How to get phone numbers from Cash Buyers lists?

Hey there Dean. This was another fantastic video on THANKSGIVING and reviewing to stay motivated.Thanks.

I know of a couple going through a divorce. Both live in different location. This residence is 4bd/1ba,1530 sq ', 2800 sq'lot, duplex. They are behind in their mortgage by 4 mos.@805 a mo. House was built in 1907, good location, rear yard and garage. The mortgage owed in about $55,000. It could produce from Zillow.com 1,114 a month, appraisal.com has a appraisal value of $69,849. They would like a cash deal of $65,000, I would like to clear about $4,000. Houses of the same type has sold from $99-$110,000 with in the last 6 mos. They may take less than the $65,000 for a quick sale so they can go on with their individual lives. I am in contact with the wife, not the husband. Foreclosure proceedings have not occurred yet, but expected soon. What is the suggestion on how to approach this deal, my very first one. Time is an element. All suggestions please.

Ive got proptrend and was going to send mailers to them but now I think I will try this approach,didnt know % was that low on mailers.

Thank you

Aaron

R.J., hopefully I can give you some suggestions here that will be helpful with this deal.
1) You haven't indicated the overall condition of the property, but it sounds like it is not a property that needs rehab work. If that is so, and you plan to wholesale the property, you need to have cash buyers who are landlords. It appears that the property should have a positive cash flow, and a decent CAP rate, which are two very important numbers for landlords. I am going to provide the items necessary for you to complete a cash flow analysis on the property.
2) If you do not have cash buyers who are landlords on your cash buyer list, it would be a good idea to line some up. I typically find these landlord buyers through three means--1) Calling on rentals, talking to the owners, and finding out if they are in acquisition mode, and what kind of properties, areas, cash flow amounts, and CAP rates are attractive to them. 2) I also call property managers and ask if any of their owners are looking for properties; 3) The website www.naahq.org is a website for the national apartment association, and lists their affiliate organizations, you can call the contact person, or attend meetings to see if you can find owners who are in acquisition mode.
3) The property is going to have at least one immediate cash need, the delinquent payments plus interest and penalties will need to be resolved, make sure there are no other liens or tax deficiencies pending on the property.
4) Beyond that, you will need to make an offer that allows for a profit for you, resolves the issues of the property and satisfies the seller, and still meets the criteria of a cash buyer. I suggest that you run a cash flow analysis and determine a CAP rate on the property, and find out if the numbers you are coming up with are good by comparison in your local area.

Here is the data needed for a Cash Flow Analysis. Calculating a CAP rate is done by dividing the yearly Net Operating Income (NOI) from the cash flow analysis by the purchase price of the property. The result is a decimal number, move the decimal two places left and add a percent sign. My guess is that this property will have at least a 9% or 10% CAP rate, possibly higher, which is a good CAP nationally, but may or may not be a great CAP rate in your local area.

CASH FLOW ANALYSIS

INCOME MONTHLY
Monthly Income _____________
Other Income _____________
Gross Monthly Income (Total) _____________

EXPENSES
Vacancy Rate _____________
Repairs and Maintenance _____________
Management Fees _____________
Property Taxes _____________
Insurance _____________
Other Expenses _____________
Total Expenses _____________

Gross Monthly Income (From above) _____________
Total Expenses (From above) (____________)
Net Operating Income _____________

Net Operating Income (From above) _____________
Debt Service (1st Mortgage) (____________)
Debt Service (2nd Mortgage) (____________)

Net Income (Monthly Cash Flow) _____________

Note: Parentheses indicate subtraction required.

To Calculate Capitalization Rate (CAP), Multiply monthly Net Operating Income times 12 to get yearly amount. Then Divide Yearly Net Operating Income by Purchase Price of Property. Result will be a decimal number, move the decimal two places left and add a percent sign to convert to a percentage.
Note: Compare the CAP rate you calculated with average local CAP Rate. You should be able to find out average CAP rate for similar properties from a property manager, or from a Realtor who works with investors.

I like your thoughts on landlords. That call can go two ways,1) you get a possible seller or 2) you get a possible buyer!
I was just looking at landlords as tired and finding a good deal but now Im looking at them as buyers also.

Very good thanks coach

Aaron

RJ,

All of the above info is good, but nothing will happen in your favor unless you find the husband. If the wife cannot help find him, does she know who his attorney is located? How about a google search?

You need to find this guy. The deal will not move one inch without him. Paint a picture of urgency with his wife. It is in both of their interests and in yours.

I foolishly, in 2007, gave my wife money, to have her sign a Quit Claim Deed, which I BELIEVE, gave me the right to work the property solely on my terms. Unfortunately, I couldn't sell the property, and eventually was bought by an investor (like you?) through a CDPE (Certified Distressed Property Expert?), who handled the sale to the investor, but I went through a Short Sale, as it was quite a bit upside-down. If I had an investor, like you, he/she would buy the house as-is (the mortgage price), take over the loan, and rent out the house (presumably for positive cash flow).
But, your situation might be different - the numbers, the temperament of the divorced couple, the equity in the home, etc.
It's just what I did. I would have loved to have an investor to save me from a Short Sale/Foreclosure, by using a creative deal, where everyone wins (even the bank).
-td

dubaniewiczt, thank you for sharing from your experience, I think that real world situations are always the best learning opportunities for us, and I also know it can be a little painful to pull up difficult experiences from the past, so I want you to know how much we appreciate it.
If I could simply draw from your post the lesson that I believe is most important to pass along to other investors, it is that many people who are selling properties have issues and problems that may or may not be related to money, and we, as investors may be able to assist them--it is, however, critical to really understand the circumstances and the needs, wants, and desires of the seller. Wherever possible, find out from the seller what their needs are, and you will find that the solution is often included. I am a big follower of Stephen Covey's "Seven Habits of Highly Effective People," and one of those habits states: 'Seek first to understand, then to be understood."

On a different topic, thanks to Roy for bringing up such an important point about talking or meeting also with the husband in a divorce situation. I'd like to expand on this concept.
In every negotiation, it is important to determine two things:
1) Who are the decision makers;
2) Who are the potential deal-killers
People have different levels of influence on deals. If a property is an inheritance property where 5 children will split the proceeds, you will usually find that the executor is one of the siblings, and that they are the most influential, and there will be one other sibling who is a decision maker. The other three siblings may not be decision makers, but they could potentially be deal killers.
Attorneys can be deal killers. Accountants can be deal killers. Spouses can either be decision makers or deal killers. Decision makers MUST be included in all discussions about the property--they will jointly make the final decision, and excluding any decision maker can alienate them toward you. Deal killers can sabotage the deal with a couple of negative statements to one or more of the decision makers.
You want to have direct contact with decision makers and deal killers, and make sure that you understand their position and their role, and can include them in the negotiations and to hear their views on the deal. We need to get these people on our side if at all possible, let the deal killers get their negatives out of their system while we have an opportunity to turn the deal positive again, and make sure that the decision makers want to do business with us, and are clear on all the favorable aspects of the deal so they can make a positive decision.
Thanks again to Roy for bringing up this valuable topic for discussion.

Since I finished advance training on September till today I did not make any deal,
My option is to do whole sale because I don't have the money to invest in flipping the houses.I looked on every website and I was able to get couple of buyers and they gave me characteristic of the houses that they are looking for.
Now I have couple of houses - single family house and Multifamily house,in Nj.
so far I did two showing of the one of the house and no one is buying it.
Since morning to night am on computer post ad every website, but still is not working.
I am unemployed,my husband is working on wages of 9 dollar an hour,I have one child and a newborn baby is coming in couple months.I real want to do real estate to change our life and be able to secure for our kids.
am very frustrated and I don't know what to do.

Pls I need help

Clara

1) Create a marketing piece using the template at www.postlets.com. (You will need to create a free account, but your marketing piece will now have an online address that you can email or text to potential buyers.
2) Call each person on your cash buyers list, create urgency by letting them know that you have other buyers interested in the property.
3) Use multiple online websites to advertise and promote property. (Note: I have posted an article on this site called "51 Ways to Find Properties" and it is also available on my blog in this website. The same methods we use to FIND properties can also be used to SELL properties, so you can use almost any of the 51 methods listed there).
4) Post the property in the classified ads on this website.
5) Put up signs in front of the property, on nearby street corners, etc.
6) Create a flyer for the property, place it on bulletin boards, deliver copies to nearby apartment complexes, etc. Take the flyers to the neighbors of the property and offer them a referral fee plus the opportunity to pick their neighbors. Take flyers to nearby school principals, office buildings, clergy or church leaders, retail stores, etc. People like to live close to where they work.
7) Visit real estate investor associations in your local area, and promote the property there.
Email your friends and business associates and let them know that you will pay them a referral fee if they bring you a person who buys the property. Once again, if you have an online postlets address for the marketing info on the property, you have a place to direct them to for additional information on the property.
9) Post a minimum of 25 of these bandit signs to promote the property on busy corners in the area around the property.
10) Run ads in newspapers, free newspapers, or other publications.

If these self-marketing procedures are insufficient, you can list the property with a real estate agent, or you can identify other ways of selling the property such as offering a seller finance arrangement.

Important also is to identify why the property is not selling, and what you can do to resolve that. Some key questions to ask yourself as to why the property is not selling:
1) Is it a price issue?
2) Is it a location issue?
3) Is it an exposure issue? (In other words, are enough people seeing our marketing?)
4) Is there something wrong with the property? Configuration? Colors? Curb Appeal? Size?
5) Are we marketing to the right people? Have we correctly profiled the most likely buyers and how to reach them?

Last point, marketing should be a clearly thought out plan, not an afterthought. A great deal of marketing can be done with minimal expense if you are willing to get out there and post flyers, talk with people, etc. Then you are only out some gas money and cost of flyers and some time.