What They Don’t Tell You About Wholesaling
Houses When Making a Cash Offer on a House Hi, this is Neva at TimeForInvesting.com and
today, I’m going to share with you when I’m wholesaling property how I make my cash offers
to property owners. So stay tuned to see what’s at my closing kit.
So let’s get started, this is my closing kit that I’m going to show you what I include
and things like that. I target absentee owners so most of my offers are to property owners
that have rental property and I’m offering to purchase their rental property. Once I’ve
spoken with them and I know I want to move forward and make an offer, I do not make offers
over the phone. I either email the offer, fax it, or mail.
I write up my contract and everything I just tell you, include that, and then send it off
to them what my offer. And in my offer I put a note that my offer’s valid for five days.
This way they have time to think about the offer and they know that everything I’m saying
is official. I find that works better to get a contract in front of the property owner
and you can discuss it. If they have any questions, they can call me and things like that.
What I want to get across to you first is since these are rental properties, what I
do when I make the offer I always try to aim to make sure the property owner knows that
I listened and I’m trying to answer all the concerns they need they told me that they
had. I’m going to use this one for an example for
what I include when I’m sending an offer with the contract.
This one, I start off by saying, “Thank you for contacting us about your property, blah,
blah, blah.” I start off and I say that, “It looks like we can be a good answer for a lot
of the things that are important to you,” and then I list out the things that they told
me when we spoke. This one for instances I said, “I remember
you said you want to sell the property without hassles. Well, we can provide a solution.
We can purchase your property in as-is condition and complete closing within 40 days.” And
then I go on to say, “Without the property owner travelling to Virginia,” because that
was their concern. They want to close in 40 days and they did not want to come to Virginia,
because they’re out of State. I will list all the reasons that they can do that and
that the lawyers will send them the paperwork and it will have to be notarized. I will list
all that out letting them know that that is addressed in this offer to them.
Then I go explain how I came up with my cash offer so that the next paragraph I talk about,
“We’ve taken into consideration you mentioned that the kitchen and the bathroom are out-dated,
and there are water issues in the porch area as well as other repairs to bring the house
in a condition of other comparable sold houses in the neighbourhood.”
I list the damages, and things, the repairs that they told me need to be fixed. I list
them so they know I factored those into the offer. And then I list other things that are
included. I remind them that our offer takes into account the property condition and the
cost incurred holding the property because lot of times people forget that there is holding
cost when you have the property like insurance payments, utilities, and things like that,
taxes; I include that. And then because it’s a rental what I do is
I calculate and let them know how much they really net for the property currently. For
instance, this property, the rent is $1,550 a month, right. So I multiply that by 12 and
that’s $18,600 and the property taxes I estimate to $3,047. And you can get that from your
multiple listing service or your tax record. Most states have their tax records online
if you just Google it. And I estimate property insurance at $500, and this was a condo so
I included condo fees at $287 a month. When I add all that up, see we have it here; their
actual income after expenses on the unit is actually $11,409, right? Then I write, because
our cash offer is $295,579, “Our cash offer is 18 years of income in your pocket today.”
And the reason why I do that, I want to get them to thinking about how long, 18 years
for this one, that’s a long time. Because I’m offering this to you now, I’m going to
purchase the property with the tenant there, and it’s going to take you 18 years to make
how much money I’m telling you we’re going to give you today cash.
And so that really to me starts a really good dialogue between me and the property owner.
So if it’s a rental, I always calculate and let them know what their actual net income
is from the rental right now. This particular one, they don’t have a mortgage.
But if they did have a mortgage payment I will include that too. So I’m really trying
to get across, to let them know just how much they’re going to make. “This is how much you’re
currently making and this is how much our offer will be. That’s the value of this.”
And there’s other things I go into the offer; if you have any questions then I’ll let them
know what’s included in it and what I said in the kit.
So if I mail the offer, I put the contract, this whole explanation of how I came up with
the offer in this folder. In this folder I created on Vista Print. You can go on Vista
Print and make things that look completely 100% professional.
I don’t remember how much but they weren’t much. I just put our company’s name, our slogan.
I put a couple of testimonials that we received from previous customers on the back. And then,
on the inside is where I would have what I was just reading to you and the contract,
and then I also include, there’s a little insert here, I could put my business cards.
And this right here is actually a pamphlet as well from Vista Print that just talks about
the company, what we do, our contact information and actually, I got this for free. I always
get these for free because Vista Print will always send you little freebies. I always
get the pamphlets and I give them in my offer. The other things I have in the folder are
the explanation of how I came up with the offer, the actual contract that they need
to sign, and then I talk about-a little bit more about us, let them know about our company,
and what’s included in the other paperwork. I also have, I found this article online and
this article is from someone totally third-party talking about selling houses to private investors.
I include this because a lot of times when I send my postcards, this communication with
the property owner, this is really their first time really learning about the process to
sell to private real estate investors. This is just a third-party basically promoting
the process, the benefits of it. I included it in the package so that the entire package
isn’t just like us promoting ourselves, there’s also someone else talking about the whole
selling process to and investor. And then this is just a photocopy of a gift
card because at the end, when we get to closing we give them a Walmark gift card so this just
talks about the-we could say, “To show our appreciation for your business we will present
you with a $100 Walmart gift card at closing. Happy spending.” And that’s just something
that you do to differentiate us from other home buying companies who say, “Thanks for
your business, thanks for choosing us.” So that’s the package and I just wanted you
to see what I do and just I try to-then I have another, I forgot, there’s another page
right here where I explained if they’re ready to move forward with the offer, the next steps.
I tell them, “Okay, to move forward with this transaction, kindly notarize and return the
signed purchase agreement within five business days,” and that’s the contract. And I talk
about the closing date and things like that. I try to make it as easy as possible so that
when they get this package, I’ve put this together from common questions I’ve got, [00:09:53]
to send out the contract, people would ask, “What’s the next step and things like that.
It’s really good information to let them know what will happen next if they want to move
forward; okay, sign, notarize, and then I also tell them when because also with me,
I go to the property after they sign the contract. I let them know that, that’s an important
part; you go out and confirm everything. This just makes it really easy. Now I don’t
really get as much questions at all from people because they usually understand and they know
what to expect. So like I said, “I’ll send this out to you on Thursday when I send out
the newsletter this week so you’ll get it if you’re on my list.
If you’re not on my list, then get on my list so we can keep in contact or when I send out
information, you’ll also get it. See you next video, bye-bye!