The answer isn’t so easy. There are a few different factors to consider when comparing seller lead types. The first is the amount of EQUITY that a homeowner is likely to have. The second is the level of MOTIVATION that a seller is likely to have.

Let’s look at the typical homeowner in preforeclosure. Are they motivated to sell their house? Most likely, the answer is yes as the alternative is to have a bank foreclosure and end up on the streets. But do they have equity? Almost invariably, the answer is no since most homeowners in preforeclosure owe more on their home’s mortgage than its current value.

This means that your typical preforeclosure lead, while being motivated, will NOT be a quick sale. Instead, you’re looking at a SHORT SALE which, in addition to needing a level of professional knowledge beyond a regular house sale, could take months upon months to close.

Most new real estate investors want a paycheck NOW, not 6 months down the road. So I typically do not suggest that new real estate investors target preforeclosures as it can take a ton of time without a guaranteed payout. And if it does pay off, it could months down the road.

So if preforeclosure seller leads are out, what’s a newbie investor to do?

There are a ton of other seller lead types that more closely fit the bill for faster paychecks: probate, inheritance, divorce, absentee owners, property tax liens, etc. We could go on, but each of those potential leads is likely to more closely feature both equity and motivation. That gives YOU, the new real estate investor, the flexibility to structure a deal without dealing with hefty bank negotiations. You can agree to terms and close on a deal in 20 days and… GET PAID.

Now once you have your systems in place and are fielding multiple lead types, then by all means go after the preforeclosures! I’m all for filling up the pipeline. You can do the faster deals in the short-term while prepping the preforeclosure short sales so when they’re ready to pay out in six months, you’re there ready for those as well. Stack the pipeline and watch the paychecks come in!

Want to know more? Then fill in the form above to learn the top secrets to flipping houses in YOUR market!

Wholesale or Flip?

One of the frequent questions new real estate investors have is how to get started flipping houses. They watch a few TV episodes of “Flip This House” or a similar show and want to get right into building the business and raking in the paychecks.

But the question they often fail to ask themselves is…. “What Kind of a Real Estate Investor Do I Want to Be?”

After all, there’s no rule that says being a real estate investor means flipping houses. Huh??? That’s right – who says you have to flip houses? Wholesaling real estate is another bona fide way to be a successful real estate investor with a booming business. Of course, there are other ways also: private lender, hard money lender, landlord and more.

What I want to discuss here is the difference between wholesaling real estate and flipping houses. And we first have to define the terms for the sake of discussion:

WHOLESALING — Generally speaking, this is when you acquire a property well under market value and either assign the contract or quickly close to an end buyer, usually a house flipper or landlord buyer.

FLIPPING HOUSES — Just as you think — buy a house well below market value, renovate it and resell on the open market for a retail price. When you learn how to flip a house, you feel very empowered!

When you wholesale a house, you’re either not taking possession at all or only going on title for 24 to 48 hours, in most cases, after which you sell to your end buyer. The advantages of wholesaling real estate are obvious — practically zero holding time and costs, and the ability to rapidly get in and out of properties without tying up any capital. Of course, it also means smaller — but more frequent — paychecks.

Flipping houses is somewhat the opposite — you’re leveraging the necessary resources to own a property for 3 to 6 months, manage the rehab project and take on the extra risk. But it also means a much higher reward than a typical wholesale deal.

THE #1 MYTH OF WHOLESALING REAL ESTATE

New investors frequently believe that wholesaling deals is just a way to get enough cash in the business so they can start flipping houses. BUT THIS IS NOT TRUE. Many investors want nothing to do with flipping houses and gladly devote their entire business to wholesaling. They’re able to build a fast cash buyers list and get enough deals in their pipeline to rapidly do 2 to 4 deals a month without having to manage any rehab projects. If you can pocket $15,000 a month from wholesaling, do you need to take on the extra risk and stress of flipping? Maybe not.

Ultimately, the decision is yours and depends on:

1. Your local real estate market (# of deals and “juice” in your average deal)
2. Your ability to grow and maintain a fast cash buyers list
3. Your (un)willingness to manage rehab projects
4. Whether you like smaller, more frequent or large, less frequent profits

As you can see, it’s very much an individual decision. Yes, it’s true, many wholesalers start out with the intention to get into flipping houses. Just understand that you have options and may choose to make wholesaling real estate your main business. And that’s ok, too!

Before we talk about REIAs, let’s briefly discuss why networking is so important. There’s an age-old cliche that says “it’s not what you know, but who you know”. Well, I agree to a point — both are incredibly important. However, there’s another saying that I’m fond of:

“People want to do business with people they like”.

Think about it. If you had a smoking hot real estate deal and you were going to assign the contract or a sweet fee, would you rather assign it to someone you like or someone you don’t? Of course, the former. Isn’t it great when we can make money AND make our friends money? That’s one of the great things about this business. And the reverse also works — when a real estate agent has a motivated seller that calls for a fast cash buyer, they’ll call their friends first. So make friends!

The Power of a REIA

However, networking goes beyond pleasant emails and meetings at Starbucks (not to knock Starbucks — that’s actually where I’m writing this blog post). A REIA (Real Estate Investor Association) is group of generally like-minded real estate investors that meet to network, share ideas and even exchange deals. Most meet monthly and feature some sort of speaker — title officer, real estate attorney, hard money lender, niche expert (lease option) — and finish off with more networking.

Your very first REIA meeting can be overwhelming. After all, when you’re new it MUST mean that the other 99 people in the room are all incredibly experienced investors with countless house flips under their belt, right?? WRONG. Don’t be a wallflower, afraid to speak to all the “veterans”.

Here’s a secret: most people at a REIA have never done a deal. Think I’m wrong? It’s true! REIAs are magnets for “tire kickers”, people that feel warm and fuzzy by being surrounded by successful investors but are so frozen by “paralysis by analysis” that they don’t actively market for deals and certainly wouldn’t put their name on a contract. Go into escrow on a deal? Perish the thought — too scary!!

But that’s not you, right? RIGHT?? Just checking =D Fine, you may not have business cards (here’s where I get my cards that always impress). You may not have a website. And you may not know exactly what you’re talking about when discussing ARV and MAO. So what — talk to people anyway. This is about building relationships, and proper relationships are built over multiple meetings. Even with all the tire kickers, any quality REIA will have very successful attendees who you can learn a thing or two (or 100) from. Meet them, try to discover why they’ve been so successful. Here are my top 5 tips for REIA success at your first meeting:

5 Tips for REIA Success

1.  Talk to Everyone. In the beginning when you’re learning how to flip a house, you won’t know with whom to spend the bulk of your time. So talk to everyone. Ask about their experience, their objectives and how you might be able to work together now and down the road.

2. Dont’ be a Leech. There’s nothing worse than having a new person cling to you like saran wrap. Believe me, I could tell you stories. Don’t be that person. Your time is valuable as is everyone else’s. Meet and greet, exchange pleasantries, contact info and politely excuse yourself on a high note. There’s always time to re-engage with someone at a later date. For now, just make a solid introduction and set the foundation for future communication and repeat meetings at the next monthly gathering.

3. Cut the Bravado. Hopefully you’re excited about all the real estate deals you’ll be doing and how your life is going to change (especially if you’re joining Mastery). However, there’s a difference between confident excitement and being brash. Respect others and congratulate their achievements, no matter how small. Your path is your own and not necessarily someone else’s. Build positive energy only.

4. Listen, listen, listen. Our first tip said to talk to everyone, BUT — listen more. The most successful people in life listen far more than they speak. Re-read that 100 times before continuing. Listening to someone attentively implies respect and leaves a good impression of yourself in someone else’s mind.

5. Be a Value Provider. Every interaction should be some exchange of value. “But Mike, I’m new. How can I provide value??” Easily — maybe you can bird dog deals to an active house flipper with cash and make money along the way. Maybe you can joint venture with another investor who has opposite resources (time but no money for marketing) than you do. The bottom line is that you should leave every conversation on relatively equal footing as your conversation partner. You should both feel better off for the 5 minutes spent together.

Follow these tips and you will increase your success and your value proposition to others dramatically. Remember: listen, be confident (but not a jerk) and respectful, and share value.

BONUS TIP: LOL I almost forgot about this. I remember about a year ago I was at a local Honolulu networking event and a woman came up to me, interrupted an enjoyable conversation with another professional, and just handed me her business card without asking anything about me or what I do.

You know where that card ended up? You got it, and I — shockingly, I know — never called that woman. Business cards don’t make you successful — YOU will make yourself successful (especially if you’re following the Mastery program!).

Now go CRUSH your first REIA meeting!

Veterans — do you remember your first REIA meeting? Share your experiences below!

Leverage.

You can make more money with other people’s funds than you can with your own. Having access to private capital means being able to flip multiple houses at the same time instead of being restricted to the buying power of your own bank account. It’s the same idea of using a general contractor to do your renovations instead of doing it yourself — even if you’re the next Bob Vila.

But while most investors know that private lending is often the lifeblood of an investors’ business, many get stuck on how to actually raise it. And let’s face it — asking someone for money is often a daunting experience. So let’s get right to it!

1. Change your State of Mind. Being a private capital lender is an opportunity, and that’s the mindset you should have. Yes, you need money for your business but you also need to remember a very important point: your lenders need YOU to give them a better investment opportunity than their other options! When you’re speaking to an interested potential lender, you’re the one in the position of power — that’s the mindset. They need you as much, if not more so, than you need them.

2. Establish Credibility. Any potential investor will want to do some diligence on you and your business. If you have a few house flips under your toolbelt, then show them photos, videos and deal analyses, including how your private capital investors were both protected and realized a worthy return. Maybe even walk them through a property you’re flipping right now.

If you’re a new investor, then you’ll want to put together some form of credibility packet that clearly outlines the private lending process and what makes it so attractive. Be extremely professional when putting this together. (bonus: FortuneBuilders Mastery students get a credibility packet all ready to go)

3. Be Yourself. I’m going out on a limb here and assuming that you, the reader and real estate investor, are a professional individual with oodles of honesty and integrity. Let this shine through. Private lending is about building a relationship founded on trust. You want your lenders to rave about how well you treated them and how you always put their interests first. If you’re rugged, be rugged (yet professional). Be whoever you are, just do it with professionalism, class and integrity.

Private lending is a cornerstone of any real estate investor’s house flipping business. Remember to present the opportunity, establish your credibility and be yourself and you’ll go far. If you want to get your own private lender credibility packet in addition to countless other methods for raising private capital, then fill in the form above to see if FortuneBuilders Mastery is right for you!

The seller meeting is, therefore, obviously a critical point in putting the deal together. It can be a rousing success, paving the way for us to flip another house and keep raking in the profits, or it can be a failure if we’re not prepared or otherwise botch it up.

So how can we help prepare ourselves to lock up a real estate deal when meeting with sellers for the first time?

How to Lock Up a Real Estate Deal

• Research, Research, Research. This means research the history of the house, from its sales history to renovations and permits. Have a decent idea of the house before you arrive. Not only will this help you prepare a proper offer at the meeting, but it will establish credibility in the eyes of the homeowner.

• Be Prepared. Just like the Boy Scout motto, be prepared before arriving. This means be sure to have all the proper paperwork ready to go. There’s nothing worse than getting a homeowner to agree to your price and terms, only to be without a contract to sign and the seller to back out when you get back to the office.

• Listen. Last and, in my humble opinion, most important, listen FIRST before delivering your pitch on all the benefits of selling their house to you. You might want to focus on price when what the homeowner needs is some fast cash. Listen first to find out what they need and only then explain how your service solves their need or problem. You can’t take the “Server Approach” if you don’t know what they want you to serve them.

If you can nail down the above, you’ll increase your chances of a successful home seller meeting dramatically. Of course, you won’t lock up every deal but you should see a big time increase in your conversions.

What a successful group of men and women!

Do you live in Hawaii and want to learn how to flip houses? You’re in luck because my mentors and friends from FortuneBuilders, the nation’s #1 real estate investor training company, are about to descend up on Hawaii the second weekend in January 2013. They’ll be both in Oahu AND in Maui!

It’s no secret that the real estate coaching leaders from FortuneBuilders Mastery have flipped houses upon houses from Hawaii to Florida and back again. In fact, the Mastery coaches and students are in about every metro area in America. And that only works when the coaching works at the individual student level.

I can attest personally, having been a Mastery student and now a coach, that the program works, even right here in Hawaii. I’m actually flipping a condo right now in Honolulu that will be a veeeeeery nice payday when it’s done (check it out at honoluludreamcondo.com), likely more than most people make in a yearly salary. And it’s all done without using any of my own money. And I just picked up a new short sale just this afternoon.

The Power of Mentors

None of this would have been possible without the connections, knowledge, training and systems-based approach that’s at the core of the FortuneBuilders Mastery real estate coaching program. You see, we all need mentors in life, no matter what we’re trying to achieve. And having successful mentors who are actually on “Flip This House”, who know all the ins and outs of the real estate investment business, who will be in your corner every step of the way, is an asset that you can only appreciate once you’re in the program. Going it alone is rarely a ticket to lasting success, but forging ahead with the support of those who have already paved the way — people like Than Merrill and Paul Esajian — is how we succeed as entrepreneurs and real estate investors.

So if you want to see if Mastery is right for you — if you want to start doing real estate deals right here in Hawaii, whether it’s flipping houses or wholesaling — then you need to contact the staff at FortuneBuilders and get signed up for this incredible two-day event. This is not a pitch — it’s TWO FULL DAYS of actual knowledge and instruction, straight from the pros at FortuneBuilders. There’s no better way to learn how to flip houses than to hear it right from the pros themselves.

FILL OUT THE FORM ABOVE and I’ll see you in January! Aloha!

Marketing

If you want to make money flipping houses, then you need to wrap your brain around how to market your real estate business. Your marketing efforts will basically fall into three primary categories:

1. Online
2. Offline
3. Networking

Online — we all know what that means because you’re using it right now reading this post. Let’s be blunt — I’m marketing the FortuneBuilders Mastery program to you right now in this post, right? Hey, I’m nothing if not honest! We’re a month away from 2013 and unless you’re the last living Neanderthal on Earth, then you know how important online is to how business — and the world — operates today. Ignore online and wither away like a dying flower.

Your online marketing will be some combination of social media (Facebook, Twitter, LinkedIn, Google+, Pinterest, Reddit), blogs (like this site here and this one), board/forum sites (ex. Craigslist) and lead generation sites (example). Of course, a core company website is critical as well.

While it may seem like a Wild Wild West of a digital presence, it’s important not to get overwhelmed, especially if you don’t have a techie background. You have a choice — you can take it on yourself or you can outsource it to others who have both the time and expertise to carefully craft your online marketing. If you do outsource, just make sure you check referrals out the wazoo and whoever is going to putting your face to the world about your business. There are tons of people out there who will gladly take your money just to blast some spammy tweets and low-quality posts and links. The damage can take years to undo — do your due diligence.

The true entrepreneurs will always suggest you plan with the end goal of having someone else do your marketing — that’s the difference between working in your business and working on your business. However, I’m a fan of learning first from the inside out — by doing. Get your hands dirty, figure out how you want you and your company to be presented to the outside world, and then you can start to delegate to others and take back your time by using virtual assistants or local talent you trust.

If you do decide to start out yourself, then it’s important to get a gameplan together before you start posting this and that. Figure out your branding, the message you want to convey, and the places you want to convey it. Do you want to be on secondary sites like Reddit and Delicious or are Facebook and LinkedIn enough? Will you be more professional or more ‘hip’? Who’s your customers base and how can you reach them in the digital world? Spend some time on this — days, even — so that your image, branding and message are consistent across all avenues. CONSISTENCY OF BRANDING IS INCREDIBLY IMPORTANT!

In the next post, we’ll discuss how to get started with your offline marketing methods. Just because the world is digital, doesn’t mean traditional methods don’t work — they can work beautifully if done right.

Want to know how to put this to work TODAY and start cashing in wholesaling and flipping houses? Fill out the form on this page and speak to someone in FortuneBuilders Mastery. No obligation, no hassle – just chat with them and see if you’re up for the challenge.

Me with Founder Paul Esajian

I had the pleasure of spending last weekend at the MGM Grand in Las Vegas with some pretty successful real estate investors from around America. It was a meeting of the founders and coaches of FortuneBuilders Mastery, the top-rated real estate investment education program. I’m talking about people like Than Merrill and Paul Esajian, who you likely know from A&E’s “Flip This House“.

We had successful real estate investors from all around the country descend on America’s Playground for a couple days of serious masterminding and brainstorming about how we can help others achieve incredible levels of success within the world of real estate.

While we were indeed smack in the middle of Sin City, we were mainly holed up in our conference room at the MGM for two days talking about both the roadblocks and successes that the current batch of FortuneBuilders students are having coast to coast. And the latter far outweighed the former! Some of the achievements are outright astounding – 6-figure profits per deal, anyone??

Success from Coast to Coast

It’s very interesting to talk with investors in different markets and see what works where. There are Justin and Eddie in Phoenix who are picking up multiple properties a month that cost less than a parking spot in Waikiki; Erik in Seattle and Dan in DC who are showing new investors every month how to leverage the resources around them to flip houses consistently; Cory in Colorado, Scot in Olympia and Steve in San Francisco are just owning their markets. We even have coaches and students in Canada now!

No matter where in the country (or continent now!) you find yourself, having the systems and knowledge of the FortuneBuilders program can absolutely catapult you to real estate investment success.

Thinking of changing your financial future? Talk to someone at FortuneBuilders! Just fill in the form at the top of the page and see if it’s right for you!

What a successful group of men and women!

 CHECK OUT FORTUNEBUILDERS MASTERY!

Be Average! (image courtesy of freedigitalphotos.net)

We’re often told growing up that being average isn’t good (at least I hope so). Don’t be a waffler, don’t hang out in the middle. Don’t be average. We should go for it! Get more out of life! And yes, I agree 100%. We SHOULD go for it, especially as real estate business owners!

But there’s also a time and place where being average — walking the middle line — can be used to our advantage. Sometimes being boring is a good thing! Well, I don’t necessarily mean boring. But what I do mean is that there’s a fine line between prominent and outlandish.

HOW TO MAKE MONEY IN REAL ESTATE BEING AVERAGE

So how does being average actually HELP us make money? Here are a few ways win by being neutral:

1. COLOR. When flipping houses, odds are you’ll be doing some renovating. That usually means, at a minimum, painting the house and upgrading the kitchen and baths. The color schemes you use can literally make or break your deal – literally. Your best bet is to stick with universally-appealing colors that will keep your property on the lists of the largest pool of buyers. Stick with white walls on the inside and a neutral blue, green or brown on the outside. You may love pink houses, but you’ll eliminate 95% of your buyers — not very good business. The same concept goes for your countertops and cabinets.

2. LAYOUT. The feeling one gets when first walking into a house can sell your deal. That means an inviting entranceway, from the outside door into the living area and kitchen. Keep it wide open and avoid the urge to get fancy with rooms hidden behind rooms. You may have to knock some walls down when fixing up older homes to bring them current, but it’s money well spent. Don’t get fancy — stay boring and watch the offers come in.

3. BEDS AND BATHS. Have you ever seen a 5/1 on your local MLS? I have and it redefines “tight-knit family” in my eyes. If you’re adding on to a house you’re flipping, keep the bedroom to bathroom ratio somewhat even. Got a 3/1? Don’t add a 4th bedroom unless you’re adding another bathroom along with it. No family shopping for a home will look forward to long lines to brush their teeth in the morning.

4. CONTRACTS. Lastly, don’t get too crazy with your contract terms. Yes, you can strengthen your real estate purchase contract by reducing your inspection period and putting down a larger earnest money deposit, but most realtors still want to see the basic terms applied and on their own contract (it’s the only one the majority are trained on). Make your terms strong, but keep the offer easy for most agents to utilize. Confuse them or seem too ‘out there’ and they’ll go seek someone else more their style and, in their eyes, serious about doing business.

THE KEY MESSAGE — BE UNIVERSAL

Yes, it’s always fun to be the cool kid who stands out from the crown. But do that by closing more deals and getting your name out there. Don’t do it by alienating customers. Bring the largest pool of customers through your business front door and you’ll quickly find yourself rising to the top of your market — by being average.

I’m sure many of you have had similar experiences (unless you’re new, in which case you likely will)!

It’s very easy in the beginning of your real estate investment career to get either star struck or emotionally compromised into thinking every house must, just must, be a deal. Along the same lines, that first realtor we talk to is going to be the one to launch us into investing stardom!

While that would indeed be wonderful, the honest truth is that we are going to have to look at multiple properties and we’ll have to work with multiple agents over the course of our real estate career to realize the success we want. Let’s also not forget that emotions do not really have a solid place in deciding whether to buy a particular property or not.

House Buying Criteria

We decide based on our clearly-defined buying criteria. These include (but are not limited to):

1. How much of a DISCOUNT off of today’s fair market value are we getting? 25%? 30%? We seek EQUITY. That differentiates investors from speculators.
2. How much can we drive up the VALUE through renovations?
3. Is there enough PROFIT left over after accounting for all operating and renovation costs? Yes, PROFIT matters!
4. Are there enough BUYERS in the area to ensure we can sell the house in a reasonable amount of time?

We can keep adding to the list, but you get the idea. If you can’t answer positively to the above questions, then guess what?

Don’t Buy That House!

It’s important to remember that we’re INVESTORS, not SPECULATORS. That means if the proverbial @#*(&$# hits the fan tomorrow, we should be able to sell the house quickly and, after paying all closing and holding costs, we still walk away without a loss. That’s sound investing!

Don’t feel pressured into forcing a deal out of a not-a-deal just because you’re anxious to start making money. If anything, you’re going backwards. If you really want to make money in real estate, as we all do, then having sound buying criteria is super important as is the courage to stick to them.

Watch this clip from Braveheart. Imagine the English troops as all the “not-really-deals” being pitched at you left and right. You don’t charge out into the field — you stand your ground, waiting for the right moment. Then, when the moment is right and a REAL HONEST HOUSE FLIP DEAL is presented, you take your spear and win the battle!

Feeling energized?? Fantastic! Want to start YOUR top-notch real estate education and start making money in real estate TODAY?

Then fill out the form at the top of the page and one of the All-Star Pros from FortuneBuilders will contact you to get all your questions answered!