Hirst

You want to make some quick cash right?

I know, I was there. I needed a check as much as I needed oxygen.

Most struggling entrepreneurs do at the start of their careers.

Don't worry. Its easier than you think.

We've been talking about WHOLESALING, so you've been driving around. You've spotted a house that looks like something out of the movie Monster House.

You figured an estimate of repairs. (If you need more help determining this, refer back to my article titled Quick and Simple Method to Estimating Repairs).

You found the owner through tax records and sent them a letter asking to buy their house.

Now they've called you and want to sell.

Now what?

Prescreen the seller by asking all the right questions. (Refer back to my article, When a Seller Calls Ask The Right Questions).

You like what the seller has to say, so now you make the offer.

Scary?

Not at all!

Heres a very simple formula for constructing a Win-Win offer.

Determine the Value in Good Condition (After Repair Value). (Theres an article on my website titled Whats It Worth. Refer to it if you have any questions).

Multiply the Value x 70%

(This will cover any closing costs, holding costs, sales costs

and profit and any hedge factor or screw up on repair estimate)

Subtract the estimate of repairs.

This will equal your Maximum Allowable Offer.

[After Repair Value (ARV) x 70%] - Repairs = Maximum Offer

Note: Subtract at least $3,000 from the maximum offer.

Heres an example of one of my recent deals:

ARV = $170,000

Repairs = $15,000

$170,000 (ARV) x 70% = $119,000

$119,000 - $15,000 (Repairs) = $104,000

I subtracted another $5,000 making my offer to the seller at $99,000

My seller accepted the offer.

(Note: Can you see that even if he didn't accept my offer, I had room to increase the offer if I had to?)

I assigned the contract to another investor adding $11,000 for my services. (My investor paid $110,000)

He was going to do the repairs himself.

If he was able to do the repairs for $15,000 or less and sell the house for retail ($170,000), he walked away with a cool profit of $45,000.

You see how It was a Win-Win-Win?

My seller got rid of an eyesore for $99,000 that he couldn't

afford to maintain.

I made $11,000 and didn't ever own the house.

My buyer potentially made $45,000 profit.

Do you see how you're performing a service to both your buyers and your sellers and making a good living at the same time?

How many of those deals do you need to do in a month to replace your current income?

I'm guessing at least one. Or maybe even half of one.

Don't underestimate the power of wholesaling. It's truly amazing how many sellers want to get rid of junkers that they can't maintain.

Keep in mind that this method of constructing offers only works on JUNKERS.

I'll teach you how to construct offers on pretty houses in another issue.

Get out there and start making offers. You're gonna love the results!

Talk to you soon.

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Toby Lynn has been teaching No Money Down real estate techniques as a speaker, workshop and seminar leader

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Copyright 2006

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