BiggerPockets

Only Made 2 Offers And 1 Was Accepted

Sunday, February 19

Beat Your Competition

Are you sick and tired of hearing “There are no good deals out there right now”?

I know that I am.

Yes there are a lot of factors that exist today to slow down the flow of foreclosures that are available to us as investors.  From Fannie Mae’s First Look Program to HUD’s “exclusive” to homeowners only it is tougher to snag a property than it was even 2 short years ago.  Then how is it that as the title of this article states I’ve made 2 offers in the last 30 days and had 1 accepted?  That’s a 50% success rate!

There are 3 techniques that allow me to  have success when making offers while a lot of others dont.

1.  All CASH* offers
2. HUGE earnest money deposits
3. Expert knowledge of area/ability to make snap decisions/remodel-construction budgeting

1. Cash Offers  This is very simple.  If you’re offers are not all cash you will lose your battle against the banks.  No it’s not a 100% given that you can’t get an offer accepted if it’s not cash, but you will almost always be beaten by a cash buyer, and if you do beat out cash buyers with a finance offer I guarantee you’re paying too much.  Switch roles for a second.  Imagine you’re the seller and you receive 2 offers.  The first one is for $50,000 contingent on the buyer getting financing through a bank for the purchase. There’s a million and one things that can go wrong in that scenario; not qualifying, appraisal, lack of down payment, or the property being un-mortgagable.  The second offer comes in at $45,000 all cash with a $10,000 deposit.  Sure there are things that can go wrong, but you’re holding a 10k check that the buyer has handed over.  You have a lot more control as the seller.  This is a very brief overview of the bank’s psychology but I’m sure you get the gist.

2. EMD  This can give you a huge leg up on your competition.  Again step into the seller’s shoes.  You receive 2 identical offers on a property.  The first one has a $1,000 deposit check attached to it.  The second has a $10,000 deposit check attached to it.  Which one gets your attention?  The last property that my offer was accepted on was with a $10,000 EMD (deposit) attached.  Was this the only reason my offer was accepted, no.  However it’s and integral piece of the puzzle that helps me buy more houses and beat out my competition.  How much is on the EMD check thatyou’re sending out with your offers?

3.  Expert knowledge of area, tight rehab/ability to make snap decisions/remodel-construction budgeting  This a 3 part answer that’s not quite as black and white as numbers 2 & 3.  Let’s start with the knowledge.  Being an expert in the area that you’re making offers, area meaning neighborhood, first and foremost means knowing sold comps.  If you want to make money in Michigan real estate investing whether rehabbing or wholesaling, you must know what houses are selling for right now.  You need to know what condition, how long they’re on the market for, and who the buyers are; homeowners or other investors.

This leads us into being able to make a snap decision.  There are times where you will be forced too jump in head first or walk away and you may need to decide within hours.  A real life current example for this is the last property that I had an offer accepted on my initial offer was $20,000 less that I could actually pay for the property and still make my minimum profit margin required.  Less than 2 hours after my “lowball” offer the listing agent actually called me and told me “I’d have to come up like 20k” if I wanted to be in the running.  So I immediately adjusted my offer up exactly $20,000 plus I upped my deposit to $10,000.  Less than 2 hours later I had the house under contract, and was very happy about the purchase price.  The reason I could make that snap decision so quickly is because I knew within $1,000 how much work the house needed to be marketable to a retail buyer.

You must know your remodel-construction budgeting.  Lastly, I obsess over knowing my numbers.  That means exactly how much money and work a property needs to be perfect for the buyer I have in mind.  Sometimes it’s less than $1,000.  It could be a quick paint job and yard cleanup on a house I’m going to wholesale or quick flip to another investor.  That’s not too hard.  Now when it comes to a full rehab leading to a maximum list price with hopes of a maximum appraisal then sale price…that’s a whole different animal.

Using the same example property as above-when I first pulled in the driveway I knew that there was something very special about the house I was about to scout.  Remember I’ve been in hundreds if not thousands of houses looking for diamonds in the rough, so when I get that tingle of Spidey-Sense I’m usually not wrong.  As I was saying, the exterior was absolutely exquisite.  What that normally means is the interior is DESTROYED.  Well on this house it wasn’t the case.  I’ll keep this part short, but it’s hard for me because this is waht I really love about real estate.  The interior was an A- as far as foreclosures go.  New kitchen cabinets, 2 full baths (one in the master), new windows, new roof, beautiful hardwood floors (after a refinish), new furnace/water heater/air conditioner, huge fireplace, and an amazing view. In less than 5 minutes I knew it would take $20,000 to make this house 100% perfect and get the absolute maximum appraisal and sale price for the neighborhood.

This is my personal formula for making successful offers.  There’s hundreds of other tips that other investors may have that work  for them.  I urge you to leave a comment below and tell all of us in the REIA of Macomb community what you’re doing or have done to get more offer accepted in this market.

Back to my offers,
Dylan Tanaka-Founder

If You're NOT FLIPPING? You're Losing

Saturday, February 04

Good News for Flippers-Bad News for landlords

Recent statistics from the leading source in our business (check out the blue highlighted section above) , Realtor Magazine, show that the Metro Detroit region has lost 13% in housing values over the last 90 days alone.  This means that if you are holding residential real estate you are losing money as you read this, and maybe lots of dough.

It depends on a few different factors;

1. What type of property is it?

2. What city is it located in?

3. Where does the school system rank?

4. What percent of houses are non-owner occupied (rentals)?

Why are you being delivered this “negative” information?  First of all it’s not negative-it’s the truth.  Secondly, the only reason this website and the REIA of Macomb exists is for Michigan real estate investors to make more money, and lots of it.  So if that’s my M.O. for doing what I do, then why wouldn’t I want to show you proof that you should be flipping not holding if you want to make money invesiting in Michigan real estate in the short term.

Speaking of flipping-some areas of metro Detroit are actually selling for more than last year. Royal Oak being one of them, certain parts of Clinton Township, Rochester, Shebly Township, and Sterling Heights also.  If you want to know what’s going on with values and how using  sold comps will help you make better purchase decisions get plugged in at the REIA of Macomb where real investors are doing real deal and making real money.  None of us can buy all of the houses out there so that’s the big reason that I offer investment training seminars to deliver to you what’s working now-plus where, when, and why.

At a recent speaking engagement where I was main presenter I was asked “What makes what you and you’re group are doing so different than everyone else out there?” I simply stated “We are a group of Make It Happen individuals who are taking action and making money right now in Michigan real estate, not just talking about it.” I challenged that individual to come to the REIA’s next live training event, and she did.  At the end of the session she and her husbandboth became members and have referred another investor who’s also joined.

If you’re not achieving the goals that you know you can or you’re not getting a crack at the sleeper5-figure-profit deals that are out there right now in this market, I challenge you to come to the next live training event and get on the right track.  There’s ladies and gentlemen out there just like me who are literally stealing money right out of your pockets.  Come on and join in on the fun.

Relentlessly,
Dylan Tanaka-Founder

The #1 Mistake You Can Make On Your Real Estate Investing Website

Saturday, February 04

Having any kind of web presence is always better than having none. That being said, if your site sucks and doesn’t help you achieve what you’re trying to achieve then it’s basically useless. Below I’ll breakdown 3 separate websites that all came up when I searched for “We Buy Houses”. Whether you’re new to Michigan real estate investing or an old grizzled pro, you should all have “We Buy House” websites active right now.

Let’s go from worst to best. My opinions are strictly based on my own success using websites to make money with my real estate investing business plus the tens of thousands I’ve spent on marketing training focused on selling or buying real estate online.

#1 Crappy (above)
-Too cluttered
-Mixed message
-Small font
-Not welcoming colors to the masses

#2 Pretty Good (above)
-Nice and bright
-Welcoming to men and women
-Very clear message
-Widgets on the right sidebar offer information to those who are true readers not just skimmers

#3 The Best (above)
-Very short
-100% to the point
-Not too polished and professional looking
-Again welcoming to both men and women
-Very clean, fresh, and up-to-date look

Think about this-what websites can you look at that sell lots of stuff and have lots of traffic?
Walmart.com
Ebay.com
Apple.com
Amazon.com

All of the companies above offer multiple products in different categories while we as real estate investors are usually only looking to do 3 things;
-buy your home
-sell a house
-find private lenders

So yes there is a bit more clutter than what will be on your sites but what I want you to do is click around those sites and feel how easy the navigation is. Look at the style, the colors, the overall feel. That’s what we want to achieve when people click on our site.

Personally I think that Apple does it best. When you “land” on their site you’re greeted by a “splash” page that’s basically just a showcase for their most recent release. You can’t even make a purchase on the front page. What they’re doing is getting you emotionally involved because their products are luxury products. think about it;

iPhone-costs 4 times the average cell phone and is $130 per month for unlimited everything

iPod-they’ve all bu stopped selling the little ones and are pushing you towards the $200 model

iPad-a massive iPod for 3 to 5 times the price of an iPod

Mac computers and laptops-at least 50% higher in price than a comparable (but not really)windows machine

So yes they are a luxury brand because you don’t need to pay their prices to achieve what you do using their products. But people like me buy, use, and love them because we are emotionally involved due to their great marketing.

Everyday I work to translate that into my businesses, both the hardcore house investing side and my consulting company. If you’re going to do it, then do it right and to the best of your ability. Your website now more than ever is your prospective clients first look at your company-make it count.

Coding,
Dylan Tanaka-Founder

Opporuinties In Michigan Real Estate Investing Are Crazier Now More Than Ever

Thursday, June 30

1 Thing You Cant Do To Be Successful In Michigan Real Estate pt. 2

Thursday, June 30

Here's The Secret Key To Your Success

The most beautiful gift that the internet has given us as business people is laziness.  Not quite how you thought this training article was going to start?  Well part (2) is the easiest way for all of us to truly be successful as real estate investors.  Here’s where the laziness makes us rich…licking and sticking.  Say what?  If you’re from the 90′s, 80′s or 70′s you know exactly what I’m talking about-Direct Mail.

When’s the last time that you spent 5 seconds to put together a piece of snail mail that wasn’t a bill or some type of Hallmark card?  A long time I’m sure.  Well the last time I sat down and wrote a truly hand written letter was last week.  No it wasn’t a sales letter and no it wasn’t a note to my Grandmother.  It was a letter to a CEO of a very successful and quickly growing company.  Now here’s the best part.  She e-mailed me 2 days later thanking me for my letter and confessing that “she got it”.  Got what you’re asking?  My letter to her was about an employee of the company that she runs.  Not just any employee, the best employee that I’ve ever seen in my 15 years in both the corporate world and the small business world.  I was so compelled by this employee’s actions that I sat down and made sure that my contact with this CEO was gong to have an impact.  I hand wrote a 2 or 3 page letter and sent it out priority, you know one of those flat full size envelopes.  The funny part is the employee actually received this package and delivered to to her CEO not knowing it was a glowing testimonial letter about her.

What does this have to do with flipping houses?  Everything.  Let’s take “deal partnering” and make it the subject of why you come to the REIA of Macomb and it’s the investing strategy that you think will work best for you.  You’ve got $30,000 to work with and you’re not quite ready nor do you have the last 10 or 15k you’ll need to perform the rehab that the properties in the neighborhoods that you’re looking at on your own.  You set off to to meet another real estate investor who has the missing pieces to your puzzle.

As you network at a REIA of Macomb event you work the room and pick up 40 business cards and you “star” the cards from the people who you believe you may want to work with.  On your drive home you formulate a nice 5 or 6 line e-mail thanking them and pushing them towards your goal of partnering.  You send it out to all 40 and you receive 4 real responses.  Your next contact with them is much more detailed.  You outline “around” how much that you have to work with, where you want to invest, your strengths, and where they may fit in.  Out of the 4 only 2 seem to make sense as possible partners.  Here’s where you schedule your coffee date.

Your meeting with #1 goes well.  You like what he had to say and he seemed like a good guy.  You’re meeting with #2 reveals that this guy has more money than time and he’s looking for someone to basically “manage” his real estate investments, and he’s willing to give up a piece of the action for this-meaning you get a piece of the profits.  After a few more pointed questions you believe you’ve found your meal ticket out of the rat race of your 9 to 5.  WAIT!  As you’re about to part ways from the coffee shop he let’s you know that he’s meting with 3 other investors that he met at that same REIA of Macomb event.  Here’s where using direct mail comes in.

This is what I would do, have done, and will do when faced with that situation if I’m in your shoes.  I’d drive directly to the office supply store and buy some nice stationary.  Nothing too frilly, just classy.  Then I would take my time and write out a letter on yellow legal paper double spacing it so I can edit it easily.  After rereading it a few times I would then hand write it out on the nice stationary, affix a nice big picture stamp, and toss it in the mail.  The funny thing with the mail nowadays is that if it’s local it almost always get delivered within 2 days and a lot of times next day for .44 cents, especially if it appears to be private party.

Here’s a $1000 trick when sending a business letter…

At the end of your letter to your new prospective partner add a p.s.  What I would do is this situation is to toss a $10 Starbucks card in there and say something like this;

p.s.  Next time we sit down to discuss our investing strategies the coffee’s on me.

I guarantee you’ll probably receive a call within 3 day, maybe even the next day with the surprised recipient on the other end both thanking you for the letter and to schedule your next meeting.  How can I guarantee his, because I’ve done it with multi-millionaires and it works.

You should be using mail in a host of other ways also to help create, reinforce, and grow new relationships but how to do it and do it the right way is a weekend bootcamp within itself.

Hunting for a blue mailbox,
Dylan Tanaka-Founder

p.s he never mentioned anything about the 3 other investors he was meeting because your letter blew him away

The 1 Thing You Cant Do If You Want To Be Successful In Real Estate

Sunday, June 26