In this blog we are looking at the cost of doing business in 2021; how to win on the buy, and how to win on a sale so you can increase the net profit on the bottom line.
Steve and Kayce Tackett are wholesalers in the Columbia, SC area. Kayce and Steve went to Flip Hacking Live with one flip under their belts. They were so impressed with the information they received there they convinced Bill to let them join Altitude and took off running with their real estate business. When we heard that they had doubled their profit margins and were on track for $1,000,000 in income in 12 months, we decided we needed to share what they are doing with all of you.
The #1 Most Important Tip:
Keep your finger on the pulse of the market and adjust. The market will tell you what to do. See opportunity in the challenge that the market offers and stay flexible.
Kayce and Steve were ‘just’ wholesalers who were consistently not closing on deals they thought were going well. They started giving higher bids to buy and finding ways to maximize profit and create new leads on the selling side.
For example, sometimes they will buy from landlords with the tenants still in the house, let the lease run out and then flip it. There was not enough of a market to just wholesale so they adapted and created another exit strategy for those deals that were still great deals. Below are a few of their adaptive strategies that allowed them to flourish in the 2021 market.
On the day of closing put a ‘For Sale by Owner’ sign in the yard immediately after the deal is confirmed. The sign is simple, an 18 x 24 yard sign ‘For Sale by Owner (phone number inserted underneath)’ and a space for a rider that says ‘Flip Coming Soon.’ This attracts immediate attention from anyone interested in buying either retail or wholesale, as well as from real estate agents.
Pro-tip: Every morning we gather our team and do a dispositions meeting. For 15/30 minutes everybody involved in dispositions gets on the same page so every step of the process runs in a smooth and timely manner.
Utilize every contact made from that sign in the yard.
Even if you get an offer on the property, leave the sign in the yard and develop relationships with the real estate agents and interested buyers who contact you.
You can keep the information of everyone who calls and build your email list of interested buyers and agents who agree to be put on the private ‘Buyer’s List.’
Use ‘Supply and Demand’ to your Advantage.
The amount of interest this sign draws also will help you know if a neighborhood is hot. If the demand is incredibly high in a neighborhood but the supply is low, (say you have one house and 15 potential buyers in one neighborhood), you can then isolate the neighborhood for a marketing campaign such as EDDM (Every Door Direct Mail) to everyone in that area and perhaps get another lead in that ‘hot’ neighborhood.
With these new leads you can make higher bids on properties because you know you have a waitlist of interested retail buyers.
Pro-tip: To maximize your time, on properties in ‘hot’ neighborhoods, create limited showings (say a Friday from 1-5pm), and put a boundary of a few days on when offers are due.
These great deals are locked down with private money. It allows you as the buyer freedom to buy properties from landlords that need minimal fixing up and keep a tenant for six months without paying high interest. When you are not racing a clock and watching your interest you have more freedom to get creative with deals and make those adjustments that make you the buyer they close with.
Having up to date comps are important when you are showing your property to your investors and the market has just shifted in your favor.
Free Marketing Platforms:
Zillow and Facebook Marketplace are the two that Kayce and Steve have used with great success. Once you own a property outright you can market it on Zillow with a ‘buy now’ and ‘buy later with work done’ prices. In the details you can specify the stipulations on these different selling prices as well as what type of buyers you are looking for (loan or cash).
Facebook Marketplace is free advertising.
You can create a spreadsheet of all the industry groups in your local area or even areas nationwide as people are often looking to move. Groups without rules allow you to post immediately, and groups with rules you can have a VA or employee post for you at the specified time. Investors as well as buyers respond on Facebook and once you field their questions and develop a bit of a relationship you can potentially add these buyers and investors to build your Buyer’s List.
Pro-tip: When fielding all the responses from Facebook Marketplace there are ways to shorten your response time. Most people ask basically the same questions and you can pre-write responses and create ‘shortcuts’ in your phone to quickly and efficiently answer and narrow down these responses to legitimate buyers. For example typing ‘xym’ into your phone as a shortcut can instantly paste a four paragraph introductory letter into your messenger or email. These ‘shortcuts’ are also available on your computer with a program called Text Replacement.
These are a few of the many solutions Kayce and Steve have discovered and implemented into their new business. Stay tuned as we continue to share methods you can utilize to change challenges into opportunities!