Real Estate Investing: Crashing Market Strategies Explained
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http://www.GreatGuruGiveaway.com Wholesaling Expert Eric Medemar provides insight on our crashing real estate market and gives tips on turning out huge profits with no money down strategies.
Is Now A Good Time To Get Into Real Estate Wholesaling?
It seems like everyday I get at least 5 people asking me this perplexing but very simple to answer question. My answer is always the same. Of course right now is a good time to start wholesaling!
No I don’t say any of this to sell another investing course. If I thought wholesaling was stupid I would just make a new course on a better strategy. Anyway, back to my point
Yes our economy is in the gutter.
Yes our housing market sucks
Yes investor all over America are losing their a$$es
Yes people are running scared.
All of those conditions make it the perfect time to wholesale real estate. Why?
Think about it like this:
Example #1
In a good real estate market home A is worth 100k.
Wholesalers would try to buy at 70k or below.
That is based on buying homes at 70% of current market value.
In a bad market home A is worth 80K
Wholesalers would then need to buy at 70% or less of 80K $56,000
That is based on buying homes at 70% of current market value
70% of a homes current value is still going to be a great deal even if the market completely has bottomed out. Because as a wholesaler you are looking to buy at 70% of the CURRENT market value.
Investors and retail buyers still love to sweep up deals and 70% of current prices, because 70% is still a great deal. Do you follow?
Many rookies mistakenly believe that since homes are selling for 30% less this year that somehow there are just too many good deals already and wholesalers aren’t needed. Nothing could be further from the truth.
Wholesalers still need to put homes under contract using the exact same formulas as before except we need to be careful to adjust our offers to CURRENT market value and not the value that COMPs Are showing.
Anyway I hope that helps.
Lastly, we are getting closer to giving away a free house at our house raffle, don’t miss your chance
Be sure to either leave a comment or subscribe to my blog. On March 1st I will be giving one lucky reader a Free Real Estate Investing Course. Hopefully you will have already bought the course and in that case I will just give your money back.
Eric Medemar
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For some strange reason people are always wondering what kind of money they can make wholesaling real estate. Here are the basic factors that will determine how much you can make wholesaling.
The price of the home- Typically higher priced homes will have more room for profit then lower priced homes. Example: if you can find a home for 50% FMV (Fair market value) and sell the home for 70% FMV then you would have a 20% spread. 20% of $100k is far more than 20% of 20k.
The motivation of the seller-With all things being held equal, the lower the price that you can put the home under contract for, the greater your profit potential will be. Example: If you can buy the home for 50% FMV and you have buyers that are willing to buy homes at 70% FMV, your profit will be far greater than if you put the home under contract at 60% FMV.
The motivation of the buyer- Owner occupant buyers will typically pay far more for a home than another real estate investor. Owner occupant buyers are willing to pay more simply because they are looking for a home to have as their principal residence rather than as an investment property.
I have personally dealt with different variations of all of the above. When conditions have been have been perfect, meaning I had a very motivated seller and a very motivated buyer I have made up to $28,000 on a single transaction without the need for cash or credit. That is one of the reasons why I decided to become a full time real estate wholesaler.
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If you pay close attention to the way we treat learning in our society, you will quickly realize that after our formal education is complete, many of us consider our learning to be “done”. Having said that I have a recommendation to all high school seniors and college graduates across the U.S, KEEP AWAY FROM THE CAP AND GOWN. All formal education seems to end with the cap and gown, and all learning seems to end with the formal education, therefore stay away from the cap and gown and you will stay away from the end of formal education.
Once your formal education is complete, the fun learning should begin. Now is the time to start learning about the things in life that truly interest you. Move over Pythagorean theorem, Pi, and amoeba dissection. Bring on the self discovery, new hobbies, and self improvement.
If you think learning is boring try spending an afternoon with a 2-5 year old. Listen to the questions, watch their mind working, or watch as they discover something new around every corner. Far too soon these human sponges will be well on their way to disliking learning just like you. Once our school system gets their grimy little mits on the little learning sponges that we call children, thing go down hill quick.
Once our children enter school learning becomes a forced activity and all creativity involved in the learning process is left for art class once a week. Now when our little learning sponges aren’t interested in learning about a particular subject, at a particular time, they are labeled ADD, a disruption in class, or slow. It is not long before their little learning sponge minds start creating the child logic short cuts like.
I used to learn without getting in trouble..
Now I get into trouble if I don’t learn at a particular pace.
When I get into trouble I don’t feel loved.
When I don’t feel loved it makes me sad.
So maybe if I stop learning, I can’t get into trouble for not learning fast enough, because after all this learning stuff seems to lead to pain every time. (Sure we get the occasional good job when we do something right, but when we do something wrong the whole world seems to end).
Having said that, is it any wonder why so many of us stop learning once our formal education ends?
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Over the weekend my wife and I went to see one of those crazy hypnotism comedy shows. You know the shows where they get like 20 people to come up on the stage and make fools of themselves while they are hypnotized.
One of my favorite tricks of the evening was when the hypnotist convinced this 300 lb Hulk looking dude that he could not lift his left foot off ground. Here was this man, who on an average day could probably squat 600 or 700 lbs, but when hypnotized he could not life his foot no matter how hard he tried. His face was beat red, he was sweating buckets, you could clearly see that he was trying with all his mite but that foot would not move.
Why couldn’t this massive muscular dude move his foot? Experts will tell you that when you are under hypnosis the hypnotist is speaking directly with your subconscious. Without your conscious mind making all of the decisions about what you can and cannot do, your subconscious mind is much more open to suggestion. This 300 lb guy could not move his foot simply because he didn’t think that he could.
How does this relate to you? If simple thoughts could render the Hulks foot useless, how could your thoughts about investing success be affecting you? Have you convinced yourself that you can’t achieve success as an investor for one reason or another? Is the market too bad? Do you need more money first? What limiting beliefs do you have about what you can achieve? Have you hypnotized yourself into limited success without knowing it?
If your a struggling newbie your answers to the questions will move you closer to the root cause of your problem. Even if your a seasoned investor, you are likely to have some limiting beliefs about how big you can grow your business. Once you uncover your limiting beliefs, you simply need to notice when that little voice inside starts trying to convince you of your limits. Instead of getting in a pushing match with the little voice, simply ask “How do I know this is true?”. If there is no way of knowing whether or not something is true, you simply need to dismiss what the voice has to say and move on.
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Over the holidays I had the pleasure of speaking with one of my coaching students about a closing that he just finished. This was no ordinary closing, this was his first closing since he had started living his dream of becoming a real estate investor. Ever since Jay was about 15 years old, he said that he had been fascinated by real estate investing. Coming from an extremely humble beginnings Jay knew that college most likely would not be an option for him. Jay saw real estate as his only escape from the traditional 9-5 blue collar jobs that his parent had worked so desperately hard at for most of his life.
Jay did not do particularly well in school, he was more of a daydreamer. Of course our school systems don’t offer many rewards for daydreamers. Instead the daydreamers of our world are poked and prodded until they become like everyone else. Luckily for Jay he had a strong will like his mother. When the bad grades arrived Jay did not see them as reflecting on him. Instead he looked at his “Bad grades”as an indicator that he was doing something right, because from the looks of things being just like everybody else didn’t look so rewarding.
I asked Jay what advice he had for other rookie investors who are currently struggling to keep their faith about investing during these “Troubled times”. His answer was no less than perfection, “Troubled times, I guess I didn’t know we were having troubled times Eric. Maybe while I was daydreaming about what could be, I forget to pay attention to how bad the market supposedly is”.
Then this once labeled “Slow” 22 year old man said one of the greatest lines I have ever heard. He said “Eric just a minute, let me run into the dining room and grab my check, maybe my check can tell you about our troubled times”.
I cannot tell you how much I appreciated spending time on the phone with Jay. How many of you would be much better off being just a little “Slow” and decided not to listen to your friends, family and the media about how “Bad” our market is.
The problem with the “Bad market” mindset is that if you think the markets bad, then it is. Once your reality says the market is bad, then you severely limit your chances of accomplishing anything. Instead of seeing our real estate market as either good or bad, just see it as “The market”, then adjust your real estate investing strategies accordingly.
If you would like to learn more real estate investing strategies for investing in a slow real estate market please visit my site www.GreatGuruGiveaway.com
How much money Should I make per wholesaling/Flipping deal it sounds like $10k is the going rate?
I know my market wont bear too many $10,000+ wholesale deals right now. Maybe a few here or there, I have had a couple of people make $40k plus. The factor that many investors fail to look at when they want to make $10k+ per deal is how many $5k-8k deals are they passing on while they are waiting for a $10k deal. I would much rather do 4x$5k deals in a month then a $10k deal every 2 months.
One huge factor that most people forget drives price besides location, and condition of the home is the amount of investor competition in the area. Too many investors make prices artificially climb. One large investor willing to except $5k a deal could literally knock every other investor out of decent profits.
When I meet with new investors I tell them my program:
1. I will tell you how much I can sell the home for when its done and how fast I can sell it at that price.
2. You tell me how much you will have into repairs.
3. Then decide how greedy you are.
I have had investors looking for a GREAT deal for months while my other investors settle for GOOD deals and are doing a couple per month.
$8,000 profit will always be $8,000 that you didn’t have before, if you see a lot of great deals then go for those, but if your 1 or 2 months in and haven’t found your $10k deal then maybe you need to lower your standards a bit.
Many rookie real estate investors use the “Waiting” game for huge profits as a crutch so they don’t have to ever step up to the plate. These rookies run around talking about being an investor, looking at homes, doing their courses, and keep getting ready to get ready. Then when people ask them how many deals they have done they can say “I’m still looking, just have not found the right house yet”.
You do need to do your homework don’t get me wrong, the last thing you need to do is buy a $200k home and make only $10k. In my market many real estate investors are waiting for some GREAT deals to come up in the nicer areas ($85k to $300k), the problem is these deals are not coming around often enough. Then when these “Super deals” do come up they are no longer “Super deals” because everyone wants them.
Meanwhile you could be buying in the “bad part of the city” where wholesaling produces less money, but higher volume availability. The investors looking in the pretty areas do not want to buy in this area because “its not a nice neighborhood”. Great for you,
So to reiterate:
Most real estate wholesalers are waiting to maybe make $10k per transaction. But, these deals come around about once or twice a month with fierce competition.
I would rather pick up 5-6 deals a month making $5-8k per deal on homes than not doing any deals at all.
I want to leave you with something to think about. “thinking about getting into real estate” for more than a month, then your no longer “thinking about getting into real estate” your just “Thinking of reasons why you can’t do it”.
To Your Success,
Eric Medemar
P.S If you want to learn how to make between $5,000-$20,000 per deal feel free to visit http://www.GreatGuruGiveaway.com (Oh, and we are giving away a FREE House)
Being in the real estate wholesaling business I have learned alot of things and this is one of them.
In order to change your life, you must first change the decisions that you make a daily basis. Poor decision making can account for up to 99% of your current position in life. In order to make better decisions we must first identify all of the decisions that we have made that have gotten us up to where we are today. Without knowing the good and bad decisions that we have made it will be nearly impossible to change our lives.
So why do you make so many bad decisions? One of the main reasons for our complete lack of decision-making ability is that our minds are preprogrammed for short term pleasure. Short term pleasure does not necessarily mean that we enjoy what we are doing. Short term pleasure can be derived simply by thinking that what we are currently doing is easier than our other alternatives. The funny part is “easier” does not always mean easier either. Short-term easy often means less effort or less immediate pain. To make things even more complicated “pain” does not always mean pain either. Pain is far too often thrown into a group with performing the unknown. It’s funny how many people would much rather have a painful “known” thing happen rather than commit to a wonderful “unknown”.
One of the tools that I have developed to get around our poor decision making skills is called the 5×5 method. Whenever you need to make a decision ask yourself 5 simple questions.
1. How will this decision impact my life 5 minutes from now.
2. How will this decision impact my life 5 hours from now.
3. If I keep making this decision, how will it affect my life 5 weeks from now.
4. If I keep making this decision, how will it affect my life 5 months from now.
5. If I keep making this decision, how will it affect my life 5 years from now.
If you can derive a positive answer to all of those questions then you can rest easy knowing that you have made a good decision.
If you are interested in Grand Rapids Foreclosures you must check out this site: www.Incomehomes.com
WE are giving away a house for FREE check out our Home Raffle site
