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Finding, Flipping & Fixing the Beginning

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Finding, Flipping & Fixing the Beginning 1 Finding, Flipping & Fixing The Beginning Real Estate Investor’s Basic Training Course Timothy McKierney 2 3 Finding, Flipping & Fixing The Beginning Real Estate Investor’s Basic Training Course Introduction………………………………………….7 Section One – Birddogging (Finding) Find a Property……………………………………….15 Lead Sheet……………………………………………28 List a Property……………………………………….31 Sell the Property……………………………………..34 NCND……………………………………………….41 Resources 1…………………………………………..46 Section Two – Wholesaling (Flipping) Wholesaling………………………………………….49 Finding Sellers………………………………………64 Investor Profile Sheet……………………………….69 Filling Out the Lead Sheet and Profile……………...72 Agents and Properties……………………………….78 4 Contracts……………………………………………..86 Section Three – Fix and Flip (Fixing) Fix and Flip…………………………………………..95 Resources – Videos…….…………………………..109 Resources – Books……………………………….....116 Forms and Documents Forms and Documents…………………………….118 Affidavit & Memo………………………………...121 Back to Back Closings ……………………………127 B-C Real Estate Purchase and Sale Sample……….129 Business Card……………………………………..143 Buyer Script……………………………………….145 California Information…………………………….147 Commission Agreement…………………………..150 Disclosure Agreement…………………………….151 End Buyer Down Payment Statement…………….152 Land Contract…………………………………….153 5 Land Trust Revocable Trust………………………..159 Probate Letter………………………………………166 Probate Tracking Sheet……………………………..168 Property Appraisal Sheet……………………………172 Real Estate Affidavit & Memo – Generic…………..177 Real Estate Affidavit & Memo – Simple……………187 Realtor Script………………………………………..190 Resources Books…………………………………….193 6 7 Real Estate Investor Training INTRODUCTION Welcome to Real Estate Investor Training! The objective of this course is that you will be able to find, evaluate and sell properties quickly at wholesale prices. To do that, you will also need to find buyers, market your properties, write contracts to protect yourself both as a buyer and seller and to negotiate effectively for the best deal. You will learn all of that in this course. And you don’t need a website. All you need to succeed is a cell phone and internet connectivity. You may think there’s a lot to learn but don’t worry, we’ll take it step by step and learn it one piece at a time so that by the end of this course, you will be a true real estate investor. As you go through this program, you may discover many things you do know, you just haven’t applied them to real estate. Take notes, study and apply your knowledge as soon as you can. I recommend doing at least one thing a day, beginning today. In this course you will learn three methods of making money from real estate. The first method is commonly called “birddogging.” In this method, you collect a Finder’s Fee for each property you find and sell to an investor. How much you receive from each home you find is negotiable 8 but I recommend you use either a percentage method or a fixed fee basis. The second method is “Wholesaling.” This is when you find a property, put it under contract and then either assign or sell the property to an investor. This has a bit more risk than birddogging and will require you have some cash to pay the deposit and possibly a down payment. That’s why birddogging comes first, so you can build up your cash reserves before going into Wholesaling. Wholesaling is also called simply “Flipping.” Method three is “Fix and Flip.” Locating and evaluating a home is the same as in the first two strategies, but in Fix and Flip, you will buy the house and then fix the minor deficiencies with the property. Next you will raise the price of the property to a level you think is fair – lower for a quick sale, higher if you can afford to wait longer for the sale. Fix and Flip requires that you are able to evaluate the costs of repairing and upgrading the property accurately (within a range) and that you have the cash set aside to repair the property and then that you have the cash set aside to hold the property until it sells. Some investors use this strategy exclusively and have made millions using Fix and Flip. We also provide a Financial Management Planning course. This is available separately and will help you manage your income, invest for cash flow and provide a means to monitor your income and expenses. 9 With the Financial Management Planning course, we will show you several passive income sources. Passive income is – ideally – where you make an investment and then never go back to it, but the money from that investment keeps rolling in forever. Less ideal is where you make an investment but then have to spend a few hours a week (or a month) to maintain the cash flow from that investment. Passive income sources vary widely in their returns ranging from just 2% or 3% a year (or even negative) to well over 100% a year. More typical returns currently are 15% to 25% each year. As you may imagine, the higher the return the higher the risk so we will also teach you how to evaluate the risk and benefits of an investment. Most passive income investments require that you be an “accredited investor.” The IRS defines an “accredited investor” as someone who has earned an income of at least $200,000 in the previous two years AND has a net worth of at least one million dollars AND you expect to earn at least $200,000 in the current year. This means you probably won’t be able to make a passive investment tomorrow, but if you keep investing in real estate, sticking to the basics – and don’t get crazy or make outrageous risks – and if the economy doesn’t poop on us – you will be an accredited investor sooner rather than later. OVERVIEW OF STRATEGY ONE 1. Find a property 2. List the property 3. Sell the property 10 Let’s take each step one by one and explore what you’ll be getting into. Find a Property We will show you 7 different ways of finding suitable properties for sale. Then we’ll show you how to evaluate a property to weed out those that are not suitable, keeping only those that will sell fast and start putting money into your pocket quickly. List the Property Listing a property for sale begins with finding possible buyers for your properties. We will show you at least 3 different ways of finding buyers. Next we will provide you with a set of websites that allow you to post your home for sale for free so that you receive national exposure for your homes. Sell the Property Most likely you will be selling your homes to other investors. These will be the on the list of potential buyers you developed from above. As buyer inquiries come in, you will respond with a Finder’s Fee agreement, telling them that specific details of the property (address & MLS number if it has one) will be sent to them as soon as they have signed, dated and returned the Finder’s Fee agreement. You will also tell them that they may use your broker to buy the property or they can acquire their own. I suggest this for two reasons. 1. If they use your broker you have greater control over the transaction meaning you will be less likely to get cut out of the deal (doesn’t usually 11 happen, but sometimes it does). 2. By using your broker, it saves your buyer time in finding their own broker. Because the homes you find often are sold within a few days (by others competing against you), you want your buyer to be able to buy from you as soon as possible. We will give you an email format to use for this. And that’s pretty much it for the Overview of the program and the Overview of the first strategy. A few tips: For your phone number, I do not recommend you use your home phone. Either use your cell number or get a separate cell phone or online phone number for your business. See Resources for details. Business cards. You will need business cards eventually. You can order up to 250 cards free from Vistaprint.com and just pay the shipping charge – usually $9.95. Emails: When corresponding to sellers, agents, buyers, attorneys or other professionals, you should keep the length of each line of your email to a maximum of 60 characters. There are several studies that indicate that emails with a line length of 60 characters or less are viewed more favorably and as being more professional by their recipients. Also emails with line lengths of 60 characters are replied to more often. Your office: You don’t need one. Use your bedroom, the local McDonald’s, a spare room, closet, the garage, 12 whatever. I used a table in the shade of the veranda in the courtyard at Tempe Mission Palms Hotel in Tempe, AZ. I was outside all day (Loving it!) and when I got too hot, I went inside for some cool air. I was within walking distance of a Dunkin’ Donuts and Starbucks where I got my coffee and donut or bagel for breakfast and within walking distance of about 20 restaurants of all types for lunch. After a long, hard day of work (LOL), I was within walking distance of about 15 taverns, bars and pubs where I would go for a beer or two and fries, wings, a burger or sometimes a salad – if I was feeling in a “health mood.” Business license. You are operating a business so technically you will need one. But I would be careful about this. The odds are high that as a private investor, the office providing business licenses will have no category in which to place your business and as a result they may give you a license that is unsuitable for what you do, requires undue restrictions or places restrictive regulations on your practices.
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