I’m only going to cover wholesaling and lease/options. There are many other possibilities such as retailing and Palm Beach architects different types of auctions, which are beyond the scope of this book.You already decided how you were going to sell (your exit strategy) before you bought the property in the first place, right?
If you bought a “junker” (an “ugly house’ in need of repair) and followed the MAO formula, you can either wholesale it or retail it. You can wholesale it quickly for cash. You could make more money retailing it, but there is also more risk and it takes longer.
Wholesaling is nothing more than finding a bargain for a bargain hunter. In other words, selling the house to someone who is willing to do the repairs and retail the house. They’ll be doing most of the work so they’ll be making most of the profit. You’ll pocket a healthy “finders fee” for discovering the deal.
If you choose this option, put an ad in the real estate section of your local paper. It should read:
Handyman Special Cheap, Cash 219-555-1212
You could put a website in the ad too, if you have one and your local paper allows it.
Other than that, DO NOT change the ad. Run it just as it is. The first and last lines of the ad are blank. It costs a little more, but it makes the ad stand out and draws more attention. The ad is proven over time to attract buyers.
Your asking price should be at or about MAO. If you followed the rules, you paid less than MAO (at least $5,000 less than MAO) so you should make several thousand dollars profit.
Your goal is to build a “buyer’s list” for this and future “junkers”. When the phone rings, prescreen your buyers.
Tell them you get deals like this often and ask if they’d like to be contacted as other houses become available. Get their contact information. Also ask if they can pay cash and close quickly.
Ask them to go see the house and get back to you quickly if they’re interested. You shouldn’t be showing houses.
When they call you back, ask how quickly they would like to close. The only acceptable answer is ASAP – no longer than 10 days. If they need more time than that, they’re not a real buyer so move on. They’re probably trying to tie up your property so they can wholesale it to someone else.
Get as much money as you can as an earnest money deposit. Then schedule the closing as soon as possible to get the rest of your money.
Oh, and you don’t need any cash to wholesale a propertyÃƒÂ¢Ã¯Â¿Â½Ã‚Â¦do you? You get the property under contract, and then find a buyer before you have to close. You can assign the contract to your buyer for the difference between his or her purchase price and yours.