If I Were 22 Again… A Dad Explains Real Estate Investing to His Son

My twenty-two year old son asked me a question last night. He said, “Dad, if you were just starting out, like me, and you wanted to get going in real estate, what would you do?”

What a great question, and I really had to think about it before I answered him. What I told him isn’t original with me. These ideas have been expressed much better by other authors before now, but since the essence of creativity is selective borrowing, here’s the advice I gave him.

I said that the first thing I would do is become an expert in my target market.

“How long will that take?” he asked.

Ah, youth- always in such a hurry.

“Depends on how much time each week you can devote to it,” I answered, giving him another of the vague responses he has grown so used to.

Predictably, he groaned.

I went on to explain to him that, if he really committed himself to following my advice, and if he committed to a minimum of 15 hours each week, he should become both competent and confident in about 3 months, which doesn’t seem like such a long time. The key is looking at tons of houses, and asking tons of questions of the right people.

I told him, if I were just starting out, I would also find the right Realtor to work with. The right Realtor will be able to put you in touch with a boatload of opportunity you can’t find by yourself, and provide you a list of foreclosures and vacant properties to look at every day.”

“What would you do next?” he asked.

I said that I would work on building a buyer’s list at the same time I was learning my market.

“How would you do that?”

“I would find and join my local REIA (Real Estate Investors Association) group, and attend every meeting. If my area didn’t have a REIA group, I would start one. This is the place to start finding, meeting, and networking with the people in your area who invest in property. I would also read the newspaper classifieds for “Buy Houses” or “Buy Property” ads. These people are active buyers, and should be added to your buyer’s list. Your goal is to have as long a buyer’s list as possible, at least 50-100 names depending on the size of your area.”

“Why?” he asked me

“I’ll explain that in a minute.” I said

He rolled his eyes. Talking with your son is like chatting with a nuclear physicist- every time you try to impress them with your knowledge, they make you feel like they can’t believe how long it took you to come to your childish conclusions.

I pressed on, determined to give my son the advice he was seeking.

“Next,” I said, “Armed with an in-depth knowledge of my market area, and my active buyer’s list, I would start making low offers on every foreclosure and vacant property I looked at.”

“Every one?” I could see the doubt in his eyes.

“Well, close to every one. Every house that your confidence level allows you to make an offer on.” I could see the next question coming.

“What do you mean by that?” he asked. So predictable.

“What I mean,” I continued, “is that the market knowledge you gather during your market research will give you a certain level of confidence. The more knowledge you have, the more your confidence will increase. When you first start making offers there will be a lot of properties that will appear to be beyond your skill level, and if they seem to be, they probably are. You simply won’t have enough confidence to make offers on those properties.

“As time goes on, though, and your knowledge grows, so will your confidence. Then those properties that intimidated you at first will become less frightening. Instead of seeing hazards, you will see opportunity. Don’t stress about this, because it’s a natural progression. As long as you’re putting in the time learning your trade the knowledge will come, and so will the confidence. One follows the other like the summer follows the spring.”

Next, my son asked, “But how do you determine how much to offer?”

I went on to explain to him my method for determining the right amount to offer. See my article titled "Real Estate Investing- Is There One Magic Rule?"

“I get it,” my son said, head bobbing up and down knowingly. “What comes next?”

“OK,” I said. “What happens next is, most of your offers are rejected completely, a few might be countered, and one out of every twenty to fifty will be accepted.”

“Is that all?” he asked, perplexed.

“That’s all, but that’s alright,” I said. You can’t handle a whole bunch at once right at the beginning anyway. One or two is enough to get you started. What you do next is very important.”

“What’s that?” my son asked.

“Start marketing your fool head off.” I replied. “You know that list of buyer’s you’ve been developing? You call every one of them and tell them about the great deal you’ve got, and see who’s interested. Put ads in the paper, signs on the property, and signs anywhere in the neighborhood you can get away with. Create a flyer to pass around at your REIA meeting. Sell, sell, sell is the name of the game. Whatever it takes, find a buyer for that property BEFORE you close and take possession of it.”

“What about the title work and all the legal stuff you have to do when you buy a house?” he asked. He’s smarter than I give him credit for.

“That’s just mechanics, and I can teach you mechanics as you’re going through each deal. What we’re talking about here is strategy. If you get this strategy down, you can learn the mechanics.

“OK,” he said, “how do I make money?” A very astute question.

“Simple- the same way you make money on any product you sell. You sell it for more than you paid for it. For instance, let’s say you get a house under contract for $40,000 that you determined beforehand has an After Repaired Value (ARV) of $97,000 and needs repairs of about $12,000. If it were me, I would try to find a buyer in the $48,000 to $53,000 range. That way, your buyer would still have room to make his repairs and make a tidy profit, and you would walk away with somewhere around $5,000 to $8,000 after taxes and fees.”

“Fees and taxes?” my son asked. A rude awakening.

“Yes, paid to your attorney, the Realtor, the title company and the government. Of course you could do a simultaneous closing, and there are other ways to eliminate some or all of those fees, like making your offers in the name of an LLC and then selling the LLC instead of the property, but again we’re talking about mechanics, and that’s the subject for another discussion.” (And another article)

“How much would it be reasonable to earn doing this full-time?” he asked. A light going on.

“There’s no reason a full time wholesaler (wholesaling is really what we’re talking about here) couldn’t make $5,000 to $10,000 per month, or more. Not at first, of course, but after a few months or a year of consistent effort, the sky’s the limit.”

“Wow,” my son said, “I never though about it like that before. I never understood so clearly what wholesaling is all about. I think I could do that.”

I think he could, too. For that matter, so can you. In fact, what’s stopping you?

Now, go make more offers!

If I Were 22 Again… A Dad Explains Real Estate Investing to His Son

My twenty-two year old son asked me a question last night. He said, “Dad, if you were just starting out, like me, and you wanted to get going in real estate, what would you do?”

What a great question, and I really had to think about it before I answered him. What I told him isn’t original with me. These ideas have been expressed much better by other authors before now, but since the essence of creativity is selective borrowing, here’s the advice I gave him.

I said that the first thing I would do is become an expert in my target market.

“How long will that take?” he asked.

Ah, youth- always in such a hurry.

“Depends on how much time each week you can devote to it,” I answered, giving him another of the vague responses he has grown so used to.

Predictably, he groaned.

I went on to explain to him that, if he really committed himself to following my advice, and if he committed to a minimum of 15 hours each week, he should become both competent and confident in about 3 months, which doesn’t seem like such a long time. The key is looking at tons of houses, and asking tons of questions of the right people.

I told him, if I were just starting out, I would also find the right Realtor to work with. The right Realtor will be able to put you in touch with a boatload of opportunity you can’t find by yourself, and provide you a list of foreclosures and vacant properties to look at every day.”

“What would you do next?” he asked.

I said that I would work on building a buyer’s list at the same time I was learning my market.

“How would you do that?”

“I would find and join my local REIA (Real Estate Investors Association) group, and attend every meeting. If my area didn’t have a REIA group, I would start one. This is the place to start finding, meeting, and networking with the people in your area who invest in property. I would also read the newspaper classifieds for “Buy Houses” or “Buy Property” ads. These people are active buyers, and should be added to your buyer’s list. Your goal is to have as long a buyer’s list as possible, at least 50-100 names depending on the size of your area.”

“Why?” he asked me

“I’ll explain that in a minute.” I said

He rolled his eyes. Talking with your son is like chatting with a nuclear physicist- every time you try to impress them with your knowledge, they make you feel like they can’t believe how long it took you to come to your childish conclusions.

I pressed on, determined to give my son the advice he was seeking.

“Next,” I said, “Armed with an in-depth knowledge of my market area, and my active buyer’s list, I would start making low offers on every foreclosure and vacant property I looked at.”

“Every one?” I could see the doubt in his eyes.

“Well, close to every one. Every house that your confidence level allows you to make an offer on.” I could see the next question coming.

“What do you mean by that?” he asked. So predictable.

“What I mean,” I continued, “is that the market knowledge you gather during your market research will give you a certain level of confidence. The more knowledge you have, the more your confidence will increase. When you first start making offers there will be a lot of properties that will appear to be beyond your skill level, and if they seem to be, they probably are. You simply won’t have enough confidence to make offers on those properties.

“As time goes on, though, and your knowledge grows, so will your confidence. Then those properties that intimidated you at first will become less frightening. Instead of seeing hazards, you will see opportunity. Don’t stress about this, because it’s a natural progression. As long as you’re putting in the time learning your trade the knowledge will come, and so will the confidence. One follows the other like the summer follows the spring.”

Next, my son asked, “But how do you determine how much to offer?”

I went on to explain to him my method for determining the right amount to offer. See my article titled "Real Estate Investing- Is There One Magic Rule?"

“I get it,” my son said, head bobbing up and down knowingly. “What comes next?”

“OK,” I said. “What happens next is, most of your offers are rejected completely, a few might be countered, and one out of every twenty to fifty will be accepted.”

“Is that all?” he asked, perplexed.

“That’s all, but that’s alright,” I said. You can’t handle a whole bunch at once right at the beginning anyway. One or two is enough to get you started. What you do next is very important.”

“What’s that?” my son asked.

“Start marketing your fool head off.” I replied. “You know that list of buyer’s you’ve been developing? You call every one of them and tell them about the great deal you’ve got, and see who’s interested. Put ads in the paper, signs on the property, and signs anywhere in the neighborhood you can get away with. Create a flyer to pass around at your REIA meeting. Sell, sell, sell is the name of the game. Whatever it takes, find a buyer for that property BEFORE you close and take possession of it.”

“What about the title work and all the legal stuff you have to do when you buy a house?” he asked. He’s smarter than I give him credit for.

“That’s just mechanics, and I can teach you mechanics as you’re going through each deal. What we’re talking about here is strategy. If you get this strategy down, you can learn the mechanics.

“OK,” he said, “how do I make money?” A very astute question.

“Simple- the same way you make money on any product you sell. You sell it for more than you paid for it. For instance, let’s say you get a house under contract for $40,000 that you determined beforehand has an After Repaired Value (ARV) of $97,000 and needs repairs of about $12,000. If it were me, I would try to find a buyer in the $48,000 to $53,000 range. That way, your buyer would still have room to make his repairs and make a tidy profit, and you would walk away with somewhere around $5,000 to $8,000 after taxes and fees.”

“Fees and taxes?” my son asked. A rude awakening.

“Yes, paid to your attorney, the Realtor, the title company and the government. Of course you could do a simultaneous closing, and there are other ways to eliminate some or all of those fees, like making your offers in the name of an LLC and then selling the LLC instead of the property, but again we’re talking about mechanics, and that’s the subject for another discussion.” (And another article)

“How much would it be reasonable to earn doing this full-time?” he asked. A light going on.

“There’s no reason a full time wholesaler (wholesaling is really what we’re talking about here) couldn’t make $5,000 to $10,000 per month, or more. Not at first, of course, but after a few months or a year of consistent effort, the sky’s the limit.”

“Wow,” my son said, “I never though about it like that before. I never understood so clearly what wholesaling is all about. I think I could do that.”

I think he could, too. For that matter, so can you. In fact, what’s stopping you?

Now, go make more offers!

Real Estate Investing - Matching Buyers with Properties

One of the things you have to consider as a real estate investor is matching buyers with properties that you acquire. When you develop a buyers list for your properties, whether you?re trying to wholesale or rehab, you will find that the simple saying, ?Different strokes for different folks,? applies. Some of the different ?strokes? might be low-end rentals, high-end rentals, multiple unit rentals, and rehabilitation projects.

The different ?folks? will often match these properties. For every investor, there is a niche they specialize in. If you want to wholesale properties, it?s up to you to offer the greatest spread of properties to fellow investors. Also, you must take into account, your regular home buyers (owner-occupants).

Part of any building block of a business is to identify the target market. For instance, with this site, we identified the people who would be visiting it most likely. We tailor the articles with content that is basic in order to meet the ?customer? needs. We don?t overload the articles with complexities, but we do offer the basic 1-2-3 steps for beginning a real estate investment business or a business in general. Part of this required developing a ?character? for our visitors. In doing this, we are constantly developing new avenues of interest that we think our visitors will benefit from, including hard money financing (coming soon).

So, for matching buyers with properties is to simply define what each potential buyer prefers. When you decide to advertise for buyers, you might put out ads like this:

Deep Discounts-Properties need Rehab, Priced to Sell, Call XXX-XXX-XXXX

or

Excellent Cash Flow Rentals offered at Discounted Prices, Call XXX-XXX-XXXX

This may attract buyers who are looking for rehab projects. Thus, you?ll be matching rehabbers/contractors with properties in need of rehab. However, when the phone starts ringing, you?ll need to distinguish the type of homes each potential buyer wants. For instance, some might want 4 bedroom, 2 Bath, high-end rehabs, while others will want your basic ?bread and butter? home, 3 beds and 1 bath. Also for the second advertisement, you?re looking for landlords. Additionally, you?ll need to identify the different areas each buyer will consider.

You may also run an ad like this:

Stop Renting-Starter Homes Available-Mint-Discounted Prices Call XXX-XXX-XXXX

These buyers might be your owner-occupants that are currently renting that you?ll add to your buyers list. Part of your strategy here might be buying, rehabbing and selling them yourself.

Of course, running one ad might be most economical:

Deep Discounted Properties for Sale, Home Buyers, Investors Call XXX-XXX-XXXX

Now, how do you determine what each investor/buyer wants? You may ask the following questions:

What type of property are you looking for?
Specifics? (# of bedrooms, baths, rooms)
What locations are you primarily interested in?
Have you closed on properties in these areas before?
What are your overall objectives for properties you buy?
What is the ideal return on investment you?re looking for?
What type of rentals do you prefer?
How do you continue to grow your customer base (the amount of people you can sell a property to)?

Well since money is always the bottom line and not all buyers have cash to buy (and you should never expect or rely on that solely), expanding the pool of investors and buyers you can sell to comes down to having contacts. If your buyers don?t have the contacts or the cash, you will need them. So four simple things you should do are:

Make contacts with good mortgage brokers and use them to qualify buyers
Make contacts with good hard money lenders to qualify investors (noobs)
Make sure these brokers and lenders can close deals quickly
Make sure you know the process inside and out so you can expedite the process
Lastly, you may look for ads that offer rehabbed homes for sale. For example, if you see a for sale ad that says, ??renovated? or some variation, call that number and begin the process of adding that individual to your buyers list. Visit the property to get a completely true feel for what they look for. This can be a very effective way of getting investors who are actually involved in performing on a contract because they already have demonstrated the ability to do so!

Always remember that you?re running a business. Every successful business has a well-defined strategy for marketing, sales and growth. Real estate investing is no exception!

?2006 noobdogs.com

Real Estate Investing - Matching Buyers with Properties

One of the things you have to consider as a real estate investor is matching buyers with properties that you acquire. When you develop a buyers list for your properties, whether you?re trying to wholesale or rehab, you will find that the simple saying, ?Different strokes for different folks,? applies. Some of the different ?strokes? might be low-end rentals, high-end rentals, multiple unit rentals, and rehabilitation projects.

The different ?folks? will often match these properties. For every investor, there is a niche they specialize in. If you want to wholesale properties, it?s up to you to offer the greatest spread of properties to fellow investors. Also, you must take into account, your regular home buyers (owner-occupants).

Part of any building block of a business is to identify the target market. For instance, with this site, we identified the people who would be visiting it most likely. We tailor the articles with content that is basic in order to meet the ?customer? needs. We don?t overload the articles with complexities, but we do offer the basic 1-2-3 steps for beginning a real estate investment business or a business in general. Part of this required developing a ?character? for our visitors. In doing this, we are constantly developing new avenues of interest that we think our visitors will benefit from, including hard money financing (coming soon).

So, for matching buyers with properties is to simply define what each potential buyer prefers. When you decide to advertise for buyers, you might put out ads like this:

Deep Discounts-Properties need Rehab, Priced to Sell, Call XXX-XXX-XXXX

or

Excellent Cash Flow Rentals offered at Discounted Prices, Call XXX-XXX-XXXX

This may attract buyers who are looking for rehab projects. Thus, you?ll be matching rehabbers/contractors with properties in need of rehab. However, when the phone starts ringing, you?ll need to distinguish the type of homes each potential buyer wants. For instance, some might want 4 bedroom, 2 Bath, high-end rehabs, while others will want your basic ?bread and butter? home, 3 beds and 1 bath. Also for the second advertisement, you?re looking for landlords. Additionally, you?ll need to identify the different areas each buyer will consider.

You may also run an ad like this:

Stop Renting-Starter Homes Available-Mint-Discounted Prices Call XXX-XXX-XXXX

These buyers might be your owner-occupants that are currently renting that you?ll add to your buyers list. Part of your strategy here might be buying, rehabbing and selling them yourself.

Of course, running one ad might be most economical:

Deep Discounted Properties for Sale, Home Buyers, Investors Call XXX-XXX-XXXX

Now, how do you determine what each investor/buyer wants? You may ask the following questions:

What type of property are you looking for?
Specifics? (# of bedrooms, baths, rooms)
What locations are you primarily interested in?
Have you closed on properties in these areas before?
What are your overall objectives for properties you buy?
What is the ideal return on investment you?re looking for?
What type of rentals do you prefer?
How do you continue to grow your customer base (the amount of people you can sell a property to)?

Well since money is always the bottom line and not all buyers have cash to buy (and you should never expect or rely on that solely), expanding the pool of investors and buyers you can sell to comes down to having contacts. If your buyers don?t have the contacts or the cash, you will need them. So four simple things you should do are:

Make contacts with good mortgage brokers and use them to qualify buyers
Make contacts with good hard money lenders to qualify investors (noobs)
Make sure these brokers and lenders can close deals quickly
Make sure you know the process inside and out so you can expedite the process
Lastly, you may look for ads that offer rehabbed homes for sale. For example, if you see a for sale ad that says, ??renovated? or some variation, call that number and begin the process of adding that individual to your buyers list. Visit the property to get a completely true feel for what they look for. This can be a very effective way of getting investors who are actually involved in performing on a contract because they already have demonstrated the ability to do so!

Always remember that you?re running a business. Every successful business has a well-defined strategy for marketing, sales and growth. Real estate investing is no exception!

?2006 noobdogs.com

Real Estate Investing - Matching Buyers with Properties

One of the things you have to consider as a real estate investor is matching buyers with properties that you acquire. When you develop a buyers list for your properties, whether you?re trying to wholesale or rehab, you will find that the simple saying, ?Different strokes for different folks,? applies. Some of the different ?strokes? might be low-end rentals, high-end rentals, multiple unit rentals, and rehabilitation projects.

The different ?folks? will often match these properties. For every investor, there is a niche they specialize in. If you want to wholesale properties, it?s up to you to offer the greatest spread of properties to fellow investors. Also, you must take into account, your regular home buyers (owner-occupants).

Part of any building block of a business is to identify the target market. For instance, with this site, we identified the people who would be visiting it most likely. We tailor the articles with content that is basic in order to meet the ?customer? needs. We don?t overload the articles with complexities, but we do offer the basic 1-2-3 steps for beginning a real estate investment business or a business in general. Part of this required developing a ?character? for our visitors. In doing this, we are constantly developing new avenues of interest that we think our visitors will benefit from, including hard money financing (coming soon).

So, for matching buyers with properties is to simply define what each potential buyer prefers. When you decide to advertise for buyers, you might put out ads like this:

Deep Discounts-Properties need Rehab, Priced to Sell, Call XXX-XXX-XXXX

or

Excellent Cash Flow Rentals offered at Discounted Prices, Call XXX-XXX-XXXX

This may attract buyers who are looking for rehab projects. Thus, you?ll be matching rehabbers/contractors with properties in need of rehab. However, when the phone starts ringing, you?ll need to distinguish the type of homes each potential buyer wants. For instance, some might want 4 bedroom, 2 Bath, high-end rehabs, while others will want your basic ?bread and butter? home, 3 beds and 1 bath. Also for the second advertisement, you?re looking for landlords. Additionally, you?ll need to identify the different areas each buyer will consider.

You may also run an ad like this:

Stop Renting-Starter Homes Available-Mint-Discounted Prices Call XXX-XXX-XXXX

These buyers might be your owner-occupants that are currently renting that you?ll add to your buyers list. Part of your strategy here might be buying, rehabbing and selling them yourself.

Of course, running one ad might be most economical:

Deep Discounted Properties for Sale, Home Buyers, Investors Call XXX-XXX-XXXX

Now, how do you determine what each investor/buyer wants? You may ask the following questions:

What type of property are you looking for?
Specifics? (# of bedrooms, baths, rooms)
What locations are you primarily interested in?
Have you closed on properties in these areas before?
What are your overall objectives for properties you buy?
What is the ideal return on investment you?re looking for?
What type of rentals do you prefer?
How do you continue to grow your customer base (the amount of people you can sell a property to)?

Well since money is always the bottom line and not all buyers have cash to buy (and you should never expect or rely on that solely), expanding the pool of investors and buyers you can sell to comes down to having contacts. If your buyers don?t have the contacts or the cash, you will need them. So four simple things you should do are:

Make contacts with good mortgage brokers and use them to qualify buyers
Make contacts with good hard money lenders to qualify investors (noobs)
Make sure these brokers and lenders can close deals quickly
Make sure you know the process inside and out so you can expedite the process
Lastly, you may look for ads that offer rehabbed homes for sale. For example, if you see a for sale ad that says, ??renovated? or some variation, call that number and begin the process of adding that individual to your buyers list. Visit the property to get a completely true feel for what they look for. This can be a very effective way of getting investors who are actually involved in performing on a contract because they already have demonstrated the ability to do so!

Always remember that you?re running a business. Every successful business has a well-defined strategy for marketing, sales and growth. Real estate investing is no exception!

?2006 noobdogs.com

Real Estate Investing - Matching Buyers with Properties

One of the things you have to consider as a real estate investor is matching buyers with properties that you acquire. When you develop a buyers list for your properties, whether you?re trying to wholesale or rehab, you will find that the simple saying, ?Different strokes for different folks,? applies. Some of the different ?strokes? might be low-end rentals, high-end rentals, multiple unit rentals, and rehabilitation projects.

The different ?folks? will often match these properties. For every investor, there is a niche they specialize in. If you want to wholesale properties, it?s up to you to offer the greatest spread of properties to fellow investors. Also, you must take into account, your regular home buyers (owner-occupants).

Part of any building block of a business is to identify the target market. For instance, with this site, we identified the people who would be visiting it most likely. We tailor the articles with content that is basic in order to meet the ?customer? needs. We don?t overload the articles with complexities, but we do offer the basic 1-2-3 steps for beginning a real estate investment business or a business in general. Part of this required developing a ?character? for our visitors. In doing this, we are constantly developing new avenues of interest that we think our visitors will benefit from, including hard money financing (coming soon).

So, for matching buyers with properties is to simply define what each potential buyer prefers. When you decide to advertise for buyers, you might put out ads like this:

Deep Discounts-Properties need Rehab, Priced to Sell, Call XXX-XXX-XXXX

or

Excellent Cash Flow Rentals offered at Discounted Prices, Call XXX-XXX-XXXX

This may attract buyers who are looking for rehab projects. Thus, you?ll be matching rehabbers/contractors with properties in need of rehab. However, when the phone starts ringing, you?ll need to distinguish the type of homes each potential buyer wants. For instance, some might want 4 bedroom, 2 Bath, high-end rehabs, while others will want your basic ?bread and butter? home, 3 beds and 1 bath. Also for the second advertisement, you?re looking for landlords. Additionally, you?ll need to identify the different areas each buyer will consider.

You may also run an ad like this:

Stop Renting-Starter Homes Available-Mint-Discounted Prices Call XXX-XXX-XXXX

These buyers might be your owner-occupants that are currently renting that you?ll add to your buyers list. Part of your strategy here might be buying, rehabbing and selling them yourself.

Of course, running one ad might be most economical:

Deep Discounted Properties for Sale, Home Buyers, Investors Call XXX-XXX-XXXX

Now, how do you determine what each investor/buyer wants? You may ask the following questions:

What type of property are you looking for?
Specifics? (# of bedrooms, baths, rooms)
What locations are you primarily interested in?
Have you closed on properties in these areas before?
What are your overall objectives for properties you buy?
What is the ideal return on investment you?re looking for?
What type of rentals do you prefer?
How do you continue to grow your customer base (the amount of people you can sell a property to)?

Well since money is always the bottom line and not all buyers have cash to buy (and you should never expect or rely on that solely), expanding the pool of investors and buyers you can sell to comes down to having contacts. If your buyers don?t have the contacts or the cash, you will need them. So four simple things you should do are:

Make contacts with good mortgage brokers and use them to qualify buyers
Make contacts with good hard money lenders to qualify investors (noobs)
Make sure these brokers and lenders can close deals quickly
Make sure you know the process inside and out so you can expedite the process
Lastly, you may look for ads that offer rehabbed homes for sale. For example, if you see a for sale ad that says, ??renovated? or some variation, call that number and begin the process of adding that individual to your buyers list. Visit the property to get a completely true feel for what they look for. This can be a very effective way of getting investors who are actually involved in performing on a contract because they already have demonstrated the ability to do so!

Always remember that you?re running a business. Every successful business has a well-defined strategy for marketing, sales and growth. Real estate investing is no exception!

?2006 noobdogs.com

If I Were 22 Again… A Dad Explains Real Estate Investing to His Son

My twenty-two year old son asked me a question last night. He said, “Dad, if you were just starting out, like me, and you wanted to get going in real estate, what would you do?”

What a great question, and I really had to think about it before I answered him. What I told him isn’t original with me. These ideas have been expressed much better by other authors before now, but since the essence of creativity is selective borrowing, here’s the advice I gave him.

I said that the first thing I would do is become an expert in my target market.

“How long will that take?” he asked.

Ah, youth- always in such a hurry.

“Depends on how much time each week you can devote to it,” I answered, giving him another of the vague responses he has grown so used to.

Predictably, he groaned.

I went on to explain to him that, if he really committed himself to following my advice, and if he committed to a minimum of 15 hours each week, he should become both competent and confident in about 3 months, which doesn’t seem like such a long time. The key is looking at tons of houses, and asking tons of questions of the right people.

I told him, if I were just starting out, I would also find the right Realtor to work with. The right Realtor will be able to put you in touch with a boatload of opportunity you can’t find by yourself, and provide you a list of foreclosures and vacant properties to look at every day.”

“What would you do next?” he asked.

I said that I would work on building a buyer’s list at the same time I was learning my market.

“How would you do that?”

“I would find and join my local REIA (Real Estate Investors Association) group, and attend every meeting. If my area didn’t have a REIA group, I would start one. This is the place to start finding, meeting, and networking with the people in your area who invest in property. I would also read the newspaper classifieds for “Buy Houses” or “Buy Property” ads. These people are active buyers, and should be added to your buyer’s list. Your goal is to have as long a buyer’s list as possible, at least 50-100 names depending on the size of your area.”

“Why?” he asked me

“I’ll explain that in a minute.” I said

He rolled his eyes. Talking with your son is like chatting with a nuclear physicist- every time you try to impress them with your knowledge, they make you feel like they can’t believe how long it took you to come to your childish conclusions.

I pressed on, determined to give my son the advice he was seeking.

“Next,” I said, “Armed with an in-depth knowledge of my market area, and my active buyer’s list, I would start making low offers on every foreclosure and vacant property I looked at.”

“Every one?” I could see the doubt in his eyes.

“Well, close to every one. Every house that your confidence level allows you to make an offer on.” I could see the next question coming.

“What do you mean by that?” he asked. So predictable.

“What I mean,” I continued, “is that the market knowledge you gather during your market research will give you a certain level of confidence. The more knowledge you have, the more your confidence will increase. When you first start making offers there will be a lot of properties that will appear to be beyond your skill level, and if they seem to be, they probably are. You simply won’t have enough confidence to make offers on those properties.

“As time goes on, though, and your knowledge grows, so will your confidence. Then those properties that intimidated you at first will become less frightening. Instead of seeing hazards, you will see opportunity. Don’t stress about this, because it’s a natural progression. As long as you’re putting in the time learning your trade the knowledge will come, and so will the confidence. One follows the other like the summer follows the spring.”

Next, my son asked, “But how do you determine how much to offer?”

I went on to explain to him my method for determining the right amount to offer. See my article titled "Real Estate Investing- Is There One Magic Rule?"

“I get it,” my son said, head bobbing up and down knowingly. “What comes next?”

“OK,” I said. “What happens next is, most of your offers are rejected completely, a few might be countered, and one out of every twenty to fifty will be accepted.”

“Is that all?” he asked, perplexed.

“That’s all, but that’s alright,” I said. You can’t handle a whole bunch at once right at the beginning anyway. One or two is enough to get you started. What you do next is very important.”

“What’s that?” my son asked.

“Start marketing your fool head off.” I replied. “You know that list of buyer’s you’ve been developing? You call every one of them and tell them about the great deal you’ve got, and see who’s interested. Put ads in the paper, signs on the property, and signs anywhere in the neighborhood you can get away with. Create a flyer to pass around at your REIA meeting. Sell, sell, sell is the name of the game. Whatever it takes, find a buyer for that property BEFORE you close and take possession of it.”

“What about the title work and all the legal stuff you have to do when you buy a house?” he asked. He’s smarter than I give him credit for.

“That’s just mechanics, and I can teach you mechanics as you’re going through each deal. What we’re talking about here is strategy. If you get this strategy down, you can learn the mechanics.

“OK,” he said, “how do I make money?” A very astute question.

“Simple- the same way you make money on any product you sell. You sell it for more than you paid for it. For instance, let’s say you get a house under contract for $40,000 that you determined beforehand has an After Repaired Value (ARV) of $97,000 and needs repairs of about $12,000. If it were me, I would try to find a buyer in the $48,000 to $53,000 range. That way, your buyer would still have room to make his repairs and make a tidy profit, and you would walk away with somewhere around $5,000 to $8,000 after taxes and fees.”

“Fees and taxes?” my son asked. A rude awakening.

“Yes, paid to your attorney, the Realtor, the title company and the government. Of course you could do a simultaneous closing, and there are other ways to eliminate some or all of those fees, like making your offers in the name of an LLC and then selling the LLC instead of the property, but again we’re talking about mechanics, and that’s the subject for another discussion.” (And another article)

“How much would it be reasonable to earn doing this full-time?” he asked. A light going on.

“There’s no reason a full time wholesaler (wholesaling is really what we’re talking about here) couldn’t make $5,000 to $10,000 per month, or more. Not at first, of course, but after a few months or a year of consistent effort, the sky’s the limit.”

“Wow,” my son said, “I never though about it like that before. I never understood so clearly what wholesaling is all about. I think I could do that.”

I think he could, too. For that matter, so can you. In fact, what’s stopping you?

Now, go make more offers!

Real Estate Investing - Matching Buyers with Properties

One of the things you have to consider as a real estate investor is matching buyers with properties that you acquire. When you develop a buyers list for your properties, whether you?re trying to wholesale or rehab, you will find that the simple saying, ?Different strokes for different folks,? applies. Some of the different ?strokes? might be low-end rentals, high-end rentals, multiple unit rentals, and rehabilitation projects.

The different ?folks? will often match these properties. For every investor, there is a niche they specialize in. If you want to wholesale properties, it?s up to you to offer the greatest spread of properties to fellow investors. Also, you must take into account, your regular home buyers (owner-occupants).

Part of any building block of a business is to identify the target market. For instance, with this site, we identified the people who would be visiting it most likely. We tailor the articles with content that is basic in order to meet the ?customer? needs. We don?t overload the articles with complexities, but we do offer the basic 1-2-3 steps for beginning a real estate investment business or a business in general. Part of this required developing a ?character? for our visitors. In doing this, we are constantly developing new avenues of interest that we think our visitors will benefit from, including hard money financing (coming soon).

So, for matching buyers with properties is to simply define what each potential buyer prefers. When you decide to advertise for buyers, you might put out ads like this:

Deep Discounts-Properties need Rehab, Priced to Sell, Call XXX-XXX-XXXX

or

Excellent Cash Flow Rentals offered at Discounted Prices, Call XXX-XXX-XXXX

This may attract buyers who are looking for rehab projects. Thus, you?ll be matching rehabbers/contractors with properties in need of rehab. However, when the phone starts ringing, you?ll need to distinguish the type of homes each potential buyer wants. For instance, some might want 4 bedroom, 2 Bath, high-end rehabs, while others will want your basic ?bread and butter? home, 3 beds and 1 bath. Also for the second advertisement, you?re looking for landlords. Additionally, you?ll need to identify the different areas each buyer will consider.

You may also run an ad like this:

Stop Renting-Starter Homes Available-Mint-Discounted Prices Call XXX-XXX-XXXX

These buyers might be your owner-occupants that are currently renting that you?ll add to your buyers list. Part of your strategy here might be buying, rehabbing and selling them yourself.

Of course, running one ad might be most economical:

Deep Discounted Properties for Sale, Home Buyers, Investors Call XXX-XXX-XXXX

Now, how do you determine what each investor/buyer wants? You may ask the following questions:

What type of property are you looking for?
Specifics? (# of bedrooms, baths, rooms)
What locations are you primarily interested in?
Have you closed on properties in these areas before?
What are your overall objectives for properties you buy?
What is the ideal return on investment you?re looking for?
What type of rentals do you prefer?
How do you continue to grow your customer base (the amount of people you can sell a property to)?

Well since money is always the bottom line and not all buyers have cash to buy (and you should never expect or rely on that solely), expanding the pool of investors and buyers you can sell to comes down to having contacts. If your buyers don?t have the contacts or the cash, you will need them. So four simple things you should do are:

Make contacts with good mortgage brokers and use them to qualify buyers
Make contacts with good hard money lenders to qualify investors (noobs)
Make sure these brokers and lenders can close deals quickly
Make sure you know the process inside and out so you can expedite the process
Lastly, you may look for ads that offer rehabbed homes for sale. For example, if you see a for sale ad that says, ??renovated? or some variation, call that number and begin the process of adding that individual to your buyers list. Visit the property to get a completely true feel for what they look for. This can be a very effective way of getting investors who are actually involved in performing on a contract because they already have demonstrated the ability to do so!

Always remember that you?re running a business. Every successful business has a well-defined strategy for marketing, sales and growth. Real estate investing is no exception!

?2006 noobdogs.com