MOTIVATED SELLER : FIX AND FLIP KEY

Single-family homes are the backbone of the country. Most people start out in real estate by buying a single-family home. Most people who purchase single-family homes also think about living in the home, rather than renting them out. I won’t spend much time on single-family residences as a house to live in. Therefore, I will speak about single-family residences as Income Property. When buying a single-family residence as an Investor you must deal with Motivated Sellers. A Motivated Seller is someone who needs to sell the property, not someone who wants to sell the property. There is a big difference. Is someone who has their property listed in the MLS a Motivated Seller? Possibly, but most sellers in the MLS are retail sellers. They don’t have to sell the property. They will sell if they get their price or close to their price. This is an example of someone who wants to sell their property, but does not need to sell their property. We need to deal with motivated sellers that have to sell the property for one reason or another. Where do we find these Motivated Seller?

1) People who are in foreclosure - These can be people who are in the Pre-Foreclosure process, or at the Foreclosure Auction.

2) Heirs that have acquired property through probate -These can be found through the courthouse, or a private service that sells this information.

3) Listings : a. Multiple listing services. b. Realtors. c. For sale by owner’s (FSBO). d. Newspapers.

The two main ways of holding single-family residences for income are fix and flips and buy and hold for long term.

Fix and Flips Buy the property as cheap as possible. This can be done many different ways such as:

1) Buying a short sale.

2) Buying a pre-foreclosure or at a foreclosure auction.

3) Buying a Probate.

4) Use an option. The main thing to remember is you must have a Motivated Seller. A Motivated Seller is someone who needs to rid themselves of the property. It is not a seller who will only sell if he gets his price. Most Listings in the multiple listing services are all retail prices. For a fix and flip you have to buy wholesale. When you find a Motivated Seller be sure to get it at a wholesale price. A wholesale price is approximately 65% to 80% of the retail price depending on how much fix up that you need to repair the property. If there is a lot of fix up you might want to pay less than 65% of the retail price. If there is no work to be done and you can flip it without putting any money into it then you might pay as much as 80% of the retail price. If your pay more than 80% of the retail price you are paying retail!

Maximum Allowable Offer On the fix-up, are you going to do your work yourself to save costs or are you going to hire out the work to get done. If you do the work yourself you will save money on labor however it’ll take a lot longer unless you’re a contractor. If you hire it out it should be much faster but more costly to do the flip. To do the work yourself you have to factor in the time value of your money. Do you want to have the property for three or four months to do repairs on the weekends, maybe at night etc. or are you going to work eight hours a day seven days a week until it’s finished with no disruptions. Some properties will not need any fixing at all. Those you can start marketing retail right away. To flip the properties right away, you must have buyers. Where are you going to get your buyers?

1. MLS - you can always list your property with a Real Estate Agent and he/she will put it in the Multiple Listing Service. That will be a retail way of finding a buyer.

2. Have an Email Buyers List. Start compiling an email list of buyers. Some can be purchased, or you can start a campaign to collect as many email addresses of potential buyers that you can. If you have a website, you can collect email addresses by giving something away on a squeeze page. This is a page that makes people import data to obtain information, i.e., name and email address.

3. Put it on craigslist. You have to be careful about other wholesalers trying to get your property as inexpensive as possible. 4. Old-fashioned newspaper. Newspapers still do classified advertising. The other way of investing in single-family residences (SFR) is the Buy and Hold method. This is where you buy it either wholesale or retail, and you plan on holding it for a long time such as 10 years or more. One can pay retail if you are going to hold onto it for a long period of time. Inflation will catch up during the next 10 years or more. Of course, if you pay wholesale you will receive a much greater return on your investment. These properties can also be fixer uppers and instead of flipping immediately for profit, one can hold onto them long term for an even greater profit over the period of years. Many people have gotten wealthy by buying a lot of single-family residences, renting them out and holding onto them for many years.

#costefficiency #returns