It’s important to accumulate knowledge in various aspects of the fix and flip process. Lack of knowledge will teach you valuable, but often expensive lessons.
Gaining knowledge and experience in the following six topics should be a top priority.
- Knowing real estate values and health of your target market
- Knowing how to find good deals
- Knowing how to quickly estimate repairs.
- Knowing how to negotiate with a seller
- Knowing how to manage the rehab project / contractor
- Knowing how to finance your deals.
In this article we will discuss topic #2 Knowing how to find good deals.
Knowing how to find good deals:
You make your money in fix and flip real estate transactions when you buy. If you buy at the right price, you set yourself up for success. Pay too much and you are likely to fail.
Working with a real estate agent or a wholesaler can be quick and relatively easy. You can get good deals this way, but due to competition, you will not likely find a great deal. The key to finding great deals in your target market is to find motivated sellers that no one else knows about. A motivated seller is someone who owns a desirable property which has become a problem for them. If you are the only solution to their problem, i.e., no competition, you are positioned to get a great deal.
The reasons a piece of real estate becomes a problem are many. Some of the most popular causes of seller motivation include:
- Behind on payments: (Mortgage and/or Real estate taxes)
- Property was inherited and they want/need cash now
- Repairs are needed to sell conventionally, and there is no money or interest to make the repairs.
- Need to move quickly or already moved and property is vacant and deteriorating.
- House is not selling conventionally – expired listing
- Illness / death
So how do you find them? You need to market to motivated sellers. This requires effort, money, time and skill, but it’s worth it. You need to test multiple marketing campaigns and expand those that are most successful.
Some of the marketing tools I that I used when I was flipping houses in order of effectiveness included:
- Bandit signs
- Newspaper ads (this really dates me)/ Social Media ads
- Direct mail to expired listings
- Direct mail to pre-foreclosures
- Direct mail to out-of-town landlords
- Fliers on door knobs
- Radio commercials
Some local sources of training on how to market to find motivated sellers include:
- Bill Hook (local real estate guru and trainer): https://www.facebook.com/HookedUpBillHook/
- ACRE of Pittsburgh (Active Community of Real Estate Entrepreneurs) https://www.acrepgh.org/
- ACRE of Beaver County http://www.acrebeaver.org/
Be patient, do some marketing and find yourself some great deals.
Future issues of this blog will talk about the other 4 areas of knowledge.
If you would like to get preapproved for a loan and one or more proof of funds letters, please follow this link. https://www.hardmoneypgh.com/loan-request/
Please contact me if you would like to discuss a project by clicking here: https://g.page/r/CTcMtkHdqQHYEBA