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Viewing 15 posts - 1 through 15 (of 35 total)
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  • #5512
    Avatar of cashflow
    cashflow
    Member

    Where would you get started?

    I have read the success pack and big book, just looking for some fresh ideas, since there was SO much info in there, not sure where to start

    If time wasn’t an issue and you had all the energy in the world, weren’t afraid of rejection and wanted to spend your time in all the right areas…..would you just pick up the phone and make offers?

    To whom? Expired listings? FSBO’s, for rent ads, or all of the above?

    For me, I have not had problems getting property owners to work with me on staying on the loans in exchange for a full price offer down the road, the more difficult thing for me has been finding people to come in with large enough down payments (say 3-5%) to make it work out, what would be your suggestions for finding those buyers? (I come from a lease option background)

    Just looking for some “getting started” advice if you pro’s don’t mind

    Thanks in advance for your advice

    #28713

    @CashFlow wrote:

    Where would you get started?

    Of course there is only one way to answer that question and you know I have to say it… “at the beginning”.

    This will also answer some of your other questions. There is no better way to “get started” or do this business than with DAILY phone calls to sellers, regardless of how you obtain the phone numbers to call.

    - Newspaper Ads, house for sale, house for rent, rentals, lease options etc.
    - Drive neighborhoods and write down numbers
    - Ask co-workers, friends, relatives etc if they know anyone looking to sell or buy
    - Internet Ads
    - Put up signs and flyer at grocery stores etc that say, “I will Offer YOU Full Price” etc.
    - Visit your local REIA and talk to other Investors and Investor Friendly Realtors and Lenders.
    - Join Toastmasters or a local Business to Business Network.

    @CashFlow wrote:

    I have read the success pack and big book, just looking for some fresh ideas, since there was SO much info in there, not sure where to start

    “Fresh” ideas? Howbout just making lots of calls. Other than 3rd-Party referrals, there is no better way to find opportunities.

    @CashFlow wrote:

    If time wasn’t an issue and you had all the energy in the world, weren’t afraid of rejection and wanted to spend your time in all the right areas…..would you just pick up the phone and make offers?

    What Rejection? We are not in the “sales” business per se. Who’s being rejected. We simply ask a question or two and if they say no, so what, ask someone else. There is no rejection.

    To whom? Expired listings? FSBO’s, for rent ads, or all of the above?

    @CashFlow wrote:

    the more difficult thing for me has been finding people to come in with large enough down payments (say 3-5%) to make it work out, what would be your suggestions for finding those buyers? (I come from a lease option background)

    What “Down Payment”? You need to eliminate that verbiage, not only from your speech but also from your mind. And where are you coming up with 3% to 5% “Down”?

    Try this…

    Seller Will Carry!!!
    Only 2 payments plus closing costs…
    Moves You In!
    No Down
    No Credit
    No Qualifying
    Just $1350 mo. + taxes & Ins.

    This would only require $3000 to $5000 to move in on a $175,000 home. And, who said they have to have it all to actually move in the place? Have them move in now on an Interim Occupancy Agreement until they can come up with the required amount.

    #28714
    Avatar of areyes
    areyes
    Member

    What’s up Scott(Cashflow)!

    Nice to see you posting on the board.

    #28715
    Avatar of homesavers
    NULL
    Member

    @Scott_L._Moyes wrote:

    What “Down Payment”? You need to eliminate that verbiage, not only from your speech but also from your mind. And where are you coming up with 3% to 5% “Down”?

    Try this…

    Seller Will Carry!!!
    Only 2 payments plus closing costs…
    Moves You In!
    No Down
    No Credit
    No Qualifying
    Just $1350 mo. + taxes & Ins.

    This would only require $3000 to $5000 to move in on a $175,000 home. And, who said they have to have it all to actually move in the place? Have them move in now on an Interim Occupancy Agreement until they can come up with the required amount.

    Ah ha! so you have changed your qualifications. You used to say that if they did not have at least 3 percent they would not be qualified. So now we can get renters into homes. I always thought this bar would be lowered some day. That day has come. David H. uses this same technique and I always thought it was a good idea.
    No you have lowered it enough to be realistic. Thank you. Now I can find some people to fill these houses I am getting left and right.

    Furthermore, I see how much of a moving target this business is and what is said 6 months or even 3 months ago does not apply in the present.

    I say Get Creative!!!

    #28716
    Avatar of isaac duenas
    isaac duenas
    Member

    @homesavers wrote:

    @Scott_L._Moyes wrote:
    What “Down Payment”? You need to eliminate that verbiage, not only from your speech but also from your mind. And where are you coming up with 3% to 5% “Down”?

    Try this…

    Seller Will Carry!!!
    Only 2 payments plus closing costs…
    Moves You In!
    No Down
    No Credit
    No Qualifying
    Just $1350 mo. + taxes & Ins.

    This would only require $3000 to $5000 to move in on a $175,000 home. And, who said they have to have it all to actually move in the place? Have them move in now on an Interim Occupancy Agreement until they can come up with the required amount.

    Ah ha! so you have changed your qualifications. You used to say that if they did not have at least 3 percent they would not be qualified. So now we can get renters into homes. I always thought this bar would be lowered some day. That day has come. David H. uses this same technique and I always thought it was a good idea.
    No you have lowered it enough to be realistic. Thank you. Now I can find some people to fill these houses I am getting left and right.

    Furthermore, I see how much of a moving target this business is and what is said 6 months or even 3 months ago does not apply in the present.

    I say Get Creative!!!

    We’ve talked about this 2-3 conference calls ago. Nothing has changed. You can find this ad in your BIG BOOK or your workshop book. I’ve found that you have to find what works best for you at your level right now. But regardless of what it is you just need to DO IT AND TAKE ACTION.

    I’ve found that most of my questions and complains are always answer by only doing what Scott is always telling us to do and that is MAKING OFFERS.

    Ijust MAKE OFFER and I forget about what I don’t understand or I don’t like.

    If pleople want to do business with you they will and if they don’t they won’t.

    Just find the best approach that works for you.

    #28717

    @homesavers wrote:

    Ah ha! so you have changed your qualifications. You used to say that if they did not have at least 3 percent they would not be qualified. So now we can get renters into homes. I always thought this bar would be lowered some day. That day has come. David H. uses this same technique and I always thought it was a good idea.
    No you have lowered it enough to be realistic. Thank you. Now I can find some people to fill these houses I am getting left and right.

    Furthermore, I see how much of a moving target this business is and what is said 6 months or even 3 months ago does not apply in the present.

    I say Get Creative!!!

    This was My Bar that I set for my deals. You can do anything you want. Yes, I have “lowered” my ENTRY Bar, but not the total I want to collect. It may not be all upfront but I WILL GET IT.

    #28718
    Avatar of dbhenderson
    dbhenderson
    Member

    The interim lease agreement was used originally to get the RB in the house while the trust paperwork was completed (at that time it took 2 months to get the docs completed). Why not use it now to get the RB into the house until they can come up with enough contribution to pay closing costs, contingency fund, first month and my profit.

    I don’t like 2 payments plus closing costs because closing costs are deceptive. I like 5% ($4,250) Plus 1st month ($1,400) Moves You In Today! This also helps me, because I get $4,250 plus $300 a month positive cash flow Up Front!

    #28719

    @dbhenderson wrote:

    The interim lease agreement was used originally to get the RB in the house while the trust paperwork was completed (at that time it took 2 months to get the docs completed). Why not use it now to get the RB into the house until they can come up with enough contribution to pay closing costs, contingency fund, first month and my profit.

    I don’t like 2 payments plus closing costs because closing costs are deceptive. I like 5% ($4,250) Plus 1st month ($1,400) Moves You In Today! This also helps me, because I get $4,250 plus $300 a month positive cash flow Up Front!

    I have no problem with using the Interim Occupancy Agreement as long as you know the risks of using it. You are putting in a “Tenant” with no real committment to an end result. Dave likes to get a few thousand upfront (his profit now) and gives them an Option to Acquire an Interest in a Trust, not a property. He then gives them 6 to 12 months to come up with the rest of the funds to pay for the Closing Costs and Trust Setup. In the meantime he has a few thousand in his pocket, a tenant and maybe some cashflow.

    However, unless you have a rediculously low monthly payment, the days of just adding $300 to the payments for cashflow are over. I don’t have any cashflow on deals I’ve done in the last year. But, I do have several hundred thousand in equity interest.

    #28720
    Avatar of homesavers
    NULL
    Member

    I guess it all comes down to how creative you want to be and if you can get money up front or not. How does an equity position help you now, Scott? If you have trusts that last three years or more then you will not get paid for a long time. I know getting cash flow is hard in most markets unless you want to work rehabs.

    I was talking to Jim P. Long ago about getting renters into homes for 2-3 months payments. He told me that would be a liability.

    Sellers want cash and buyers have none. So we are now waiting to see if the Government can help. Bad idea. Government only helps themselves to a big chunk of your freedom and income.

    Every single owner I speak to is different. So I am finding it hard to create a viable exit plan unless I lower the bar on the buyer end.
    We all have one thing in common- We all need Shelter. There seems to be no “velocity” in this market. Everybody is sitting on the fence, waiting.

    So maybe all of us need to sell loan modifications until the market (people) get moving again. I am not sure.

    #28721
    Avatar of dbhenderson
    dbhenderson
    Member

    @Scott_L._Moyes wrote:

    However, unless you have a rediculously low monthly payment, the days of just adding $300 to the payments for cashflow are over. I don’t have any cashflow on deals I’ve done in the last year. But, I do have several hundred thousand in equity interest.

    Okay Scott, we have a difference of opinion again (and let’s not talk about how many deals I’ve done in the last year).

    I don’t agree that you can’t just add $300 to the lease payment for positive cash flow. The ability to give the RB the tax benefits makes it possible to compete with the lowest rents on a net rent basis. Example: If the mortgage interest is $1,200 a month that’s a $14,400 tax deduction. $14,400 divided by 3,000 (on the back of the W-4 form it recomends 2,600 so this is conservative) = 4.8 which means if you change your W-4 withholding by adding 4.8 (or 5) more allowances you should see about $480 more in your paycheck. If my lease payment is $1,500 (which includes my $300 PCF), my net lease amount is $1,020 (you can hardly rent a two bedroom 1,200 sq. ft. apartment for that).
    And, I haven’t even figured any appreciation (if there is any) the RB will also get.

    I’m sorry, but I can’t afford to stay in the business if I can’t make some money up front on my deals and have to wait 3 years to get paid.

    DavidB

    #28722

    @dbhenderson wrote:

    Okay Scott, we have a difference of opinion again. I don’t agree that you can’t just add $300 to the lease payment for positive cash flow. The ability to give the RB the tax benefits makes it possible to compete with the lowest rents on a net rent basis.

    I totally understand where you’re coming from and you are right, we do indeed have a difference of opinion.

    Tax Benefits are a great selling point, but an even bigger selling point is the monthly payment amount. I believe that most people are sold more on the monthly payment than being able to take tax benefits. You also need to understand that the RB only gets the “allowable” tax deduction. Their entire lease payment IS NOT deductible, only the part that is Interest, Taxes and Insurance. If the seller’s PITI is $1200, only $800 or $900 of that may be deductible. It doesn’t matter what you set the RBs payment at, they can only deduct what is “allowable”.

    Also, did you know that an owner CANNOT take the Full Interest Tax Deduction if they Refinance. They can only take the deduction for the amount of the payment based on the “previous” loan balance, not the new loan balance or interest payment. The IRS is now auditing those who have refinanced and taking the interest deduction on their new loan. The deduction in only available for the original purchase loan. If that is true for the owner, it’s most likely true for the RB as well.

    Car Dealers sell payment, not tax benefits or fancy add-ons. You’re going to have to make a few thousand upfront and maybe graduate the payments over time in this market.

    Just my .02.

    #28723
    Avatar of dbhenderson
    dbhenderson
    Member

    All I know is that on all of the deals I have done the monthly lease amount was not the problem. The 5% contribution was the deal killer. And on the deals we didn’t lose, everytime we settled for less than the 5% there we problems. Yes, I know, I made good money on those deals, but every month there were late notices, late PCF payments, loss of contingecy funds, penalties and 3 day pay or vacate notices.

    DavidB

    #28724
    Avatar of dbhenderson
    dbhenderson
    Member

    Since I can no longer edit my post, here is some more on that thought:

    I have come to the conclusion that the 5% contribution before the trust is done is a “great” qualifier. If we had used more qualifiers in the past we wouldn’t be in the mess we are in today.

    For me and my house, we will not do trusts until the 5% contribution is there!

    DavidB

    #28725
    Avatar of rick
    rick
    Participant

    Dave, I talked with a lady yesterday that quit paying her loan 13 months ago. She was asking me if I had anything available, in the area where I was adverting my NEO , and in her price range. I asked her if she saved the money, she would have used for the payment, to get into a new house. She said yes. That is about 20k.
    I have had this same conversation with folks in the last week. People have the money for the contingency fund. If we underwrite our contracts for less than 5%, in most cases, and lower the bar, we set ourselves up for what the banks are now facing. Quality buyers are out there and we just need to find them and maybe we just need to look in the right place and I think I may have found one.
    Let me set this up.
    Last night I was setting up an appointment with a young man in our church because he is going to be doing his first speach in our speakers club and I am the toastmaster.
    I was talking with his father, who is the VP of the commercial division at a local bank, to set up an appointment with his son. I asked him how business was at the bank and started asking him questions. I then said: I have a question for you. How does your bank handle seasoning issues? If I buy a property via short sale at below market value on January 1st, can I sell it to an end buyer on January 2nd at a higher price that better reflects fair market value? He said they would loan on the appraised value. I then told him about our system, and said I know some associates working with title companies and lenders, in Utah, that are helping them put quality RB’s into their defaulted homes. Our conversation lasted about an hour and he asked me: Who thought of this. This is brilliant. I told him Mr. Bill Gatten, and he said please send him some information.
    After that conversation I came to a conclusion. Instead of working from the bottom up, it might be better to work from the top down. Not only do we have a better vantage point, we will show total credibility if we can hook up with one of these banks.
    Dave, one of the questions the banker asked me was, what does the RB have to lose if they default? I told him 3 payments plus 2% closing costs.
    He was okay with that, although he did mention 10% in the conversation. For me, in most cases, about 5% is the min.
    Don, Go to your local banks and talk with the VP or P in the commercial division. They understand triple-net very well and will listen. Then you don’t have to talk with the sellers any more.
    My 2 cents.

    #28726
    Avatar of cashflow
    cashflow
    Member

    This will also answer some of your other questions. There is no better way to “get started” or do this business than with DAILY phone calls to sellers, regardless of how you obtain the phone numbers to call.

    - Newspaper Ads, house for sale, house for rent, rentals, lease options etc.
    - Drive neighborhoods and write down numbers
    - Put up signs and flyer at grocery stores etc that say, “I will Offer YOU Full Price” etc.
    - Visit your local REIA and talk to other Investors and Investor Friendly Realtors and Lenders.

    Sorry for the delayed response, haven’t been back since been so busy with family lately.

    I spent about 4 hours today with straight cold calls, ran out of people to call, most likely cause I wasn’t prepared enough for my time on the phones.

    Not sure where you get all these people to call, I pull the expireds for the three major counties in Sacramento, after they were scrubbed for the DNC list, there was only 60 numbers, which is crazy to me, slammed through those and about 30 FSBO’s pretty quickly

    Who’s next?

    You mention call houses for sale, well I assume you mean call their realtors? And say what? The realtors just want to know what is it in for them

    “Fresh” ideas? Howbout just making lots of calls. Other than 3rd-Party referrals, there is no better way to find opportunities.

    I need more numbers to call, so yea more ideas the better, see above

    What Rejection? We are not in the “sales” business per se. Who’s being rejected. We simply ask a question or two and if they say no, so what, ask someone else. There is no rejection.

    I get tons of rejection,

    Sellers:
    “no I don’t want to sell, this house has been in our family forever”, “no thanks we want to hold on to this property for the long haul”

    Buyers:
    Not enough money for down/closing costs. Doesn’t matter how you word it, whether you call it closing costs, 2or 3 payments or a down payment, the end result is the same and that is they need to have cash to close right? If on a $400,000 house they need to come in with 12,000-15,000 there just aren’t a lot of people willing to throw that down in my area from my experience. I have 35 houses under contract to sell on terms, so my problems isn’t with the homeowners and getting the sellers to work with me, it is getting buyers who will commit to the money monthly and the down/closing costs. I have ads on 14 websites, have ran ads in the very expensive local paper, craigslist, mass emails, mass emails to realtors, bandit signs, you name it. That is why I say I am looking for fresh ideas

    Thanks again for your new and fresh ideas, like to keep re-inventing new ways to find buyers

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