Does anyone know of a way to profit when dealing with sellers asking full retail and all cash i.e. not offering terms of any kind? It's basically a traditional sale.
Would be helpful to hear from folks who might have done such deals successfully (or unsuccessfully for that matter).
It is supply and demand bro
Justin - that's true, but could you elaborate on the exact strategy? Have you done such deals?
If they will only take retail value then its time to move on to the next one.
Cant get water from a rock.
@James Wise that's what I thought, but I'm wondering if the answer changes in the context of the REACT strategy that is being taught by Jon Iannotti. I'm wondering if anyone has tried this out and could elaborate on whether it works.
@Andy Argonaut ....Motivated is the key component...keep it moving...
@Rolanda Eldridge thanks for the reply! What techniques are working for you for finding motivated sellers? I'm not having much luck with it despite having sent over 10,000 postcards and trying different strategies.
Never fall in love with a property. Put in an offer that you can make money on and move on to the next. Supply and demand will decide whether that house will be on the market in 2 weeks or a month. If it is... Then you'll have a more motivated seller won't you...
@Gualter Amarelo great point. In my case, there isn't a specific property I'm in love with. But I see what you're saying - if I find a seller that is unmotivated, then instead of trying to do a deal, you're suggesting to just wait 2 weeks or 1 month and then contact them again. Is there a certain frequency of follow up that you find works well? Do you follow up with phone calls? Letters?
@Andy Argonaut ...I purchase most off MLS, but prices in area increasing and lots of buyers out. I'm currently researching tax deeds..
how often and "how" you follow up ar going to be directly related to your strategy. For instance, I prefer a buy and hold strategy. So my falls have to be bought at the right price in port to cash flow. In my market I know what the value of a property is and I know the type of buyer I am competing with, since I target triplexes this is primarily other investors and the occasional owner occupied buyers looking to lower their mortgage payments. This means that if the house doesn't have a good sized yard or a driveway then likely it's not attractive to home owners and will sit on the market a while. In this case I'll wait a month after my initial offer. If an investor had lower price requirements then I do and are willing to pick it up for more than I am, more power to them! But I am looking for a GREAT deal and am not willing to over pay for a property. But I've reached out 2 weeks after as well when I feel like things could move faster, like during the spring when buyers are everywhere and sellers more excited about selling. I usually go up in price each time. Maybe 5k just to make them re-consider. A phone call or letter could go either way and I would try any avenue you can think of until you find something that works! Then let us know about it so we can all learn together! Chees!
@Gualter Amarelo makes sense. Out of curiosity, what kind of cap rate are you targeting for your triplexes? And are you making offers on MLS?
I honestly don't pay too much attention to the cap rates although I do tend to get about 4-5% cap which is actually pretty good for my location in Fall River, MA. I've heard of other parts of the country where they can get up to 10%, but I've never seen it around here.
I prefer to use the 50% rule and aim for $100-200 cash flow per unit. Right now I have one property hitting $200 and a duplex that is getting $250 which is pretty amazing in my book!
I generally use the MLS to check out rents and property stats, but I have an amazing agent who knows my criteria and will call me before listings even hit the MLS in some cases. This is HUGE if you can train your realtor to do this. It gives you a competitive edge and lets you take a look at a property before it's built up traffic in some cases.
Not much you can do with people that want full retail.
If you are an agent you can list the place or refer it out. Other than that there won't be much you can do with full price and no terms crowd.
@Shaun Reilly that's what I'd think too. I was just wondering if anyone had been able to work these types of deals in any way. One strategy I've heard of is to tie it up under contract at full retail, or get an option contract on the property, and find a terms buyer to assign it to. With a real buyer in hand, the seller might become more open to a terms offer. Feels a bit like a bait and switch, but I'm curious if anyone has gotten this to work.
An option I have worked with is going in with a good offer. Once they are under contract I bring in the inspection and call in a bunch of contractors to provide me with quotes on repairs. On my most recent purchase I was able to save $25k due to water in the basement and a dug out crawl space. After closing the simple fix is fill in the crawlspace that never should have been dug out in the first place...
So I put in the offer for $130k but ended up getting the house for $105K after negotiations. This obviously only works if the house needs work, but sometimes sellers need to be made aware that their house isn't in as great shape as they think (or their agent makes them think) in order to make them more willing to negotiate.
Originally posted by @Rolanda Eldridge:
I'm currently researching tax deeds..
Please elaborate on that. How do you do it?
@Gualter Amarelo wow that's awesome! I've seen a few thousand being shaved off from MLS properties after having an inspection, but nothing close to 25k on a 130k contract. That's about 20% off the top.
The best part is that the house is valued at $159k! So I already had a great deal going into it. Obviously deals like this don't come up all the time, but if you play your cards right occasionally you can turn a great deal into an amazing one! You never know how a deal will turn out until you close.
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