How does a 23 percent DISCOUNT on your next deal sound to you? Think you could manage to make a little extra profit with that kind of wiggle room? Some exciting new data from RealtyTrac shows clearly how to do it, and we’ll talk all about it in today’s episode. First, however, I want to mention another great way to get deals (and, by the way, a great deal for you) if you live in the Birmingham, Alabama or Miami, Florida areas. On May 10 in Birmingham and on May 16 in Miami, Auction.com is hosting a LIVE SEMINAR on how to use their website and other investor-specific concierge services to get fantastic deals on properties. The May 16 event is particularly exciting, I think, because Rick Sharga, a former senior VP at RealtyTrac and current executive vice president at Auction.com (which, by the way, is now calling itself Ten-X) will be the featured speaker at the event. If you are going to be in either of those areas, check out all the information at www.rei.today/auction and, by the way, when you register mention that you heard about it here and you’ll get in for free. And you better tell me all about it when you’re done, because I’m hoping to get down to Miami myself but I just broke my foot which is going to make traveling hard…We’ll see what happens.
Anyway, now that you know how to gain access to the biggest online real estate auction around on a personal level, let’s get back to that 23 percent discount. Here’s how it works: You pay cash. Now before you throw up your hands and say “I don’t have enough money to pay cash at closing for a house!” wait a second. “Paying cash” doesn’t always mean you show up with a suitcase full of gold coins or hundred-dollar bills. Here’s the definition provided by Investopedia on the topic:
“An all-cash deal is the transfer of a real estate property without financing or mortgages. The buyer produces the appropriate funds at the time of closing and the seller receives the entire selling price at closing.”
In terms of your real estate deals, what this essentially means is that your offer will become significantly more attractive if you can tell the seller up front that you have access to the cash you need to buy the property and are not going to be waiting on, say, Bank of America, for your 30-year fixed-rate mortgage. Sellers will give major discounts (as you can see) for fast closings (not an option with conventional financing) that they can count on (also not an option with conventional financing), and you can take advantage of that even if you don’t have a couple hundred thousand dollars squirreled away in your mattress or buried in the basement. In
Many real estate investors opt to use their retirement accounts to fund their deals, which means that they can pay up front for their purchases and access the advantages that hedge funds and other huge investment powerhouses have over most buyers. You will need a self-directed account to do this, though, so if you don’t have one, talk to an expert (oh, and start listening to SDI Radio on iTunes) about how to make this happen. You probably have a LOT of investment money you didn’t know about just waiting to be leveraged if you’ve worked outside the home at some point in your past.
Second, you can access unconventional financing. If you work with a private lender who has already committed to loan you the money for a short-term investment (say, perhaps, that you are planning to wholesale the deal) then you can offer very similar terms to a seller that an all-cash buyer can offer because you can close quickly and you know that you’ll get your financing. Private and hard money loans are a great way to be competitive in this market, but be sure you’ve run your numbers carefully as they come with the price of higher interest rates!
Finally, many real estate investors simply build lists of cash buyers to whom they can wholesale their deals, then get to work finding deals to those cash buyers’ specifications. While you may not be buying the deal yourself, you’ll get a cut of the profits and you can probably leverage your cash buyers to make the deal more attractive. That being said, it’s very important to be clear with sellers about what you are doing. Don’t lie! If it’s not YOUR cash, don’t say it is! Just establish the terms of the deal and get that sucker under contract so you can get to work solving EVERYONE’S problems.
Of course, in some markets, that 23-percent discount is actually much, much bigger. Check out our list of markets where the discounts are 40 percent OR MORE in the REI Today Vault at www.rei.today/vault. Not yet a member? No worries! text REITODAY no spaces, no periods to 33444 and I’ll immediately send you the information you need to get that access and ALSO provide you with fast, immediate access to all sorts of great trainings, news coverage, interviews, and lot more timely information that will help make your investing safer, faster, and more profitable.
And remember, when you do that, you’ll also be able to GROW YOUR NETWORK by interacting with me and your fellow listeners to REI Today… so stop by to ask questions, make comments and network with other investors across the country. Text REITODAY no spaces no periods to 33444 or head over to www.rei.today/vault right now.
REI Nation, thanks for listening in and always remember this:
Your best investment is your own education.
Carole Ellis is the host of Real Estate Investing Today, a popular 9-minute daily podcast focused on educating real estate investors about the important topics that will make their investing SAFER, FASTER, and MORE PROFITABLE. She's also the editor of the Bryan Ellis Investing Letter. She has more than a decade's worth of experience in and reporting on the real estate industry and, additionally, has written dozens of courses on the topic. Carole lives in Kennesaw with her husband, Bryan, and four children. She believes wholeheartedly that your best investment is always your OWN education.