Question: I Can’t Find Any Good Deals. Can You Show Me Where To Find Them?
I have a lot of investors who tell me they would buy property from me if I can find them a good deal, but when I go into the MLS, the best deals sell in minutes. The rest of them aren’t all that great, especially in this market with the prices dropping. How can I find good deals for my investors?
James P. in Madison, WI
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Read Transcript for “I Can’t Find Any Good Deals. Can You Show Me Where To Find Them?”
Using the techniques I teach, leads will come to you in droves; you won’t be able to keep up with the leads that you get. Here’s some of what those techniques are.
“I have a lot of investors who tell me that they’d buy property from me if I can find them a good deal as a realtor, but when I go into the MLS, the best deals sell in minutes. The rest of them aren’t all that great, especially in this market with the prices dropping. How can I find good deals for my investors?” – James P. in Madison, Wisconsin.
Joe: You’re right. If you go into the MLS, you can probably buy properties all day long, 10-15% under market value in just about any market except in a really, really hot market (which we’re not experiencing in too many places in the country right now). You can probably go into the MLS and find properties like that, but not too many investors are going to be excited about 10% to 15% under market value unless there’s some other type of financing advantage to do it that way.
Joe: You’re absolutely right as well if you’re trying to find properties that are 20-30% under market value in the MLS. Those are very hard to find. Occasionally, they pop up, but you have to be quick – I’m talking within hours – and you have to be able to make an offer on those types of properties. It doesn’t give you enough time to go to your investors and say, ‘Hey, would you like this property?’ and then let them make a decision. You have to be able to be in a position to make the offer yourself. So that’s not the way we do it.
Joe: The other way that you can find properties (and the way I did it when I first started) was go to HUD foreclosures, and get VA foreclosures and do the fix up thing – I’d do the standard real estate investing methods of fixing up the property, buying them with credit and putting my money into them, holding them and then turning around and selling them.
Joe: In the beginning of my career, it was great because the market was going up like mad – I could buy a property at 10% under market value, which was about what we were getting on those VA foreclosures at the time, because it was a really hot market in California back in the late 80’s. Then we’d turn around and flip those properties and make a chunk of money, because they’d go up in value 20-40%, so you’d see a 20-40% increase in value and were almost guaranteed to make a huge chunk of money at the end.
Joe: But when the market changed, that all changed as well. Also, there’s only a certain amount of properties you can buy if you’re using loans and if you’re using your own money for down payments and fix up. You’re only going to be able to buy up to 10 because at some point, you’re going to get stopped, and usually, it’s right around 8 to 10 properties when you run out of money, that is, unless you go to hard money, but hard money loans don’t always make sense because of the interest rates, points and all of the stuff that you have to pay.
Joe: So, I don’t like using loans to buy properties to fix it up and resell. What I’d much rather see you do is use the techniques that I teach to go after for sale by owners, expireds, for rent deals, general people out on the market right now looking to sell their homes, etc. – all of those different techniques, i.e. the organic techniques, the online techniques, the signs, the classifieds, the eBay, the Craigslist, the different voice blasts and email blasts – all of those different techniques that we use in the “Push Button Method” to find these leads.
Joe: There’s no way that you can possibly keep up with all of the leads that you can get using the techniques that I have. And if you ever do get to that point, all you have to do is expand into a different town and expand into a different state.
Joe: And also, when you’re working with investors right now in this market, a lot of them aren’t going to be able to qualify for non-occupied loans – they have to do full docs now. They have some stated income loans deals out there right now, but their interest rates are really high; they’re up in the double digits right now.
Joe: That’ll change. The market will drop back down and it’ll fluctuate. We sell to people that get loans and we help them find properties for rental, mainly for passive investing, not active – we sell them to investors for passive investing that they can keep for the long term, and we’ve done very well with that, but I think that you’re going to want to focus on finding deals on terms and then turning around and flipping it to an investor, if that’s your choice, for an assignment fee, and charge them $5,000 to $10,000, or take the equity as a note, or take some money up front and take some equity as a note.
Joe: That way, you’re a partner in it with them, but you don’t have to manage it and you don’t have to take any risk – they can be the ones that have to make sure the payment’s made, and then if the payment’s not made, then you can go to them and you can always take the property back if you need to because you’ll be secured by your position and your equity position will be secured by a note.
Joe: So there are lots of great ways to work with investors. I have a newsletter series, which is part of the Mentor Program, and it’s called ‘Building A List Of Investors’. It teaches you how to build a list; it teaches you how to send out a newsletter to them. I’ve even given you articles that you can send out to teach them about the process.
Joe: There’s also an audio that you can listen to. I think I’ve told you about it before: JoeCrump.com/longterm. If you go to that website, there is an audio there that teaches you about long term investing which you can use to help your investors. If you can use that knowledge and information to help your investors understand why it makes sense to hold property long term, even if it has negative cash flow (negative cash flow is not necessarily a bad thing for everybody) and the tax benefits and all of the other things that can come out of buying property – if you have that knowledge, it’ll be easier for you to sell it to investors and for you to write your newsletter.
Joe: With the newsletter you’re going to be sending out to your investor list every week, you’re also going to add in properties that you have for sale, so as your investor list grows, every time you get a property, you can send it out to your list, and sell it instantly, well, not always, but it’s going to be very likely that you can (and we’ve certainly done it very quickly).
Joe: I’ve been in a situation where I’d send out an email and then I’d sell an entire subdivision of fifteen or twenty properties in a matter of a few hours, to where all I had to do was be on the phone, and I’d never even been to the subdivision – I just got pictures, inspections and did everything remotely because I wasn’t even in the state where they were at. Plus, they were going to be filled by property managers that we have in place and I was buying properties there myself, so it gave it a little bit of credibility. So, you might want to keep some for yourself, just to show your investors that you’re serious about investing in property as well.
Joe: So, in other words, you’re playing both sides of it: you’re getting the cash flow from the investors and you’re getting the long term wealth from keeping the properties. I hope that helps.