclosure list know that you are interested in buying houses for cash – simple letters, postcards, knocking on their doors, reverse phone look ups and phone calls – you need to approach them. When you find your own deals, you make a considerably larger profit than if you have to cut someone else in on every deal.