How do you overcome viewing a depressing, dirty and borken old home?

We've been doing this for 14 years & the crapier the house the more potential profit. Experience will teach you to look past the mess & see the potential of the house, take 70% of the ARV, subtract the repair costs, subtract your profit & that is the highest you will offer on that house.
Two days ago I previewed a REO, within 5 minutes of being inside(I knew there were animals in the house because of the stains on the carpet & the smell in the house) I was bitten-ed up & covered with fleas.
Did that **** me off, of course ... but I kept on seeing $$$$ signs ... I knew it needed 8 or 9K in repairs/materials; the house was worth 45K done; I would offer of 18,600 for the house, leaving me a 17K profit.
That makes it worth it !!!

Hello Gary and Jill,

Thank you for giving me your dose of reality. I will keep that in mind. Do you have your own repair crew or do you do the repairs yourself?

it is not just the females that have trouble with this. I suppose you could have someone do it for you, but probably the only way to know to your satisfaction is to go in the trenches!

You'll never see the true nature of a home until you see it with your own two eyes.

Expect this to be the norm of what you see and then you won't be 'depressed'; see the bigger picture.

You overcome it by seeing what you can get out of it, make your money, and moving onto the next

Hope it helps

We do our own repairs/rehabs, except for roofs or central A/C. Those two contractors do the installations much quicker & cheaper than what we could, besides they're familiar with the county codes & inspectors; this way the permit inspections pass much quicker.
As for kitchens, bathrooms, electrical & plumbing; we take care of that ... it saves us money keeping a better profit margin & it's fun. We like working together & taking a dump & transforming it into a beautiful finished product that a new family can enjoy!

Gary and Elix hit this one the head - visualize the ARV and profit

What you described is what most fix/flip investors want--we see money

If you dont want to look at this type property, look at higher priced homes that need minor cosmetic repairs

MOST af all, see VALUE/PROFIT

I always say I love the smell of cat or dog poop or both!! I smell $$$$$. The houses we get and make money on are the ones the owner/occupants don't want. UNTIL we fix the place up that is!! Looking for beautiful dream homes is for owner/occupants ( They ALWAYS pay more than an investor)Investors look for properties that they can buy and CREATE equity. Give me disgusting carpet, dirty popcorn ceilings, water damaged bathrooms, dark smelly dumps all day long. We turn them into the houses you want to walk through now. However once we are done, you pay retail!!

Michael Mangham
Mentoring/Team Building Nationwide
MD Home Acquisitions

Hello Elix and Gary

One of my favorite things to do is travel around the country to teach and train students on how to evaluate and view potential properties and what we look for. The first things I tell the students is the more smelly, ugly & depressed the property, the better your deal is going to be. When we view the properties, open the front door and the first thing I say is……”It smells like Money”. (students laugh) We all should love the smell of money. When the house looks and smells bad, this is money to us.
You have to keep reminding and telling yourself, the pay out after the repairs are done, will outweigh the look and smell of the homes. The other part of this business is to let others do the work and let them do what they do best and we need to continue doing what we do be and that is finding the house that “Smells like Money”.
Keep your nose to the ground.
Best of Luck

When looking at homes and seeing the damage that needs to be fixed, or the amount of grossness that are in them. Keep the end in mind. Think of the money you can make.

When I look at distressed properties, I see $$$$ signs. That just gives me leverage to ask for a lower price, and thus I make more money.

You just need to put your money goggles on!

Keep Moving Forward!!!

Just remember that there is a direct relationship:
The greater the distress... the greater the potential profit!

Ralph,

Don't let that depress you in the least. Make such a low-ball offer using the MAO formula (After Repair Value X .65 - Repairs - your Wholesale fee = Maximum Allowable Offer) that you are embarrassed by your offer. Just think about it, with a house in that extreme condition, he probably hasn't had too many offers!! As Dean says, you should (almost) be embarrassed by your offer.

Also with the power off, you really need to be low enough to factor in the contingencies of issues with the electrical and/or HVAC. So go low; as low as you dare in your offer and make sure to include a contingency or two in case your buyer comes back with more repairs than you first find.

Also don't counter your own offer. If the owner doesn't accept, thank him for his time and ask him if you can check back with him in a month or so. Then a month or two later, call him back to see if the house has sold. If not, re-evaluate your numbers and make him the same (or lower) offer. Time changes everyone's perspective and what he may not accept from you today, may sound like a pile of gold a month or two from now.

So don't argue with him. Don't negotiate against yourself. Be polite and gain his permission to follow up with him in a month or two and do so. After he has to pay taxes and insurance for another month or two, he may be begging you to buy the house from him at an even lower price!!

Good luck; keep at it; and don't get disheartened. There is money in them thar houses!! lol

--Walter

'If it is to be, it us up to me'. -Unknown

Well first of all we are looking for the homes that nobody else wants. Mr. and Mrs. Smith buying a home do not want a fixer upper. they are turned off by Mold, holes in the ceiling, carpeting shot and all the walls have been tagged.

That being said is exactly what we are looking for....just the opposite! The diamond in the rough, the potential waiting to happen.

Besides that if we are selling the property, that is our buyers decision. As a matter of fact the cruddier the buyer. We are not buying the house for ourselves and a lot of new investors are approaching homes just like that.

Remember these type of homes have much less competition and that is in our favor! Take advantage of it and reap the benefits!

Randy Bailiff
Dean Graziosi Investment and Life Coach

You just found a gold mine!!!!

Shirley

I don't think you can ever let yourself get down in real estate. Sure, your disappointed for a minute when you first see a property...every body is, but you have to get over that really fast and try to see the potential rather than whats wrong. If you have problem seeing the potential, you might want to take someone along that has a better ability to do so.

In real estate sales, we realtors face this everyday, especially with couples. Most people only see what is wrong with a house, and that is what they bring up. In any form of sales, that's what's called an objection, and some are absolutely valid. In sales, you have to overcome the objection with a comment like, "Yes, but that can be fixed," or "imagine what it would look like if that was fixed and you painted it like...," etc. When you're going it alone, you have to overcome your own objections (that your mind puts up).

Of course, follow Dean's teachings about doing a cost analysis, too. Some places are indeed too far gone to flip, and thus they are not a suitable investment.

And, if the deal falls through, move on immediately. I have deals or prospective deals fall through nearly every hour. I cannot get negative even for a moment, because I have to move on to finding positive solutions for the next person.