How Do I Put Together A Deal That’s Out Of My Local Market?
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How Do I Put Together A Deal That’s Out Of My Local Market?
Joe: Hey, it’s Joe. Got another question here. This is from Don Meyer from Rome, Georgia. Don says, “In your new video series please discuss the sequence of steps you go through when you do a deal out of town, something that’s not in your own local market. Discuss the way you work with the seller and buyer to put the deal together. Also, how you get the boots on the ground person, and how you close the deal with the tenant buyer, sending them the documents and discussing it with them. Also, receiving the checks from the buyer.”
Joe: Well, there’s a whole process to this, but I’m going to give you, it’s kind of, the concept in a nutshell here. Boots on the ground, you can find easily by just posting an ad on craigslist. Tell them exactly what you want to do. In my mentor program I’ve got the actual verbiage in an ad that just goes through and tells them you need to do this, you’ll need to do this, you’ll need to do this, you know, I want to make sure you have a license and a car, you know, you need to be responsible. These are the tasks that you’re going to do and we just lay everything out. And it’s a long, you know, ad, and when people, and we pay, you know, $8 to $10 to $12 an hour, typically, $10 an hour is what I’ll pay boots on the ground. And all they need to do is go put a lock box on the door, take a picture of the property, sometimes show the property for me. You know, put a sign in the yard, those types of things as well that I need boots on the ground for.
Joe: As far as talking to the seller, we do that over the phone anyway, so that’s, you don’t really need to be there. And you can fax your documents. You can email them. Most people these days have a scanner and a printer, or a scanner, that you can email them the documents. They can print it out, they can sign it, they can scan it and send it back to you. And that’s pretty normal, so you don’t really need that to be done.
Joe: There’s also a thing called DocuSign which isn’t very expensive. If you don’t feel that you can do it that way, then get DocuSign and people can sign right online. It’s a subscription thing, I think it’s $50 or $60 a month, haven’t priced it recently because we have pretty good luck just having people scan and sign and send back to us. So it’s usually not a problem doing that.
Joe: As far as collecting money from a buyer, we have them wire us the funds. It’s always better than a cashier’s check. I like to have the funds wired directly into my account, or we do an ACH where we can pull their money directly from their account. You have to set up a business account that will allow you to do ACH and that may not be possible for large numbers unless you have a decent chunk in your account because it creates some liability for the bank and they need to feel comfortable that you’re doing it. But, wire is not a problem and they can send the money directly to you.
Joe: Also, everybody has a bank account these days that they can get online and they can actually send money from their bank account to yours. You can, if you don’t have ACH, you can’t collect from theirs, but they can send to yours. So all you have to do is give them your account number and routing number, they can send you the money, as soon as it clears the account then they can move in. If they wire it, then you’ll get it that same day. You know, if they send it otherwise it’ll probably take three or four days before it gets to you. So, keep that in mind.
Joe: And that’s really about it. It’s really not a difficult process to do this remotely. And I think the thing that it took me a while to get my head around it, said, oh, I can’t see the property, what’s that going to do? But I don’t have to see the property if I’m flipping it. I put the responsibility on the buyer and seller to be comfortable with the property and that’s in our disclosures. And if I’m buying it for myself, then I’ll hire somebody who is an inspector or who is a contractor to go over there, it’s usually a contractor, who I’m going to hire to do the work, and they’ll go over and take a look at the property and tell me what it’s going to take to get it done. If it’s a local to me, then I’ll go see the property or if I don’t mind taking a drive out for the day, you know, I go, I’ve driven down to, you know, a friend of mine is in southern Illinois. We’ve been buying some properties together and he’ll find some properties, I’ll go down there and we’ll look at them and we’ll buy them.
Joe: But we’ve gotten to the point where we’re buying enough of them where I’m comfortable that he says, “This is a good property, it’s going to cost about this much to fix up, you know, you want to go ahead and do it?” And I’ll say, “Yeah, let’s do it.” And you know, we wire the funds and we close the deal. And the title company sends me the paperwork and I sign it in front of notary and boom – it’s done. You know, it’s not, none of this is rocket science. And the people that you’re working with and you’re buying from can help you through the process, the title company can help you through the process. Whenever you’re buying a property always close at a title company. When you’re selling, you don’t always have to use a title company, depending on the structure that you’re using.
Joe: Anyway, doing it remotely will change your life. It also will make it scalable, which means that instead of working one little town, you can work the entire state and then once you’re done with the state you can move into the next state and the next state after that. If you’re working in California and you want to buy portfolio properties but the only thing you can find are $500K properties in your area, you can go out to Kentucky and you can buy a property even though you live in California, buy a property in Kentucky, or buy a property in Tennessee or Indiana or Ohio or, you know, all these other states in the Midwest and the rust belt and the sun belt. There’s a ton of properties available that would be great portfolio properties if you buy them and get good property managing, good people to work with that.
Joe: You’ll need a little bit of an infrastructure to make that happen, but once you’ve built it one place, it’s not going to be hard to build it in the next one, and the next one after that. Because you’ll start to understand what it means to work with good people. And when you work with good people they’ll take care of all this stuff for you while you don’t have to worry about it. And all you have to do is have your bookkeeper, you know, send the documents once a month and say here’s where we’re at right now. And I do it twice a month, but still, I’m looking over the documents. I know how much came in, what didn’t come in. I also get emails from the property managers letting us know that money came in, all that stuff, so, it goes across my desk even though I don’t have to spend much time with it. And you can do it the same way.
Joe: All right. Hope that helps.