Tag: Real Estate

Categories
Landlords

Minimize the Learning Curve: 4 Expert Tips Beginner Landlords Need to Know

A young man looking professional in his stylish suit
Source: Photo by Austin Distel on Unsplash

Landlording can be a lucrative business, but it also comes with its own challenges. That’s why it’s essential to minimize the learning curve as much as possible and get tips from those who have been in the business for a while. You don’t have to take the trial-and-error approach if you already know the “secrets” and tricks to landlording successfully!

Read on to know the four expert tips for successful real estate investing.

Make It Difficult for Rental Advertising Scammers

Unfortunately, there are a lot of rental property scammers out there—especially on Craigslist. One of the common scams is where other people will steal your real estate listing, use the property information and photos, and replace the contact details with their own numbers and email addresses.

They’ll then:

  1. Attract interested tenants
  2. Say that they’re “currently out of the country” and can’t turn over the keys to them
  3. Have the tenants hire a locksmith to change the locks themselves
  4. Collect rent money and security deposit

Then disappear into thin air. You’ll be left with clueless tenants you didn’t get to screen, and a rental property you can’t rent out without telling the scammed tenants to go.

How can you avoid these scams?

Be proactive and mark your photos with your phone number and contact information. Scammers won’t take the extra time and effort to remove your watermarks; they’ll skip over your listing and look for other opportunities elsewhere.

Another tip is never to publish the actual address of your home. Instead, use the nearest cross streets to give tenants a good indication of where your property is without revealing the address to scammers.

Be Attentive and Creative in Screening Tenants

The ultimate goal of screening tenants is to ensure they are responsible people who’ll pay rent on time, maintain your property well, and abide by all the clauses in your lease agreement. In other words, the best way to avoid bad tenants is by having a good screening process.

Here are our pro tips on how to screen them:

  • Assess their cleanliness: Walk them to their car. Take a peek at how clean or dirty their car is inside. Chances are, if their vehicle is filled with garbage (like this poor vehicle), they’ll treat your rental home the same way, too. Their car is a reflection of what’s to come for your home. Or even do a surprise visit to their current residence – how it looks is how your property will look after they move in.
  • See if they have pets: Don’t ask if they have animals, because they can easily say no to that. Instead, ask how many animals they have—indicating that you already know they have pets and you only want to know how many of them there are. Make it a bit harder for them to lie.

Moreover, don’t believe anybody who says that their animals will “live somewhere else”. All too often, those animals will only live elsewhere for a while before moving into the home.

In other words, make it slightly more difficult for them to hide secrets from you. By checking their car and assuming that they have pets, you’ll get more honest answers out of the applicants, making it easier to decide if you want to accept them as your tenants or not.

Be Cautious in Accepting Upfront Payments Covering Multiple Months

Receiving upfront rent payments may seem great for you. You get to secure the money earlier without having to chase tenants for payments every month. However, take note of the following:

  • Is it legal? State and landlord laws might have a maximum upfront rent payment allowable, while some will require you to pay interest on it. Ensure that you’re familiar with the laws before accepting any upfront rent.
  • Why can the tenant afford it? Did they come upon some money and want to ensure that it goes somewhere necessary before they spend it irresponsibly? If that’s the case, they might not have a stable income or employment to afford the home in the first place.

Of course, there are exceptions to these situations. If you’re renting out to students, for example, the parents might pay upfront rent so their family won’t have to worry about paying monthly rent anymore.

Have a Thorough Lease Agreement

You may be tempted to use online lease agreement templates so you won’t have to create one from scratch. However, barebones templates won’t do much in protecting you or your investment property.

Plus, there are specific state and local landlording laws that you’ll have to consider in your lease, and other rental-specific rules that you’ll want to have (e.g., regarding smoking, pets, or painting the home’s interior). These are things that generic templates won’t guarantee or cover.

Instead, everything you want the tenants to know should be included in the lease agreement, so use online templates only as a guide to creating your own document.

Once your attorney approves the draft, sit down with your tenant and go through the entire thing. Don’t assume that they’ll read the agreement on their own—most of them will skim through it and call it a day. You’ll end up with tenants that will likely forget your rules, creating many problems down the line that could’ve been avoided in the first place.

Ensure that they know and understand your rules by having them put their initials at the start of every paragraph or sign every page of the agreement as confirmation. If anything unfortunate happens in the future, the tenants won’t have any excuse to say that they didn’t know the rental lease guidelines.

Pro Tips for a Successful Real Estate Investment Business

There are many other pro tips that you can learn from experts. Knowing these secrets is the best way to ease yourself into the rental business, become a great landlord for your tenants, maintain your real estate property, and protect your monthly cash flow for investment success.

Become a successful landlord today! Get in touch with me or my team at Logical Property Management.

We’ve been managing properties for more than two decades now, and have more tips and tricks to share for a thriving rental property business.

Categories
Landlords

Top 3 Upcoming Trends of Short-Term and Vacation Rentals in 2022

An STR in the metro market
Photo by Andrea Davis

During the pandemic, STRs took a hit to their profits. Let’s take a look at some of the upcoming trends and the positive outlook facing STRs in 2022.

Before the COVID-19 pandemic, the short-term rental (STR) market was going strong. In fact, Airbnb reported a 33% increase in booking during February 2020—a month before the pandemic hit. In contrast, during the pandemic, STR bookings took a massive hit. By January 2021, Airbnb reported record low bookings, down 31% from their average.

It’s now 2 been years and we have to ask: Will the STR market recover?

While we have seen that people are becoming more willing to travel with COVID-19 restrictions slowly easing up, there are more than a handful of factors that affect the future of STRs. You’ll need to know these if you want to navigate the uncharted waters ahead.

Let’s take a look at some projections for the STR market in 2022 and beyond.

STR Trends for 2022 and Beyond

If you’re running an STR business, you’ll have to reevaluate your strategies to adjust to the changes. With how COVID-19 changed how we look at STRs, the market has adjusted to fit the new norm. Here are 3 of the biggest changes we can expect to see for STRs.

#1 – The Fall of Seasonality

Before COVID-19 made vacations impossible, it was fairly easy to predict when booking would increase.

For example, for a property located in the mountains, you’re likely to see an increase in tenants during the winter. For rentals located near theme parks or beaches, such as Orlando and California, you would see an increase in booking during spring and summer vacations.

However, thanks to the rise and familiarity of remote work (both for employers and employees), people are more willing to go on a vacation during off-peak seasons. In a May 2021 report, Airbnb recorded that 64% of respondents are willing to travel during off-peak seasons—making bookings highly unpredictable.

With people more willing to travel during off-peak seasons, bookings for vacation rentals might see sporadic bookings throughout the year. The number of total bookings might be roughly the same, but it won’t be concentrated on seasons.

To adjust to this, you should provide deals and discounts more frequently instead of focusing on seasons. Having regular weekend discounts can target the customers looking for bookings during off-seasons.

#2 – Recovery of the Urban Market

During the height of the pandemic, many people fled from cities to avoid the crowd. For instance, over 320,000 people fled New York City during the height of the pandemic, primarily to get away from crowded areas and retreat to more rural environments.

However, with the increased distribution of COVID-19 vaccines, people are returning to normalcy in terms of their comfort with meeting people. They aren’t as afraid of the crowds inherent to cities anymore as they were during the height of COVID-19.

In fact, New York City had an influx of  new residents starting in May last year. Plus, malls are reopening, more restaurants offer indoor dining, public transportation is returning to normal operations, and people are starting to repopulate the cities.

With people flooding back into the city, the need for accommodations will rise. Therefore, the urban market is looking to make a fast recovery—giving you the perfect opportunity to grow with it.

#3 – Longer Bookings Are Becoming the Norm

With the rise of remote work and online schooling (at least, for the meantime), people have changed the reasons for their vacations and, in turn, the duration of their rentals. The increase of flexibility with our responsibilities affected the length of everybody’s willingness to travel.

In a recent report, Airbnb showed that the number of people willing to book stays over 28 days has almost doubled. This is a great opportunity for your STR to adjust your pricing, provide duration-focused promotions, and meet the increased demand.

For example, offering a 10% discount for every additional week that they book can entice customers to choose your STR for a month-long trip. Even providing one free day for every successful referral can encourage people to give in to a longer vacation—and give you another guest to look forward to!

By providing customers with attractive deals for long-term bookings, you can:

  • Increase the number of visitors choosing your STR
  • Increase your occupancy rate
  • Increase and strengthen your rental income

Take Advantage of STR Opportunities in 2022

With travel restrictions lifting, the future for STR investments is looking brighter than ever. Our world is returning to pre-pandemic norms and the STR business is rebounding—if you use the opportunities wisely.

Take these trends into account and change your STR’s business strategy. Adhering to the market and behavior shifts will certainly strengthen and grow your profits as an STR owner, thriving in a market that people are looking for in 2022 and beyond.

Did you notice any other shifts in the STR market? Comment below and let’s get a discussion going.  

Categories
Wholesale Wholesaling

Your Ultimate Checklist for Wholesaling Real Estate

A wholesaler and a homeowner working out the details of the contract
Photo by Scott Graham

It’s no secret: wholesaling can be a lucrative real estate investment method to earn a profit with minimal capital. On average, you can make around 5-10% of a property’s market value if you wholesale an undervalued home—that means you’re looking at a profit of $10,000 to $20,000 with a $200,000 home if you can get it under market value!

However, getting a slice of this pie does not come easy. Contrary to popular belief, real estate wholesaling takes a whole lot of skill, patience, and elbow grease. 

For example, you need to find a property with a motivated seller, then find a buyer for it, coordinate all the paperwork required, complete the deal as soon as possible, and repeat everything again. You also have to simultaneously grow and maintain your buyer’s list so your business doesn’t come to a halt.

In other words, there’s a lot to keep track of when dealing in wholesaling. 

But there is a solution to it: Make a list! Just like most projects in life, it’s easier to streamline the wholesale process if you have a checklist to guide you. That’s why we’ve written this ultimate checklist for wholesaling real estate—perfectly designed to help wholesale investors like you.

The Wholesale Checklist

Having a guide to the step-by-step requirements of a wholesaler can make the entire procedure easy as pie. But we do understand that not all of the things we’ll mention below will apply to you, so we advise that you focus only on the things that are most relevant to you.

Let’s get to the checklist!

A. Select a Market

Have you selected a market? Have you checked the trends of the current market? 

Selecting a prime market can land you a hot deal. You want to find a market where there isn’t too much competition but is still highly coveted. In other words, try to find a balance—buyer markets that are on an upward trend without much competition to deal with. 

Take for example Burlington, N.C. There’s a total of around 57 thousand brokers in North Carolina—far smaller than states like Florida with 212 thousand. But, the real estate market in Burlington, N.C. is booming right now. In fact, it is the 2nd most lucrative market in the US with listings only lasting an average of 35 days on the market.  

You can only identify potential markets like these if you’re familiar with real estate market trends, so here is a quick jump-off point to get started:

  1. Reference the MLS listings to get an idea of current trends in real estate prices.
  2. Look for how long listings stay on the market. The less time on the market, the faster the turnaround for properties, and the better the situation for you.
  3. Additionally, it’s important to know the median price of properties sold, so you know what you’ll be working with. For instance, in Burlington, it’s $295,000.

Once you’ve chosen your ideal market, you can move on to the next step in the checklist.

B. Build a Buyers List

Have you built your buyer’s list? Have you found any willing buyers in the area? 

You’ll need a robust buyers list for a steady stream of good deals. Your goal is to continuously generate and follow up with the leads in that list so your wholesale investment becomes a growing business.

Here are a few options to build and grow your buyer’s list:

  • Create an online marketing campaign. Use social media and other platforms to get the word out on your name to build a potential buyers list.
  • Use customer relationship management platforms (CRM). Creating accounts on CRM platforms like Hubspot or Zillow can increase your reach to interested buyers.
  • Take note of buyer contact information and criteria. Make a note of the budget of your potential buyers and their contact info. When you find an appealing property, you can reference your list to see if the property coincides with the budget of one of your contacts. 

By having an established and growing buyers list, you can increase the reach of your wholesale business which can lead to more deals and profits.

C. Look for Motivated Sellers

Once you’ve accomplished the first 2 steps, you can now enter the meat of the wholesale process: Finding a motivated seller with a property that coincides with the criteria of your interested buyers. 

Now, in the industry, you’ll notice that distressed properties are popular for real estate wholesaling. There are 2 reasons for this: It’s easier to convince sellers to let go of their unkempt homes, and it’s easier to secure a larger discrepancy versus market price.

But how do you find distressed homes and motivated sellers? You can already do this by increasing your scope, using the same techniques for finding buyers:

  • Use CRM software to find properties. 
  • Use social media to create a marketing campaign for yourself. 
  • Create a dedicated email address and/or phone number to screen incoming leads.

Once you’ve found a motivated seller. You then must hash out your wholesale contract.

D. Create the Wholesale Contract

Having found a motivated seller, you now need to finalize the wholesale contract. When creating the contract, you need to make it clear to the seller that you’re not buying the property. 

You need to establish that you’re only finding an interested buyer for the seller. 

Given that, be sure to establish the terms of what will happen if you fail to find a buyer. For example, you can set up an earnest money clause that will act as a guarantee. This clause will protect you and the seller in the event of failing to find a buyer. You will hand over an earnest money deposit that will act as a contingency that will be returned to you once the wholesale is complete. 

Then, you need to find a buyer for the property.

D. Look for an Interested Buyer

Once the details of the wholesale contract have been decided, you then need to find a willing buyer. Be sure to thoroughly scope out the property to make it easier to find buyers. 

For example, take photos of the property that shows potential buyers exactly what it looks like without having them visit the home. Additionally, take note of important details such as the number of rooms, the size of the property, and the overall condition of the property. 

Once you’ve gathered all the necessary information, you should then do the following:

  • Send the property report to targeted buyers on your buyers’ list. Ensure that you send the property only to the buyers with the perfect criteria—or you lose their trust in the long run.
  • Like insurance, you can get in touch with local wholesalers to market to their own buyers. This expands your coverage, helps you grow your network, and makes it easier for you to sell.

Once you find a willing buyer, you can then move on to the contract turn-over. 

E. Assign the Contract 

With a willing buyer, you can then move on to assigning the contract. Here are the basic steps to remember when assigning a contract to a buyer:

  1. Receive the amount necessary to purchase the property from the buyer.
  2. Collect your earnest money deposit from the seller. 
  3. Turnover the buy and sell contract of the property to the buyer. 
  4. Enter into a new assignment contract with the buyer and collect your wholesale fee.
  5. Contact an escrow company to complete the deal after the arrangements have been made.

Once the buyer has the contract, you can move on to the final step of the wholesale process. 

F. Close the Deal 

The escrow company will now oversee the process of transferring the property to the end-buyer. During this phase, you should keep in touch with the escrow company to get updates on the progress of the sale. 

Once the sale is completed, the escrow company will turn over your assignment fee, and your wholesale will be completed. 

Follow this Checklist to Make Your Wholesale Easy 

Getting into wholesaling unprepared can be a recipe for disaster, and we don’t want that—not when real estate wholesalers already tend to have a bad reputation because of newbies making rookie mistakes!

But with the use of a checklist, you can avoid many of the pitfalls of wholesaling, increase your odds of landing a wholesale deal, feel less stressed with conducting your business and reap continuous profits from the many deals you’re scoring.

Take our list and make it your own! Good luck in your venture and feel free to comment on any other concerns you have in the comments section below.

Categories
Landlords

Real Estate Magic: 4 Secrets of Successful Landlords

A landlord handing over house keys to their new tenant
Photo by Alena Darmel

Being a landlord isn’t all sunshine and rainbows. If you try to go in blind, inexperienced, and without proper knowledge—you’ll likely make dire mistakes that will ruin your bottom line.

Plus, doing some research online can only get you so far. You’ll get some bits of good information, but none will necessarily guarantee your success. No, you need to know how the pros do it so you can put yourself in the right direction towards becoming a successful landlord.

Not to worry, we’ve already compiled their “secrets” for you. No need to look elsewhere, here are the 5 things you should perfect to be as successful as the giants out there.

1. Successful Landlords Conduct Thorough Tenant Screening

Screening is an important process for every landlord, so it’s of utmost importance that you have a firm grasp of how to properly screen potential tenants. Add to that, you need to abide by tenant screening laws to avoid potential lawsuits.

Generally, you need to keep these factors in mind when screening applicants: 

  • Abide by the Fair Credit Reporting Act (FCRA), which limits your access to applicant information without their consent. 
  • Follow the Fair Housing Act, where it’s illegal for you to reject applicants due to race, sex, disabilities, and other discriminatory factors.
  • Perform rigorous background checks on their credit history and criminal records.

Once you make sure to abide by these laws, you should make a checklist for your ideal tenants. If your screening process is rigorous, you’ll end up with much better tenants. They’ll pay rent on time, take care of your property, and abide by everything in the lease agreement.  

2. Successful Landlords Have a Well-Written Lease Agreement

You need to be specific when writing the lease agreement, otherwise, you might run into confusion later on. List down all the things the tenant can do, all the things they can’t, from having pets to subletting. That way, there aren’t any misunderstandings down the road.

A good contract will make sure to include terms like:

  • Names of all the tenants
  • The maximum occupancy
  • The terms of the lease
  • The monthly rent
  • Deposits and fees

Other terms you might include in a lease agreement are: 

  • Pet policies
  • Parking arrangements
  • Allowed renovations
  • Subletting conditions
  • Property maintenance
  • Pest control schedule

With a thorough lease agreement, you can protect yourself, maintain your assets well, and be confident that your tenants will support you in your rental business.

3. Successful Landlords Manage Their Property Professionally

How else do you keep good tenants? Well, you do so by being professional at all times. Trust us, this goes a long way in keeping your tenants happy and satisfied enough to stay longer.

Here are a few pointers to keep in mind when managing your tenants:

  • Make it easy for your tenants to reach you. Ensure that they have your contact details and are fully aware of what situations call for immediate action.
  • Keep on top of tenant emergencies like repair requests, so the property remains habitable and you solve issues before it turns into an expensive repair.
  • Don’t be afraid to evict those who defy the lease agreement, such as:
    • Not paying rent on time or in full
    • Does major property renovations without your permission
    • Conducts an illegal business in your rental property
    • Causes excessive property damage (e.g., broken structures, flooded bathrooms, pest infestations due to hoarding or garbage)

Instead, your goal is to establish and nurture a healthy landlord-tenant relationship where both parties are respectful. That way, tenants will stay longer and effectively stabilize your monthly cash flow and overall investment.

4. Successful Landlords Prioritize Keeping Good Tenants

Landlords don’t just find good tenants—they keep them. In fact, successful landlords are experts at keeping quality tenants around for a long time. For example, they’ll offer to upgrade selected amenities in exchange for renewing the lease. 

Those incentives can include things like:

  • An internet connection upgrade
  • New flooring or furnishings
  • Improved HVAC system
  • New kitchen appliances
  • New in-suite laundry

While these do cost a pretty penny, doing so will reduce vacancies, turnovers, and maintenance. In other words, they look at the big picture and treat their tenants as they would want to be treated. By doing that, they’re less likely to look elsewhere leaving your rental vacant and not profitable. 

Learn How to be a Successful Landlord from the Start

Successful landlords don’t waste their time and money on situations that they can avoid. Instead, they are proactive in figuring out ways to find quality tenants, keep them around for a long time, and list all obligations and expectations down from the get-go.

To give you a running start to becoming a great landlord, follow our tips! By running your rental property like a pro, you won’t have to spend unnecessary time, money, and effort to earn back your investment returns—and more.

Do you have any landlord tips for those starting out? Feel free to share them in the comments below!

Categories
Wholesaling

Top 6 Ways to Increase Real Estate Wholesaling Leads and Grow Your Buyers List

Consistent lead generation is paramount to your success in the real estate wholesaling business. Finding a seller begins the wholesale process while finding a buyer closes the deal. 

However, generating valuable leads does not come easy. 

Even when you already have a long list of leads, you’ll still have to trim it down to the quality ones. After all, you don’t want to have just any leads—you want to garner high-quality leads to close more deals. And this can only be achieved by mastering the methods for consistent lead generation.

In this article, we’re going to tackle some real estate lead generation ideas so you can keep growing your buyer’ list. By having consistent growth in your buyers’ list, you can be confident that you’ll keep closing wholesale deals—and keep your income stream flowing. 

6 Ways to Generate More Leads

Generating leads in wholesale real estate requires diligence. That said, even a wholesaler’s time and effort are an investment. To ensure that your work pays off, you’ll have to work smart—not hard. 

For example, if your current method isn’t giving you the desired results, you need to try different lead generation strategies. Remember what Albert Einstein said, “Insanity is doing the same thing over and over and expecting different results.” 

And you don’t want to fall into that frustrating trap.

So, consider using these wholesale lead generation strategies to fill up your list, so you can spend time closing more deals.

1. Multiple Listing Service (MLS)

The Multiple Listing Service is an exclusive online database for licensed real estate agents, featuring properties available and sold on the market. What’s great about this is that it can automatically send leads to your inbox, among many other perks. More importantly, this real estate lead generation strategy is completely free—as long as you find access to it. 

Another benefit of this is that it can also connect you to other real estate investors in the market. As you grow your buyer’s list, you can also grow your business network.

Still, using MLS requires some dedication to be effective. Since a lot of agents use this strategy, posts can easily get lost among thousands. You’ll also need to go through many real estate leads until you find quality ones. 

So, yes, MLS comes with a few challenges. But, it’s comprehensive, affordable, and convenient—making it a terrific real estate lead generation method. 

2. Leverage Networking

Connecting with other real estate investors and helping each other out can keep you consistently closing deals. Now, some wholesalers are looking for sellers while others are looking for buyers. But by pooling together your resources, you can establish a mutually beneficial relationship. 

Nevertheless, this setup requires you to split profits. You’ll earn a bit less, which means you need more leads to compensate. This strategy is still great for growing your buyers’ list, as well as your network, so the pros outweigh the cons.

Apart from the real estate community, you can also look at your personal network. You never know which one of your friends or family members is looking to invest in. A quick post on social media sites or asking around might seal you some great—unexpected—deals. 

In other words, think out of the box and use your current network to generate wholesaling leads.

3. Cold Calling

This method is a popular one, as it kills two birds with one stone. By cold calling, you use your existing leads to generate new ones. 

The idea behind this is that people with similar interests usually gather together. Similar to how there is a network of wholesalers, there is also a network of buyers. So, take advantage of your current connections to see if they know others who are interested in your deals, even if they aren’t interested themselves.

Once you’ve identified some prospects, give them a quick call. Then, keep all of these individuals in mind and remember to follow up whenever you have something to offer. You can then continuously assess which ones are willing to make a deal, giving you very high-quality leads more willing to make a deal with you.

4. Drive for Dollars

Driving for dollars is a tried and tested strategy for real estate lead generation. There are many leads out there in the world—and sometimes all it takes is a quick drive around town to spot the right signs, literally. Yes, your car’s mileage will increase, but so will your buyer’s list.

Many real estate investors are also renters. In other words, you might find a house with “for rent” signs and contact details. 

Once you see these potential clients, give them a call to ask if they’re investors looking for properties. Investors are always looking for the next opportunity, so you might just get lucky and land on a willing prospect. And even if the person is an agent, that still works, because they might be looking for properties on the market as well.

5. Real Estate Agents

If there’s anyone that’s knowledgeable about the local real estate market, it’s the real estate agents. 

If you’re considering doing future investments in a certain area, a real estate agent can help you start. Real estate agents can be very helpful in building your buyers list and growing your own network. When you’re investing in a new area, they can help you close your first few deals by linking you to local sellers, investors, and properties in the local market.

Once you gain a grasp of the local market, you can start doing deals on your own. Alternatively, if you establish a good business relationship, you can even consider becoming long-term business partners. Real estate agents won’t only help you grow your buyers’ list, but they can help you land consistent deals.

6. Bandit Signs

Bandit signs are poster-sized signs with a short, direct message and contact details. You usually see a dozen of these signs near a property, often in high-traffic areas like local markets, shopping malls, and busy streets. It’s a common practice in real estate since it’s an effective form of real estate marketing. 

After all, leads can come from all sorts of places. And this method is a great way for you to cover multiple areas and expand your reach. Also, it’s usually quite affordable to put up bandit signs making this a more cost-effective way to strategically grow a buyer’s list.

Conclusion

Real estate wholesaling takes time, effort, and commitment. As a wholesaler, you have to strategize, think ahead, and be ready to face challenges head-on. Yes, generating wholesale leads does take a lot of work. But if you do it right, all that hard work pays off. The more leads you generate, the higher your chances of closing deals. 

With these strategies at your disposal, you’re now ready to generate consistent leads to propel your real estate wholesaling journey to the next level.

Got tips of your own or stories to share? Let us know in the comments below!

Image courtesy of RODNAE Productions

Categories
Wholesaling

Build Dual Income Streams by Wholesaling and Renting Real Estate

Most real estate wholesalers only focus on only one thing: Connecting sellers with buyers. So, they build a buyers’ list of flippers and buy-and-hold investors every day, manually turning the wheel and generating a consistent flow of income by sealing deals as often as possible.

However, while being the middleman is lucrative, it can also be very labor-intensive.

You’re constantly on the lookout, hunting for opportunities to get a house under contract at a workable price. Then you’re always trying to find buyers to sell it immediately after purchasing. As a result, you buy low, sell high, and repeat—because stopping means no income.

Eventually, you get to a point where you’re sealing more deals than you expected. You feel like you’re all maxed out, working 60 to 80 hours a week. You say to yourself, “I made it! I’ll just keep doing this to make more money.” 

And that’s what you’ll do forever.

Is it really worth the time you’re spending on it? Personally, we think there’s another, smarter way to use your time and money. In this article, we’ll show you how to harness the money-making power of wholesaling real estate plus renting out properties to build a two-layer strategy within your portfolio. That way, you can generate both active AND passive income.

Wholesaling Real Estate is Short-Term Money – So, it’s a JOB

Wholesaling makes money at high volumes. But the biggest downfall with wholesaling properties is that there is a limit to your earning capability (i.e. the number of deals you can physically close each month) because it’s very hard to scale.

The reality is this: Wholesaling doesn’t build up wealth. It relies on your constant hustling it to earn a living. When you stop working, your income stops.

Let’s illustrate this point by going over your daily schedule as a wholesaler:

  1. You wake up early to make phone calls and reach potential sellers and buyers before they go to work.
  2. You continue those calls until lunchtime, because you want to catch them when they’re on break.
  3. Then you crawl from courthouses to probates, scan divorce and bankruptcy rooms, do direct mailings, and drive around target neighborhoods to seek good deals.
  4. You also stay in touch with sellers, agents, and buyers with follow-up calls, emails, or physical mailing lists.
  5. You input all of this information in your tracking sheets and databases and continue tomorrow.

You’re doing the grind, trying to build a pipeline. Eventually, you’ll realize that there’s a ceiling to your earning capability because, at the end of the day, you’re trading time for money.

For example, you can’t physically do 500 calls a day to increase getting good deals. And while you probably feel ecstatic with learning how to improve your margins from one sale to another, you’ll eventually realize that $6,500 a month… just isn’t enough.

If you want to do something bigger but with less effort, you need something more scalable. You have to expand to other real estate investment strategies to gain more wealth.

Wholesaling Real Estate to Support Long-Term Wealth

Wholesaling is lucrative—especially when you use it as a feeder to a larger, wealth-building business.

Here’s the idea: Try to combine the active income you get from wholesaling with other investments that can give you passive income. That way, you’ll earn money in the long haul—not just that month.

Let’s see how this idea works. 

Imagine if you buy one house for every seven that you wholesale. You turn that house into a rental and start earning monthly income from rent. The result? You’ll earn dollars that will help you pay an annuity forever. You’ll create a ripple effect, growing your portfolio with two strong streams of income—wholesaling fees and rental income. 

Wholesaling vs. Rental Properties

By setting goals like the example above, you stand to gain advantages from both investment strategies. You can make quick money from wholesaling deals, channel a portion of your profits into rental investments, and achieve long-term financial freedom that’s not dependent on you working 9-5 as a wholesaler.

Wholesaling Real Estate + Rental Properties = Lucrative Portfolio

Make the most out of your time and money. You don’t have to stick to one real estate investment strategy. Instead, you can connect them to build wealth in your portfolio and surpass your previous income goals.

To wrap it all up, continue with your wholesaling plans, but set new goals for the long haul. You’ll find that it’s much more fulfilling to build a business that looks to the future. Treat wholesaling as a part of your overall investment strategy—instead of just a side hustle.

What is your goal in wholesaling real estate? What’s keeping you from scaling your investments?5

Categories
Flipping

Why You Should Always Target Distressed Properties to Flip (And Where to Find Them)

Creepy old mansions may be a nightmare for most people, but they’re hidden gems for a house flipper. These oldie-but-goodie properties are examples of how distressed properties have great value within them, giving real estate investors opportunities to gain massive flipping profits.

Why are there distressed properties in the first place?

Well, there are a lot of reasons why a home could become neglected. Here are a few examples:

  • The home could’ve been a foreclosed home left to someone as inheritance, but it’s located far from where the person currently lives. The home left behind will often go into probate for a year, during which time the new owner cannot touch it. That means it’ll sit for a year, quickly deteriorating.
  • The home could’ve gone through a natural disaster like a flood or tornado, and the owner doesn’t have the funds to repair it. It’ll also sit there rotting away.
  • The home could’ve been a rental that a tenant trashed and the landlord can’t take it anymore—not bothering to fix the home up again.
  • The home could’ve been owned by a hoarder with low income. They pay taxes, sure, but they don’t have the money, skill, or energy to keep the house in good condition.

Any of these situations leave many homes neglected and, eventually, distressed. However, while these homes are someone’s problem, they’re certainly your investment opportunity.

Here are a few reasons you should buy distressed properties, and how you can find these lucrative deals.

The Flipping Opportunity with Distressed Properties

To understand how the concept works, we need to first discuss how a home becomes a distressed property. So, here’s what usually happens:

  1. Owner Hardship and/or Neglect: Owner of a property loses their job, becomes ill or perhaps relocates. They may also inherit the property.
  2. Property Deteriorates: The issues above lead to the property falling into disrepair. At a certain point, potential buyers either don’t want to take on the repairs or can’t get a standard mortgage on it due to the poor condition.
  3. Cash Opportunity: At some point the homeowner will try to sell the property. Or maybe a motivated flipper can convince them they should sell. Either way, they will have to sell at a discount due to the lack of market demand for the property when it’s in poor condition. 

Situations like these give you opportunities to buy properties at a low price. These distressed properties are ideal for flipping because they’re rundown homes with tons of hidden value. Yes, they’re cheap because they’re in poor condition, but the lack of market demand will drive the market value even lower than the cost of repairs. 

The Risks and Benefits of Flipping Distressed Properties

Now, while the benefits of flipping distressed properties sound exciting, there are certain risks you’ll need to consider before committing to one. Here’s a chart to help you see the full picture:

The benefits are great, but the risks are inevitable. By anticipating the potential issues that sometimes arise with distressed properties, you’ll be ready to handle high-risk, high-reward fix-and-flip projects without a hitch.

Ways to Find Distressed Properties

You won’t find “distressed property” a common label in the real estate industry. Instead, you’ll need to think more strategically about how to find situations that will have motivated sellers. 

Thankfully, there are several ways to seek out distressed properties. Here are some of them:

  • Drive For Dollars: Select a neighborhood and look for homes with obvious signs of neglect. These can be signs like multiple notices on the front door, peeling and faded paint, an unkempt yard, broken windows, or uncollected mail.
  • Access the Multiple Listing Service (MLS): If you can find a way to access the MLS (say, if you have a real estate license or a friend who can help you), you can find distressed properties with remarks like,  “handyman special” or “fixer upper”. The longer the property stays in the MLS, the higher the motivation of the seller.
  • Find Foreclosed Properties (REOs): Peruse REO and bank-owned properties to find good opportunities. Lenders and banks aren’t in the business of keeping properties, and want to get rid of these non-performing assets as soon as possible. They will likely sell the homes to you at a discount.
  • Identify Homes with Delinquent Mortgage Payments: You can find public records of delinquent mortgages at your local courthouses. Individuals who can’t pay their mortgage are likely willing to sell their home to avoid foreclosure. 

You can also try to find motivated sellers with delinquent property taxes, as they’re likely behind on mortgage payments as well.

  • Consider Probate Options: You can visit the probate court to find properties left behind by situations such as divorce or death in the family. In some cases, the family left behind might not want the home. That said, keep in mind that you’ll need a special process to make an offer, since the property will be sold through an executor or attorney.
  • Get in Touch with Out-Of-State (OOS) Owners: Whatever the reason is for them moving to another state, some homeowners struggle to maintain the properties they can’t visit often. The result is distressed properties with highly motivated sellers. You can identify these people through direct mail or networking.
  • Check City Records for Code Enforcement Tickets: A property getting numerous tickets for neglect is a sign of an owner not taking care of their property and may be interested in selling.

Conclusion

Distressed properties are the perfect choice for house flippers since your goal is to acquire undervalued properties with the highest flipping profit. By buying valuable properties at a low price point, you’ll set yourself up to gain a large margin for a profitable fix-and-flip project.

What is your experience with buying distressed properties? Do you have any tips on successfully flipping them for a high profit?

Image courtesy of Malte Luk

Categories
Wholesaling

5 High-Volume Influential Real Estate Investors to Learn From

There is no better way to become a successful real estate investor than by learning from those who’ve already done it. One of the greatest investors in this world, Warren Buffett, gave the same piece of advice when he said, “In the business world, the rearview mirror is always clearer than the windshield!”

Luckily, many real estate investors are more than willing to share their rearview mirrors with you.

Here are five of the most influential, high-volume real estate investors in the industry today. These real estate icons generously share their thoughts and experiences on social media, making it easy for you to follow and learn from them on a daily basis.

Max Maxwell

At the ripe age of 21, Max acquired his real estate broker’s license and began selling properties. He experienced the 2008 bubble burst and continued on this journey through real estate wholesaling. Years later, Max set up his first real estate investment company, Cash Homes Triad. He set a personal goal to earn six figures—which he did by December of 2017. 

In two years, he generated over $2 million in wholesaling fees alone.

Today, Max Maxwell is known as one of the top real estate investors in the country. He hosts annual Wholesaling Elite Live events—where one of them garnered over 1,200 attendees—dubbed the biggest wholesaling event in history.

Quoting from his website, “It is my strong desire to help others achieve financial freedom. By using my social media presence and hosting meetups and events, I hope to directly impact the lives of millions. Remember, you’re only one deal away!”

Here are the links for you to follow Max Maxwell online:

Max Maxwell constantly posts entrepreneurial tips on his Instagram and in-depth real estate advice on his YouTube channel. 

Raul Bolufe

Raul Bolufe is a CEO, investor, and coach in the real estate community. By his 23rd birthday, he famously flipped a total value of $15 million and made $355k off the Multiple Listing Service (MLS). 

Today, he is the president of the growing company Capital Rise Investments LLC and has done over 200 wholesale deals since his first one in 2014. He is passionate about sharing entrepreneurial advice and wholesaling-specific tips for real estate beginners looking to scale their businesses.

Raul Bolufe hosts the Flipping Miami podcast, where he talks about the following topics:

  • His average and highest monthly profit
  • His experience with real estate investing
  • His unique technique that grew his business
  • His tips on Section 8 and why it matters in investing
  • His best tips on how to search and land the best deals on MLS

Here are some of his other profiles online that you can follow:

Raul Bolufe posts generic advice for all entrepreneurs on his Instagram account and shares real estate wholesaling how-to videos on YouTube.

Tom Cafarella

Tom Cafarella is a real estate investor and broker-owner. He is considered to be one of the most successful real estate investors in Boston, Massachusetts. He lives by the motto “If you’re not happy with the work that you do, you’re never going to be great at it” and encourages all aspiring real estate investors to chase their dreams—just like he did. 

Today, Tom Cafarella is an expert at building and scaling real estate businesses. He has acquired the company Ocean City Development LLC. In addition, he passionately teaches other people how to increase deals, scale their return on investment (ROI), and how to gear their mindset towards investment success.

Follow and learn from his story and company here:

Tom Cafarella regularly shares valuable and practical tips across multiple channels—YouTube, Facebook, Twitter, and his podcast “Massachusetts Real Estate Careers with Tom Cafarella.”

Joe McCall

Joe McCall is the host of Real Estate Investing Mastery Podcast (ranked 4.8 out of 5.0 by 559 reviews on Apple Podcasts), where he shares the secrets of wholesaling and lease options to earn full-income figures. He helps people “escape the 9-5” by holding valuable conversations with successful real estate investors, discovering new strategies to implement in your real estate investment and business.

He is also the author of four real estate investing books, including one about wholesaling lease options (a fast and easy way to make money from real estate) and another about how to make extra money flipping houses while on vacation.

Here are some of his social media profiles that you can visit and follow:

Joe McCall posts practical how-to content on both YouTube and Twitter.

Additionally, he also speaks at conferences and workshops nationwide. His talks give all investors the necessary information on marketing, automation, and delegation in the real estate industry. 

He’s the guy Raul Bolufe learned his business growth hacks from!

Graham Stephan

If you’ve been watching real estate videos on YouTube, you’ve come across Graham Stephan.

Graham Stephan is a real estate agent that has gained a significant following online due to his real estate accomplishments and valuable lessons for investors. His content centers around financial independence and the importance of investing correctly. 

Graham Stephan is his own testimony, as he famously skipped college to jump into the real estate scene immediately. He got his real estate license at the age of 18 and earned $500 on his first commission. By the time he was 27, he had sold a total of $120 million worth of real estate and has earned up to $1.6 million a year—being praised by Kevin O’Leary for his impressive accomplishment.

Now that he’s 30 years old, he has reached a staggering net worth of around $6.5 million. He has served celebrity clients such as Orlando Bloom, Chloe Grace Moretz, and Wale. In addition, he works as a realtor associate for the luxury property brokerage, The Oppenheim Group. 

Follow Graham Stephan via these links:

Since 2017, Graham Stephan has decided to pursue YouTube as a full-time job. All his videos are for teaching real estate investors just like him.

Conclusion: You Can Be Next

It’s never been easier to learn from other investors today. With the rise of the internet and the generosity of successful real estate investors, the world of information and inspiration is literally at our fingertips!

Follow Max Maxwell, Raul Bolufe, Tom Cafarella, Joe McCall, and Graham Stephan for daily lessons and tips on becoming successful in the real estate scene. Their experience defines our future success.

Who knows… You just might be featured in an article like these in the future!

There are way too many influential people in the real estate industry we can all learn from. Anybody else you’d like to add to our list?

Disclaimer: We are not endorsing any of these investors or their advice. Always exercise caution when taking investment advice from people on the internet! 

Image courtesy of Rodnae Production

Categories
Wholesaling

Where to Find the Best Real Estate Wholesaling Deals

Like plenty of new investors, you may have decided to try out real estate wholesaling.

Using this investment method, the turnaround period is short, and you don’t need a lot of money (if any) to start—this is why a lot of first-time investors gravitate towards wholesaling.

However, to be successful at it, you do need to find the best properties for wholesaling. After all, not all deals have an equal potential for giving you the returns you desire. You’ll need to source houses significantly (ideally around 50%) under market value, and for that, you’ll also need to be dealing with motivated sellers. 

Finding these kinds of properties isn’t easy – that’s why not everyone and their mother is out there working as a successful wholesale. But to get you started, here’s a guide to help you source profitable wholesaling deals.

Offline Methods

There are two main kinds of wholesale deal sources: offline and online. Though many will consider online methods to be more efficient—especially in today’s digitally driven world—offline techniques also have their benefits.

Those who were successful at real estate wholesaling started their careers with these old-fashioned methods. Though these methods often require more time and resources to set up, you have a good chance of sealing your first deal with the help of these proven techniques:

Driving for Dollars

Before the internet, driving for dollars was one of the most popular ways to hunt for wholesale leads. If you’re tight on budget, this old-fashioned way can still work wonders.

You simply hop into your car and drive through target neighborhoods (i.e. places where buyers actually want to live or invest), looking for properties that show signs of neglect. Some signs to look for are the following:

  • Abandonment or vacancy
  • Overgrown lawn and plants
  • Boarded-up windows
  • Visible damages
  • Uncollected trash

Once you spot a potential property, use public records to find the name of the registered owner, and contact them to make an offer. Often, an unused property could be more of a burden to the owner than a boon – like the unwanted home of a deceased relative, for example – and they’ll be fairly motivated to consider letting someone take it off their hands.

Bandit Signs

Bandit signs are another low-cost and effective way to find deals in your local housing market. Often spotted on random street corners or busy traffic areas, these signs say things like “We Buy Houses” or “Sell Your House for Cash”. Place them in the neighborhoods you want to target for your real estate wholesaling deals.

However, before you start putting up your own, just make sure that these signs aren’t illegal in your area!

Direct Mail Campaigns

This involves sending out postcards or letters to potential sellers, expressing your interest in buying their property. Direct mail campaigns can be effective, though they’re a bit pricier and slower to generate leads than their equivalent online methods.

You’ll need to secure mailing lists and be persistent with getting a response. To increase your success rate, only target owners of pre-foreclosure properties, high equity or delinquent mortgages, probates, and other types of motivated sellers.

Networking

Joining local real estate investment clubs is a great way to find deals. There may be sellers that just haven’t listed their properties yet, which a network of agents, investors, and attorneys can inform you about. Making connections in the industry will also grow your buyers’ list, increasing your chances of closing deals on both ends.

Newspapers

Old-fashioned newspaper advertising can help you reach sellers who aren’t online. After all, 10% of all Americans aren’t online—equating to nearly 33 million Americans!

To avoid missing an opportunity for a real estate wholesaling deal, you can reach more people by posting “I Buy Houses!” ads in local newspapers.

Online methods

Online methods are often more convenient and faster at producing results, though they may not always be as effective as offline methods—and there’s plenty of competition online that you have to contend with, too! Nevertheless, you can still discover a lot of good deals online that you wouldn’t find otherwise.

Here’s how:

Wholesaling Website

Creating a website allows you to target a larger customer audience. With a single click, you can reach thousands more people—a lot more than you can reach with local signages.

Your website should sell yourself as a willing and capable real estate wholesaler, convincing people to trust you with their property. You should optimize your website with SEO, PPC advertising, and social media marketing (as well as retargeting ads) to generate leads and seal more deals.

Expired MLS listings

Expired MLS (Multiple Listing Service) listings are properties that weren’t sold by the date specified in the listing contract between the seller and the listing agent. There aren’t a lot of properties that get this far, but a real estate agent or broker should be able to help you find these deals.

To do this, focus on a particular city or neighborhood, check the properties within, and get in touch with the owners of the expired listings to show your interest in their property. Usually, they’re pretty motivated to sell, since the property has already sat on the market for a long time with no buyers coming forward.

Online Forum and Auction Sites

Craigslist, Hubzu, ForSaleByOwner, and Auction.com are places where people often post to sell quickly. This makes them potential gold mines for real estate investors, and wholesalers in particular. If you move faster than your competition, you can snag some great deals from these websites.

Final Thoughts

For you to be successful in real estate wholesaling, you have to make numerous offers to seal enough deals—both online and offline.

Once you find a motivated seller with a distressed property, make sure to move fast to get them under contract. Then, follow through with assigning the rights to your buyer and collecting your fee, before beginning your search anew!

Any other sources we’ve missed? Which one’s your go-to strategy to find deals?

Image Courtesy of PhotoMIX

Categories
Wholesaling

How Wholesalers Can Monetize Land and Increase Value

Land leasing is a good option for achieving long-term returns on your investment

Land is a form of real estate often neglected by wholesalers. Most wholesalers flip properties, but flipping undeveloped land has unique advantages of its own. It requires less upfront capital, and there is less competition.

The typical land wholesaling model is the same as property wholesaling: you enter into a contract with a motivated seller to purchase the land below current market value, and then either flip the land or sell the rights to the purchase contract to a third party for a profit. But one added benefit of land wholesaling is there are options to further increase the value of raw land while you have it under contract, by subdividing it into multiple parcels or applying for a change in zoning.

Rezoning to Add Value

Rezoning, or changing the use district of a particular parcel of land, is a common way to increase the value of non-residentially zoned land. By changing the use district of industrial or agricultural land to residential or commercial use, you can increase the value of your land by anywhere from 100-400% of its original value. You don’t have to own the land outright to apply for rezoning – just make sure that rezoning is permitted in your contract with the seller if you intend to change its use district before flipping it.

The process of applying for rezoning can take a few months or up to 2-3 years, and in addition to meeting all the requirements set by your local authority, it’s also important that you research and understand your city’s plans for development in the future. For example, changing from a residential to commercial use district could either increase or decrease the value of land, depending on whether or not the city has plans to prioritize commercial development in that area in the coming years.

Splitting Parcels

Subdividing land, or splitting a single plot of land into two or more parcels, can increase the value of land and the total amount of rental income you receive from it. Legally subdividing a property can be a lengthy process – it usually takes several weeks or months from start to finish, and will require that you submit an application to the local authority for approval. You also have to take into account the zoning restrictions and specific rules in your area (such as the minimum permitted plot size) when splitting your land into parcels, and will need to hire a surveyor to plat the land. Usually it costs between $1,000-$3,000 to subdivide a piece of land into two parcels, but the benefits of doing so can be considerable. Smaller parcels are more affordable, and thus appeal to a larger number of buyers and tenants, and it’s possible to increase profits on a single piece of land by as much as 100% when selling or renting it out as two smaller parcels.

As long as it’s permitted in your contract with the seller, you can subdivide land while still under contract, but you will need to close with the seller before selling the individual subdivided parcels outright. The major benefit of this wholesaling strategy is that you can subdivide a plot into 4 parcels, for example, and sell 2 of them outright, leaving you with 2 parcels that you own free and clear.

Don’t be scared off if you find a great piece of land to wholesale and you’re worried it will take too long to rezone or split. Instead, negotiate with the seller on a longer purchase contract as it doesn’t hurt to ask. If that doesn’t work, you can also try more of a partnership agreement with the seller, where you do all the work and then split the profits.

How to Monetize Undeveloped Land

Once you’ve sold some of your subdivided parcels and closed the contract on a land wholesale deal, you can sell the remainder of the parcels outright, or monetize them in other ways.

Developing raw land yourself can be a costly and time-consuming process which may not be feasible for wholesalers operating in different states. There are other ways you can generate income from land without having to develop it. These options do take more time and energy than simply selling your land immediately, but the result is higher profits on each plot you own in the long term.

Rent your land to a small business venture

Land leasing is a good option for achieving long-term returns on your investment. If you market your property to the right audience, you’ll find there are a whole range of unexpected business plans which only require raw land to get started. Archery ranges, escape rooms, and drone race tracks are just a few examples of businesses that will pay to rent land, even without any structures or facilities in place. These businesses generally require plots anywhere from .2 – 3 acres in size, so even if you don’t have a huge amount of land, this can still be a viable option for you.

Put up a parking lot (without paving paradise)

Having a parking lot can be an inexpensive way of monetizing your land. Even if your land isn’t near a very transited area, you shouldn’t necessarily discard this option.

Try to think of who may have parking needs and may want to pay lower fees than those charged in downtown areas. A perfect example would be truck, bus and coach companies, since these usually prefer inexpensive options to keep their vehicles overnight, as opposed to expensive central locations. For some of these clients, you won’t even need to pave the land, and they usually pay somewhere around $10 per vehicle for parking overnight.

Rent-to-own

Rent-to-own is a type of transaction in which the tenant is given the opportunity to buy the property outright after a maximum lease period of 5 years. The tenant usually pays you an initial deposit of 3-5% of the property’s value as a purchase option. A portion of the monthly rent then goes towards the purchase price of the land, and after the initial leasing period, the tenant can exercise the purchase option. If they choose not to proceed with the purchase, you can begin the process over again with a new tenant once the agreement ends. It’s also possible to monetize land using a lease-to-own agreement while you still have the land under contract. With a sandwich lease agreement, you can sign a lease-to-own contract with the seller, then sign a separate lease-to-own agreement with a tenant-buyer of your own, who pays a higher rental rate. Once the lease term concludes, you can complete the agreement with the seller and close the deal with your tenant-buyer.

Partner Up!

If you’ve got a free and clear piece of land, it’s an asset, that like cash, you can invest in a deal. In this case you can put up your land as your part of an investment in a new construction or development project. Look for active builders and developers in the area of the land and see what they’re interested in doing.

If you subdivide into parcels, wholesaling land could lead to you owning some plots essentially for free. Whether you decide to sell these outright or pursue a long-term monetization strategy for the land you own, any revenue you receive will be 100% profit, and that’s perhaps the biggest advantage of the land wholesale investment model.

Image Courtesy of Marek Mucha

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