What You Missed by Cliff Barteaux
Our January general meeting was packed full of information. Vena Jones-Cox gave us information on how to build a deal finding machine. People spend most of their time marketing so that they have deals to buy, sell, and hold to build their wealth. You need to do it both efficiently and effectively in order to be successful.
Vena has been investing in real estate for 19 years. She has been speaking to groups for 10 years now and has found that lack of support and fear stop people from following through on deals more than anything else. Her mission is to both narrow and widen peoples’ perspectives on real estate investing.
New investors need to narrow their vision. They need to just focus on making a deal. You don’t have to know everything to make money and do a deal. For instance, you don’t need to know about land trusts, LLC’s… to do your first deal. Find some help at SREIA. You also don’t need to do it all. If you listen to Robin Thompson she makes it sound so good to do rehabs. The same holds true for someone like Mark Sumpter who deals with foreclosures. It is only natural to think that they are right and why shouldn’t you do that too. They are right, but you need to add methods over time. Part of the paralysis of analysis is feeling you don’t know enough. Concentrate on one area first and doing your deal. There is only a limited number of skills needed to make money.
Vena’s nearly perfect real estate plan is a simple formula that consists of the questions: what do you need to get, how do you get it, and what are you going to do with it. You need to define your goal, understand basic finances, and understand exit strategies. Your exit strategy is what comes from your goal. She used an example of using lease options to control single family homes in pride of ownership areas. You also need to know what you want to do. She asked what the purpose would be of quitting your job to find out you don’t like investing or being a landlord full time?
When you find a great deal you need to know how to evaluate it, fix it, negotiate with the seller, and how to present an offer to the seller. She noted she just made an offer of $70,000 that was accepted in December on a house that originally listed for $180,000 and had an asking price at the bank of $110,000 at the time. She was able to get such a great deal because she could close quickly and get the property off the banks books before the end of the year.
Vena outlined the way to money making deals are in six steps:
1) understand your exit strategy;
2) generate leads that bring motivated sellers to you; (What kind of people have the kind of needs and situation that will sell you their house and you can take over payments such as in a divorce? Who are they and where do I find them? How do I get them to call me?)
3) find out fast over the phone whether or not it is a good lead; (Learn how to triage.)
4) find out the after repaired value; (ARV)
5) determine a profitable price;
6) use purchase contracts that protect you if you mess up in steps 1-4.
There are thousands of properties listed on the MLS. They are in all kinds of condition. Why not look for ugly properties that way? They will still be significantly below retail value. There are three strategies to working the MLS “goldmine”. 1. Get a buyers agent if you’re qualified to buy who can make multiple offers for you. 2. Work with lots of listing agents and let them show you their listings so they receive the full commission. 3. Become a real estate agent yourself. If you can do six or seven deals a year, it eliminates the need to work with a buyers agent or listing agent.
Vena then gave tips on working with agents and then how to work on estate sales. She noted these properties are probated first and then sold via an executor or an administrator. In dealing with an estate you can either deal directly with the executor or estate attorney who represents the estate who can make a decision quickly or wait until the property clears probates and gets listed on the MLS. The only problem in dealing with executors is that they are usually grieving parties and need to be dealt with that in mind. Do not just call them. Maybe do a timed mail out over a six month period not only expressing your sympathy and not pushing too hard, but also politely showing them the benefits of working with you.
Frustrated landlords or those downsizing were the last group of motivated sellers Vena mentioned you might find worthwhile. Mailing or calling a list that you purchase or make up through court records is essential. They are motivated, there is little competition, and they understand that you need to make a profit . It is also usually cheaper to follow through with a deal. You can find their information in public records. The examples given were: evictions, building and health code violation lists, section 8 lists, and non owner occupied properties.
The bottom line and Vena’s keys to success she says lie in her ability to generate tons of good leads and get the information she needs on the properties quickly and accurately.
See past meetings here
