I buy and sell houses for cash and I buy and keep apartment buildings for cashflow. I figured you need to do both so that you will have the cash (from buying and selling houses) to buy apartment buildings which in turn give you passive income and long term wealth accumulation. The only requirement for this model to work is that you need to be able to sell the houses you buy. If you can't sell the houses you buy...you won't make the money you want to make or worse, you can even LOSE money. It's crucial therefore that you need to sell properties as quickly as you can. When you buy and sell houses, your profit is in direct proportion to the speed with which you sell houses.
DO you want to know the formula that guarantees every house you buy can be sold? Here's the formula: KNOW WHAT YOUR BUYERS WANT AND GIVE IT TO THEM. The formula is simple yet profound. It seems easy yet it works everytime. As always the things that work are always simple at their core and because of their simplicity, people assume they should NOT work. If you're looking at a complicated formula for selling every house you buy...you will not find it here in this blog post. In fact, if you think you need to do something complicated in order to succeed in real estate investing, I suggest you unsubscribe from this blog because you will not find complicated formulas here. Instead you will find simple, yet profound formulas and techniques that work. If you follow the formulas here, you will make money. Period.
There are 2 parts to this formula: KNOW WHAT YOUR BUYERS WANT AND GIVE IT TO THEM. Let's break it down. The first part is KNOW WHAT YOUR BUYERS WANT. How do you know what your buyers want? First, there are 4 types of buyers of houses:
1. The retail buyer or end buyer
2. The tenant/buyer
3. The landlord
4. The renovator/rehabber or developer
I've described who these buyers are in separate blog posts. What's more crucial is you understand exactly what your buyers really want. If they're retail buyers or buyers who want to live in the house you're selling for example, do you know...
1. what type of house are they looking for (condos, townhomes, house and lot, etc.)?
2. what's the size (of the lot and house)?
3. how many bedrooms and bathrooms?
4. the amenities they're looking for?
5. the price range?
6. the location or the area?
Do NOT gloss over this. Really dig deeper into what your buyers really want. Why are they looking for a 3 bedroom house vs. a 1 bedroom house? Are they going for one location because of the schools or because it is closer to their place of employment?
Sometimes, buyers do NOT verbalize what they want or they do NOT know what they really want. It's up to you to guide them. DO NOT make any assumptions. Doing so can lead to disaster or at best to you wasting your time and your buyer's time.
Also, do NOT waste time with buyers who are NOT qualified. You need to qualify them over the phone. Do they have the downpayment and the financing lined up so they can buy your house? Do they have a stable income that banks which will finance them want to see? What documents can they show you that prove this?
Once you have qualified buyers in your hands and you KNOW exactly what they want, it's time for the second half of the formula: GIVE IT TO THEM. How do you get the house your buyers are looking for? There are 3 steps:
1. Focus on a target area/location and do eXtreme Marketing
2. Pre-screen the leads, analyze them and make offers
3. Close the deal
Focus on a Target Area and Do eXtreme Marketing
One of the things you need to understand is the area or location your buyer is looking for. It's important you NARROW the area you want to buy houses in. Narrow it down to the level of a neighborhood or a subdivision. If your buyer wants to buy in a city...force the buyer to focus on a certain part of town, then down to a neighborhood. You cannot do a good job at finding the right deal for your buyer if you're forced to spread your marketing throughout the city.
After you narrow your focus you can do eXtreme Marketing. The goal is to create perceived dominance in the neighborhood through your marketing. This means that the entire population of the neighborhood will think or assume that you are the dominant real estate company in the neighborhood. You do this specifically by passing out flyers door to door. Enroll every citizen of the community to become your talking and walking billboards. "Bribe" them a referral fee so they will look for the right house for you. Put out 20-50 bandit signs in the busiest street corners or intersections. Talk to real estate agents who specialize in the area to find out if they have listings that match what your buyers want and to ask them to look for properties for you. Your marketing has to create enough buzz in the community that your phone should ring off the hook with potential leads. If you're not getting at least 10 phone calls a day from your marketing, your marketing is not eXtreme enough.
Pre-screen the Leads, Analyze Them and Make Offers
Once prospective sellers of properties call you, use the WOWWW formula to pre-screen the leads. You need to deal ONLY with sellers who are desperate to sell and willing to lower their price or give in to your terms. Once you figured which leads are worth looking at, analyze them using my Universal Acquisition Equation. Lastly, formulate what offers you're going to make using my Universal Acquisition Flowchart.
Make the offers in writing and either fax or email them to your seller. Negotiate over the phone versus wasting time visiting properties. In the real estate business, you do NOT get paid based on the number of properties you visit. You are paid based on the number of offers you make. The more offers you make, the more deals you're going to do. The more deals you do, the more money you make.
Close the Deal
Once you get an accepted purchase contract signed by the seller (via fax or email), it's time to close the deal. The way you do it in the right way is to visit the property and bring your buyers in tow. Get your buyers to inspect the property and more importantly, get your buyers to BID against each other so you can get the highest price for the property. Once you get a signed Sales Contract from one of your buyers, ensure you collect a sizable non-refundable earnest deposit (or reservation fee). You need to ensure your buyer is serious and will most likely close. At this point, you need to ensure all the documentation required to get the deal closed are lined up. Ask your lawyer to ensure these documents comply with the laws in your area. Follow up the buyer to ensure his or her financing is approved or being lined up. There are many things that could fall apart at the last minute and you need to be on top of all the details. It's NOT over until it's over.
dedicated to your success,
Trace
P.S. Do you have a property you're interested in buying but you're not sure if there are buyers for it? Stop guessing and hoping you will sell the house. Attend my webinar this Saturday to ensure you have buyers for any property before you buy it. Click here https://www2.gotomeeting.com/register/581918611
1 comments:
Thank you Trace!
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