Section 1 | Marketing
If you haven't done a deal yet don't worry, so long as you take action it's not if you get a deal it's when. Simply put it's a matter of time and effort. When you get your first deal you will have an "aha" moment and it will be proof of concept that you CAN do this! It's a game changer.
If you don't know this already you can wholesale many types of deals not just cash deals.
These include:
Cash deals
Seller finance deals
Subject to deals
Lease options
Land contracts
Objective
Finding property owners who are willing to sell at a discounted price.
Why do they sell at a discounted price?
1. Property condition/ situation
Property is in bad condition
Property has a bad tenant
Property going through an eviction
Property owner needs money quickly
2. Owner is in a bad personal/ financial situation Examples
Bills like medical bills
Can’t make loan payments
Behind on loan payments
Credit card debt. Etc…
Loss of job. Divorce. Bankruptcy
What do you need?
1. Filtered list of property address
2. Owner phone number
3. Software to SMS and Call or do it yourself
ATTENTION! There are many software's out there and I am only recommending the ones we use because we have tried a ton and wasted a lot of money, so this is just what works for us. We always want the lowest price whilst being the most effective in booking owner appointments.
How to get property addresses / filtered lists?
● Free: Drive for dollars
● Paid: Propstream - 7 day free trial
How to get phone numbers / to call & sms the owners?
● Free: www.truepeoplesearch.com/
● Paid: batchskiptracing
How to contact owners?
1. Cold Call
Free: You make the phone call.
Paid: You pay a company to make the phone calls. Or hire, train, and manage a VA to call.
Recommendation: www.caddiegroup.com
Fully trained human caller specific to calling property owners
Management and quality control is handled for you
We still use them and get at least 7-12 owner appointments every week
Recommendation: www.evoluto.ai - PROMO code DOM for just $199.00 $25.00/month
Ai caller specific to calling property owners
Can take a midnight inbound call from a lead
Cheaper as you're only paying for actual call time not hours on the job
We use them for SMS and EMAIL and a human for calls
Can book a demo on their website
2. SMS
Free: You text the owner.
Paid: You pay for a texting software to text the owner. Or hire, train and manage a VA to text.
Recommendation: www.evoluto.ai
You only pay per SMS and email and its super affordable
Their Ai responds to all SMS and emails, qualifies owners, & books them directly on our calendar
Its truly set it and forget it and books us about 10-20 owner appointments every week
We tried a free account at first to test it and this is definitely a hidden gem for now
Can book a demo on their website
3. Direct Mail
You send a mail piece or a postcard... We don’t do this its super expensive at scale.
Expectations:
● It can take 100s to 1000s of calls and texts to find a deal
● 95% of seller’s you contact will be aggressive and pissed off
● We are working off low numbers for large returns
Best lists?
Vacant
Out of state owners
Pre-foreclosure
Liens
Water shut off
Code enforcement
Driving for dollars
Long time of ownership
Probate / Estate
Divorce
Section 2 | Seller appointment / sales
Seller Appointment most important objective
● Build rapport with the seller
● Build trust with the seller
● Build confidence in the seller that you are legitimate
● Be empathetic to their situation
What we need from the phone appointment: We want to know these 4 pillars
○ 1. Condition ○ 2. Motivation ○ 3. Timeline ○ 4. Price
Phone call script
Hey “Seller” this is John and I’m calling about your property on 123 main st, to see if you would consider a cash offer?
Not interested -> Totally understand and do you have another property you would consider selling?
What’s your offer/ How much? -> I don’t know exactly without knowing a little more about the property if you have time now or would you prefer to schedule a call?
Condition Questions
○ What would you rate the condition 1 through 10? 10 being in perfect condition.
○ Have you made any updates in the last 5 years?
○ Do you know the age of the roof? Since you purchased it have you replaced it?
○ Do you know the age of the AC? Since you purchased it have you replaced it?
○ Is the property vacant, rented, or do you live in it?
Tenant Questions
For my next few questions here you might think why do we need to know this but because we purchase with tenants in place, we need to know a little more about them.
○ So how are your tenants? Do they pay on time?
○ Do they have a lease or is it month to month?
○ When does the lease end?
○ How much are they paying?
○ Do you have property management?
○ Probably take 10% of gross rent, right?
○ Ok great, and it looks here in our database your loan is at __________. And your monthly payment is around ____________. So you're probably
■ making a little bit, right?
■ You're giving them a great deal, wouldn’t you agree?
■ You're making a lot monthly so it’s probably going to take a lot for you to sell?
Timeline Questions
○ Thanks for sharing and now we know the condition and the occupancy status, we would like to know more about your expectations.
○ So if we came up with an agreeable offer what would your timeline to close be?
■ 30 days 60 days, as soon as possible?
Price Question
○ Ok great and if we were to close on that time frame do you have a price in mind that I can share with my underwriter here?
No -> No problem I will share this with our team here to put together an offer. When would be a good day and time to call you back?
You called me / You give me the offer -> You’re correct, I will pass this information to my underwriting team to put together an offer. When would be a good day and time to call you back?
Seller Give’s Price: $100,000 etc. -> Ok thank you, and considering we cover all the closing costs, no realtor commission, we take it totally as-is so no repairs, with or without tenants, and close on your timeframe, what’s the lowest you would be willing to accept?
Section 3 | Second appointment / closing
Making the offer Call
● Hey “Seller” this is John again and not to be redundant but to confirm what I’m hearing, the condition is ______________________________, The occupancy is ______________________________ and if we can agree on a price it sounds like you’re ready to make this work and close in _________ days?
● So the all cash offer I have here includes us paying all the closing costs, we take the property as-is so no repairs, no realtor commissions and with or without tenants. The price is __________________________ but we would need a quick inspection. We trust everything you have told us but we have been burned in the past by not inspecting. So when would be a good time to do this if you’re not opposed to our offer?
Probably a negotiation on price here.
If they agree on price ->
Ok great - Have you sold property before?
Ok sounds good, here’s a quick overview of our process, and its exactly the same as selling with an agent, but without having to pay a commission.
First we enter into a simple purchase agreement
● You will see our purchase price
● Our timeline to close
● We are purchasing as is
● We will have a short inspection period
● We totally trust what you have told us but we have been burned in the past by not going to see a property and verifying the condition so we would just need a simple walkthrough, does that sound fair?
● If the walkthrough checks out then we simply close with a local company named _________________. They are a little more expensive than others but we pay those costs anyway. But it's worth it because they are brilliant at what they do and close 100s of these transactions every month. The added benefit is you can close remotely so since COVID you can now close from home and we can send a notary to you if you don’t want to come into one of his offices.
● So when the inspection checks out we simply tell closing, hey we are good to close, and at that point in time they’ll reach out to you and to us and ask for all our information to close on time and if you want to close remotely.
● When we close you will receive funds and we take ownership simultaneously. So the first step is to sign our simple agreement and then we can probably schedule an inspection at some point in the next two weeks if that sounds good?
If they Do NOT agree on price ->
Sub2 switch up
What I’m hearing is, you're probably not interested in the cash offer because the price is too low And you’re looking for more in your pocket, and that’s ok. So it sounds like if there was a way we can get you more at closing we can probably make this work for you and for us. So forget about your loan or the purchase price, what’s the net amount you would hope to walk away with in your pocket (Cash to you)?
3 ways to sell
Ok great, so you’re probably aware already, there’s 3 ways to sell a property, and the good thing is we can make all three work, so here’s our second option and a third I didn’t mention yet.
1. All cash offer at __________________
2. TOP program offer at __________________ a. What this means is we take over ownership of the property and responsibility for the loan payments moving forward of _______ including taxes and insurance. And this way we can get you ____________ at closing in __________
3. Or you could list it with one of our agent affiliates.
So you probably need a little time to make a decision and please don’t feel like I'm pressuring you, but if you had to select one of the three options which one would work best for you?
Next steps
Ok great, have you sold property before?
Ok sounds good, here’s a quick overview of our process, and its exactly the same as selling with an agent, but without having to pay a commission.
First we enter into a simple purchase agreement
● You will see our purchase price
● Our timeline to close
● We are purchasing as is
● We will have a short inspection period
○ We totally trust what you have told us but we have been burned in the past by not going to see a property and verifying the condition so we would just need a simple walkthrough, does that sound fair?
● If the walkthrough checks out then we simply close with a local company named _________________. They are a little more expensive than others but we pay those costs anyway. But it's worth it because they are brilliant at what they do and close 100s of these transactions every month. The added benefit is you can close remotely so since COVID you can now close from home and we can send a notary to you if you don’t want to come into one of his offices.
● So when the inspection checks out we simply tell (closing agent), hey we are good to close, and at that point in time they’ll reach out to you and to us and ask for all our information to close on time and if you want to close remotely.
● When we close you will receive funds and we take ownership simultaneously. So the first step is to sign our simple agreement and then we can probably schedule an inspection at some point in the next two weeks if that sounds good?
Section 4 | Underwriting
Underwriting to make an offer principals
1. Obviously we are trying to buy as low as possible.
2. The lower the price means bigger profit/ bigger margin for error.
a. Depending on the scale of the rehab and tenant situation Underwriting
1. First we need to know what the property will sell for on the market fixed up - this is know as ARV or after repair value.
2. Secondly we need to know how much in repairs we are looking at with this estimated based upon what the seller has told us (for now)
3. Thirdly we need to include: closing costs, points on the loan, number of monthly loan payments, and the realtor cost of 6% when flipping.
Example Address: 123 main st
ARV: 200,000 (based on similar properties that have sold in a 1 mile radius in last 90 days, do not include properties that are not similar sqft, type (condo vs townhouse vs single family vs commercial etc) or have been purchased at a discount by other investors)
Repairs: 20,000 (initially based on owners conversation: “buyer’s are liars / seller’s are worse” so let's assume kitchen, ac, paint, flooring, bathrooms, miscellaneous items, lighting fixtures, clean up)
Purchase price: A rule of thumb is 70% of ARV minus the repairs but this is binary and doesn’t always make sense
Purchase price based on above: (200,000 x 0.7) - 20,000 = 120,000.
Now we need a hard money lender.
1. They want 10% down
2. They will charge about 2 points on the loan
3. Interest rate will be around 12-20%
4. Monthly payments will be interest only
5. They want you to have 6-12 months loan payment in reserves
6. They will lend the rehab cost
a. Depending on the lender you may have to pay for the rehab and they will refund you at each stage the work is completed
Example:
Purchase price: 100,000 Rehab: 20,000
Loan: 120,000
Down payment: 12,000 2 Points: 2400
Loan balance: 108,000 @ 12% interest only for 1 year
Monthly payment: 1080
6 months to rehab and sell: 6480
Additional Expenses:
Closing costs buy = 1500
Closing costs sell = 1500
Realtor cost = 200,000 @6% = 12,000
Profit:
Sale price = 200,000
Minus Commission = 12,000
Closing costs = 1500 on buy
Closing costs = 1500 on sell
Loan points @ 2 = 2400
Loan payments 6 months = 6480
Loan balance = 108,000
Profit = $68,120.00
Section 5 | Contract example
Message me if you need contracts
Not to be used without attorney representation.
Signed contract:
○ 30 day due diligence period to back out if you want to walk away.
○ Low earnest money: I haven't ever had push back on less than $250.00
■ I know this is ridiculously low
■ This should be refundable if you cancel in your due diligence period
■ You can decide on a local closing company - I would find someone “investor friendly”
Steps:
1. Get a list and get phone numbers
a. Drive for dollars for list generation (free)
b. www.propstream.com for filtered motivating factor list generation (paid)
c. True people search for free phone numbers (less accurate)
d. www.batchskiptracing.com for paid data, phone numbers and email (more acurate)
2. Marketing to set appointments
a. www.caddiegroup.com for calls (paid)
b. www.evoluto.ai for SMS and email (paid)
c. Call or SMS yourself (free)