10 Critical Steps to Fix and Flip Success Part 2: Find that Deal
Hey guys, it’s Torsten Coulson again, bringing you back to our series on fix and flips.
Last time, we talked about who the heck I am and how to take that first critical step toward fix and flips. So if you missed it, you should check that out. I shared some cool stuff about me and my REI experience, plus some awesome great REI info, too.
As for today, we’re moving on to critical step #2, which is actually finding that deal.
How? I thought you’d never ask…
Critical Step #2: Finding that Deal
When it comes to finding deals there are only 2 ways to go about it:
- Physically going out and looking for a deal. Or…
- Marketing to get a deal to come to you.
Which Deal Method Is Right for You?
Okay, so what’s the difference in these 2 methods? One is a push and one is a pull, but they are both viable. Also, both can be viable at different times.
Let me give you some examples…
#1 The Push Method – This is when you physically go out and look for a deal. You are seeking the deal out. You are driving for dollars, searching on the MLS, inquiring from business partners, etc.
#2 The Pull Method – This is when you market deals so that they come to you. For example, you could market on Craigslist, create websites, bandit signs, bird dogs or any other form of lead generation.
One approach might be more effective than the other in different markets, but usually investors tend to find that method #1 is the one they really prefer for the long haul. So once you get a homeowner who is ready to sell a house, you need to come up with a step-by-step process on how you're going to negotiate the deal.
Tip: Keep in mind, you're not going to be able to buy the property from them at a discount on your very first contact. It's going to require multiple contacts and multiple negotiating styles.
What if the Homeowner Is not Ready to Sell?
Okay, so… if the homeowner is not ready to sell the property, it's going to require you to continue to have a follow-up plan until:
- They sell you the property down the road.Or…
- They sell the property to somebody else.
What if You do not Have Time for a Step-By-Step Process?
If you are limited because or your “real job” or your investing is still in the hobby phase, you can…
- Buy Direct – Talk with wholesalers and buy properties direct from them. But this, also, is going to require you to build-up a relationship with the wholesalers so that you can get the very best deal that's out there.
- Do Your Homework – Now (once you've identified the properties that you are wanting to go ahead and purchase) you need to do your homework on the deal. You need to figure out what the estimated value is going to be by finding out what properties are currently selling for and what properties have sold for recently in that area. You need to look at the properties that have been rehabbed to come up with what has sold and what is on the market to be sold.
- Time Management – During your research, look at the time it will take to sell the property. What are the average days on market? What are the properties that are listed currently and the ones that have been sold?
- Be a Realist – To finish up, you need to be realistic on your numbers for profit. You need to understand that as much as we all want to do 1 fix and flip and become a billionaire, that's not always the case. We need to have realistic expectations of profit, because if your expectations are too high, then you'll probably never really buy that first deal.
It’s really simple; sometimes you just have to focus on the black and white and not the gray. I hope this puts things in perspective. Stay tuned for the next part of our series on fix and flips.
See ya then…
Clever Investor Mentor