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Lori Greene
  • Specialist
  • Huntsville, UT
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Make 6 Figures Wholesaling in Your 1st Year - Learn How for Free

Lori Greene
  • Specialist
  • Huntsville, UT
Posted Nov 26 2018, 17:35

Author: Lori Greene

RE Investor, Mentor and Co-Founder of RealEstateCompsToday.com

Where investors can get Unlimited MLS Comps from Local Realtors anywhere in the U.S. without contacting an agent directly – and do it all online!”

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How to Make 6 Figures Wholesaling in Your 1st Year

My Light Bulb Moment. There are many real estate investing strategies for finding deals and making offers. I’ve read them all and tried just about everything.

But also having had a background in sales and marketing, I realized that some of the sales techniques I’d learned over the years, could also be used to find motivated sellers and get offers accepted.

Maybe you’ve heard of the marketing tip where a salesperson should never ask a yes or no question, but should instead give the customer options to choose from.

For instance, “Would you like to by it” vs “Which one do you like the best? This one or this one? What do you like about it?” It’s well known in the sales and marketing industry that getting the customer to answer positively by giving them options to choose from can greatly increase conversions.

One day a light bulb went on in my head when it occurred to me to use this strategy to make offers. I call this strategy the Multiple Choice Offers Strategy.

It worked so well for me the first time I tried it, that I ended up getting 5 offers accepted in about 30 days. And it’s now one of the main strategies I teach.

Here’s how I did it. I started by putting ads on local online classifieds and putting out bandit signs, car decals, business cards, email signatures, direct mail, etc. You know the drill.

The same day that first ad went out, I started getting calls. Stating full market value got people excited. And you’re probably thinking, “How can you make a profit paying full market value?”

Here’s How I Can Make a Profit at Full Market Value:

1. First of all, Full Market Value is a relative term. It depends on what comps you’re using to prove what buyers are willing to pay for a property. It’s my job to do a very thorough analysis of the comps so I can help the seller understand my opinion of the property value.

(Tip: You can get Unlimited MLS Comps & detailed property value analysis from Local Realtors without contacting an agent directly at: RealEstateCompsToday.com. These agents LOVE investors).

2. My ad states, “Full market value minus repairs.” So, it’s also my job to show the seller everything that needs to be done to the property to get it into sellable condition. That way I can discount my offer by the cost of the repairs.

3. When I submit my multiple choice offers, I encourage the seller to sell the property to me as a For-Sale-By-Owner. This way, I can discount my offer by the amount saved in broker commissions.

4. And I encourage the seller to use Seller Financing. I do this by presenting Multiple Choice Offers with my cash offer being the lowest offer, my seller financing offer as the highest offer and my split seller financing offer (small down payment & seller financing the rest) as the middle offer.

Using all of these options not only gives the seller several options to choose from but it also allows me to make a discounted offer by showing them a numbers analysis that compares the end profit they would make with a full price offer through an Agent vs my FSBO Offer.

I carefully create my offer to show the seller a slightly higher profit if they accept my offer rather than a conventional offer through an agent.

Here is an Example Multiple Choice Offer I Made:

Offer A: $210,000 100% Seller Financing for 3 years.

Offer B: $195,000 with $15,000 Down and Seller Financing for 2 years of $180,000.

Offer C: $179,000 all cash now.

Here is an Example of the Numbers I Showed This Seller:

(Illustration of End Profit, Real Estate Agent vs. our Offer A:)

Offer through a Real Estate Agent of $240,000 – Selling Costs: 6% REA commission ($14,400) + 3% Closing costs ($7,200) + 4 mortgage payments at $2,000 while waiting to sell ($8,000) = $29,600 in selling costs.

$240,000 - Purchase Price

- $34,050 - in selling costs

$210,950 - True Purchase Price after selling costs

-$135,000 - your loan pay-off

$75,400 - your end profit

Our Offer A of $212,000 – Equivalent of Full Market Value after agent selling costs

$212,000 - Purchase Price

-$135,000 - your loan pay-off (no selling costs)

$77,000 - your end profit

Here’s how it all worked out. They were current on their mortgage, had a ton of equity and the place needed no repairs. The husband was being transferred and they needed to sell quickly. That’s why they called me, for a fast sale.

They were asking $249k with an appraisal of $263k. They owed $135k. I showed them that their house would not sell for more than $240k by showing them my lower end comps and showing them why the comps used in their appraisal were too far away in a higher end neighborhood.

After going over my 3 offers above, they countered at $212k all cash now because they saw my logic in the numbers and their end profit after saving Realtor costs. And they wanted all cash now, not Seller Financing. I countered at $195k all cash now. They countered again at $205k all cash. I countered at $200k all cash now. They said no. I accepted their offer for $205,000 all cash now. My high comps were 247k. There were no repairs needed. I sold within about 60 days at retail for $239k as FSBO, giving me a $34,000 gain. After about $16,000 in selling, holding and closing costs, my end profit was about $18,000.

Now, here's another example of a Multiple Choice Offer I made from that same ad:

Offer A: $101,500 100% Seller Financing for 3 years.

Offer B: $95,000 with $5,000 Down and Seller Financing for 2 years of $90,000.

Offer C: $86,500 all cash now

This seller told me he had recently built a small house with a plan to rent it out as a cash flow investment. He didn’t have luck renting it out, so he had rented it to a friend for $500/mo and his mortgage payment was $850/mo (a $350/mo loss). He was about to start school which was going to be expensive, his friend was ready to move out and his wife was threatening divorce if he didn’t sell that house!

After running comps, we could see that the property value was no more than what he owed the bank. He had zero equity (no bargaining room). So, we had to get creative to make room for a profit.

Knowing that we couldn’t offer him less than he owed the bank, we realized the only strategy that made sense for this particular situation was a Seller Finance Rental. Our plan was to make his mortgage payments for several years while we rent the place out, in which time the house value would appreciate while the mortgage balance would decrease, creating room for profit in the end.

The value of the property at the time was about $105,000 and he owed $101,500. Appreciation in the area was about 6%/yr at that time. We projected the property would be worth about $118,000 in 2 years and $125,000 in 3 years.

Our rental market research revealed that we would only be able to rent the place out for about $650/mo. Since the place was almost brand new, we wouldn’t have any rehab costs. We asked that he also pay $200/mo towards the mortgage (hey, a $200/mo loss is better than a $350/mo loss, right?).

This One Worked Out Well in the End:

We knew he wouldn't be able to accept offers B and C because he owed too much and was short on cash. But the beauty of Multiple Choice Offers is that the less appealing offers make the other ones look better. That's the whole point.

He ended up accepting our Offer A for full price with 3 years Seller Financing while we rent the place out. He was willing to pay the $200/mo towards the mortgage because it was saving him $150/mo. He was also relieved to turn everything over to someone else and get out from under that house at the end of the contract.

After about 3 years, we sold that house for $126,000 as an FSBO. After costs, we made about $20,000 in profit. Not bad for a deal that appeared to have zero profit potential at first glance. And we didn't have to do anything except advertise for renters (who ended up staying the place the whole 36 months).

To Make 6 figures in Your 1st Year, you have to close more deals:

To close more deals, you have to get more creative with offers like these. I bought 5 houses in my first 30 days using this strategy.

And Most Importantly: Keep in mind that, immediately after closing these deals, you can wholesale them out and easily make $10,000 per month or more. I will show you how to wholesale properties in a moment.

Steps to the Multiple Choice Offers Strategy:

Step 1: Create a Detailed Seller’s Questions Sheet.

Step 2: Put Out the Ad in as many places as you can: “I will buy your house today for full market value minus repairs.”

Step 3: Interview Sellers when they call in. Keep your Seller’s Questions Sheet with you. Get inside the Seller’s head to understand their motivations so you can craft your offer to meet their needs.

Step 4: Preliminary Due Diligence and Analyzing the Deal. This step is one of the most important and requires further explanation.

Doing in-depth research on a property is critical to a successful deal. But the secret to getting more deals done is a quick analysis process. So you need to have the perfect combination of accurate research that is also super fast.

Once you’ve used your 5 minute phone interview to identify the seller’s motivations including what they owe, whether or not they are delinquent and how much they’re asking, you’ll know if they’re motivated enough to accept offers like these.

Next you need to get an accurate As-Is Value for the property and an accurate ARV (After Repair value). The only way to get accurate values to run your offer numbers is to get a local agent who lives in the area and knows it well to run your comps and value analysis.

It’s okay to start with sites like Zillow.com, Trulia.com, Redfin.com, Realtor.com, etc., to get a vague idea of a house’s features and photos. But beware that those sites can be extremely inaccurate when it comes to property value.

You can do a simple test to prove it. Do a Google search for: home value websites. Compare the values you get from the various property value estimation sites for one house. You’ll see how widely the values will differ.

The only way to know what a house is really worth is to get real comps from a local agent and analyze them carefully. The formula for analyzing comps for an accurate house value is a discussion in itself. For the very most in-depth and accurate value analysis, you can get a CMA (Comparative Market Analysis) report from a local agent. A detailed CMA can be as accurate as a $500 appraisal because it also makes value adjustments for the differences between the subject property and it's comparables. And it can save you a ton of analyzing time.

Fortunately, there's now an easy way for investors to get MLS comps from a local Realtor without the hassle. Just go to RealEstateCompsToday.com and fill out the 2 minute order form and you’ll get your comps within about a day. It’s only 5 bucks and will give you an accurate property value. You can even get a One-on-One Phone Consultation with a House Value Expert to help you analyze and understand your comps for the most accurate value possible.

If you base your offer on an inaccurate value from an instant house value site, you could lose thousands. Don’t risk your investing career. Use a Realtor for comps!

Step 5: Visit the Property. Make sure to visit the property and the seller in person to confirm the repairs, the condition of the property and their motivations. While you are there, make sure to take a look at any comps or appraisal the seller has. Then show them your comps (which you have previously analyzed very carefully). Show them all of the details that confirm your property value number.

For example, if your comps are more comparable in size, age, proximity or condition, make sure to point it out. If they have no comps or appraisal, just show them all of the details of the comparable homes in order to help them understand your property value number.

This step will help tremendously with the amount of offers you get accepted.

Step 6: Create and Present Your Multiple Choice Offer. Now is the time to take all of the information you’ve gathered so far to craft several offers that will appeal to the seller as I did in the offer examples above.

Step 7: Email the Sellers a letter explaining the logic of your offer and illustrating numbers crunches that show how they will make as much or more profit from your FSBO Offer vs a Full Price Offer through an agent. Then call them or visit them in person to go over all of the particulars of your multiple offers. If they don't choose one of your offers on the spot, follow up with them a day or 2 later after they've had a chance to think it over.

Once your offer is accepted, you can use your due diligence period to do deeper due diligence to confirm with county records things like how much the seller owes, whether they are current or delinquent on their mortgage loan and more.

This is also when you should have an inspection done. Never skip the inspection. It will reveal many things you didn’t know about the property that will directly affect the profit you make in the end.

How to Wholesale Your Deals Like a Money Making Machine

Now that you've got some deals closed, how do you move them quickly? It's easy. There is no shortage of investors, cash buyers and flippers looking for good deals.

Why would they pay you for deals when they can get their own? Because, in this business, time is money! And you've just saved them a lot of time by finding, analyzing, offering and closing these deals.

Once you have a deal to wholesale, you have to move quickly.

1st, create a PDF that is basically an ad for the property. Think like a flipper in your presentation. What kind of deal and presentation would make you want to buy it? Show them the detailed numbers with a breakdown of the ARV minus all of the projected costs (including your wholesaling fee) and their final profit or cash flow. Tell them about what repairs or upgrades are needed. Show them photos of the property inside and out. Wow them with all of the homework you've done for them and handed it to them on a silver platter. This ad is what will sell your deal for you.

Here's an example of the elements of a great Wholesale Deal Presentation:

Title to Wow Cash Buyers: "Deeply Discounted Fixer-Upper - INVESTORS DREAM!!!"

Property Address

After Repair Value & Purchase Price

Cost & Profit Breakdown

$131,500 ARV

(65,320) Purchase Price

(24,780) Repairs & Upgrading

(5,240) Closing Costs

(4,500) Financing Interest

(1,200) Taxes & Insurance

____________________________

= $30,460 PROFIT

____________________________

Actual Sold Comparables

Estimated Repair Details

We have a huge Cash Buyer’s list. This one will go fast. Don’t delay!!!

Your Contact Info

2nd, blast your presentation EVERYWHERE! Hopefully, you've already started on a Cash Buyer list. Bigger Pockets and a similar site called ConnectedInvestors.com are perfect places to find Cash Buyers. Email your presentation to them. Copy and paste all of the info from your presentation into online ads and posts on BiggerPockets.com, ConnectedInvestors.com, Facebook Investor Groups, Linked-In Investor Groups, CraigsList, local online classifieds, etc. Then take your PDF in paper form to local Investor Club Meetings and any real estate auctions you can find. This is where Cash Buyers hang out and they are hungry for deals!

Using these steps I bought 5 houses in the first 30 days which you can repeat again and again to make 6 figures in your first year. Once I started making Multiple Choice Offers like this, I became a much more successful investor and you can too.

Feel free to message me anytime for help with this strategy at [email protected]. I will gladly help you.

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