The world is full of success stories.  Everyone loves the spoils of succeeding.  The fast cars and big houses and the retirement lifestyle.  But no one really wants to hear about the harsh bloody truth of a real estate investment start-up.

I started with less than nothing fifteen years ago and you can do this too.

If you are just starting out with nothing, here is what you do:From-Scratch

Focus on finding undervalued property. This will cost you just about nothing to learn and implement.

(I’ll tell you how we do it in just a moment.)

Then focus on contacting buyers for the properties you find.

Once you have found a couple of undervalued properties, contact the people who buy these property types and see if they want to purchase them. Now you are building a buyer list.

Forget about looking at deals and chasing financing or fixing up houses on the weekends.

Right now, this very moment, there are thousands of people who want or need to sell their property very quickly.  Your job is to find them.

Decades of our data shows that about one out of a hundred property owners, without a mortgage in place, need to sell their house/land lickity-split.

This works with all property types.  We have chosen LAND, but it works for houses as well as apartment buildings and nursing homes.

Here is how to find them:

  • Locate a market where there are homes/properties that are about the same size and style and built around the same time. Out west we call these places “master planned communities.”  In the Midwest they are incorrectly called “subdivisions.”  It’s the kind of neighborhood where those kids who found ET lived.
  • Get a list of all the owners in the area and narrow the list (scrub it) so you are left with property owners who have no mortgage associated with the property.
  • Send them an offer to buy the property that is substantially less than market value for the area. (Not colored letters or postcards, an offer with a price and a closing time frame in it.)

Prepare yourself for two responses.

  • The Haight (hate): A few people get so insulted with your offer that you would have thought you threatened their dog.  The first few times this can really hurt.  After about ten calls like this, it gets to be pretty funny.  We have a board in our office full of threating letters.  Put your thick skin suit on.
  • Signed agreements: You will receive signed purchase agreements back in the mail for your asking price.  Sometimes you get three back on the first try, sometimes it takes three mailings to get a single one back.  Our overall average for all property types is 1 out of 100 mailers. We get them in the mail weekly from offers sent as far back as 2003.

What to do when you have a signed purchase agreement and you don’t know a real estate deal from Adam:

Find people in that market who buy undervalued property.

They are all over the internet and specifically on Craigslist.  They are waiting for your call.

Better yet, go to the county and look up all the property owners in that area.  Only look for property that is owned by an LLC (or other legal entity).  These are the investors in the area.  They either rehab properties for flip or they rent them for long term gain.  Leave out properties owned by individuals.

Call them and say, “I see you have a property located at XYZ.  Well I have one that is priced 25,000 cheaper than the area value.”

They will drop everything to take a look.

Everyone in real estate, and I mean everyone from Donald Trump to Sally Duplex, loves to be on the inside track for off-market undervalued deals.

There is way more money out there than talent.

You have the talent, but no money and it’s only a matter of time before the money comes.

The Math:

For houses try to get about five good buyers to work with.  They will show you how to close the deals with them so you get paid.  For houses target $10K net to you per deal at first.  Spend a year doing this.  Make $100K (less than 1 deal a month) and learn as much as you can.

For land, the opportunity is limitless.  Budget $1,000 per deal net to you but you will do hundreds of deals pretty quickly on the internet.  Land is easy to sell.

If you are any good at this, someone will either hire you or you will start you own investment firm.

Hints:

  • Stay out of the MLS. It’s too late.  Someone got there before you did.  The MLS is one big festering neon distraction.  It’s for the residential real estate agents who are in love with their hairstyle.  You are a private investor in love with revenue.
  • Back tax property is complicated. It’s extremely profitable for seasoned investors like us.  In the beginning, don’t get distracted.  A few years from now you will make millions in this area.
  • Put together a calendar/schedule for the mailings. Send out 100 or so per week until you can no longer manage the work (this will happen much more quickly than you imagine).
  • Always remember this: You are solving a seller’s problem. Treat them with respect and hold their hand through the transaction. They almost always know and understand that they are getting less than they could if they sold it through traditional channels.  When you buy a gallon of milk at a convenience store, you know you are paying more than you would at Walmart.  You do it anyway because it’s easier. Give your sellers the same experience.
  • Keep your eye on the long term goal. Save the money you make.  In no time at all, you can remove the buyer and simply close on the deal yourself.  Now you own these properties outright and you can sell them anyway you choose or rent them.  You are in complete control of your property and your destiny.

I started with less than nothing 15 years ago and you can do this too.

You are not alone in your real estate ambition.