Wholesale Defined
purchase a contract
Sell or assign the contract
The assignment
You have to have brains, guts and will to be successful in any business in life. Especially real estate investment. Now, overthinking, making decisions that don’t make sense, and will without action will sink you as fast as anything else. The biggest part of investing in real estate is taking action. Just studying or looking at numbers will never make you money.
Action is required to be successful in real estate investing. Offers – hundreds of offers. Yes, the average deal earns a person $10,000, but you have to earn more than $10,000 per year to be successful.
Success goals for most people starting out are defined as $10,000 per month. That’s an average offer each month. If you don’t have 100 leads coming through your lead systems each month, you probably won’t be making $10k per month.
Why?
Numbers. It’s about the numbers. These numbers are taken from long-term averages. Sometimes you need more leads and sometimes fewer leads to be successful. Check out our findings based on hundreds of thousands of potential customers:
100 Leads = 10 Quality Leads with Potential = 5 Contracts = 1 or 2 closures
Again, these numbers are our success numbers over the last 6 years. Everyone is different. In the long term, you will find numbers similar to these.
What does this all mean?
You need more clues. Plain and simple. More leads = higher chance of closings. They don’t pay you until there is a closing.
Now, my first wholesale deal was from the third lead I found. The numbers were great. 40% of the ARV of the post-repair value was the contract number. The seller was an appraiser who needed to move fast.
The next deal took over 200 leads. Everything is averaged over time.
If you don’t have enough leads, you need to get more.
I have used pre-foreclosure contacts for the last 6 years as my main source of investment contacts. I only dealt with people who had enough capital to deal directly. I hated trying to work with banks. Just 3 years ago, banks would rather repossess the house and fix it up and then sell it for the best price than complete a short sale. Gratitude was the friend of banks.
With the real estate crisis and banks owning too many properties, short sale deals are much easier to negotiate these days.
Short sale offers make pre-foreclosure sales opportunities even more valuable. Banks have too many properties on their books and actually save money by cutting their losses before repossessing the property in foreclosure.
Instead of looking for owners who have 60% of their equity available, I look for properties that fit my criteria and are on the pre-foreclosure list. Banks generally won’t negotiate a short sale unless the property owner is a few months behind.
A few months back is where the foreclosure process begins. Previous foreclosures are cutting edge.
Many people will come forward before foreclosure to sell their home. They realize that they will not be able to save their house. You have to wait many times until they are behind enough for the banks to agree to 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 go after you.
I’m just telling the seller that I can’t help them because of their equity position, and since they’re only ____ days late, I can’t help them either. If they were 90 days late I could…
No matter how you approach informing homeowners on the pre-foreclosure list that you are interested in buying homes for cash (simple letters, postcards, knocking on their doors, reverse phone searches, and phone calls) you must approach them. . When you find your own deals, you make a considerably higher profit than if you had to include someone else in every deal.
Use www.LocalHardMoney.com/list [http://LocalHardMoney.com/list] to get cutting edge information for my potential clients. You need to do the same too.
