Saturday, August 18, 2012

"Call Me When You're Ready To Sell, Or Don't Call Me...!"

One of my students called me last Tuesday and shared his version of an objection-meeting gambit that I wanted to share with you.

Here's what he told me:

He advertised in the "real estate wanted" category of craigslist for income property. He didn't mention any creative financing. He just said "I want to buy income property [in his city]. Call me if you're ready to sell."


His call to action screened for sellers who were "ready to sell', and screened out the dreamers and temperature takers.

He got a call. The seller told him that he 'just wanted out,' and that he was "sick of being a landlord."

The seller added that he, "wasn't interested in any seller financing, or master leases, or any creative financing, and that he was firm on his price."

Really? Well....!

Some might respond, "I understand. Good luck with that approach this market" and hang up.

Not my student. He just plowed forward and confidently told the seller this...

"Mr. Seller, you told me what you wanted; that you were firm on your price; that you wanted out; and you weren't interested in seller financing.
That's fine, but there are many cash flowing REO's selling all over the place, for much less than what you're asking.
If you're not willing to negotiate price or terms, then I'll continue looking for something more sensible to invest in. If you change your mind let me know."

That's a great response to someone who's telling you how inflexible they are.

But this approach is more than a rejection of the seller's position.
This is a gambit called the "take away." It's an effective bluff-calling strategy. This put my student in firm control of his negotiations, even if the seller stood fast, because my student was qualifying the seller. Meantime, he told the seller the truth without apologizing for it.

So, what did the seller do?

The seller changed his tone and position so fast it was as if he had a personality disorder.

All of the sudden he was curious what my student had in mind. It was no longer a 'my way or the highway' situation. It allowed my student to instantly reframe the negotiations to include the possibility of a master lease, getting the deed (sub2), or adjusting the price for cash.
The question arises, "Could the 'take away' work as well in a 'seller's market?'" Absolutely, and you'll see how in a later post. Stay tuned.

Meantime, look for ways and opportunities to practice the "take away" and see how it improves your control of your negotiations. It's nearly magical.

That's it for now...!

Your Sub2 Coach, Jay

P.S. If you would like to use the same system that my student used to maintain total control of his negotiations, Click Here. Controlling My Negotiations

Friday, May 4, 2012

My Sub2 Deal Won't Sell...!

A newbie flipper couldn't find a buyer for his "rent to own" deal despite following "all the advice" he'd received on marketing with "Bandit Signs." 

I asked him what his ad copy said.  I discovered he wasn't focusing on the "benefits" and wasn't focusing on the right buyers.  Here's what I advised:

"Oh, blezz gawd, that's too much information for any kind of bandit sign...!!!!!!!  Of course, I know you're not putting all that on a yard sign, right?  I do know that, right?  Shocked

Let's trim this baby down to something effective...

1.  You own/control a house.
2.  You're offering "seller financing" via a lease/option/rent-to-own.

Backing up the trail a few feet...we need to analyze the amenities of property to determine the exact buyer that will most want this house.

Every house was designed to appeal to a certain buyer.  Custom built homes are especially designed to appeal to one buyer.  So what buyer is your house going to appeal to most?  To answer that, let's review the features and amenities the house offers.

List of features and amenities:

3 beds, 2 baths
Corner lot on culdesac
x streets of Crest###, Mountain #### and East#### Villages
Close to all the shopping and restaurants
Mature landscaping line these streets
Child safe
Detached storage
Large trees
Excellent shade
Azaleas Nobody
Japanese Maples
Holly Trees/Bushes
Detached storage
1-car garage
Low down
Under-retail price
Call Bob at  205.602.#### 
Price $172,500 Comps $205 to $250k
Rent $1295.00 

OK, this house is going to appeal to a family with pre-teens that are moving up from a 3/1 or 2/2, or moving in from another area.

It's not going to appeal to:

1. Empty nesters, because there's too many bedrooms, too many noisy, bratty kids and teenagers, and it's a corner lot with "lots" of maintenance issues, and only a 1-car garage. 
2. Large families, because there's only three bedrooms, not four or five bedrooms and only a 1-car garage. 
3. Single persons, because there's too many bedrooms, too many noisy, bratty kids and teenagers, it's a corner lot with "lots" of  maintenance issues.
4. Newly marrieds,because there's too many bedrooms, too many noisy, bratty kids and teenagers, it's a corner lot with "lots" of  maintenance issues and only a 1-car garage. 
5.  Retirees, because there's too many bedrooms, too many noisy, bratty kids and teenagers, and it's a corner lot with "lots" of maintenance issues. 
6.  Families with small children, because neither the front or backyard is fenced (despite the neighborhood being "safe for kids."  There's no such thing as "safe neighborhoods" today; only safe, fenced backyards.  Then there's the mention of poisonous plants. The mere mention of Holly trees conjures up a dead five-year old on the front lawn, frozen, reaching for Holly Berries, with his now-rigormortised arm.  And (drum roll please) there's only a 1-car garage.   

Conclusion on Analysis:

We want to appeal to the family with two kids between 9 and 12 years old that won't "need" a fenced yard, and won't eat Holly Berries.

The one-car garage situation is "fine," because mom and dad both work, and they're always using the car, so a garage is only critical for storing crap, not parking cars.

The fact that the streets are lined with mature trees, and there are colorful flowers and the rest is just "extra" but not deal makers.  Those are things we reserve for our long form advertisements.

The actual deal makers here (after the amenities have been sifted through) are: 

1. Seller financing offer to a credit challenged buyer...
2. The payment...
3. The down payment...

I could go through all the elements of a bandit sign, but I'll just cut to the chase and offer what I know works, based on my analysis of what you've outlined.

Rent To Own!  No Qualifying!
3/2, 1,309 sqft. $1295/mo.
$8k Option Fee, Great area for kids. 
Mature landscaping. Roomy Family Room
Call Jason Today at 205.602.####

Notice I didn't mention the sales price?   I don't want "bargain hunters" calling me. In fact, I'm setting the price to today's retail value of $250,000.  Otherwise why give a bargain price, to someone needing help financing? 

The ones with fewer options, are the ones that only pay attention to the payment and the down payment.  If these are workable, they'll give us the rest of what we want.  Buyer's that fit our profile, don't care about the price (at least the ones we want to attract and pitch). So, the price is "retail."

I want people who...

1. Want to own a 3/2 home
2. Want room to live
3. Want a place for their kids to spread out
4. Can afford $1295/mo
5. Have $8K in Option Money
6. Needs temporary seller financing
7. Appreciate bargain terms (for a credit challenged buyer)

I don't want...

1. Tire kickers with only $1000 for Option Money...
2. Folks who can't afford more than a $1000/mo.
3. Credit dead beats...

Now the question comes up, "Why advertise "no qualifying" if you're going to "force" the tenant/buyer to get his own financing in just a few months.  What happens if he can't qualify for a loan?

Few buyers are going to give us $8K unless they're fairly confident that they will get financing.  Once the prospect knows that we are offering this deal for only 24 months, he'll have to determine if this is worth the risk. 

That said, if our option price is not over-retail (in this case it should be "retail," and not a discount) then any tenant/buyer with OK credit should be able to qualify for his own financing and exercise his option. 

Of course, the types of financing he's going after is a clue to his success.  FHA, or conventional have different qualifying requirements.  So this has to be accounted for in both the terms and advertising ad copy, if not the overall expectations.

We think it's wrong to knowingly put a tenant/buyer into a house, that  he'll never qualify for.  Failed buyers spread the word about our businesses, and then it just pours sand in our gears long term.  So, even though we don't do a credit check, we do ask some questions, and then move the deal to where it will work for everyone. 

That all said, we should be sending our buyers to our mortgage broker for an evaluation, to make sure our buyers can perform in a timely manner, and give us an idea of what to expect.  It's all about negotiations in this business."

If you would like to know the system I use to find, finance, and sell houses, within days, and pocket more than a few thousand in cash, subscribe to this, and watch this presentation...

"How To Flip Pretty Houses For Fast Cash With No Job, Credit, or Down Payments"

Monday, April 23, 2012

The Sub2 Camel Hump

Camel’s humps go up and down.  Yes, they do.  Know why?  Because camels store water in their humps, and their humps expand and contract according to how much water they’ve stored.

If the camel’s hump is small, it may refuse to get up and walk, until he gets his hump filled.  In other words, if the Camel’s hump is shriveled, he won’t let you ride him anywhere.  And if you’re depending on that camel to get you to the Promised Land, you’re screwed ...until your camel gets some “hump water.”  

That’s exactly the way it is with the wrong Sub2 prospects.  They’ll just sit there, stare, and spit.  The only solution is to wait until they get their humps grown back.  And this can take a while, because a camel can drink you under the table, as it were. 

In the same fashion, until the Sub2 prospect is properly motivated, he won’t be interested in giving us his deed in return for debt relief.   Promises to protect his credit by taking over his payments, and otherwise allowing him to move on, won't matter much.  He’s got options.  And the option he’s exercising now is just, “sitting, spitting and waiting with a shriveled hump.”

So, what’s the point?  The point is that we need to find and qualify the Sub2 sellers that have “big humps.”  These are the sellers that are ready, willing, and able to be 'ridden' to the Promised Land.  They’re ready to give up their deeds and debt. 

The question is, “How do we find these Sub2 sellers?”

There are several ways.  One way is to look for prospects with expired listings.  These sellers have experienced one or more of the following:

1.    Suffered one or more failed escrows...
2.    Couldn’t lower their asking price and still pay the realtor...
3.    Afraid of being a “FSBO” seller (For Sale By Owner)...
4.    Just need quick debt relief for any number of reasons...

Speaking of those who just need debt relief, another hidden source of prospects are those who typically get in trouble within the first two years of home ownership.  These are sellers that bought houses, accepted all sorts of credit card offers, loaded up the cards, bought new cars, furniture, and appliances, and now find themselves rationing toilet paper.  They can't wait to give us their problems, if it solves "their problem."

Then it’s a matter of making no down offers that will allow us to get in light, and resell without a lot of overhead ...and capture thousands of dollars in down payments from motivated buyers..

Of course we only want to buy and sell newer, nicer homes that everyone wants.
It should go without saying, but we want to quickly disqualify and wade around the sellers sporting shriveled humps, that just want to both sit down, and then spit on us.

The great news, is that you can easily find these Sub2 sellers using the same system I've been using for years.  It's a sophisticated system to both find, qualify, and close on the most motivated Sub2 sellers in this market.  It's about making money flipping nice homes in just days without down payments, loan apps, a job, or credit.
$20 Dollars Down
If you would like to learn the system I used to find the seller with a big enough hump to accept just twenty dollars for his equity, just click on the following link to see a video about how you can do the same thing:

“Finding Sellers With Big Humps, And Riding Them To The Promised Land.” 

Of course, that's not the actual name of the presentation...but you'll get it, once you see it.

Friday, April 20, 2012

Two Million Burning a Hole In My Pocket

Here's what I said to a wanna-bee, 20-something, with $2M dollars to invest in commercial real estate...
Dear $2Millionaire,

"You've got great goals and a plan, but for the love of gawd, leave that money where it is!!!!!!

You need to act as if you had about .20c in your pocket, not $2M.

Any investor you talk with that had a wad of money in the bank when he started will tell you about his disasters and losses.  Why?

Because having that much money in the bank (or available) is the instant-rice recipe for making the most short-sighted, ignorant, stress-relieving, prideful, cocky, stupid moves e.v.e.r.  !!!

That much money sitting in the bank is so easily mishandled, it's like holding a lit stick of dynamite in a room with the gas turned on... Something's gonna blow like Mt. Vesuvius, before anything good ever happens.

At 25... honestly, and without insulting your character and intelligence, you need to SLOW down.  You've made a wise decision consulting this forum... Just saying.  But...

$2M is like having an Olympic-sized pool of opportunity waiting for you to dive into.  It gets your juices going.  The problem is you don't have any diving experience, much less know how to swim, much less hold your breath, or even do a lap without drowning.

So, what's the answer?

Start with a wading pool. (OK, this is an analogy, not an instruction to go buy a kiddie pool...)

Fill the wading pool with some water, and splash a little, and learn how to fall face first into the wading pool without injuring yourself.  Then move to the Doughboy pool and learn how to hold your breath underwater until you're confident you won't drown by accident.  Then learn to maintain your buoyancy by dog paddling. 

Then move to the bigger in-ground pool with a diving board.  Learn to do cannon balls off the diving board.  Then move to jumping head first and coming up alive (If you fail at this point, you've got other problems, besides bad depth perception).

Then practice holding your breath at the bottom of the pool until you're confident you won't drown by accident.  Then learn to swim underwater from pool end to pool end without coming up for air.  Then practice laps and learn to breathe.

After all that, you'll have learned how to hold your breath, do laps and dive with ease (and all without a brain injury).  Then you'll be prepared to dive into the deep end of your Olympic-sized pool and begin training for the big leagues.

Short of that, and you'll find yourself jumping headfirst into the Olympic-sized pool, only to discover there's no water, and instantly become a financial quadriplegic. 

Meantime, anyone with $2M+ is going to be almost compelled to accept what they believe are short-cuts around the practical experiences they need to make profitable decisions.  Decisions based on reality and experience, not on hunches and/or bad advice from others who don't have anyone's best interests at stake, except their own. 

With this much money, many larger, stupid mistakes can be camouflaged.  But if the mistake is large enough the camouflage instantly fades, and the losses become grossly obvious, and one is left with a bulls-eye on his forehead and a message on his back that says, "I Lost $2M And All I Got Was This Lousy T-Shirt"


It will take some discipline to overcome the temptation to take the fire hydrant hose you've got in your hands and not just spray water all willy-nilly on shiny objects in the guise of "investing."

So, I would suggest that you go buy a four-plex with 20% down with conventional financing, and make that work first.  Of course you want a bargain.  After that purchase, think about what you've learned by buying at the wrong price despite the agent's advice; in the wrong neighborhood, with the wrong demographics, with a wrong management approach, with wrong tenants, and finally with the wrong financing ...all after three of your tenants bail on you and do $15,000 worth of damage to your investment just because.

Then accept the losses, and start over with your more sophisticated understanding of reality.  Go buy an actual deal-of-a-four-plex, raise the rents, increase it's value, understand how to create wealth out of thin air, and then rinse and repeat, until it's second nature. 

Then move up the food chain using the exact principals and experience you garnered with the smaller properties by scaling up to multifamily projects, commercial buildings, and finally to development of shopping centers, golf courses and ...the sky's the limit.

Then, you'll find yourself with several hundred million in savings, and that old $2M you left in the bank will seem like chump change.

Meantime, if you start with baby steps, you'll likely avoid blowing $2M on pipe dreams that professional snake oil salesman will tell you is the steal of the century.   

So, don't dive head first into the Olympic-sized pool without first learning to splash in the wading pool.  And then when you're ready to dive in, you'll know to check that there's actually water in the pool. 

BTW, "The [rea] Donald" crashed and burned with millions to start with.  His answer to why, was that he took his eye off the ball.  Well, if a situation can arise with someone with this much experience, and this many millions to "camouflage" his smaller mistakes, than it can happen to anyone with way less millions and way less experience.  Again, just saying.

TheDonaldJr, you have in your hand either a bomb, or the tools to begin strip mining for Gold.  It depends on how you walk with it.  Either way, you need to take baby steps and start very, very small.  You've got YEARS to scale up, and turn that $2M into $7B "TheDonaldJr. dollars." 

I'm pulling for you and wish you extreme success!!!  beer beer beer