A Lesson I learned In NJ About Selling A Home

Hello to my fellow DG'ers:
In another post I replied to yesterday, I talked about my visit to NJ with Mikey Laurita and Pauly Jacobi.

I mentioned that they sat me down and went over alot of the things I had been doing and just as important, what I was not doing.

The first thing that both these veteran guys told me was to put aside what the Dean Graziozi's, Ron Legrands, and all the others tell you to do and start thinking about how I would do things. At first, it made no sense to me but as the days went on, I began to see what they meant.

What they meant was that even though these guys offer great information, it is not going to lead me to success, I needed to get myself there and be accountable for my own success as well as my failures.

Mike and Paul both believe that if I make a mistake using one of Deans techniques and it does not work out right that I cannot blame Dean.

Here is the lesson I learned about selling a property. Here is the example Mike used. The story of the deal is as follows.

I find a great deal on a 4 bedroom, 3.5 bath home in a upscale neighborhood here in Texas, worth $250,000.00 and I can pick it up for $110,000.00 and it needs about $1000.00 in repairs.

I go out and buy it and do the light repais myself. Now I have to either rent it out, lease it out on a rent to own basis or sell it, or if I wanted, I could move into it, but since I already have a home I like and my wife likes, that option is not viable.

So lets look at the options and the solution:

1. Rent it out: I could get $1400.00 per month, certainly enough to cover debt service and the water and taxes.

2. Rent to own: I could bump the lease payment to $1700.00 a month, seems like a winner.

3. Sell it: Well now that's the least worry some and intensive of the options. I could sell it to a wholesaler for $130,000.00 and make a decent payday. I could sell it to a retail buyer who would occupy the home and sell it for $175,000.00, make a really nice payday and give the end buyer a turn key equity of $75,000 or better.

Well If this were a real deal, I would go for option 3, because buy and hold is not in my business model.

Ok, one problem, I am just one of over 200 plus investors in my own backyard, and that in itself is not bad. However, each of these other investors has a active inventory of homes, in a marketplace where there
are just not enough buyers.

So what do I do to set myself apart from all the other investors, what gives me the edge? and this is where my two buddies expertise is worth a million dollars or more.

The solution is to offer financing with my inventory. This gives you and I an edge over all the other investors in the marketplace.

Think about that for a moment. Your offering a turnkey ownership package. You have a property and you have financing to buy that property.

I then asked Mike and Paul if this would be seller financing and the said no, and I then asked well what then.

Mike said to me, go out and establish a relationship with two lenders. One for those who have less than steller credit and one who offers financing to those who have great credit.

Pauly jumped in and suggested a private money lender. He said this is the way to go.

Pauly said, ask yourself this, you have a home buyer looking at your property and others. The others want to just sell a home and how the buyer buys it is on them as long as they can get a loan, versus me who has a funder already setup to fund the deal, who will the buyer turn to? the obvious answer is me.

This is a really great piece of advice and a great lesson learned.