30 Days Quick Cash Formula

Maybe if you ask your REA to get a list of properties that sold for cash in the last 90 days, he could get that for you. Then you have to search the county records to get he actual cash buyers info.

Aniko

Here are the numbers I've dug up:

Estimated ARV: $46,800 ($47/sq.ft)
County Appraised: $32,300
Avg Rent in Area: $540/mo.
Property Characteristics: 3BDR/1BTH; 995 Sq.ft
Notes: Property is already being rented out @ $450/mo; tenant has lived there 2 yrs. Seller says prop needs new roof and has some foundational issues but hasn't been a problem as of yet. Seller has not given sales price.

Given the info, what would a realistic offer price be? Thanks for the advice!

If you require a "non refundable earnest money deposit", it's the same as a cancellation fee.

You can do the contracting either way... either contract it, then show it to your buyers if you KNOW you have buyers that will probably want it, OR get the info about it and tell your buyers all the details WITHOUT the address, and if he says "yes I want to look at it", THEN contract it.

I'd tell the Realtor that "the only way the names would be different is if I bring a partner in on the deal and we use his company name, otherwise it'll be my name on the contract and the checks". This way when you assign it, you can say "remember I told you if I partner on the deal we may change the name?". If you do a double close, nothing will change on the 1st closing, it'll be you and your check buying.

Nick

Maybe this recording would help you, it's an interview I just did with a guy who's closing 5-10 REO flips a month. (I hope it's ok I put this here, it's VERY good content that people paid for - mods, if it's not ok please edit, I really feel people will benefit from this though - http://instantteleseminar.com/?eventid=22057023 )

Anytime you're dealing with foundation problems I'd suggest taking a pass or getting a solid estimate for repairs. For starters this property needs a roof, that's $4k or so. A foundation problem at the minimum is usually $10k, but likely higher.

If the property was worth $200k a foundation repair can be figured in, but houses at this price are VERY hard to flip even if there's not much work needed. The problem is rehabbers want to make at least $25k-$30k at a MINIMUM for any house the fix and flip.

How can you make $25k when you're only able to sell it for $45k?

If I was going to offer on this, I'd offer around $5k.

Look at the numbers if you're going to flip to a rehabber who will fix and flip.

So you offer $5k, you sell it to your rehabber for $10k. ($5k for you) He then pays $3,000 in closing costs for the 2 closings, (he's up to $13k) he'll pay a Realtor around $1500-$2,000 when he sells, (we're up to $15k)and he'll pay $4k for the roof and (let's assume) $10k for the foundation. (he's now put $29k into the deal) I'm assuming another $5k (probably more) for other repairs(if it needs a roof and foundation work I'm SURE it needs at least carpet and paint) so he now has $34k into the deal... and we haven't added his utility costs, insurance for a few months, and his interest/cost of funds to buy.

So you've got a guy who has put around $36,000 into a house (and a few months of his time) who can likely sell it for $40k. (if ARV is $45k)

He's going to make around a $5k profit... maybe. If nothing else comes up. And that's IF you can get your offer of $5,000 accepted.

The other option is maybe you offer $20k or so, add $5k and try to sell it to someone who will put a roof on and hope nothing else goes wrong and continues to rent it. Even so, the guy's now got $30k into a house that with foundation troubles most likely isn't worth what he owes. Yeah, he can make a couple hundred a month, but if that foundation goes it's going to take him 4 YEARS of cash flow to fix it. It's quite a risk...

So again, I'd offer $5k and see what happens. Let the seller know that that foundation is a HUGE risk.

The other option is make a higher offer but insist he fix the foundation first.

The moral of the story is this... run away from foundation troubles unless you're an expert or can work with one, and stay as far as possible from deals that the ARV is as low as this one is, unless you're buying for cash flow and long term rental.

It's VERY hard to squeeze profits flipping a house that will only sell for $40k-$45 AFTER the repairs are done... again, because your buyer wants to make $30k or so after the deal's done... so unless you can pick them up with very little repairs needed, OR for around $5k-$10k it's a lot of time spent for nothing. I'd try to find higher priced houses...

Nick

Thanks for the information. I gave it to my realtor and he is trying it out now.
I hope this works because he can't figure out how to do it and it should since you are a realtor yourself. Your help is greatly appreciated ty.

Elelina1

I didn't mention that the prop is FSBO and I'd just be assigning the contract, so no realtor fees and only one closing cost, and that all of my buyers pay cash and won't be taking out mortgages so the $450 rent would be pure cash flow. They may even be able to raise rent since the avg rent in the area is actually $540/mo.

Considering the above, you still think this would be a poor investment? Thank you again for giving me your inside knowledge!

OK.when i find a property i think is a good deal and want to lock it up for wholesaleing or lease option.Which contract do i fill out,sign and give seller to lock it up?Also when i find a buyer for it do i use the lease purchase contract or purchase agreement for whatever the buyer is doing........Also when i find a property to lock up for wholesale or lease option,on my contract do i use the 14 day inspection for an exit stradegy?...Sorry guys,im just so ready and am just getting these kinks out because Mr. Rambo will succeed..Thank You Family.Thank You..God Bless!

Right... but I'm evaluating this from the perspective of someone who's going to BUY, FIX, and RESELL. When you assign it, your buyer will pay a closing cost. If he rehabs and resells it, he'll pay ANOTHER closing cost. He'll also pay a Realtor... not "now", but after he does all of the repairs and re-sells it in 3-6 months. It doesn't matter if it's now or 6 months from now, he still has to factor those expenses in.

And, when they pay cash most of them use private lenders. If they use a private lender they likely pay 12% or so interest plus a few points. So even if they're going to buy and rent it, they'll likely borrow 35k, so now they have a $385.00 payment, PLUS taxes and insurance. There's not much left getting $450.00 a month rent. They may even be negative.

Even if they use their OWN money and pay $35k to buy and repair the place, you have to calculate their cash on cash return and "what else" they could use that $ for. They put out $35k, and I'm guessing $150 a month goes to taxes and insurance... so if they get $450 a month in rent, after they pay the taxes and insurance they bring in $300.00. So they "make" $3600 at the end of the year IF it's not vacant at all and IF there's no other repairs, a change in tenants, etc..

So they make $3600 on a $35,000 investment. That's around a 10% cash on cash return... not bad, but how much "could" they have made with that $35,000 putting it somewhere else?

I'm not trying to "poo-poo" the deal, lol. I'm just saying you have to put yourself in the shoes of the people you'll try to sell to before you put in the time. Will anyone buy a house that's only worth $45k that needs $20k+ in work, and buy it cheap enough so you can make money too?

Unless he could pay under $10k AND get the foundation fixed for really cheap, it'll be hard to find a rehabber (buy/fix/sell) to buy this.

But someone who wants to buy, rent and hold may be interested... if a 10% return makes him happy.

The unknown is the foundation. If someone has to pay $15,000 to fix that, and another $4k-$5k for the roof, they're into the place for $20,000 in REPAIRS alone. Add the purchase price and it's tough to squeeze out a profit. (the blood from a turnip theory) The place is only worth $40k-$45k.

So if I were you, I'd look a lot more into the foundation problem before doing anything. Either have the seller fix it, or get a REAL estimate on the real cost to fix it from someone. If it's minor and can be fixed for only a few thousand, it may change things.

Keep in mind, if the foundation is bad, the whole house can be literally skewed. Windows and doors aren't "square", walls literally can break/crack, roofs become un-level... you hear the term "a house is only as good as its foundation" used in all kinds of situations, because it's so true. And they're not cheap to repair.(in many cases the entire house has to be lifted on jacks)

I'd start by asking your buyers "would you be interested in a property in this general area of town (no address) that's worth $45k and needs a roof and foundation work? And if so Mr buyer, how much would you offer?".

If he says "yeah I would be" and gives you a number that you can add a few thousand to and make that offer, THEN put it under contract... or maybe just get an option up front and shop it a little.

Really though... try to find deals worth a LOT more. (ARV) Remember the turnip!

nick

Thanks again for the detailed information! I get where you're coming from now. Unfortunately, I'm only getting calls from sellers of low-valued properties, even though I'm placing my signs in areas where ppl are financially affluent.

How are the bandit signs working out? What I have been learning by doing this in different areas that I am in, is that there is a lot of tweaking in finding good deals! Wow, its actually a lot of fun!

I am going to be re-doing my business plan for Chicago and start doing and learning techniques like bandit signs. There is a lot of competition in the MLS and you have to act extremely fast. So, I think there would be more room for profit from a "self harvested" deal.

Excited to try them.

So my very first deal that I had an agreement on, never panned out. The numbers weren't the best on it for a flip. The home would be AWESOME for a rent-to-own or just a buy and hold. It literally needed zero work, but a lot of my buyers are interested in flipping and not buying and holding at the moment. That's okay though. There will be new deals to be had.

I have 2 short sales under contract in Central Illinois. It will be interesting to figure out how well these go. I am a little nervous with these actually. I feel like I left myself a little too exposed on them. I had to end up using my own money for earnest money. My buyers aren't intersted in them unless I get the bank approval from the contract. At that point my buyers will take a look at them, but I am in a position that if the buyers don't want them, I can loose my earnest money if I pull out. Oh well, I have learned a lot on the short sales so far which is worth way more than the earnest money...if I loose it worse case scenario. One of the houses would be a good deal, it only needs 3k of updating. I am also very nervous about using transactional funding with these, but this comes from not knowing what to expect.

One awesome tip that I have discovered along the way is.....instead of hiring a home inspector. You can hire certified handy men to give you estimates. That way, if you need to back out of a deal, you got a certified estimate from a certified roofer/plumber/election/contractor that is registered, licensed and bonded. You can use their free estimate to get you out of a contract if you need to. You're not paying for it either! I love it!

My Realtor in Michigan is kicking butt and taking names. In the last week we have fired off 40 offers. One of them may hit it looks like. Its an REO. Becareful with REO's most Fannie and Freddie properties have title seasoning issues. Meaning you have to own the home for 60, 90 or some other length of time and/or then not sell it for X amount over the previous sale price. In this particular area, the value on finding deals outside of the MLS is huge.

Its very exciting to see how much you adapt to a particular market. Looking back on it 3 weeks ago, I really knew nothing about any of this. Its awesome, how much knoweldge you gain and develop. Its going to be so valuable here in just a bit. I just know it!!

Keep on Trucking!!

Over the last week, I have been in touch with some fellow DG'ers. I am actually working a deal or two in Chicago with some people. Its a lot of fun, and very encouraging. I cannot stress how VALUABLE it is to possibly team up with somebody, especially from DG.com.

For the past week, I had been feeling down and "alone" with a lot of this. But, being able to reach out to somebody that is trying to do the same thing is amazing. Its such a breath of fresh air. It gives you a boost of confidence and lets you be twice as effecient.

For example. One area in Chicago that I am working on with a DG'er we have an agreement that she will work on finding the buyers and I'll help. I'll work on finding the property by being an investor friendly agent for us. I'll use the MLS, submit a ton of offers, look up comps, negotiate and lock up the property. Once that happens, she can help do some of the home inspections and we will both work on assigning it to a buyer. Right now we are VERY close to securing 2 properties under contract. I'm so excited!!

I cannot tell you how awesome it is to use each other and help each other. You'll absolutely love it!

they're working out very well--we put 10 more out last night and woke up this morning to 3 voicemails on my Google Voice acct! The only downside is that i'm only being contacted by sellers of props w/low property values (ARV of $47K and below) that need TONS of work.

I have a question regarding ARV (from doing comps and such) vs County Appraisal Value--which one is accurate? Sometimes these numbers differ by the tens-of-thousands of dollars!

Over the past week, I have felt every single emotion about trying to scramble and get a deal done. Once your agent says "CONGRATS!! YOU GOT ONE!" That's when it hits. I haven't closed a deal yet, but working hard for my first one.

Here is a video on a lot of the stuff I have "felt." A lot of the negativity towards me has started to kick in by people that are close to me. Some of my co-workers, friends and family are starting to doubt me now that I have properties locked up under contract and no money to pay for them.

You just have to trust everything you have done to this point, enjoy it, and look through the thick emotions. Don't give up! I know I surely wanted to. Let's get through it!!

http://www.youtube.com/watch?v=_P3sRPgRX3M

Hey Everyone I submitted 25 offers yesterday with my agent. I text her today and this is the exact response i got back.

(Agent) It would take me a little while to draw up all the offer. And I need you to sign for all of them too. And if you are purchasing cash, you would need POF IE a Bank statement.

My qeustion to anyone is do I need both? POF and IE bank statement?

And I would like to know did anyone get a POF letter from Coastal Fundding.com and used it to submitt offers thru an agent? And did the offer go thru?

Does this POF letter from Coastal Fundding really work?

Someone please give me advice.

Thanks in advance!!!

A lot of misconception about the cash offers are....that agents think you have to have money in the bank and prove it to pay for a property in cash.

So.....I'll try to explain.

You are writing a cash offer..more specifically an equivalent to a cash offer. Basically what you are doing is waiving your right to a mortgage contingency. This mortgage contingency is for people who are getting a mortgage/loan on the property. If somebody that is buying a home and getting a mortgage and somewhere down the line can't get obtain one, they can use their mortgage contingency to back out of the contract with out penalty (meaning get their earnest money back.)

By waiving this contingency, in some/most contracts it represents a cash offer. Now, using Coastal Funding, you really are getting a "loan" if you need to use them. But they are hard money lenders that usually will give you the cash so that you can write "cash offers."

If your agent asks you for a bank statement, tell him/her that you are waiving the mortgage or financing contingency. You are going to use a hard money lender.

Also, if that doesn't work. Try using the www.indsiderscash.com proof of funds letter. It gives you two letters. The first letter is your "proof of funds letter." The second letter is from a banker at Wells Fargo saying there is greater than $500,000 in the bank account being used. That should suffice this situation.

Hey Ray, if you're paying cash, you just need the POF letters. They should go through. When your agent said i.e. bank statement, you can still provide her with just the POF letter - bank statement is just another form of proof of funds.

And sometimes, you just gotta do it to find out if it works for you, your agent, your market, and everything else

If it fails, then only figure out another way. Hope that helps!

Hey Awaterloo I would like to say first thanks for all the great info and video you have in the Thread. But I have a qeustion for you, I read in your post that you put the earnest money up and Im guessing it was a lot. But lets say I put up the Earnest money like in your situation, but I put in my contract that I would want a 14-30 day expection period. Then I get close to the ending of my expection period and I dont have a end buyer, would I lose my earnest money for backing out of a deal?

Hey and I learned another exit strategy from Carol Stinson's Mentor call. She said she sometimes put in her contracts as one of the contingecies (Purchase with the approval of my partner). Thats another good exit strategy. Thought that would be helpful for you!!

Alex, you just solved one of the big questions I had on my mind. I might still end up getting a home inspector if I think there might be hidden problems with the property (might need to negotiate the price based on volume). Thanks and good luck with your deals!

I just wanted to say thank for the advice and Your rocking this thread keep it up and like dean said you help others and good things would come your way thru different situations. Your fisrt deal might be with those 2 properties you have under contract. Good luck and hope everything goes well!!!

Hey Ken thanks for explaining what the IE statment is for. I just want to do and say the right thing and not scared this agent away because I sound and dont know what I'm talking about.

Thanks anyway and good luck!!!

Michelle, Nick's got some great points. However, have you considered the deal with only 1k profit for yourself? That would give the ultimate buyer some room to make more profit. And since it's FSBO, negotiate with the seller if he'd accept a low offer, 5-10k maybe. If he agrees, use the bird dog agreement located on http://www.deangraziosi.com/birddog to "assign" the deal to you buyer. This way, you don't have to lock up the deal and mess with all the hassles.

One thing, if you put your bandit signs in financially affluent areas, how are you going to find people facing foreclosures etc? Also, don't really understand why sellers with low-value properties would call you...maybe they live close by?

I checked out insiderscash.com and they seem AWESOME! Slight hiccup though, they require that you enter in an LLC or other business name of sorts before they'll generate the letter. This won't mess up the paperwork will it--if you have the purchase agreement and everything else reflecting your personal name and then the POF letter reflecting a business? Or could you put "[your name], LLC" as in "michelle casey, llc"?

When I say financially affluent, I mean the houses in the area are newer (10-20 yrs as opposed to 70+yrs) and in somewhat better condition; and houses in every neighborhood are in foreclosure! Plus the signs are out by YMCAs, Walmarts, grocery stores, gas stations, places like that so they a great variety of ppl are being exposed to them

I have no problem keeping my fee to $1K and would graciously accept it; I wouldn't really expect to make $5K-$10K on houses with low-market values where I couldn't make the numbers work in the best interest of the investor.

Wish I knew why I'm only receiving calls from such sellers as well (?). One respondent is a landlord who is wanting to retire and move "back up north" (wherever that is) and she was able to sell her other rentals to her tenants. She only has two left and the tenants aren't looking to buy, she saw my bandit sign, and decided to give me a call. Another guy is a contractor of sorts who bit off more than he could chew with this one particular property and just doesn't have the time to do all that needs to be done w/it (roof, paint, carpet, etc--even though he bought all the materials already) when other projects that will bring him and his company more money demand attention; but at least I was able to also qualify him as a cash-buyer.

Suppose in this business, its sifting through the mud and muck to finally unearth that piece of gold or "diamond in the rough". I'm definitely going to contact the Success Academy Monday and run the lot by them and see what their advice is.

Hello all,
I've been holding off a little too long on getting my marketing efforts underway. But I have my business cards and have started handing out everywhere I go, it gets easier each time you do it and becomes kind of a fun game. But I haven't really used any other marketing methods yet. So I vow to start doing them today.

I've made a personal decision to not do a traditional ghost ad. I understand the pros to them but there are so many other ways to get the word out and find cash buyers that I don't want to use any methods I don't feel are based fully in integrity. But each person has to decide what feels right to them and I fully understand why some may think they are perfectly fine and ethical.

I'll be using all sorts of other methods, especially the one's highlighted by Greg Murphy in his Mentor talk and I will try posting non-Ghost Ads of some kind that are still entiticing to buyers.

I went to a REI Club meeting today. It was a decent class on Lease Options. I was amazed at how many people left right afterwards instead of networked. I managed to talk to 6 people afterwards and began my marketing in that area, one was a cash buyer while the other 5 were like me just starting and looking to focus on wholesaling or similiar strategies.

I got a little bogged down in trying to make my website look good before I started my marketing efforts and it took a bit longer than I planned to get it functional. But at least that part is done and I'm ready to finish of page 3 of the 30DQCF and move onto Page 4 and beyond. Best of wishes to you all.

Don't get too hung up on the POF thing all... it's one of the things that new investors lose sleep over and you laugh about it later. (that and EM)

I have not been asked for POF in years... even when dealing with people that don't know me. An answer can be "depending on what part of town and price range the property is in, I'll be using different sources, some I'll bring in partners, others I'll fund myself... I'll get you something, but you're ok if the money comes from somewhere else when we close right? (he'll say I don't care as long as you close, then you say) "Anyway Mr Realtor, get me an offer accepted and I'll get you whatever you need".

You need to TAKE CONTROL, but without them realizing it just happened.

Also, as long as you have an inspection clause, or "contingent on partners approval" or "contingent upon attorney review" you'll get your EM back without needing to pay anyone for inspections, etc.. After a while you'll be able to walk through a house and know within a few thousand how much the repairs will be.

Realize this business is not easy... it's "simple", but not easy.

Many of you will also find that you'll do your first deals in other niches than REO's or dealing with Realtors. Just don't ever give up.

If anyone wants a training audio on estimating repair costs, shoot me a PM.

nick

I think you should cross him off your list and find another agent. You don't need to qualify for a loan. He isn't on the same page. Move on.

Tell him you are asking for a list of all cash buyers of all agents in your city, area etc for the last 90 days. Not just his sales. You will probably just get a list of the addresses of the homes that sold. You will have to look up in the tax records the actual owner and address to contact. You also will have to look up the phone number online or just send a letter. I got my first list yesterday and I have been working on tax record research. I am going to mail a letter to each investor, just like Dean tells us to do in his book.

Hey everyone I figuered I share with you how amazing the banit signs are working for me. First let me say I only put out 8 signs Friday night. why 8, because the hurricane Irene is suppose to be coming up nothern east towards CT where I'm at. So I didnt want to put all 25 out and risk them getting blown away!!. Well I put the 8 in the busy intersections and the next morning I recieved 3 calls to my google account number. One guy owns his house feel and clear and told me he needs the money to invest in something else. He lives in New York and hates traveling back and forth. He had the property list with an agent but didnt sell. So I think hes real motivated and this probably is going to be my first deal!!! The other 2 call were people that still owed high mortgages on their properties. Well I pick my signs back up, 1 was missing. what I'm trying to say I had 8 signs out in a matter of 17 hours and got 3 call. Now if i had put the whole 25, iwould probably got 5-6 calls!!!

I can't wait until this storm passes, so I could put all 25 out!!!!!

I have been putting off doing the ghost ads for the same reason. Just cant seem to get past the feeling that it is not the right thing for me to do. If you would, let me know what other methods you are using and how they are working for you. you can pm me if you prefer. I am a person who likes to have all my ducks in a row ( spend to much time on getting set up ) and end up with education overload without going into action. I definately am going to stop reading and learning and all that for now and just follow the RBBP formula.
Sharon Wallace
Summerset Enterprises