driving around in your neighborhood you’re going to see a lot of signs that say “for sale by owner”. Call the number and ask three questions and the acronym for those three
questions is “WOW”, make a note of that because those are three important questions. (1) “What are you asking?” (2)
“How much do you owe?” (3) “What will you
take?” What’s that going to tell you when you ask those three questions? It’s going to tell you whether the seller is motivated because if you get to the second question and they say “that’s none of your business” you’re wasting your time and theirs. Just say thank you very much and hang up because they’re not motivated.
If they really want to sell the house they’re going to tell you exactly what they owe and how far behind they are on their payments or whatever else you ask them. The motivated sellers are the ones that have the good deals. The ones that just put a sign out in front of their house and are still living there are just testing the water to see if maybe someone will pay more than it’s probably worth.
Stop at garage sales because a lot of people have garage sales just before they move and if they’re not maybe they know someone that’s selling their house. Just stop in and ask if they know anyone that might be selling their house because that is the business you’re in. Tell them you’re interested in buying and leave them a flyer or card and ask them to contact you if they hear of
someone. You would be surprised how many leads you can get at garage sales.
Check the local newspaper: This is Carleton Sheet’s way to go. He even has several tapes that tell you about what to say when you call. What do you say when you call the ads? Remember the “WOW” questions. Ask them those three important questions to see if they are motivated and to kind of get an idea what they want for their house.
If they say the house is worth $100,000 and they’re asking $95,000 you’re probably not going to do very well with them. If someone asks what your house is worth would you tell them what it’s really worth or would you give them the ARV? You’ll probably give them the highest number you can. Your questions are just to get the conversation started.
Go to the legal section and find foreclosures and look at homes for sale. In the legal section you won’t call but you may see some in your area that you will want to check on. The foreclosure business is a whole business in itself. Check out the REO’s. Now if you go to Chase Bank and ask them about “real estate owned” are you going to get anywhere? No, you aren’t going to get anywhere because it’s a National Bank. What banks do you want to go to that may have some real estate? Credit Unions, City Banks, Community and State Banks will be the words you look for in a bank name.
The best one in the state of Texas is Justin State Bank. They’ve got rates there you won’t believe, you save a lot of money but there are also banks in Fort Worth and the surrounding towns. These banks will be happy to talk to you and usually these small banks are so friendly and it isn’t hard to find the right person because there are only five or six people that can make a decision and you can cash in on these things.
These are properties that the bank has loaned money on and had to take back or they are about to take it back. Sometimes they’ll tell you they’re about to repossess one and you can go talk to the people. You can actually make a living this way but you’re spreading out your area when you do REO’s. You’ve got to go further to get them.
Looking for vacant, run down, fire damaged and abandoned houses:
Talk to neighbors: When you’re looking at these vacant houses go to the next door neighbor because if the grass is all grown up don’t you think that
neighbor wants someone to buy the house? They’re so cooperative they’re going to help you find them.
Research auctions: There are several kinds of auctions and several different companies that do auctions. When you’re driving around there’ll be a big yellow sign that will say “auction here on such and such date”. It will have a website and you have to go to the website to do the research.
You have to find out how much they want down and what the terms are and how long before you have to pay the rest of it. It’s all explained for you and they’ll tell you when the auction is going to be.
When I first started I went to a lot of auctions and thought it was a waste of time because I would go research the house and the house would be worth $150,000 and I would say I’m going to pay $106,000. They would start the bidding at $80,000 and they would get it up to $135,000 and I could not
believe these people were paying way too much for these houses. It was buyers that were going to live in the house that were paying too much. In their mind it’s worth $150,000 so if they can get it for $140,000 they got $10,000 below market and they’re happy and there are a lot of those at the auctions.
I had given up on auctions but one day they were having an auction just down the street from me and it was a pretty house and I thought I would go and see some investors there and do some networking and watch the auction. I had researched and knew the house was worth $200,000 and it was raining that day but I decided to go anyway in case the rain stopped.
Only three or four other people were there and it sold for $108,000. I wasn’t prepared but I realized you can make money at auctions. The difference was the rain. Potential house buyers don’t go house hunting in the rain and new investors don’t go to auctions in the rain. If you know what you are doing you wait until it rains and go the auctions.
Someone once asked if I have been to a courthouse step auction. You have a brief foreclosure then the courthouse auction and then you have the after foreclosure. I don’t know many people that make money on the courthouse steps and if they do that’s all they do and they’re really good at it and they have some inside knowledge.
It takes a lot of work and then once you get there somebody else will probably beat you to it and the people that do that are very protective and territorial and they don’t want you in that so if they see you and you’re new they may just
overbid just to get rid of you. Maybe someone can do that and come teach me but I have never met anyone that makes any money at it.
Government Auctions: Government auctions are pretty much what I do because it’s easy. VA and HUD are kind of the same as these auctions because you’ve got to be prepared way ahead of time. You’ve got to know what you’re doing and how the game works. If you learn the game and know what you’re doing there are a lot of opportunities.
I remember being very unsure about getting into HUD because I thought there was so much competition. But there are only two or three other people that show up like we do every week and their criteria is different from mine so they’re looking for different houses.
I do these other things too as they present themselves and many times people call me with good deals because they know I do this but If you want to get into this or any of the other ways of investing I suggest you just try several of them out and one of them will feel good to you.
The way HUD works is you have about a week to look at the house and come up with your figures and you have to have your bid in by midnight Sunday. If
you’ve got a realtor that will turn your bid in on Sunday night (and I do), then you’ve got the whole week to do it and Saturday you can make your final preparation.
My secretary and realtor do all the work. I pick the sheet up and make the decisions on what to bid on and that’s all I do and I’ll make anywhere from $40,000 to $55,000 every time I buy a house and I buy one or two a month. Owning property is a good way to make a living but there’s a lot of work that goes into managing everything.
No matter which of these others you pick you’re still going to need to advertise. If you’re going to be in the real estate business it’s a marketing business.
Here is a big secret, finding good deals is the easiest part of the business, I can give you ten good deals any day. Finding deals is the easy part. What is the
hard part? When you want to build a fire there’s a triangle. You’ve got to have
fuel, oxygen and ignition, those make up the triangle. The fuel would be the deals—like when I came to Texas I would see all this wood stacked out in front of the stores and I would wonder why. There would be a bundle for a couple of dollars and I couldn’t believe people were paying for wood. I’m from Alabama and you can get all the wood you want for free.
It’s kind of like that with the deals in Texas, there are just so many of them you can go find what you want but you’ve got to have the oxygen which is the
money and the ignition which is the work and enthusiasm you put into it. The enthusiasm is easy at first. Anybody has that enthusiasm when first getting started. If you do any of these tactics the deals will just come, you’ll have so many you won’t know what to do. The money is what stops so many people.
The money’s out there but most people just don’t want to do what they have to do to get it. The banks are going to ask you for page after page of information and if you haven’t done it before and you don’t have it in a file it’s hard. If you go talk to investors they will want to know about your experience and why they should invest with you. It takes three or four years before you can really go talk with them and you’re able to say just go look at my website and you can see what I’m doing and then they’ll pull out their checkbook.
It takes time but the money’s the hard part and part of this whole deal is
advertising. If you want your business to work you’ve got to get it out in front of people. If you don’t have business cards where can you find them? On my website www.dennisjhenson.com go to support materials and at the bottom of the page go to free business cards and they’re really free, they are the same ones I used to use.