Help submitting an offer for REO planned for wholesale in my home area

Are you aware that you cannot assign an REO? You will have to find an escrow company that will do a double close?

Where are you located in CA?

Karen

Aracely,

Most banks will insert language into the contract that specifically prohibits 'assigning' the contract. As such, you will need to do a double-close as kareng suggests. And to do that, you will need to find and use Transactional funding, if you do not have the actual funds yourself.

Look to your local REI club for real Hard Money Lenders. Most of them will also do Transactional Funding. Expect to pay 2% for this, with a minimum of maybe $2500 - $3k in fees (e.g. 2% of a $200,000 transaction would be $4k total; but if you are talking about a $100,000 purchase, then you will pay the minimum of $2500 - $3k or whatever their fee is).

Your Transactional Funding source will provide you a Proof of Funds letter that the Realtor is asking for. Good luck.

--Walter

If it is to be, it is up to me! -unk

Another important point. I stick to having my realtor pull "Standard Sales" and don't personally do REOs because REOs require more Earnest Money. I get by with much smaller EMDs on Standard Sales.

Best of luck!

Karen

Yes most all here in northern Cali are reo. The problem I am having I am being out bid on everything. I have put in 5 offers and all out bid. So now I am trying to find one that I can do as a lease option and sign it over to my buyer but seems I am having a hard time finding them.

I am a little confused here. Are you trying to get an REO and do a L/O? Are you planning to actually buy it yourself and then L/O it out to a T/B?

Karen

Julie,

I'd say you are 20% of the way (then) to your first deal, using Dean & Matt's 25:1 formula.

Don't fret not being the winning bid. Review what your offer was, and when able, learn from what the winning bid was. Re-evaluate the numbers and make it a learning experience.

Also keep in mind that you could have ended up over-paying what the houses are really worth, and been the winner on each of the five bids. Dean & Matt actually talk about that in '30 Days to RE Cash'. Some people "brag" about doing better than the 25:1 ratio that Matt seems to have perfected; and as Dean says, that just means that you are paying (offering) too much.

So look at the glass as half-full; 5 bids and 5 non-winning bids just means that you are 20% of the way towards your first SUCCESSFUL bid. Keep at it; you are on the right track.

--Walter

If it is to be, it is up to me. -unk

No I have tried to put offers in on reo but I am not getting anywhere so I thought I would try to do a lease option if I can find one then I will lease it to my buyer. Hopefully I can do this, I am definitely not going to give up.

I am reading the book for the second time thank you for your help and I will get it together maybe a little longer than 30 days but it will happen

Where do you live in N CA? Have you picked out a specific target zone (Area) to concentrate on?

You want to find an area that will have distressed properties. A blue collar type area that is maybe about 50/50 owner vs rentals. An area that when you drive through, you see props that are being rehabbed, so that you know that when you find a prop there that you will have someone that wants to buy it. Then target an area about 1 mi X 1 mile square. I took my Thomas Guide map book to a printer and had them blow up that area in blk and white and highlighted my boundaries.

Then you start driving up and down. Up and down. Hit every street. I use a red pen and mark the street on my map and when the streets are all redded in, you can go home. Be on the look out for any houses that look empty or boarded up. If you see any, make note of the address and when you get home look it up. Find the owner and get in touch to see if they are interested in selling.

If you just look all over the place, it's like shooting with a scatter gun. You won't have near as good of luck. Try it. You will be amazed at the results.

Best of luck to you.

Karen

I am in Vacaville ok i will do that thanks i read your posts all the time they help me alot as do everyones. I will let you know how it works out, thanks

Arcey,
as far as financing , it is always CASH. You need to have a buyers list . See at the top of this page and get Deans 30 days cash. You can do it!
John W

What if you "pay to much" and still wholesale the deal to one of your buyers for a profit. Should you not do the deal because it did not fall into some rigid offer formula? "I guess I showed them" and not make any money?? We have done deals where we had to cut our fee to $1000. Should we have not done the deal? This is where real world experience over comes theory. Don't lose money by offering to little! Some $$$ is WAY better than NONE!! It just depends on the deal. Each deal is different.

Just my advise and opinion of course!

On another note, just read an article that states that available inventory nationwide averages a 4.2 month absorption rate. Only unemployment is holding back the recovery. Don't believe what the main stream media and gurus are saying!! There will NEVER be a flood of REOs hitting the market (shadow inventory)NEVER!
As we move into a sellers market over the next year or two will you still insist on using buyers market strategies??

Michael Mangham
Mentoring/Team Building Nationwide
MD Home Acquisitions LLC

Hello Karen,

Thanks for your response. I am in Visalia, California; in between the bigger cities of Fresno and Bakersfield. This would all be new to me. Should the process of going through the escrow company something difficult or costly? Would you explain it in steps, if you don't mind?

Arcey

Hi Walter,

I have heard that if I use transactional funding, I am expected to already have the buyer or the property I plan to purchase and resell, so I could flip it within a very short period, sometimes even just 5-10 days? Am I correct. Should I work on having a buyers list right away too?

Aracely,

Yes, definitely work on getting your Buyer's List composed; absolutely. However just because you are using transactional funding that certainly does not gum up the process. They, the Transaction Funding (Hard Money Lenders) will not 'fund the transaction' until they know that everything is in place (i.e. ready to close including a buyer in place). They will probably want to see your contracts too; shouldn't be a problem. However they WILL certainly give you a 'Proof of Funds' letter which should help you answer your Realtor's question about funding while you are making offers. Hope this helps.

Michael,

Certainly not trying to "pick a fight", and paraphrasing you "everyone has an opinion". However I was just trying to provide encouragement to a new investor and (again a poor) paraphrase to something Dean has said, that if "you are getting better than a 25:1 deal ratio you are paying too much" [sorry Dean, I know that I have very very poorly paraphrased you, but I am absolutely certain that I have read this phrase by you in one of your books. I cannot put my finger on it exactly at the moment, but I will continue to look for it and then re-post the reference].

In Dean's latest book '30 Days to RE Cash' on page 77 3rd paragraph he talks about how Matt was originally hitting a 40:1 ratio of offers made to an actual deal closed. However Matt has since refined his expertise and is now at 25:1. So since she has made 5 offers and has not been the 'winning bid' yet, I am just trying to encourage her that she is just that much closer to being the winning bid herself.

Dean goes on to say on page 88 of the same book (30 Days to RE Cash; top paragraph) a very good reference to $1000 vs. $25,000. ...less work, less risk, and less time....

Michael, I'm afraid you have forgotten what it is like to be a new investor. New investors really should be looking for deals with a little more meat on the bone. At your level of experience and expertise, go ahead and chase $1k deals if you want. And yes (before you ask again), certainly $1k in the bank (or pocket) is better than nothing at all. But you are trying to build a better mousetrap, and I think Dean's weekly video made a reference to that last week. New investors (myself included) don't need to focus on building better mousetraps; we just need to find someone who is successful (let's say Dean Graziosi or Matt Larson, for example) and to follow their example (exactly).

Quoting Dale Carnegie (again poorly), "The fastest way to sure riches in America is not to build a better mousetrap. Rather it is to find someone who is already successful, and to imitate their methods exactly". Personally (this is just for me), I will follow both Dale Carnegie and Dean Graziosi's advice until such time as my bank account exceeds either one of theirs.

Tina1 even has created a good thread entitle 'Success is NOT doing a deal'. Here is the link to that thread:

http://www.deangraziosi.com/real-estate-forums/success-forum/115250/know...

Just good reading!

--Walter

If it is to be, it is up to me. -unk

Hey don't get me wrong. I would not be where I am today if it were not for Dean, his books and the Success Academy. I like Be A Real Estate Millionaire, it is my favorite book from Dean. He explains how his strategies change or DON'T work in various markets and which ones to use in which market. So in no way am I trying to "build a better mousetrap". In Dean's books he states that you have to "tweek" the strategies, forms, scripts etc. to match your market.

If you take what Dale Carnegie says literally and to the letter as absolute law we would all be on horseback using oil lamps. I am sorry but there are plenty (most) of successful people that are innovators. They did some thing entirely new on their own. OR they took something and IMPROVED it. Edison, Ford, Jobs, Trump, Dean, Matt etc. I really think Carnegie is referring to what all successful people have in common, do what they do. Like be fully determined to make your dream happen, TAKE ACTION and never give up. Not serve hamburgers just like McDonald's does to the letter.

To me, new investors should do whatever they can do to ACTUALLY close a deal. They will learn so much more and meet more people and have agents that work with them when they close deals. So for new investors to hold out for better deals is counter productive. The real world education they get will be worth any fee they get. Out and away from motivational books, guru education theory and into the REAL world is the best thing that can happen to new investors. Not waiting for the perfect high dollar deal!!! Won't happen, they will be on this site for three years with out doing a deal!

Anyway, good luck on the 30 days. What day are you on? Keep at it, adjust strategies as needed. Don't keep doing the same thing and expect different results (Einstein I believe). Stay away from the kool-aid. Hey, find me a deal in Denver and I will split the deal!! I have done that with other DG.com people.

Michael Mangham
Mentoring/Team Building Nationwide
MD Home Acquisitions LLC

Sorry, I don't think Dale Carnegie's advice would have us all on horseback and using oil lamps; that is certainly not his advice. His quote is the "FASTEST WAY to SURE RICHES...."; not 'the only way'. So for those that are inventors or creators (i.e. better mousetrap builders like Michael Dell, Bill Gates, Mark Zuckerberg, Steve Jobs, Dean Grazisoi, Richard Branson {and let's include Mitt Romney too at least as a creative and successful financier} etc.), more power to them. And we as society will all benefit from their creations / inventions.

However for the vast majority of us on Dean's site here, Dean himself (weekly video # 195) says that we are better off following his 'blueprint' exactly. He even told a nice little story about a family member (his own family, mind you) who "tried to tweak Dean's method"; only to give up out of frustration and to declare that "it doesn't work". Those of you reading this thread, these are Dean's words (more or less); not mine. Go watch his weekly video #195 as he says it so much better than I ever could.

Here is the link to Dean's own weekly video blog where he makes this point. Note the title Dean gave to this particular blog -- When Being Smart, Isn't. The link:

http://www.deangraziosi.com/content/weekly-wisdom-195-when-being-smart-i...

Michael, after each of us attain your level of success, then I don't think Dean would have much of an opinion as to our 'tweaking' his methods. But until then, and for the vast majority of those on Dean's site, we would all be (much) better off just following Dean's tried and true methods.

Just my opinion; like elbows and @$$(*!+$, everyone has one.

You tell them that it will be a cash purchase...

To simplify things for yourself, build your buyers list. Once you know what your buyers want, you can go out, find it, and put it under contract. If you put a REO under contract, make sure your buyer is ready to buy; then you can use transactional funding, and do a double close.

Look for a rei club in your area and attend the meetings; you can meet many investors in your area that way!

Wishing you success,

On Dean's blog he asks "are you putting out 25 to 30 offers a week? Not just 25/1 that is it, in Stone!! I make multiple offers just like Dean teaches. Never said not to. I am a HUGE advocate of making multiple offers. I always say No offer = no chance of making money period. I never suggested not to. Or that you don't need good agents working with you. Or have a huge buyers list.
Dean himself states that all his strategies do not work everywhere in every market. That is my point. Don't make blanket statements that everything works at all times. This is the only way, period. It is best for new investors to have an open mind as they start out. 65% of ARV minus repairs may work in Detroit but it will not work consistently in San Diego or Denver. Why? SELLERS MARKET!! Not a down/bottom market. That's an example.

I want new people to be aware of where the advise comes from. I don't buy dietary supplements from a unhealthy person. At the same time I don't take advise on CLOSING R.E. transactions and making money from some one that has not done a deal. Make sense? I really like seeing Dean's people get out and do deals. There posts sure change and their real world knowledge explodes!

Check out my new post today on driving for dollars (A Dean Strategy)

Wish you great success in REI!! Now go make some offers!

Michael Mangham
Mentoring/Team Building Nationwide
MD Home Acquisitions LLC

Karen,

What a great idea. I can assume this has been working for you. This is a great idea because I was not doing too well with finding much when I was trying to find by just looking in all and any directions. I will definitely use the tip of 1 mile by 1 mile square and the mapping of the area.

It has definitely been working for me. My whole momentum changed when I started doing this. Keep me informed.

Karen