What You Missed!
By Rob Earhart
"Rehabbing with Robyn Thompson"
Robyn Thompson is known as the "Rehab Queen" because of the extensive number of houses she has purchased, rehabbed, and sold (or kept for herself). One year she rehabbed 51 houses learning everything to do right to become successful, and what could go wrong. She tells how to best develop your business using a four step process:
Step 1 - Find a high profit deal. She found hers by buying a list of owners who live at least 4 hours away from their property. She sent our 1,000 letters and her phone rang off the wall. She got 130+ calls and there were 14 houses which were owned free and clear. With that type of property you can arrange payments and buy at substantially under market. Of those she purchased several, rehabbed them, and she was on her way.
Step 2 - Continually look for money. Use partners, hard money, private money, and whatever source you need in order to do deals quickly. This should be a priority throughout your real estate career, as the deals increase in dollar amounts; you will need more and more funds to close.
Step 3 - Do the rehabbing ! Most investors try to save money by doing the work themselves or hiring the cheapest workers. Robyn has done rehabs from a few thousand to $1.4 million and insists you must use qualified contractors for all of the work. Qualified means skilled, insured and actually be independent contractors. Always get your bids including materials, because if you purchase the materials, the contractor could be misconstrued as an employee and you could be liable for any damages or injuries. When you rehab, make your money work for you by creating a great looking home with amenities that may only be found in higher end houses: concentrate on bathrooms and kitchens, since those sell the house.
Step 4 - Market and sell it ! Robyn sells on "Down Payment and Monthly Payments" period. R.E agents always sell on price, but most people buying a house for the first time look at how much money they have in the bank and how much they can afford each month for rent. Marketing to these buyers allows you to sell your home quickly.
Robyn expounded on the best ways to find "High Profit Deals", listing 11 places to look for them. Number one is the MLS, and she suggests that you become a realtor so you can do your own research, comps, and get access more quickly that the average investor.
Going down the list there are foreclosure lists, REOs, using signs, letters to attorneys, estate sales, wholesalers, landlords, networks, ads and flyers. You don’t need to do every one of these ideas, but pick a few and begin your search.
Estate sales are huge, as there are a lot of properties where the heirs are anxious to get their money, but the house is not selling because of the soft market. REOs are plentiful and will be so for the next 18 months since banks are still foreclosing at the rate of 9,000 in the month of April 2009.
As you build your portfolio, Robyn warns not to listen to people who make less than seven figures. Poor people will always tell you what can go wrong and why you should stay broke with them, but millionaires instruct you on how to reach their level. When looking for people with money that you may be able to partner with, or borrow from, don’t judge their worth by their looks. Most millionaires dress plainly and live modestly. "If they wear Armani, they live on plastic" quoted by Robyn.
"Follow in the footsteps of someone making money, and you will make money" is another adage from Robyn, which makes the point effectively that you need to hang around successful people to become successful. One place to do that is SREIA ! Those people think like you and many have money to lend, or are willing to partner.
In explaining how some of her own deals occurred, she talked about a young man who brought her a $2.2 million property which she purchased for $1.4 million and rewarded her "birddog" with a new red Lexus for his two hours of work. This is an example of what can be done by anyone with a little knowledge and some effort.
In closing she reiterated the three steps to be successful in selling in a down market:
1. Make sure you know your exit before you buy
2. Rehab the house with quality making sure it looks "Drop Dead Gorgeous", especially the bathrooms and kitchen.
3. Sell the house on an affordable down payment and affordable payments, and it will sell quickly.
Robyn held a Saturday class immediately after the General Meeting and many SREIA members signed up for it in advance. In addition she teaches a 5-day boot camp which gives you the training, motivation and tools to succeed in your Real Estate Career. SREIA encourages everyone to get an education and Robyn Thompson is someone who can give you an excellent one.
Knowledge alone will not make you wealthy, you must put in some effort. If you learn and act on that knowledge you will be on your way to greater things.
Now go do it !