Real estate Blueprint

A Practical Step-by-Step Blueprint for Making Money Buying & Selling Real Estate

A Practical, Step-by-Step Blueprint for Making Money Buying & Selling Real Estate www.RenegadeRealEstate.com

by Robert Phillips

©2007 Robert Phillips - All Rights Reserved www.RenegadeRealEstate.com

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Limits of Liability & Disclaimer of Warranty

"This publication is designed to provide accurate and authoritative information in regard to the subject matter covered. It is given with the understanding that neither the author nor the publisher is engaged in rendering legal, accounting or other professional service. If legal or other expert assistance is required, the services of a competent professional person should be sought. Your results will vary from those of the author and/or other students mentioned in this publication. The author and publisher have used their best efforts in preparing this book. The author and publisher make no representation or warranties with respect to the accuracy, applicability, fitness, or completeness of the contents of this book. The author and publisher disclaim any warranties (expressed or implied), merchantability, or fitness for any particular purpose. The author and publisher shall in no event be held liable for any loss or other damages, including but not limited to special, incidental, consequential, or other damages. As always, the advice of a competent legal, tax, accounting, or other professional should be sought. The authors and publisher do not warrant the performance, effectiveness, or applicability of any sites listed in this book. All links are for informational purposes only and are not warranted for content, accuracy, or any other implied or explicit purposes. Any earnings or traffic figures quoted should not be considered accurate or fair and should be considered exceptional results. You may do better or worse and no claims of potential earnings should be inferred or implied in any way.” ________________________________________________________________________ ________________________________________________________________________ Your results may be better or worse than those of the author depending on your effort, determination, and persistence – things over which the author has no control. ________________________________________________________________________ ________________________________________________________________________ This book contains material protected under International and Federal Copyright Laws and Treaties. Any unauthorized reprint or use of this material is prohibited. ________________________________________________________________________


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Introduction

So many people have asked me about creating wealth in real estate that I decided to put everything I’ve learned over the years on paper in the form of a book. Now when the question comes up, I can refer people to the book. Forcing myself to put everything into an organized book also helps me. Obviously I know the business, but if I can teach you how to buy & sell single-family homes with no money or credit, then I really know the business. I want to help those who TAKE ACTION to help themselves. If it’s too much effort to download a book and read it, then I’ve successfully rid myself of a “time waster.” If you’re reading this book, you’ve taken the first step to creating wealth in real estate. This information in this book is gleaned from extensive study of the field, but more importantly several years of actually applying these principles to the business of buying and selling single-family homes in the real world. In this book, we’ll be covering the basics of Quick-Turn Real Estate. I’ll discuss some real deals I’ve done and share some of the vendors I use. You’ll also have a chance to see some of my marketing materials. If you’d like to see the marketing materials, please visit: www.RenegadeRealEstate.com/marketing/. This is an introductory book. The topic is just too broad to cover every detail. My goal is that after studying the information, you’ll have enough knowledge to know if being a real estate entrepreneur is something you’d like to pursue – either part-time or full-time. Please don’t confuse “Quick-Turn” with “get rich quick.” This is not a get rich quick scheme. However, you can create wealth quickly. There’s no reason you can’t put $10,608 dollars in your pocket in the next 21 days as I did. I’ll tell you exactly how I did it later in this book. The theory of Quick-Turn Real Estate is simple. Many people have used real estate as their vehicle to financial independence. There’s no reason you can’t do the same, but it will take some effort on your part…as you’ll discover if you decide to TAKE ACTION on the information presented. With some dedication and persistence anyone can use the information provided to increase his or her wealth.


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Before we get started, let me make one extremely important point. Simply reading this book will not make you wealthy. The most important ingredient in the recipe for success is for you to TAKE ACTION – immediately. I’ll share my knowledge and tell how to get more. You owe it to yourself to devise a plan and TAKE ACTION. Otherwise your dreams of success are just that - silly pipedreams. The future doesn’t just happen…you make it happen. With that in mind, I’m going to give you an “ACTION ITEM” at the end of each chapter to keep you on track. It’s your responsibility to TAKE ACTION. No one else can do it for you. If you decide you’d like to learn more, I recommend the “Six Simple Steps Videos.” It’s nearly 3 hours of video instruction to supplement what’s in this book. I’ll take you online to find owners of vacant properties, find the market value of houses, and show you some of the tools I use. You’ll also get an electronic spreadsheet to instantly evaluate the profitability of your deals and a detailed video showing how to use it. There’s much more, but not enough space to tell you everything here.

“Who Else Wants to Earn 10% on Passive Investments Secured by Real Estate?”

If you decide Quick-Turn Real Estate is not for you, I have another proposition for you. Do you have any retirement funds or excess investment capital that’s not earning a 10% return safely? I use private individuals to fund many of my real estate deals and pay them a handsome 10% return for the use of their investment capital. Why would I do that when I could go to the bank and get a much lower rate? Good question. Let me explain. In many situations, I need to act quickly and simply don’t have time to go through the long, painful loan approval process. In exchange for quick access to investment capital, I’m willing to pay a premium return. If you’d like to learn more, please visit my website at www.PrivateLending4Profit.com. We may be able to use Quick-Turn Real Estate as a vehicle to create wealth together. To Your Extreme Wealth,

Robert A Phillips “All glory comes from daring to begin.” – William Shakespeare


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Acknowledgements Special thanks to my brother Fred Phillips and Max Winningham for their unwavering support and encouragement of my entrepreneurial endeavors. Probably not coincidentally, Fred and Max are successful entrepreneurs. Several others who have not been so supportive spend their days working for someone else. Funny how that works out…isn’t it? Be careful to whom you listen.


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Table Of Contents

Introduction Acknowledgements Table of Contents The Big Picture

The 4 Profit Centers in Quick-Turn Real Estate The 3 Main Reasons to Buy Single-Family Homes The 6 Simple Steps to Creating Wealth in Quick-Turn Real Estate Action Item #1

Find ‘Em

What makes a seller MOTIVATED? Vacant Houses Ant Farm Classified Ads FSBO Signs Bandit Signs Direct Mail Business Cards Newspaper Ads Websites The Money Bag Realtors Sample Marketing Materials Action Item #2

Filter ‘Em

MOTIVATED SELLERS are the key The MARLA Formula The 5 Magic Questions Handling Objections Turn on the LAMP? Other Prescreening Considerations Action Item #3

Formulate Offers


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All Cash Offers Comparative Market Analysis Estimating Repairs The MAO Formula Pretty House Offers Multiple Offer Strategy Action Item #4

Follow-Up

Why Follow-Up? The Folder System The Computerized System The Autopilot System Action Item #5

Fund ‘Em

Seller-Financing Private Lenders Partners Hard Money Lenders Credit Cards Action Item #6

Fast Turn ‘Em

Wholesaling Lease/Option Action Item #7

Seller Pre-Screening Script Property Evaluation Worksheet Letter of Intent Real Estate Resources Directory Real Estate Investing Videos About the Author


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UnAdvertised Bonus Because you’re reading this eBook, you’re eligible to receive marketing materials and creative real estate investing updates. Marketing Materials – I’ll show you some of the marketing materials I use in my business. I have more pictures than I could fit in this book so I put them out on a webpage. I’ll give you the website address. Updates – I’ll keep you updated on the latest developments in creative real estate investing. As I experiment and learn new “tricks” I’ll pass them on to you so you can profit from them.

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The Big Picture Hello! It’s a beautiful day to create wealth! Let’s get started! You may wonder why you should consider investing in real estate – specifically single-family homes. Consider this: shelter is one of the basic necessities of life. Everyone needs food & shelter no matter what the current state of the economy may be. Therefore, a demand for single-family homes will ALWAYS exist. ************************************************************************ “The best time to invest in real estate was 20 years ago. The second best time is now.” – Author’s paraphrase of an ancient Chinese proverb. ************************************************************************ Will this work where you live? It works everywhere. Take a look at the real estate wanted section in the Sunday paper of the largest city in your area. How many “We Buy Houses” ads do you see? If it didn’t work, those people wouldn’t be advertising. If by some freak occurrence you don’t see any “We Buy Houses” ads, consider yourself lucky because when you place your ad you’ll get all the calls. If you’re thinking you can’t buy houses because you have neither money nor credit, don’t worry about it. It doesn’t matter. If you’ll just apply the techniques presented, you’ll see that you can in fact buy nice houses in nice neighborhoods with no money, no banks, and no credit. There are four main profit centers in Quick-Turn Real Estate.


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The 4 Profit Centers In Quick-Turn Real Estate

• Wholesaling (finding bargains for bargain-hunters) • Retailing (buy low => sell high) • Owner Financing (ownership – get in “light’)

• Options (control without ownership)

Wholesaling and Retailing generally start with a house in need of repairs and are commonly referred to as the “Ugly House” business. On the other hand, Owner Financing and Options usually involve “Pretty Houses” that don’t need repairs. Getting in “light” means using as little cash as possible. The 3 main reasons to buy single-family homes are:

• Quick Cash Profits • Monthly Cash Flow • Long-Term Appreciation

Your goal should be to become a transaction engineer. When you become a transaction engineer, you’ll be able to provide solutions that will meet the seller’s needs and still make you a profit – a true win/win situation. Remember, we’re making a profit while providing a valuable service by using our specialized knowledge and imagination to solve problems creatively. We provide a service to our communities by converting vacant, run-down houses into affordable housing. This increases the value of all the homes in the neighborhood and also increases the community's tax base.


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In addition, think of all the people that benefit from our activities: appraisers, home inspectors, real estate agents, surveyors, termite inspectors, closing agents, title clerks, attorneys, contractors and all the vendors that supply materials to these professionals. You should not be taking advantage of people. There are so many houses available that it's not necessary. Real estate deals are like buses: if you miss one, just be patient, there's another one coming shortly. It's a fact that some sellers will be in distress, but we had nothing to do with the cause of the problem. We've devoted tremendous resources to learn how to creatively solve problems and we are compensated handsomely for it. We’re simply taking advantage of opportunity, which is the very foundation upon which this country was built. Countless other professionals are compensated for helping people in need by using their specialized knowledge. That’s exactly what we’re doing. To argue differently is demonstrative of sheer ignorance. If you can provide a solution that meets the seller’s needs and still find a way to make a profit, then you have a basis for doing business. If not, wish the seller luck, leave the door open, and move on to the next seller. Make sure to leave on good terms as the situation may change letter. Everybody wins or I won’t play. Let me address one more common question. Why would a seller just give away equity? Answer: They don’t. There is no such thing as something for nothing. Sellers will not give away equity for nothing. However, MOTIVATED SELLERS will trade equity for peace of mind. They have a problem. If you can provide a solution that eliminates their problem and allows them to put it all behind them and get on with their lives, they will gladly trade equity for your solution. We’ll discuss MOTIVATED SELLERS shortly. MOTIVATED SELLERS are willing to trade equity because your solution provides more in “use value” than you take in “cash value.” Ultimately, you get what you want by helping others get what they want…not by cheating them out of what they already have. If you haven’t read my Special Reports: “Six Simple Steps to Certain Success” and “12 More Secret Wealth Creation Principles,” I recommend that you read them now.


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Attempting to create wealth without using these principles is like trying to write a novel without knowing the alphabet. Both reports are available at www.RenegadeWealthSecrets.com. The 6 Simple Steps to Creating Wealth in Quick-Turn Real Estate are:

1. Find ‘Em 2. Filter ‘Em 3. Formulate Offers 4. Follow-Up 5. Fund ‘Em 6. Fast Turn ‘Em (or Quick-Turn ‘Em)

We’ll cover each step in this book. But first, don’t you think it would be easier if you could find some other people in your area who are interested in creating wealth through real estate? It would be a good idea to associate with like-minded people. Most major cities have a local REIA (Real Estate Investors Association) that meets regularly. This is a good place to meet people, find deals, network, etc. To locate a REIA in your area, check out http://www.nationalreia.com.

ACTION ITEM #1 Find the local REIA in your area and plan to attend the next meeting. If there isn’t a local REIA in your area, at least go to one or more of the plethora of real estate websites and read some articles. Some even have chat rooms or message boards where you can interact with other investors. There really is no excuse for not TAKING ACTION to learn.


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http://www.nationalreia.com/


Here are a few websites I recommend: CameronDirect www.CameronDirect.com – This site is run by Cameron Dunlap - a successful entrepreneur and teacher. Creative Real Estate Online www.creonline.com – When I was getting started, I visited this site frequently to read the articles. That’s enough for now. In the next chapter, we’ll learn how to "Find 'Em."


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http://www.camerondirect.com/

http://www.creonline.com/


Find ‘Em Did you find out when & where your local REIA meets or visit the websites recommended? Great! You’re off to a good start. Let’s review what we covered in the first chapter. The 4 Quick-Turn Real Estate Profit Centers

• Wholesaling (finding bargains for bargain-hunters) • Retailing (buy low => sell high) • Owner Financing (ownership – get in “light”) • Options (control without ownership)

6 Simple Steps to Creating Wealth in Quick-Turn Real Estate:

1. Find ‘Em 2. Filter ‘Em 3. Formulate Offers 4. Follow-Up 5. Fund ‘Em 6. Fast Turn ‘Em (or Quick-Turn ‘Em)

If we’re going to make money buying and selling houses, we need to locate people with a house for sale. So let’s Find ‘Em.


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There are so many ways to locate prospects that I won’t be able to cover them all here. I’m going to discuss some of the methods I use. I’m sure you can think of more. You can either contact people known to have a house for sale or have them contact you through your advertising. I use both methods, but I prefer to have them contact me, then I Filter ‘Em (Step 2). The prospects we’re looking for are MOTIVATED SELLERS. Motivated sellers NEED to sell, unmotivated sellers want to sell. This is very important. You’ll get frustrated and give up quickly if you try to buy houses from unmotivated sellers. But don’t worry about that for now, the goal of Step 1 - Find ‘Em - is to generate as many prospects or leads as possible. We’ll quickly prescreen out the unmotivated sellers in Step 2. What makes a seller MOTIVATED? Good question. There are many things that make sellers MOTIVATED. Here’s a short list, but there are other reasons:

• Divorce • Marriage

• Upsizing (moving to a larger home)

• Downsizing (moving to a smaller home)

• Relocating (i.e. job transfer)

• Foreclosure

• Frustrated Landlords

• Vacant Homes

• Out-of-town owners

• Inheritance/Estate Issues


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• Already bought another house (two mortgages)

• Too little equity to sell using a real estate agent

Now that you understand some of the reasons sellers become MOTIVATED, let’s look at some ways to Find ‘Em. Here’s a list of the methods I’ve used (in no particular order).

1. Vacant Houses Ugly, vacant houses are easy to spot. You’ll probably spot some of these prospects during the normal course of driving around town every day. Owners that have left their homes vacant and in a state of disrepair are usually MOTIVATED.

2. Ant Farm If you’re too lazy to drive around finding ugly, vacant houses (like me), you can hire a few ants (they’re also called “bird dogs”) to bring them to you. Ask the ants to take a picture of the house and gather some basic information about the property like the number of bedrooms, bathrooms, etc. and a list of what needs to be repaired. I pay them $10 per lead or $15 if they provide a name and/or phone number.

Now you’ll need to find the owner, if there is a realtor sign or a For Sale By Owner (FSBO) sign in the front yard, you can just call the number. If there’s no sign in the front yard, knock on the neighbor’s doors and ask them. Still no luck? You can go to your local courthouse and look up the owner’s name in the property tax rolls. Don’t get discouraged. Generally, the harder it is to find the owner, the better the deal will be when you finally do track down the owner so keep trying. Other investor will give up. Several counties provide tax information on the Internet. Try typing this URL into your browser: www.co.yourcounty.yourstate.us. For example, the tax records for the county


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in which I live (Fulton County in Georgia) are located at www.co.fulton.ga.us. Alternatively, you could call your county courthouse and ask. If all else fails, you can use a skip tracer to track down the owner. If you provide the owner’s name and property address, you’ll receive a detailed report within 24 hours that shows the names, addresses, and telephone numbers from the subject’s most likely current address, previous addresses, neighbors, probable relatives, and likely associates. You’ll be amazed at how much data will be revealed. Then it’s just a matter of following up. I use a service which costs as little as $9.97 per search. The aforementioned Cameron Dunlap runs this service and it works. I recently bought a first mortgage on a vacant house and needed to find the owner. Using a number I got from a skip trace, I found the owners. The deeded the house to me which saved me thousands of dollars in legal fees and holding costs. That’s a pretty darn good return on a $9.97 investment. Isn’t it? For more information, please visit www.RenegadeRealEstateSecrets.com/skiptracer.html.

3. Classified Ads There’s a goldmine in the real estate classified ads in your Sunday paper. Focus on the FSBO ads. Look for ads with words and phrases such as “motivated seller,” “desperate,” “must sell,” etc. It won’t take long for you to get the hang of it. I don’t personally use this method much because I prefer to have sellers call me. However, it does work. I made a few calls one day and had a house under contract within an hour.

4. FSBO Signs It doesn’t cost anything to call the numbers you find on FSBO signs. Don’t waste your time calling houses with realtor signs (unless the house is ugly & vacant). They generally aren’t interested in working with investors. There is actually a nationwide service that will provide you with a daily list of all the new FSBOs in your area. They’ll email you a list each day and you’ll also have access to the online database so you can run a custom search. Considering what you can make on one deal, the service is a bargain at $30 per month. Check it out at: www.landvoice.com


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http://www.realestatewealthcreator.com/skiptracer.html

http://www.landvoice.com/


5. Bandit Signs Signs are a cheap way to get sellers calling you. Put out 50 signs a week in your area and the phone will start ringing. The sign should say something like “We Buy Houses” with your phone number. Be careful, many cities have sign ordinances. Check with your local authorities for the laws in your area. I do know people who have been fined. Here’s a link to the vendor I use for bandit signs: www.RenegadeRealEstateSecrets.com/banditsigns.html.

6. Direct Mail This could be either letters or postcards. I’ve had success mailing to expired listings and foreclosures. You can get a list of expired listings from a realtor. Foreclosures are a matter of public record at the local courthouse. In some areas, a list of the current foreclosures can be purchased. If you live in metro Atlanta, you can subscribe to the “Atlanta Foreclosure Report” at www.equisystems.com. If you don’t live in Atlanta, ask someone you met or will meet at your local REIA meeting. Richard Roop uses postcards to get MOTIVATED SELLERS to call him. He buys 3 to 4 houses per month with an average profit more than $25,000 per house. He also has some great resources for real estate entrepreneurs on his site. You should at least sign up to receive his FREE eLetter. I have Richard’s course “How to Collect 5-Figure Paychecks Buying and Selling Houses” and have used his postcard to buy a house. The profit on that deal is in excess of $30,000. I’d say the course was a profitable investment…wouldn’t you? Thanks Richard. Here’s a link to Richard’s site: www.RenegadeRealEstateSecrets.com/roop.html.


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http://www.realestatewealthcreator.com/banditsigns.html

http://www.equisystems.com/

http://www.realestatewealthcreator.com/roop.html


7. Business Cards

You should have business cards printed and hand them out to people. I use business cards that look like $100 bills. I’ve also used bright yellow cards. Do something that draws attention to your cards. And hand them out to everyone you meet. They won’t do you any good in the box.

8. Newspaper Ads You can place a “We Buy Houses” classified or display ad in a daily newspaper or weekly shopper. You’ll have to experiment to see which papers work best in your area. If you see other ads in a particular paper, that’s a good sign. If the ads weren’t drawing calls, they wouldn’t be in the paper.

9. Websites

A website is a standard business tool in today’s environment. They’re also cheap (less than $25 per month) and can be added to your other advertising to give more credibility to your business.

10. The Money Bag

Have you ever found Ziploc bags in your driveway with a rock and a business card? Well, one day I cam home and found several of those in my driveway. Considering I had a few thousand business cards already printed, I figured I should put them to use. So I bought 1,000 Ziploc bags at Sam’s Club. They come in boxes of 500 for $6.50 which comes out to 1.3 cents per bag. Then I bought a bag of rocks at Home Depot for $3.50. I picked a neighborhood and tossed them in every driveway. I only got two calls, but I bought a junker and rehabbed it, and got a check for over $40,000 which I’ll tell you about later. In every large neighborhood, chances are there is at least one motivated seller. You just need to find ‘em. How could you not at least pick up a bag that looks like it has a hundred dollar bill in it?


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If you threw out 1,000 bags and bought one house for a $20,000 profit, which equates to making $20 per bag thrown out. At that rate, how many bags do you want to distribute?

11. Realtors

This is a BIG ONE. I saved it for last because there’s a lot to discuss here. I’ve bought several houses on referrals from Realtors. Realtors can also give you access to the MLS (Multiple Listing Service) which makes it easy for you to do a CMA (Comparative Market Analysis) – we’ll get to that later. The first thing you need to understand is that most Realtors are clueless when it comes to creative real estate. They know how to list houses and that’s it. As a matter of fact, a lot of them will tell you what you’re doing is illegal (it’s NOT!). The best thing to do in that situation is to thank the Realtor for helping you avoid trouble with the law and move on to the next one. (You should do this when searching for an attorney who understands creative real estate too.) This means you’re going to have to handle rejection. You’re probably going to hear a lot of “no’s” before you find a Realtor who’ll work with you. But if you keep asking, it’s only a matter of time until you find one. Perhaps you already know one. A good place to meet the type of Realtor who’ll work with you is at your local REIA club. Some Realtors invest in real estate themselves and others prefer to work with investors. They’re in the minority, but you’ll find them at your local REIA. I work with several Realtors. I’ve met several at real estate investing seminars. I work with some who’ve called my bandit signs. It’s best to work with multiple Realtors. One is the worst number in business. What if your relationship with the Realtor deteriorates? What if the Realtor changes careers? Or moves? These things happen. The best way to get Realtors to work with you is to show them how the relationship will benefit them – NOT how it will benefit you. Everyone wants to know “What’s in it for me?” I ask Realtors if they’d be interested in making money off houses they can’t list. Who wouldn’t? Realtors and investors are looking for different types of sellers. I’ll refer unmotivated sellers who really want to list their house to the Realtor. And in return, the Realtor


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will refer sellers with houses he or she can’t list for various reasons (such as foreclosure or not enough equity to list) to me. And I’ll pay them a referral fee if I end up buying the house. So you see it’s a mutually beneficial relationship. As a matter of fact, I recently bought a house referred to me by a Realtor. The seller had found a new house to move into but needed to sell his current home before he could close on the new home. The Realtor contacted the seller and quickly found out there wasn’t enough equity to list the house. So the Realtor told the seller about me. A few months later, I bought the seller’s house for $20,000 under market value. I’m happy to pay the Realtor a $2,000 dollar referral fee. He deserves it. Everybody wins and now he’s likely to refer more sellers to me…and tell his Realtor friends about me which will result in more referrals. It’s beautiful! So I highly recommend you find a Realtor or two to work with. They’ll make life much easier.

There are dozens of other ways to locate prospects. The only limit is your imagination. I suggest you pick three and use them. Give them at least 30 days. You can try something different if one or more of the methods you’ve chosen isn’t effective. You’ll have to figure out what works best for you. Sample Marketing Materials (UnAdvertised BONUS) If you’d like to see some of the marketing materials I use to Find ‘Em, I’ve put them out on a website for you to see and use in your own business. To claim your BONUS, please visit: http://www.RenegadeRealEstate.com/marketing/. I’ll remind you again that the most important thing is for you to TAKE ACTION. If you do nothing to locate prospects, then none of the other steps will matter…will they?

ACTION ITEM #2 Pick three ways to locate prospects and implement them immediately. You aren’t limited to the list I’ve provided. And please don’t tell me you can’t afford to TAKE ACTION. Three of the methods I’ve given you are FREE.


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If nothing else, you can drive around and find ugly vacant houses, call classified ads, and call FSBO signs. ************************************************************************ “You may not get rich quick, but if you never get started, you’ll never get rich.” – Ron LeGrand ************************************************************************ That should be enough information for you to Find ‘Em. In the next chapter we’ll learn how to Filter ‘Em.


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Filter ‘Em

By now, you’ve found your local REIA and have picked three methods you’ll use to locate prospects. You’ve got some momentum; so let’s keep it rolling. What? You haven’t completed your ACTION ITEMS from the first two chapters? Well, it’s never too late to get started. Procrastination is one of the top reasons for failure. Don’t wait for the “right time”, because the “right time” will never come. ************************************************************************ "Do not wait; the time will never be ‘just right’. Start where you stand, and work with whatever tools you may have at your command, and better tools will be found as you go along." – Napoleon Hill ************************************************************************ Let’s review: The 6 Simple Steps to Creating Wealth In Quick-Turn Real Estate:

1. Find 'Em 2. Filter 'Em 3. Formulate Offers

4. Follow-Up

5. Fund ‘Em

6. Fast Turn ‘Em (Quick-Turn ‘Em)


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MOTIVATED SELLERS are the key In the previous chapter we learned how to Find ‘Em. Now we’re going to Filter ‘Em at lightning speed. We only want to deal with MOTIVATED SELLERS. You must remember that. Don’t waste your time trying to buy houses from people that “want” to sell their house. Focus on the MOTIVATED SELLERS that NEED to sell their house. Prescreening at lightning speed is a vital step. Remember when we talked about MOTIVATED SELLERS earlier? The truth is most sellers are not motivated. Only 1 in 10 or maybe even 1 in 20 will be a MOTIVATED SELLER. The point of step 1, Find 'Em, was to flood our “funnel” with leads. Now we’re going to sift and sort those leads and only deal with the people that want to deal with us. You need to learn to weed out the unmotivated sellers quickly. Attempting to buy houses from unmotivated sellers will frustrate you to the point of driving you out of business. You can’t squeeze water out of a rock. ************************************************************************ “Dealing with unmotivated sellers is like kissing a toad with warts…It’ll give you a bad taste for toads.” – Ron LeGrand ************************************************************************ Don’t take rejection personally. Remember this: All sellers’ situations will change with time and circumstance. ************************************************************************ “No doesn’t really mean no…it means not now.” – Cameron Dunlap ************************************************************************


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SW, SW, SW, SW. Some Will, Some Won’t, So What, Someone’s Waiting. Don’t cry over spilled milk, go milk another cow. I hope by now you’ve gotten the point. The MARLA Formula You only need to ask five questions to prescreen the seller. I use the MARLA formula. Acronyms help jog my memory. MARLA stands for:

• Motivation • ARV (After Repaired Value)

• Repairs

• Loan Balance

• Asking Price

The 5 Magic Questions:

1. Why are you selling the house? 2. How much is the house worth?

3. Does the house need repairs?

4. What is/are the current loan balance(s)?

5. What is your asking price? Follow-up: Is that your bottom line?


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Let me explain why we’re asking these questions. “Why are you selling the house?” reveals MOTIVATION. If the answer is indicative of a MOTIVATED SELLER as we discussed in the previous chapter, that’s a good sign. If the seller shows no sign of motivation, then it’s your call. I figure I’ve got them on the phone so I may as well get answers to my other four questions and make an offer, but that’s me. Some sellers withhold information until you build rapport, then they’ll spill the beans that they’re MOTIVATED. Be patient. “How much is the house worth?” gives an indication of the home’s market value. Most sellers have some idea of how much their house is worth. Of course you should do your own due diligence before actually buying the house, but for now you can just go with what the seller says. If the seller doesn’t know what the house is worth, you may be able to get a good deal. Ignorance is expensive. You’ll need to know if the house will require any repairs to bring it up to market condition so ask “Does the house need any repairs?” If yes, find out what needs to be fixed. Ask the seller to give you a repair estimate. They’ll often name a high number that will work to your advantage. To find out about the existing financing on the house ask, “What’s the current loan balance?” Don’t be afraid to ask. MOTIVATED SELLERS will tell you. If the seller won’t tell you, then s/he is not motivated and you can move on. The last piece of information is the seller’s asking price. I always follow-up with something like “Is that your bottom line?” You’ll be amazed at how often the seller will drop several thousand dollars off the asking price just like that. You may need more information to make an offer – sometimes not. But at least now you can sort out the unmotivated sellers in minutes. Two good indications that a seller is not motivated are that they won’t answer all your questions and/or the asking price is at or near the appraised value. You are looking for sellers who are flexible on price, terms or both.


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Handling Objections If the seller gives you any flack, say something like this: “Look, Mr. Seller, I’m the most serious buyer you’ll ever run across, but I'll need some basic information in order to make an intelligent offer. Will that be a problem?” ALWAYS ANSWER A QUESTION WITH A QUESTION. If the answer is no, then proceed to get the answers to the questions. If the answer is yes, then you have quickly prescreened and found that the seller is unmotivated. Next! Be nice and courteous and leave the door open. Invite the seller to call you back if the situation changes. Remember, all sellers’ situations change with time and circumstance. The seller may be motivated in the near future so don’t burn your bridges. Turn on the LAMP? If MARLA still looks good after the “5 Magic Questions”, it’s time to turn on the LAMP and see if she looks good in the light. Here are four more questions to ask:

1. Listed: Is the house listed? If the house is listed, you’ll need to get it released from the listing, wait until the listing expires, or compensate the real estate agent. Buying a listed house directly from the seller (and cutting out the real estate agent) could be considered tortious interference with a contract and you could be sued…so don’t do it.

2. Arrearage: Are the payments current? If the payments are in arrears, you could create equity through a short sale by getting the lender to accept less than what is owed on the mortgage as payment in full. But short sales are beyond the scope of this book.


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For more information on short sales, I recommend:

• Jeff Kaller at www.RenegadeRealEstate.com/shortsale.html

3. Minimum Cash Requirement: How much cash do you need now? Find out how much of their equity the seller needs now. You may be able to get seller financing which we’ll cover later when we learn how to Fund ‘Em. Whatever the seller’s answer, you could Follow-Up with: “So are you saying if you don’t get $X, you won’t sell the house?” The seller my drop the cash requirement, but you’ll never know until you ask.

4. Payment (PITI): How much is your monthly payment? PITI stands for principal, interest, taxes, and insurance. You’ll need to know this if you’re considering taking over the existing financing and making the payments. If so, you’ll want to be sure a tenant/buyer’s monthly payment will cover this payment so you’re left with positive monthly cash flow. Once you have the answers to these questions, you can make an offer. You already have the seller on the phone and s/he has answered your questions so you might as well make an offer. What do you have to lose? Don’t assume anything. You never know until you ask. The Guru puts it like this: “If you’re not making offers, you’re not getting paid.” And he’s right. It might help to think about it in terms of making money on each offer. If you make an average of $20,000 on each deal (very reasonable) and it takes you 20 offers to get one deal, then you’re making $1,000 per offer. Not too bad. And the more offers you make, the more wealth you create. But Formulating Offers is covered in the next chapter.


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http://www.renegaderealestate.com/shortsale.html


Other Prescreening Considerations Here are some items to consider in prescreening prospects.

• Is the seller MOTIVATED? Does the seller NEED to sell or want to sell? • Location; Is the home located in an area where you’d like to own homes? (if you

plan to keep the home long-term) • Asking Price vs. Est. Value; Is there enough equity to get involved? • Asking Price vs. Loan Balance; How much cash does the seller want? • Monthly payment; Will a tenant/buyer's monthly payment cover it? (for a

lease/option exit strategy) There’s a “Seller Prescreening Script” at the end of the book. It includes all the magic questions and provides space for your answers. It can’t get any easier than that. We could discuss this topic for days, but this as in-depth as I can cover it at this point so just digest this information for now.

ACTION ITEM #3 Call 10 sellers and ask them the “5 Magic Questions”? Don’t tell me you can’t find 10 sellers to call. They’re in the newspaper, or on the FSBO signs you drive by everyday. If you can’t find 10, you’re not trying. The whole exercise should take no longer than 30 minutes. What’s the worst that can happen? Don’t take rejection personally. Remember, SW, SW, SW, SW. Some Will, Some Won’t, So What, Someone’s Waiting. You might even buy a house.


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Make your dominant thought positive (How CAN I?), not negative (Why CAN’T I?). In other words, fill your head with "empowering" beliefs not "limiting" beliefs. It’s not as hard as you may think, but if you do have any fears, now’s the time to conquer them. Will you conquer your fears? Or will your fears conquer you? ************************************************************************ “We should not let our fears hold us back from pursuing our hopes.” – John F. Kennedy *********************************************************************** Now that we’ve Found ‘Em and Filtered ‘Em, we’ll learn how to Formulate Offers in the next chapter.


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Formulate Offers How did it go with the 10 sellers you called? It may have been a bit scary at first, but it was a lot easier than you may have thought wasn’t it? If you didn’t call 10 sellers, you can do it tonight…after you’ve finished this chapter. ************************************************************************ “Fear begins to melt when you take action toward a goal you really want.” – RGA ************************************************************************ Don’t ask me whom RGA is…I don’t know, but it’s a great quote. And I know it to be true from personal experience. Let’s review: The 6 Simple Steps to Creating Wealth in Quick-Turn Real Estate:

1. Find 'Em 2. Filter 'Em

3. Formulate Offers

4. Follow-Up

5. Fund ‘Em

6. Fast Turn 'Em (Quick-Turn ‘Em)

We’ve Found 'Em and Filtered 'Em at lightning speed. Now it’s time to Formulate Offers.


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This topic has been the subject of five-day events I’ve attended so please understand this discussion is in no way meant to be comprehensive. We’re barely scratching the surface. The main thing you should understand is that the ability to Formulate Offers that meet the seller’s needs and enable you to make a profit is the essence of being a transaction engineer. The more tools you have in your “toolkit”, the more likely you’ll be able to create a win/win solution and ultimately the more money you’ll make. Another important point is that you should know your exit strategy BEFORE you make an offer. In fact, your exit strategy dictates your offer. Deciding what to do with a house after you buy it is a recipe for disaster. I’ve included a simple, easy-to-use “Property Evaluation Worksheet” at the end of the book. Just crunch the numbers and you’ll quickly be able to evaluate whether or not a particular deal meets the minimum acceptable profit criteria you’ve set. We’re looking for sellers who are flexible on price, terms, or both. We may pay cash if a seller is flexible enough on price. We’re generally willing to pay a higher price for flexible terms. All Cash Offers Let’s start with all cash offers. Don’t worry about where you’re getting the cash. We’ll cover that later when we learn how to Fund 'Em. There is a simple formula for making all cash offers. You’ll need to know the After Repaired Value (ARV) and the repairs needed. Let’s briefly discuss where to get those figures. Comparative Market Analysis (CMA) You get the ARV by performing a Comparative Market Analysis (CMA). Only houses that have been sold in good condition should be used for comparison. There are three keys to performing a CMA:


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• Size & Amenities (bedrooms, bathrooms, sq. ft, etc.)

• Recency of Sale (preferably 6 months or less)

• Proximity (preferably in the same neighborhood)

The houses sold should also be in excellent condition to get a true market value or ARV. For example, one of the comparables may have sold for much less than the others. If you do a little research, you’ll probably discover it was a HUD foreclosure or something similar (a MOTIVATED SELLER) and that’s why it sold so much lower than the other houses. Don’t use these properties in determining the ARV. How can you perform a CMA?

• Find a real estate professional to do it for you.

• Subscribe to a national database service such as Win2Data (www.firstamres.com).

• Your local REIA may provide access to tools for performing a CMA.

• Internet – there are several sites like homeradar.com

• Call FSBOs & listed houses in the area to get an idea of ARV.

Value is the anchor. You CANNOT make an offer without knowing the ARV, so don’t even think about it. Estimating Repairs Estimating repairs is simple – don’t make it harder than it is. For my purposes, I estimate repairs as $5K, $10K, $15K, or $20K. $5K covers cosmetic repairs like paint and carpet. Add another $5K for each system that needs to be replaced such as central heat & air, electrical, or plumbing. If it needs more than $10K, it probably needs $20K. Anticipate the worst case and work towards the best.


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http://www.firstamres.com/


All you need to do is ballpark the repair costs. If you’re off by a few thousand dollars, it shouldn’t matter. If it does, then you shouldn’t even be considering the property to begin with. There is a hedge factor built in to the formula anyway. Of course you could get three contractors to give you estimates, but some of them charge for estimates and if this is a good deal, you’ll likely lose it to another investor who acted quickly. When you find a good deal, don’t drag your feet – ACT QUICKLY. The MAO (Maximum Allowable Offer) Formula The Maximum Allowable Offer (MAO) is ARV x 70% less repairs.

MAO = ARV x 70% - Repairs

I’m not going into the detail concerning the formula. It took “The Guru”, Ron LeGrand, many years to devise the formula. This is his formula and I’m not taking credit for it. I just know from experience that it works. When you see him live, he’ll go over it in detail. Ron’s website is at http://www.RenegadeRealEstate.com/legrand.html. NEVER PAY MAO. And don’t name the price first. Ask the seller, “If I were to pay all cash and close quickly, what’s the least you could accept?” No matter what the answer, Follow-Up with “Is that the best you can do?” If the seller’s asking price is less than MAO, then get the house under contract. Remember, MAO only applies to all cash offers – generally “ugly houses” in need of repair. Pretty House Offers Now let’s talk about offers on “Pretty Houses.” These are different from the all cash offers we just discussed. These sellers are generally more flexible on terms than price.


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http://www.renegaderealestate.com/legrand.html.


We’re usually buying the house “subject to” the existing mortgage, which is another topic beyond the scope of this book. It basically means that you buy the house “subject to” the existing mortgage and any other liens or encumbrances. Now you own the house and make the mortgage payments, but the mortgage stays in the previous owner’s name. For more information on “subject to,” please visit: www.RenegadeRealEstate.com/subjectto.html MOTIVATED SELLERS will agree to those terms. The goal when buying “pretty houses” is to get in “light,” meaning with as little cash as possible. I’m assuming the price leaves enough equity for you to want to get involved in the first place. Remember the MAO formula does not apply unless you're paying all cash. If the seller’s asking price is anywhere near the loan balance, the magic question is “Would you sell the house for what you owe on it?” If the answer is yes, you may be able to buy the house by simply taking over the payments. This is called owner-financing or seller-financing. If the seller’s asking price is well below the ARV (~20% below or more), but higher than the loan balance. Ask the seller if you can take over the existing debt and give them a note for the balance due when you sell the house. If the seller wants cash up front ask; “How much cash do you need now?” No matter what the answer, Follow-Up with “Is that the least you can accept?” or “So are you saying that if you don’t get $X, you don’t want to sell the house?” Remember, ALWAYS ANSWER A QUESTION WITH A QUESTION. Multiple Offer Strategy Once you know the seller’s minimum cash requirement, you can employ the multiple offer strategy.


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http://www.renegaderealestate.com/subjectto.html


First, take the focus off the selling price and put it on the amount of cash the seller will receive for their equity. Make the seller three offers and let them choose the offer they like best. If you make a single offer, the seller will answer yes or no. If you make three offers, the seller is more likely to find one of your solutions acceptable. Of course, you knew all these offers would enable you to make a profit before you made them…didn’t you? An example would probably clarify this concept. Let’s say you’ve discovered the seller’s minimum cash requirement is $3,000. Your three offers may be as follows:

Offer 1: $10,000 for your equity as follows: $3,000 cash now & $7,000 when I sell the house Offer 2: $7,500 for your equity as follows: $3,500 cash now & $4,000 when I sell the house Offer 3: $5,000 for your equity as follows: $5,000 cash now So you see, price was never mentioned and the seller was given three offers from which to choose. And they all meet the minimum cash requirement. Notice there is a trade-off. The more cash the seller gets up front, the more equity you get in return. One final thought. Don’t forget this rule: You make your profit when you buy; you realize it when you sell. Whatever you decide your minimum profit is, factor that in to your offer. If you can’t buy the house at that price, then don’t buy it period. I’ve provided a template you can use to incorporate the “Multiple Offer Strategy” into your business at the end of the book. It’s the “Letter of Intent to Purchase.”


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Don’t get “first dealitis.” If you do, there’s a good chance you’ll do something stupid and soon you’ll be the MOTIVATED SELLER. We’ve barely scratched the surface on Formulating Offers, but that should be enough to get you started. If you’d like to learn more about negotiation strategies, I recommend an audio course called “The Secrets of Power Negotiating” by Roger Dawson. You can get more information at: www.RenegadeRealEstate.com/negotiation.html.

ACTION ITEM #4 Make three offers. Are any of the 10 prospects you’ve already called MOTIVATED SELLERS? If so, call them back and make an offer. If not, call some more sellers, prescreen them and make offers. You can’t buy houses without making offers any more than Michael Jordan or Wayne Gretzky could score without taking shots. ************************************************************************ “You miss 100 percent of the shots you don’t take.” – Wayne Gretzky ************************************************************************ “I can accept failure. I cannot accept not trying.” – Michael Jordan ************************************************************************ If your offers are not acceptable to the seller at this point, you should Follow-Up if the seller showed any signs of MOTIVATION. All sellers’ situations will change with time and circumstance. We’ll cover Follow-Up in the next chapter.


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http://www.renegaderealestate.com/negotiation.html


Follow-Up Think about all you’ve accomplished so far:

• Joined the local REIA & visited one of several websites packed with useful information for real estate entrepreneurs.

• Chosen three methods to locate prospects. • Called and prescreened prospects. • Made at least three offers to sellers.

With all that initiative to TAKE ACTION, you may have already bought a house. If you have I’d like to hear about it. If you haven’t done anything yet, I’m beginning to wonder about your commitment. “The Guru” likes to tell the story about having bacon & eggs for breakfast. The chicken was involved. The pig was committed. Are you involved or committed? ************************************************************************ "Control your destiny or somebody else will." – Jack Welch ************************************************************************ “Don’t let what you cannot do interfere with what you can do.” – John Wooden ************************************************************************ I couldn’t resist giving you a double dose of inspiration.


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Lets review: The 6 Simple Steps to Creating Wealth in Quick-Turn Real Estate:


3. Formulate Offers

4. Follow-Up

5. Fund ‘Em

6. Fast Turn ‘Em (Quick-Turn ‘Em)

Today we're going to put some extra F into it by Following-Up. Why Follow-Up? Remember from last chapter that all sellers’ situations will change with time and circumstance. Any good salesman knows that 82% of sales are made on the second through seventh contact. These two facts make a good Follow-Up system imperative. You don’t need to Follow-Up with all your prospects. It’s probably a waste of time to do so. However, you will run across sellers who you can tell are on the brink of being MOTIVATED. These are the sellers with whom you need to maintain contact. As you become more experienced, you’ll know which prospects to Follow-Up with and which to throw in the trash.


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There are several ways to Follow-Up with your prospects. The Folder System One system is to get 31 hanging file folders and number them 1 – 31. As you prescreen prospects and find some that you deem worthy of Follow-Up, put the information sheet in the folder numbered with the day you need to Follow-Up. Each day or week (that’s up to you), go through your folders and Follow-Up with the prospects in your folders. If you buy their house – great! If not, you can decide what to do. You can either throw that lead in the trash or put it back into your folder so you can Follow-Up later. The Computerized System Other people use contact management software, such as ACT. I bought the software, loaded it on my computer and there it sits. The thought of having to read an instruction manual and enter all that data stopped me cold in my tracks. But it works for some. The Autopilot System I finally decided to put my Follow-Up system on autopilot so here’s what I did: I set up several autoresponders. If you’re not familiar with autoresponders, they automatically send e-mail messages at predefined intervals. You set it up once and it runs on autopilot. As I said earlier, I prefer to have sellers call me rather than me call them so this works great for me. You can get unlimited autoresponders for less than $20 per month. If you’re still wondering why you should make the extra effort to follow-up, here’s why. I was cleaning out my old emails the other day and found four messages from sellers. So I called all four of them. Two of the numbers were disconnected. One seller had moved out of town and had a vacant house, but wasn’t motivated enough (I’ll keep following up). And I bought a house worth $150,000 for $119,500. Not bad for a few phone calls.


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The seller had called four months previously with a house for sale and wanted to sell his house. Remember, we don’t buy houses from people who want to sell. We buy houses from people who NEED to sell. Anyway, by the time I called him four months later, his house had been listed all that time and hadn’t sold like he thought it would. He was retired and wanted to move to another state to be closer to his family and the only thing stopping him was the house. His situation had changed with time and circumstance. And suddenly he was motivated to sell. We closed two weeks later and now I have a house with $30,000 in equity just because I followed-up. So there are at least 30,000 reasons for you to follow up. Just do it! Whatever you decide to do, just remember it’s important to have some kind of Follow-Up system in place or you’ll miss out on some deals. You should also Follow-Up on the postcards and letters that'll inevitably be returned to you because the house is vacant. The word vacant will be stamped on the letter or postcard. You should run a skip trace on these houses in an effort to locate the owner who is likely a MOTIVATED seller. You can use Cameron Dunlap’s service at: www.RenegadeRealEstate.com/skiptracer.html

ACTION ITEM #5 Consider several alternative Follow-Up systems. Pick the one that works best for you and implement it into your business. ************************************************************************ “Success seems to connected with ACTION. Successful men keep moving. They make mistakes, but they don’t quit.” – Conrad Hilton ************************************************************************ If you’ve been wondering how you’re going to pay for all these houses, you’ll find out in the next chapter.


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http://www.realestatewealthcreator.com/skiptracer.html


Fund ‘Em In this chapter, I’m going to show you the money. We’ll discuss five ways to fund deals here, but there are more. One more time: The 6 Simple Steps to Creating Wealth in Quick-Turn Real Estate:


3. Formulate Offers

4. Follow-Up

5. Fund ‘Em


There are really only two times you’ll need cash in the first place.

• When you pay all cash for a house & • When you buy a “pretty house” and the seller requires cash now and/or

you need cash for some other reason (i.e. bring payments current, holding costs, repairs, etc.).

Seller-Financing The best place to get the money is from the seller. For example, I recently bought a house with an ARV of $110,000 for $50,000. Where did I get the money? The seller had a loan balance of $47,000. He agreed to let me take over the payments on his loan –


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which stayed in his name - and I borrowed $3,000 from a private lender. (We’ll discuss private lenders next.) When you find MOTIVATED SELLERS, you can do that all day. Incidentally, the seller was a frustrated landlord. He was willing to trade equity to be rid of his problem. Private Lenders The second best place to get the money is from private lenders – normal people like you and I who have excess investment capital. Ask people “Do you have any retirement funds or other investment capital that’s not earning you a 10% return safely?” It shouldn’t take long to find people willing to loan you money secured by real estate in exchange for a 10% return. Partners Another source of funds is partners. You’ll have to give up a percentage of the profits to your money partner. The profit split is negotiable. I would try seller financing and private lenders before resorting to this option, but part of something is better than all of nothing. Hard Money Lenders The fourth source of funds is hard money lenders. Hard money lenders are expensive. They typically charge 5 points and 15% interest, but the loan is based on the property – not on the individual - so your credit rating has no bearing on your ability to obtain financing. Hard money lenders generally won’t loan more than 70% of the ARV, but if you follow the MAO formula we discussed previously, you wouldn’t buy a property for more than that anyway. Hard money? That’s misleading - this is easy money. Credit Cards The last source I’ll discuss is credit cards. I know that goes against the advice of every consumer advocate that walks the planet, but let’s do some simple math shall we?


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Let’s say you find a house with an ARV of $100,000 that needs $10,000 in repairs. You pay MAO, $60,000, which is too much to begin with. You put $70,000 on several credit cards at 18% interest. You take six months to rehab and sell the property. And your holding and selling costs amount to 15% of the sales price of $100,000, which is higher than normal. Let’s look at the numbers. First of all you did everything wrong. You paid too much, you took too long to sell, your selling and holding costs were too high, and surely you could have found a credit card with a lower interest rate than 18%. But when it’s all said and done, you still made $8,700 in six months. $100,000 sales price (15,000) selling & holding costs (70,000) payoff credit card balance (6,300) 18% interest on $70,000 for 6 months -------------- $ 8,700 profit If you don’t have $70,000 worth of credit on your credit cards, you can bring in a partner or partners. Don’t throw away those credit card applications you get in the mail. Build up your line of credit so you can use it to make money in Quick-Turn Real Estate. By the way, that’s not a good deal in my opinion. It was for illustrative purposes only. You’ll have to decide what your minimum profit is, but you should leave yourself enough room so that if the worst-case scenario unfolds you still won’t lose money. Plan for the worst-case, then work towards the best-case. You can also use any combination of these techniques. The only limit is your imagination and creativity. The main point you should take from all this is that if you find a good deal, it won’t be difficult to find the money. Finding the deals is harder than finding the money. To review, the five sources of capital we discussed are:

• Sellers

• Private Lenders

• Partners


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• Hard Money Lenders

• Credit Cards

Alan Cowgill has an excellent course “Private Lending Made Easy.” I have it and have personally used the information in it to find Private Lenders to fund my deals. For more information please visit: www.RenegadeRealEstate.com/privatelending.html. Don’t let the fear of not knowing where the money’s coming from stop you from making offers with confidence. As you can clearly see, if you find a good deal, the money will follow. Now go make some offers.

ACTION ITEM #6 Ask 20 friends and associates “Do you have any retirement funds or other investment capital that’s not earning you a 10% return safely?” I’ll bet you find some money to fund your real estate deals. So we’ve Found ‘Em, Filtered ‘Em, Formulated Offers, Followed-Up, and Funded ‘Em. All we need to do now is sell quickly. In the next chapter, we’ll learn how to Quick-Turn ‘Em.


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http://www.renegaderealestate.com/privatelending.html


Fast Turn ‘Em How much private money did you find? If you didn’t find any, then you probably didn’t ask for any. Don’t be afraid - just ask. Remember SW, SW, SW, SW. Some Will, Some Won’t, So What, Someone’s Waiting. We’re getting close to payday. The final step is to sell quickly. This is another topic that could be discussed for days. At this point, you should have etched in your memory: The 6 Simple Steps to Creating Wealth in Quick-Turn Real Estate:


3. Formulate Offers

4. Follow-Up

5. Fund ‘Em


I’m only going to cover wholesaling and lease/options. There are many other possibilities such as retailing and several 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?


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Wholesaling 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.


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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 property…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. Pretty simple isn’t it? Lease/Option Now let’s talk about selling a “pretty house” on a lease/option. To attract attention, put an ad in the newspaper and plaster the area with at least 20 signs. The signs and ad should mention something like “owner financing” or “lease to own” and have your phone number and website. Your prospects for lease/option houses are people with less than perfect credit who can’t qualify for a loan right now so you want to be sure to focus your advertising to them. The phone number should go to a 24-hour voice mailbox. Why? Well, if you want to answer your phone from 7am to 10pm and answer the same questions repeatedly, then be my guest and answer your own phone.


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I think it’s a much better idea to have prospects call the voice mailbox where the recording answers questions and provides directions. It also directs people to my website where they can find the same information and see pictures. If you’d like to hear my message, call 404-812-0050. When someone goes to the house, they call the number on the sign in the front yard per my voicemail message. This is my cell phone number. When I get a call on my cell phone, I know this person is worth speaking to because he or she has called the 24-hour recording and made the effort to drive to the house. The only way to get that number is off the sign in the front yard. When they call, I give them the lockbox code to the house. They can view it at their leisure and call me back to let me know they put the key back in the lock box. I also have an application on the kitchen counter, which they’ll need to fill out and fax to me. If you’re afraid to put a lockbox on a house because you think someone will tear up the house, then you’re welcome to drive all over town meeting potential buyers at the house, but half of them won’t show up and it’s just a big waste of time. No one has ever vandalized one of my houses and I don’t know anyone who has had it happen to them. When I get the application I fax it to a mortgage broker who runs a credit check. I need to know the applicant can qualify for a loan within 24 months or I may not want them in the house. If the mortgage broker gives them the thumbs up, I look at the answers to two questions on the application. “What’s the most you can afford to put down toward the purchase of your new home?” And “What’s the most you can afford to pay monthly?” Obviously, you want to get as much as you can. The up front “option fee” is non-refundable but is applied toward the purchase price if the buyer exercises his/her option to purchase the property. The higher the option fee, the more incentive they have to take care of the house and eventually buy it. Or in other words the more money they put down, the more committed they are to the house. I take the applicant with the best combination of down payment, monthly payment, and credit. I also do a criminal background check. I use the same service I mentioned earlier. Nationwide criminal background checks are as little as $9.95 each. You can find more information at www.RenegadeRealEstate.com/skiptracer.html.


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http://www.renegaderealestate.com/skiptracer.html


So there’s a quick synopsis of wholesaling a junker and lease/optioning a “pretty house.” As an Unadvertised Bonus for readers of this eBook, I’ve put some of the marketing materials I’ve used to sell houses quickly on a webpage. If you haven’t already claimed your Bonus, please visit: www.RenegadeRealEstateSecrets.com/marketing/.

ACTION ITEM #7 If you've fallen behind on previous ACTION ITEMS, now's your chance to catch up. If you've kept up, that's great. I commend you. Now call some more sellers and make some more offers. In my best-selling eBook “Six Simple Steps to Creating Wealth in Quick-Turn Real Estate without Money or Credit”, I walk you through some real life deals I’ve done following these six steps.

You can get the ebook here: www.RenegadeRealEstate.com/ebook/ But how would you like to get the eBook for free? Check out the Special Offer at the end of this report or visit: www.RenegadeRealEstate.com/7DVideo/


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http://www.renegaderealestatesecrets.com/marketing/

http://www.renegaderealestate.com/ebook/



Seller Prescreening Script

Sellers Name: Date:

Ph# (Day): Ph# (Evening):

Cell#: Best time to call:

Property Address: City: State:

Subdivision: County: Zip:

Motivation: Why are you selling the house?_________________________________________________

_____________________________________________________________________________________

ARV/Market Value: How much do you think the house is worth?

Repairs: Does the House need repairs? Yes or No If yes, how much (in $’s)?

Loan Balances:

1st Mortgage: Balance: Lender:

Interest Rate: Payment:

2nd Mortgage: Balance: Lender:

Interest Rate: Payment:

Asking Price: Is that your bottom line?

Will you sell the house for what you owe on it? Yes or No

Listed: Is the house listed? Yes or No Listing Expiration Date:

Arrearage: Are the payments current? Yes or No If No, How far behind (in $)?

MIN Cash Requirement?

Payment (PITI): Will a tenant/buyer’s monthly payment cover this?

Evaluation: Does this seller NEED to sell? Why?

Is there a reason to get involved? ARV vs. Asking Price Asking Price vs. Loan Balance

Follow-up date (if applicable):

Exit Strategy: Remember this: “If it’s not in default or it doesn’t have liens or judgments attached and the seller won’t give you free equity…it’s over.”


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DON’T write big checks; DON’T guarantee debt; DON’T make promises you can’t keep.

Property Evaluation Worksheet 1 ARV - After Repaired Value Acquisition Expenses

2 Cash to Seller 3 Closing costs 4 Miscellaneous Total Acquisition Expenses $0 Repair Expenses

5 Cost of Repairs Total Repair Expenses $0 Holding Costs

6 Months 7 Payments(PITI) 8 Utilities 9 Miscellaneous Total Holding Costs $0 Sales Costs Sales Price $0

10 Closing Costs 11 Real Estate Commission 12 Listing Cost 13 Advertising Costs 14 Cash to Seller

Total Selling Costs $0 Net Cash Before Mortgage Payoff $0

15 Mortgage Payoff $0

18 Net Profit © 2004 Viking Investment Group, Inc. - All Rights Reserved

Bonus Video!

Click Here to View the Bonus Video: How to Use the Property Evaluation Sheet


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http://www.renegaderealestate.com/Tutorials/PES/


LETTER OF INTENT TO PURCHASE Date: _____________ Address: ________________________________

________________________________ Thank you for the opportunity to review and consider your home. We can purchase your home in one of the following ways:

OPTION 1 ____________ for your equity as follows:

1) ____________ cash at closing & take over your payments; 2) plus additional ____________ cash when we sell the property and title is transferred.


1) ____________ cash at closing & take over your payments; 2) plus additional ____________ cash when we sell the property and title is transferred.


1) ____________ cash at closing & take over your payments.

All we would need to close quickly is clear title and my Partner’s approval. Please circle and initial the option you choose. Seller(s) Acceptance: ______________________ _________ Date Seller(s) Acceptance: ______________________ _________ Date

DISCLAIMER: You should have your attorney review this document to be sure it complies with the laws in your jurisdiction.


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ACTION ITEM SUMMARY

#1. Find the local REIA in your area and plan to attend the next meeting. If there isn’t a local REIA in your area, at least go to one or more of the plethora of real estate websites and read some articles. Some even have chat rooms or message boards where you can interact with other investors. There really is no excuse for not TAKING ACTION to learn.

#2. Pick three ways to locate prospects and implement them immediately. You aren’t limited to the list I’ve provided. And please don’t tell me you can’t afford to TAKE ACTION. Three of the methods I’ve given you are FREE.

#3. Call 10 sellers and ask them the 5 questions? Don’t tell me you can’t find 10 sellers to call. They’re in the newspaper, or on the FSBO signs you drive by everyday. If you can’t find 10, you’re not trying. The whole exercise should take no longer than 30 minutes.

#4. Make three offers. Are any of the 10 prospects you’ve already called MOTIVATED SELLERS? If so, call them back and make an offer. If not, call some more sellers, prescreen them and make offers.

#5. Consider several alternative Follow-Up systems. Pick the one that works best for you and implement it into your business. #6. Ask 20 friends and associates “Do you have any retirement funds or other investment capital that’s not earning you a 10% return safely?” I’ll bet you find some money to fund your real estate deals.

#7. If you've fallen behind on previous ACTION ITEMS, now's your chance to catch up. If you've kept up, that's great. I commend you. Now call some more sellers and make some more offers.


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Real Estate Resource Directory Home Study Courses (I personally own & recommend these courses): Richard Roop “How to Collect 5-Figure Paychecks Buying & Selling Houses” & other Investor Resources www.RenegadeRealEstate.com/roop.html Jeff Kaller “Mr. Preforeclosure” www.RenegadeRealEstate.com/shortsale.html Alan Cowgill’s “Private Lending Made Easy” (How to Find Private Lenders)

www.RenegadeRealEstate.com/privatelending.html Other Resources: Find a REIA (Real Estate Investors Association) www.nationalreia.com Real Estate Entrepreneur Websites CameronDirect www.camerondirect.com

Creative Real Estate Online www.creonline.com

Nationwide Skip Tracer www.RenegadeRealEstate.com/skiptracer.html Criminal Background Checks www.RenegadeRealEstate.com/skiptracer.html Bandit Signs www.RenegadeRealEstate.com/banditsigns.html Comparative Market Analysis Sites (CMA) Win2Data www.firstamres.com

Ron LeGrand www.RenegadeRealEstate.com/legrand.html

These resources and more are available online at:

www.RenegadeRealEstate.com/resources/

& www.RenegadeWealthSecrets.com/success_library/


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http://www.renegaderealestate.com/roop.html

http://www.renegaderealestate.com/shortsale.html

http://www.renegaderealestate.com/privatelending.html

http://www.nationalreia.com/

http://www.camerondirect.com/

http://www.creonline.com/



http://www.renegaderealestate.com/banditsigns.html

http://www.firstamres.com/

http://www.renegaderealestate.com/legrand.html

http://www.renegaderealestate.com/resources/

http://www.renegadewealthsecrets.com/success_library/


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Don is featured in the best-selling book “The Millionaire Real Estate Investor” as one of the Top 20 Real Estate Investors in the nation. The book is co-authored by Gary Keller – the founder of Keller-Williams Realty (the fastest-growing real estate franchise in North America.)

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Acres of Diamonds

One of the most interesting Americans who lived in 19th century was a man by the name of Russell Herman Conwell. He was born in 1843 and lived until 1925. He was a lawyer for about fifteen years until he became a clergyman. One day, a young man went to him and told him he wanted a college education but couldn't swing it financially. Dr. Conwell decided, at that moment, what his aim in life was, besides being a man of cloth - that is. He decided to build a university for unfortunate, but deserving, students. He did have a challenge, however. He would need a few million dollars to build the university. For Dr. Conwell, and anyone with real purpose in life, nothing could stand in the way of his goal. Several years before this incident, Dr. Conwell was tremendously intrigued by a true story - with its ageless moral. The story was about a farmer who lived in Africa and through a visitor became tremendously excited about looking for diamonds. Diamonds were already discovered in abundance on the African continent and this farmer got so excited about the idea of millions of dollars worth of diamonds that he sold his farm to head out to the diamond line. He wandered all over the continent, as the years slipped by, constantly searching for diamonds, wealth, which he never found. Eventually he went completely broke and threw himself into a river and drowned. Meanwhile, the new owner of his farm picked up an unusual looking rock about the size of a country egg and put it on his mantle as a sort of curiosity. A visitor stopped by and in viewing the rock practically went into terminal convulsions. He told the new owner of the farm that the funny looking rock on his mantle was about the biggest diamond that had ever been found. The new owner of the farm said, "Heck, the whole farm is covered with them" - and sure enough it was. The farm turned out to be the Kimberly Diamond Mine … the richest the world has ever known. The original farmer was literally standing on "Acres of Diamonds" until he sold his farm. Dr. Conwell learned from the story of the farmer and continued to teach its moral. Each of us is right in the middle of our own "Acre of Diamonds", if only we would realize it and develop the ground we are standing on before charging off in search of greener pastures. Dr. Conwell told this story many times and attracted enormous audiences. He told the story long enough to have raised the money to start the college for underprivileged deserving students. In fact, he raised nearly six million dollars and the university he founded, Temple University in Philadelphia, has at least ten degree-granting colleges and six other schools. When Doctor Russell H. Conwell talked about each of us being right on our own "Acre of Diamonds", he meant it. This story does not get old … it will be true forever …

Opportunity does not just "come along" - it is there all the time - we just have to see it.


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About the Author Robert Phillips I’m actively creating wealth in Real Estate and on the Internet.

I bought my first investment property in 1998. Since then I have bought several properties including both “ugly houses” and “pretty houses.” I’ve bought houses “subject to,” bought defaulted paper, and discounted liens (commonly referred to as a “short sale”). I’ve rehabbed properties and sold houses wholesale, retail, lease-option, and with owner-financing. When I discovered how simple it was to make money online, of course I wrote an eBook about real estate investing and then created a companion DVD to teach others how to profit from the most proven wealth creation vehicle of all time. In addition to creating & selling my own products, I’ve made money with AdSense, CPA ads, email marketing, and affiliate marketing. For information on how to make money online visit: www.CyberCashology.com I’ve also created several successful information products including:

Have You Ever Wondered Why Some People are Amazingly Successful

While Others Struggle Needlessly & Live Frustrating Lives of Quiet Desperation?

6 Simple Steps to Certain Success www.RenegadeWealthSecrets.com


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http://www.cybercashology.com/



Finally! A Practical, Step-By-Step, Blueprint for Making Money Buying & Selling Real Estate

Even if You're Starting from Scratch

www.RenegadeRealEstate.com If you like the book, you’ll love the videos…

Finally! Practical, Step-By-Step,

Real Estate Investor Training Videos on CD. Watch on Your Computer and "Look Over My Shoulder" as I Show You How to Make Money

Buying & Selling Real Estate Even if You're Starting from Scratch...100% Guaranteed!

www.RenegadeRealEstate.com/video/

Discover the Amazing Cover Letter Secrets Of A Self-Educated College Dropout &

Corporate Reject That Produced 3 Job Offers in 72 Hours...and the Phone Kept Ringing!

www.CoverLetterGuru.com

I don’t claim to know it all, but I know enough to make money and I can show you how to do it too. All you have to do is take the “specialized knowledge” I provide and apply it to your goals. Fair enough?


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http://www.renegaderealestate.com/

http://www.renegaderealestate.com/video/

http://www.coverletterguru.com/

Documents

Real estate Blueprint