Presentation on theme: "REI Success Brainwash Who is Vernon Vaughan? - A serial entrepreneur. Worked as a market researcher, while pursuing a degree in I.T. Started investing."— Presentation transcript:
REI Success Brainwash Who is Vernon Vaughan? - A serial entrepreneur. Worked as a market researcher, while pursuing a degree in I.T. Started investing in Went full time in 2004 (quit my job after a 3 day weekend…)
REI Success Brainwash Who is Vernon Vaughan? - Started wholesaling by accident, all because of 4103 Boarman Ave, Baltimore MD….a rehab where I bit off more than I could chew. Average 1 to 2 wholesale deals per month with $8,000 - $12,000 paydays each. Own a number of rental properties. Have sold off underperforming properties in the last couple of years.
REI Success Brainwash Who is Vernon Vaughan? - In the past, Ive looked to rehab 4 properties a year (1 per quarter). Looking to increase that number.. - There are more opportunities and less competition, than I have ever seen in my 8+ years as an investor. There is a need to be filled! There is money to be made.
REI Success Brainwash What is wholesaling ? Whereas, a retailer buys LOW and sells HIGH. A wholesaler buys VERY LOW and sells LOW !
REI Success Brainwash What is wholesaling ? Wholesaling - Putting a property under contract and assigning your contract (or equitable interest) to another investor, for a PROFIT. 9 times out of 10, the wholesaler isnt doing ANY work to the property before assigning the contract (or equitable interest) !
REI Success Brainwash What is wholesaling ? When dealing with non-assignable contracts (REOs), you write the contract in the name of an LLC and assign the LLC. Any other time (unless stated otherwise), you can assign the contract. Sometimes, a wholesaler will actually close on the purchase of a property and resell it. (not preferable, can be expensive, USUALLY unnecessary)
REI Success Brainwash What makes a deal ? MAXIMUM ALLOWABLE OFFER FORMULA MAO = 65% x ARV - Repairs MAO = 65% x $100,000 - $10,000 = $55,000
REI Success Brainwash What makes a deal ? MAO = 65% x $100,000 - $10,000 = $55,000 (Then, factor in desired wholesale profit) -$10,000 = $45,000
REI Success Brainwash What makes a deal ? Give your SERIOUS BUYERS exactly what they want (location, type of neighborhood, size, # beds/bath, type of house, scope of work). Let your SERIOUS BUYERS determine where and even how you look for deals. BUT WAIT! Its about much more than MAO!
REI Success Brainwash What makes a deal ? There are hundreds of deals in the MLS that are priced at or can be negotiated to 65% (or whatever) of ARV minus repairs. SO WHAT!! Concern yourself only with the types of deals that your SERIOUS buyers want! It makes life sooooo much easier…..and profitable.
REI Success Brainwash What makes a deal ? REPAIRS - Break the house down in components. - Learn the price of common items (windows, doors, carpet, appliances, etc). Use HD or Lowes websites. - Always better to over estimate, than to underestimate. - Talk to experienced investors. - Take pictures and notes (plenty).
REI Success Brainwash What makes a deal ? REPAIRS MOST IMPORTANTLY Pay attention to Craig during Day #2 of the REI Success Brainwash. Hands on experience usually has the biggest positive impact on your level of knowledge and confidence.
REI Success Brainwash What makes a deal ? Your profit isnt limited to $5,000 or $10,000! Profit is determined by your ability to find and negotiate KILLER deals.
REI Success Brainwash Why wholesale ? - A low/no risk investment that is highly leveraged and PURE profit. - Quick cash (wholesale deal = 30 days –vs – rehab deal = 120+ days) - A way to capitalize on deals that dont fit your criteria (location, price, amount of work needed, etc) Why give up juicy deals, and sell for only a fraction of the total projected profit?
REI Success Brainwash What makes a deal ? QUALITY – VS - QUANTITY I look for and negotiate KILLER deals. I stay away from o.k. deals and am deathly allergic to mediocre deals. I like deals with large spreads because: I would rather make $10,000 on 1 deal as opposed to needing to wholesale 3 deals at $3,300 each. Large spreads give me room to negotiate with my buyers.
REI Success Brainwash How do I find Wholesale Deals ? Deal Sources - REO/Bank Owned - Probate/Inherited - Distressed Homeowner - Tired Landlords
REI Success Brainwash How do I find Wholesale Deals ? - My favorite! - Banks are so motivated! Speed is a MUST! - Emotion is removed from the equation! - Can find EXACTLY what your buyers want via MLS! - Can find deals on a $0 marketing budget! REO/Bank Owned
REI Success Brainwash How do I find Wholesale Deals ? - Shortsales / Pre-foreclosure (some states have laws) - Bankruptcy/Tax Liens - Job Loss/Health Issues/Divorce/Downsizing/Relocation - Direct/Targeted mailing, word of mouth, Bandit Signs - Is seller motivated? Does seller have equity? Distressed Homeowners
REI Success Brainwash How do I find Wholesale Deals ? - I love inherited properties that are vacant! - Probates = less competition. Also, you get more time! - Adversarial attorneys & feuding siblings suck! - Can find by subscribing to probate list or court house Probate/Inherited
REI Success Brainwash How do I find Wholesale Deals ? - The Real Estate Investment Gold Rush created many! - They know the state of real estate market! - Emotion is removed from the equation! - Absentee owner, Craigs List, Expired listings, REIAs Tired Landlords
REI Success Brainwash How do I find Buyers for my Wholesale Deals ? - Great deals is key is to finding buyers! - QUALITY of buyers > QUANTITY of buyers! - Power of word of mouth/networking is underestimated - Full service wholesalers have an edge - Use technology to your advantage. Marketing Pre-requisites
REI Success Brainwash How do I find Buyers for my Wholesale Deals ? - REIAs/Meet Ups - Network = Net Worth (Agents, Lenders, Contractor, Etc) - Bandit Signs (Discount Houses 4 Sale) - Direct mail to cash buyers found via MLS or list service - Classified Ads/Print Ads/Flyers Offline
REI Success Brainwash How do I find Buyers for my Wholesale Deals ? - Forums (i.e. virtual REIAs) - Free/Paid classified advertising sites - Web Site/Squeeze Page (SEO) - Answer/Question sites - MyHouseDeals.com, Trulia.com, Zillow.com, etc Online
REI Success Brainwash A.B.M Always Be Marketing
REI Success Brainwash Killer Deals - Listed for $225k. Offer of $155k accepted on 2/8/11. - Wholesaled to cash buyer via the phone for $165k while in front of the property! I will also make a 3% commission. - Appraised at $347k on 2/11/11 ! Recent comps easily support it. - Repairs of $45k. Fort Washington, MD - Built in % finished - Nearly 3,000 sq ft - 6 Bed/6.5 bathroom acre lot
REI Success Brainwash Anatomy of a Deal nd Pl, Capital Heights, MD 20743
REI Success Brainwash Anatomy of a Deal 7/30/10 – Saw listed on the MLS for $59,900
REI Success Brainwash Anatomy of a Deal 7/30/10 – Researched property -Had been listed on MLS for 109 days. Price had just been reduced from $85,900 to $59,900 - Was listed as a 4 bedroom/2 bath rambler - MLS picture revealed a 2 nd house on property, while listing didnt mention 2 nd house at all - Researched previous listings and determined it had been recently renovated and did in fact have a guest house in the rear of the property
REI Success Brainwash Anatomy of a Deal 7/30/10 - Determined after repair value of $180,000
REI Success Brainwash Anatomy of a Deal 7/31/10 – Went to take a look IMMEDIATELY!
REI Success Brainwash Anatomy of a Deal 7/31/2010 – determined repairs of $34,375
REI Success Brainwash Anatomy of a Deal 8/2/10 – Submitted $60,000 offer
REI Success Brainwash Anatomy of a Deal 8/2/10 – Pre-marketed to CASH buyers list $73,500
REI Success Brainwash Anatomy of a Deal 8/3/10 – Offer accepted!
REI Success Brainwash Anatomy of a Deal 8/3/10 – Full marketing blast (list & online) $73,500
REI Success Brainwash Anatomy of a Deal 8/5/10 – Found $69,500
REI Success Brainwash Anatomy of a Deal 8/19/10 – Set up LLC
REI Success Brainwash Anatomy of a Deal 8/27/10 – Settlement day! Made a $9,500 profit!
REI Success Brainwash Anatomy of a Deal TALE OF THE TAPE Profit: $9, Duration: 29 days Credit Requirements: N/A Cash Invested: $0 Hours Invested: 7.5 Profit Per Hour: $1,266 Projected Net Rehab Profit: $56,000 (incl. debt service) Projected Net Monthly Cash flow: $675 (incl. debt service)
REI Success Brainwash Transitioning to Rehabbing As you meet your cash needs (monthly overhead) you are able to be patient and dont require $10,000 every month. Instead you can wait 4 months to make $40,000. That is 3 less deals that you had to do (locate deal, negotiate deal, find buyer, control deal) to make the same amount of money. Wholesaling gives you a great opportunity to sharpen your skills in locating and evaluating deals and prepare you for the transition to rehabbing.
REI Success Brainwash Transitioning to Rehabbing - Purchased for $33,000 in 11/2010 from private seller - Rehab budget of $50,000. Only spent $37,000 - Should hit the market on $130, Kenmont Rd, Oxon Hill, MD
REI Success Brainwash Turning Your Buyers Into Partners A side effect of consistently making your buyers rich by bringing them good deals is that you can bring up the idea of joint venturing on deals. …..and by joint venturing, I mean having them put up ALL of the money and you do what you do best, locate the deal and manage the rehab. Then, split the profit. There are buyers out there that are long on money, but short on time. This can present a huge opportunity to you as you prove yourself to be a rain maker.
REI Success Brainwash Turning Your Buyers Into Partners - HUD Foreclosure purchased for $110,000 on 4/22/11 - Was listed for $230, $28,500 repair budget (90% cosmetics) - $235,000 after repair value Waco Dr, Upper Marlboro, MD
REI Success Brainwash Recap - Wholesaling is great for new & experienced investors. - Wholesaling is highly leveraged, almost pure profit. - Learn MAO. Great Deals Sell! - Know EXACTLY what your buyers are looking for! And deliver it to them. - The deals are out there, the buyers are out there. - A.B.M (Always Be Marketing) - REO/Bank Owned is A source, not the ONLY source. Look for motivation.
REI Success Brainwash Recap - Wholesaling is a great way to sharpen your skills as a deal finder. - Develop a reputation for finding and delivering killer deals and the options are endless. There are buyers who will gladly take you on as a partner and fund the deals you find. - When the time is right (and if it fits into your goals), transition into rehabbing or at least make it part of your plan to build wealth.