Hi BiggerPockets members, I need some guidance with my real estate journey. I have no money to invest on real estate, so I'm planning on using a hard money lender to finance my investments. My coach strategy is to work only with homeowners and not the banks. But I've done my homework and post signs on the streets, call magazines ( the flyer ) to post an ad, I keep in contact with real estate agents to see if they know of motivated sellers that are willing to work with me, and all these without any luck. I've been doing this for couple of months, and I've not close a single deal. I'm at a point where I feel like working with the banks since they possessed most of the properties on the market, but at the same time I don't wanna go above my couch since he had more experience than me. What should I do? Thank you in advance for your answers...
What are you trying to do? I assume wholesaling, since buy and hold or fix and flip with no cash of your own is very, very difficult. But I don't see how you would need hard money to wholesale.
Its hard to wholesale bank owned (REO) properties. The banks make it difficult. They're on the MLS anyway, so anyone can buy them directly. Banks rarely come down from much from the listing price, so its not as if you're going to be able to offer one to your buyers at much, if any, of a discount to the price right off the MLS.
HML is going to require you to have 25-40% cash in the deal, especially your first one. I don't know how you're going to buy an REO with no/little cash.
What are you trying to do? I assume wholesaling, since buy and hold or fix and flip with no cash of your own is very, very difficult. But I don't see how you would need hard money to wholesale.
Its hard to wholesale bank owned (REO) properties. The banks make it difficult. They're on the MLS anyway, so anyone can buy them directly. Banks rarely come down from much from the listing price, so its not as if you're going to be able to offer one to your buyers at much, if any, of a discount to the price right off the MLS.
I'd say if you've only been at it a couple of months, keep working. There are motivated homeowners out there. Be consistent, methodical, and thoughtful with your marketing, and don't quit.
In a couple of months, you have likely gained a lot of knowledge on marketing to sellers, whereas working with banks is another track entirely. I'd say keep doing what you're doing with small tweaks rather than massively overhauling your efforts.
Totally agree with Jon Holdman - his post should be copied into every discussion about wholesaling, especially with no $$$/skin in the game. VERY difficult. But sold by all the gurus as "easy money"...
Also, it doesn't sound like you're following your current coach's advice. From your story, you're not working with the homeowners, you're working with agents. You're still one step removed. And no agents have called you back simply because you don't offer them a smooth path to a sale.
Find a new coach, and figure out what you can bring to a deal.
Home Owners are easier to deal with, but may be harder to find. Banks have lots of rules like No Assignments of Contracts and resale Seasoning (90 days).
Look into cheap marketing avenues. Also agents wont use you unless you prove to them they you have purchased homes and will close on the deal.
Edwiin Gomez, maybe you should try looking into other free types of marketing. Like expired listings (eventhough these can be diffcult to find motivated sellers) or calling fsbo signs. Do a search for "free marketing ideas" here on BP. You might just need to get more marketing done.
Jon Holdman Thanks for the advice. I notices that the banks are kind of difficult to work with and not so flexible as a homeowner. I don't think wholesaling is easy at all, but you gotta start somewhere. I read the articles, and they were very helpful, thank you.
I am not an expert, but I have been at this game for about 6 years. I, too, get frustrated still when I am not finding deals. Amazingly enough, when I stop trying to force myself to find a deal, one comes my way. That is not to say that I do nothing. Talk to people, let them know you are somebody that buys real estate (some say not to call yourself an investor, that will end up being your decision how to describe yourself, both mean basically the same thing). Observe, talk to people, try different approaches, you get the idea. And trust your gut. If your gut says your coach has value, continue on. If your gut says your coach is not a good fit, find a new one. Either way, don't let any one person steer you, compile your information from multiple people you trust and make your own decisions.
Some of my best deals have been found by "accident". I wasn't looking necessarily, but I did happen to be paying attention. When asked if I am looking to buy more properties, my answer is always YES! It doesn't matter if I have no idea how I will pay for it. You will find a way to close a great deal.
I am not a huge fan of bank financing in the beginning. I use hard money, private money, and REALLY like owner-financing. I use the banks for a couple years later when I have fixed the property and/or management problems and have some equity that I want to tap into to go buy more properties. Then I go talk to the bank and feel like a rock star when I can show them a property worth $ 100,000 that I only have a $ 50,000 mortgage on.
I'm not sure if my thoughts help or not. I am a buy/fix/hold investor in it for the long haul.