It’s Black Friday weekend. Here are the key things you need to know as a real estate investor…

This is one of the biggest sales weekends of the year. In fact, 30% of all the money spent on retail all year will happen in the next few hours. As a real estate investor you are already thinking more big picture than most people. What additional insights should you be gleaning from this?

Everyone Has Enough Money

Everyone has plenty of money for the things they really want to spend on. Over $700B is expected to be spent with retailers on Black Friday 2019 alone.

This doesn’t even count all the money spent in the lead up to Thanksgiving and the next few days of special shopping events, or Christmas shopping.

60% of consumers are expected to go into debt to fund these luxuries this year. Even if most of the items sold won’t last long, may never be used, and will just collect dust along with last year’s gifts.

Sadly, many may end up losing their homes because they put this shopping ahead of their housing payments. It is a choice for many. So, there will be wholesale property deals to pick up between now and Valentines Day.

It is also a reminder to invest first, and let those investments pay for these luxuries. A new TV is unlikely to ever pay your mortgage, no matter how ‘smart’ it is.

Deep Sales, A Sign of Desperation

Last year didn’t seem to bring the early Black Friday deals or deep discounts we are seeing now. Perhaps because retailers were more confident in the economy and consumer spending last year.

Now, once again retailers began Black Friday sales deals in October. Some are emailing promotions with 51% to 81% off of their ‘hottest selling’ items.

That’s clearly unlikely to be true. It instantly devalues the product, and creates mistrust of the brand. If your product is so awesome and so popular, there’s no need for an 80% off flash sale. If it was that valuable, it wouldn’t be offered at that much of a discount. Not unless this retailer is marking up and over pricing inventory by 80% the rest of the year.

Worth thinking about, especially if you offer your own sales.

Don’t Let Thanksgiving Be Overshadowed By The Black Friday Deals

Even before the turkey can put many people in a food coma they are already online shopping for deals on their phones. Then comes Small Business Saturday and Cyber Monday. Both big sales days. Just don’t forget about the thanks and giving part, and Giving Tuesday.

Practicing gratitude can make all the difference in how you operate every day. Hopefully we all all turning enough wholesale deals this month to prioritize giving back. Maybe even deciding which causes to support on Tuesday before we blow it on things that will never be used.

What are you buying this weekend? What are you selling? What initiatives are you giving to?

How much profit should you be making on your real estate wholesale deals?

Property wholesaler profit margins are one of the most commonly debated topics among new investors, rehabbers, and buy and hold landlords. So, what’s the right amount? How much is too much? How should wholesalers set their markups?

Some wholesalers may not make as much as they could on deals because they are intimidated about losing them. Sometimes end buyers are complaining that wholesalers are asking for way too much, and are just wasting their time. So how do you pick the right number?

4 Ways to Price Your Wholesale House Deals

Fixed Fee or Percentage

One way to choose is to pre-determine what percentage or dollar amount you are going to charge across all of your deals. It could be 3% or 6%, $1,000 or $100,000. Or more. It’s up to you. This can make it easy when screening potential properties to see if they match your criteria. However, one flaw is that this doesn’t always maximize your deal flow and profit potential long term as the market changes.

Profit Left to the Next Buyer

Again, you can choose a fixed dollar amount or percentage spread which you think if fair for you end buyer to make after they buy, fix, and flip or rent the property. Of course, every buyer is different. Some use cash. Some use very expensive hard money loans. Some can get rehab work done cheap. Others pay a lot for contractors and materials. Some can flip a property in a week. Others take over 6 months to complete a flip.

ROI on Your Time

As a real estate wholesaler you are providing a valuable service. However, unless you have a team you are still often trading your time for money. Make sure you are getting a fair return. What’s your time worth? How much time do you spend flipping a deal? If you just quit working a McDonalds for minimum wage, then making $30 an hour may seem like an awesome deal. If you just quit being an attorney or doctor making $500 an hour, then you’ll probably want to make sure you are earning $1,000 an hour as a wholesaler. Remember to factor in all the time prospecting, screening, negotiating, and marketing, and managing the transaction.

Filling Orders

Another way to do this is to simply fill orders. Take pre-orders for deals aka ‘reverse wholesaling’. Then go find a fit, and profit what you can. You may have end buyers who are happy with 20% returns on two flips a year. Others may insist on getting properties 40% below market value, or being able to double their money. Take the order, find the deals, squeeze in however much you can. This is a little more fluid when it comes to predicting your income. However, it can lower risk and waste. One downside is that you are effectively letting someone else set market prices, versus controlling them yourself.

Looking Forward

There are wholesalers who can make $100k per deal, and do 10 deals a month. Others might do 1-4 deals per month and are very happy putting $20k in their pockets. Some might land some whales and make a million on a very juicy deal. A lot of it depends on how good you are at finding and negotiating deals, as well as how you market and present the inventory.

One thing which is really important, and which many wholesalers forget is to keep an eye on the changing market. Prices and profit margins will change. Protect your income and industry but refusing to sell out too cheap, but give good deals if you want more business.

 

What do you think? How much do you charge? How much do you think wholesalers should markup deals? Let us know on Facebook and Twitter…

2015 is shaping up to be a sweet year for real estate wholesalers. New inventory, more buyers, and new loan programs are all aligning to make flipping houses a highly profitable endeavor for those that know where to look.

Finding Wholesale Deals

There’s no shortage of wholesale deals out there. If you are coming up short handed check out these four options…

Zombie Foreclosures

It’s no secret that foreclosure activity has been spiking. However, there are still tens of thousands of distressed properties that remain in limbo. In many cases owner – borrowers left years ago believing they had already been foreclosed on. Many are finding out that the bank still hasn’t followed through on repossessing them. That costs money and adds liability. That means a massive pool of properties which aren’t even being marketed for sale. They shouldn’t be too hard to spot. And by tracking down the owner or lender holding the non-performing mortgage debt great win-wins could be struck. And with no competition.

HUD Homes

HUD auctions are still churning out deals. Many have already had some rehab work done to them, and the earnest money requirements are minimal. They can be a great choice for those working with minimal capital.

Foreclosure Hot Spots

While national real estate statistics may mask the reality on the street, there are many counties battling foreclosure as if it was 2008 again. RealtyTrac reports foreclosure particularly high in MD and NV. In some counties around 1 in every 80 units is in some stage of foreclosure. That’s a lot of potential wholesale deals.

Areas Receiving Deferred Investment

There’s a 600 home community on the Delaware shore that is the perfect example of this. According to local custom home builder and renovation firm Turnstone Builders; this 3 mile stretch of beach is now receiving the benefits of a new $63M federal investment. The beach widening project is reportedly doubling local home asking prices from around $500k to $1M. And the project is just beginning.

Why Should Real Estate Wholesalers Care about End Loans?

CT Homes’ JD Esajian of the Flip This House TV show just launched a new two part report on The Number One Financial Threat in America. The report highlights how renting is becoming unsustainable, and how much cheaper it is to buy homes. WA real estate expert Joe Tafolla highlights how thousands of individuals can qualify for no down payment financing, and tens of thousands in down payment grants. Even if they are recently out of foreclosure, bankruptcy, short sale, or have credit scores as low as 640. Many others could find a combination of hard money loans and seller financing the way to get back into homeownership.

This can help wholesalers boost direct sales to retail home buyers for maximum profit, quick flips, while helping to provide affordable housing and reduce the hardship of skyrocketing rents.

Authored by Best Transaction Funding BestTransactionFunding.com is the leading source of transactional funding and hard money loans for real estate wholesalers in the US, where 100% financing, and saying “Yes” is what we love doing all day long.

America is warming up to a new foreclosure boom. So where is the unlimited funding for wholesaling higher volumes of distressed property deals? How can new cash buyers be found for your list, on autopilot?

Out of the Shadows… New Wave of Zombie Foreclosures On the Loose

Real estate entrepreneur Brecht Palombo recently packed his family up in a metal RV and hit the road, heading from New England, to the West Coast, in hopes of making it to British Columbia.

He’s not a survivalist escaping the walking dead, but a member of a new tribe of location independent real estate CEOs. Armed with a 20GB mobile data service, Bank Prospector software for tapping into non-performing mortgage loan statistics, and having put his real estate business on autopilot Brecht is on a yearlong exploration of US real estate markets.

So far he has uncovered libraries with blazing fast Wi-Fi hotspots, obsolete commercial real estate obstacles, mountain biking trails built by the Army Corp of Engineers, and is surveying large swathes of the $250B in defaulting mortgage notes and REOs held by US banks.

While the media is just beginning to catch a glimpse of the tip of the iceberg of this new wave of foreclosures, there is far more distressed property inventory behind the scenes for aggressive real estate wholesalers to bank on, if they are willing to reach out and make the effort.

Several New York towns have turned to tearing down thousands of zombie foreclosures to makeover neighborhoods. The Palm Beach post just reported new foreclosures rising by 74% in August 2014, even though FL is pegged as one of the strongest investment markets in the country.

In order to land more wholesale deals Brecht advises “The best way to succeed in this game is to get yourself informed about the challenges and opportunities with the lender by reviewing their reports. Next you call in at as high a level as you can muster and you have a real conversation about what you see. After that you let them know how you can help and you do it persistently. I go in depth in the academy (DistressedPro.com) with what a good prospecting plan looks like, what's important to banks, how to identify the right ones etc. When you're informed you'll spend less time prospecting and more time working with real decision makers doing deals. Blind prospecting and uninformed cold calling is about the worst business plan there is in today's environment.”

Creating Your Own Mobile ATM: Access Unlimited Cash and Cash Buyers

There is no shortage of cash or cash buyers in the current US real estate market. CoreLogic recently reported South Florida transactions were now almost 60% all cash. More individual and institutional investors are experiencing increased liquidity as they turn to fixing and flipping houses versus buy and hold, to benefit from recent rises in equity and avoid property management drain. New reports have also shown that nonprofits are hungry for deals after having been blocked from buying at foreclosure auctions by big for profit equity funds.

BestTransactionFunding.com provides unlimited funding for wholesalers need Proof of Funds letters and acquisition cash for back to back wet closings. Wholesalers may also benefit from hooking up their buyers that need financing with new lenders like B2RFinance or RentalHomeFianncing.com which provide long term end financing and credit facilities for buying and holding rentals.

While there may be no lack of cash or wholesale deals to be done those investors that want to still be able to enjoy the freedom and rewards will find using the web and tech tools essential. Mr. Palombo recommends ensuring you are using a professional email address, and harnessing the power of email marketing, while The Agent Institute just launched a new PPC coaching program and series of free videos on using Google Adwords for marketing for buyers on autopilot.

In summary; there are no more excuses for not enjoying more mobility, freedom, finding distressed property deals, cash buyers to flip them to, or the money you need to hit your goals…

Are mortgage note investors now one of the best sources of house deals for real estate wholesalers?

Current market conditions are ideal for real estate wholesalers. Some real estate investors of course have been complaining about the decline of foreclosure homes and publicly available inventory, as well as the rapid rise in home prices in their local areas. So where can more deals be found? Could note investors be the gatekeeper to a new sweet spot, and source of discounted homes for flipping?

It’s no secret that banks and asset managers have both delayed starting the foreclosure process on thousands of delinquent home loans, and have continued to hold many properties off market. What many may not realize is just how many of these non-performing loans are being shuffled off bank books to note investors.

The U.S. housing market is healing, but new, and legacy defaults are still substantial. However, the statistics showing foreclosure activity dropping are largely in part due to bad loans being sold off to other investors, rather than the banks foreclosing, auctioning them of, or selling them as REOs.

A growing number of real estate investors have been buying non-performing notes in the hopes of bringing them back to performing again, and benefiting from high yields and discounts.

Of course, not all of these loans can be made to perform, even if they are modified. Some borrowers simply can’t afford to keep their homes, or have no intention of trying. In these cases note investors need to foreclose, or permit short sales in order to allow homeowners a way out, and to be able to recoup capital. Note investors like the benefits of paper, they don’t want to be stuck with real property. It just doesn’t fit their strategy.

For wholesalers that can connect and build relationships with these mortgage note investors the opportunities for tapping into a significant stream of properties ripe to be flipped is huge. It provides a valuable service to note investors and homeowners, while skipping ahead of those competing for wholesale deals on the MLS, at auctions, or in mailboxes.

With Best Transaction Funding wholesalers can take on virtually unlimited volume, and flip far more houses than their competitors. It is just a matter of finding them, and building relationships. Note investors can be found in online real estate forums, advertising in magazines, via Google, and at local Meet Ups.

Real estate investors all over the country from Sacramento to Reno to New York and Miami are banging their heads on their desks as real estate deals become tougher to find.

REO prices have been rising rapidly, lenders are becoming ridiculous to work with and bidding wars are spiraling out of control as large funds bulging with cash they are desperate to put to work over pay for properties by thousands.

So how can smaller investors hone in and get their hands on viable deals for flipping?

8 Ways to Lock into More Motivated Sellers & Property Bargains:

1. Tap into Off-Market REOs

Despite Realtor’s claims analysts put the real amount of foreclosure inventory at 15 months, even if it isn’t all being marketed to the public yet. Software like BankProspector enables real estate investors to target smaller regional banks with these ‘assets’ and provides high level contact information for decision makers.

2. Educate, Educate, Educate

Struggling homeowners are paralyzed into indecision from not knowing who to believe anymore or what options can really help. Educate them, warn them of deadlines for competing short sales and strive to help them not just sell them.

3. Build Better Referral Partnerships

Referrals are easy to close because they already trust you and want your help. There are many other pros that already have databases of prospects which are perfect for you and come across new ones every day. Collaborate; it might not cost you anything.

4. Use Social & Webinars to Maximize Time

Social media and webinars are ideal for reaching masses of prospects simultaneously to get more out of your time.

5. Direct Mail

It’s competitive, everyone else is doing it but it works and generates inbound calls. Use highly targeted lists so that you can afford to make your pieces stand out more and get read.

6. Get Inside Access to the MLS

Get your own access or tap into Realtor partners to go behind the scenes and discover which home sellers are really motivated through agents comments, high commissions and bonuses being offered and use those as negotiation room.

7. Use ‘Bird-Dogs’

With so much competition out there and real estate investors trampling over each other for any deal which comes online most of the really good deals are local and found at street level. Using ‘bird-dogs’ and outsourcing screening of these ‘deals’ to a VA means you can maintain volume without working a 100 hours a week.

8. Find Buyers Willing to Pay More

If you truly can’t find viable wholesale deals in your local market that other local investors will buy due to their high cost focus on finding buyers who will pay more. It may sound crazy to some of you but there are investors who charge $15,000 as a fee to source and set up turnkey investment properties, that’s on top of what you can make on the flip and property management fees if you want to get your hands dirty.