There is something new happening in the real estate market. Wholesalers and flippers and starting to work in new markets long distance. When you talk about fixing, flipping, and maybe even wholesaling from a distance what does that look like?
We talked with our friend Jesse Trujillo who lives in San Diego and is now buying and flipping in Jacksonville, FL. When COVID hit it inspired us to make the leap into distance/virtual buying and flipping. We are going to break down what you need to know to analyze deals remotely.
You have to have at least one person who is physically in the market you are buying in. This is your ‘boots on the ground.’ This person has an important job, or jobs. In our case this person is working in a few capacities as both project manager and acquisitions manager. That way as you expand, your ‘boots on the ground’ person knows how to project manage and can train someone to come on as project manager while they focus solely on acquisitions.
See if your lenders are willing to lend in that market. Many of our lenders had no problem extending their investments to the new market.
Find your properties. We started by looking in the new market Facebook groups and getting on the MLS. We reach out and make their intentions known in the Facebook groups as flippers/wholesalers. We then gather wholesalers emails and numbers and start calling and talking to them.
Check out potential deals.
After the team gets a lead on a deal, they gather information and run numbers. Then they tag the ‘boots on the ground’ acquisitions agent who confirms the ARV and looks at the property to confirm the rehab, take any pictures needed etc.
The final decision to move on closing a deal and delivering your asking price.
When the acquisitions manager gives it the ok, he then runs it back by you (or the head of the company) for the final agreement to move forward.
Bonus: How do you come up with your asking price?
‘I add in interest rate, closing costs, ARV your purchase price, and rehab amount. I do my best to come up with the most specific number from the beginning so we have a better chance to beat out the competition and get the deal.’
Because holding costs can vary from state to state it works better to establish your own formula though you can get estimates and averages from people more experienced if you are brand new to the game. In general your calculations need fixed costs, variable costs, and profit.
Don’t assume that you are going to get deals right away in the new market. Our team uses a networking style and that takes time to build trust and relationships.
You prove yourselves by showing them what you can do and then those people call you when they have new deals coming up. Have patience and an open mind. Every market is unique and you have to be willing to adjust to it. You will run your numbers and maybe get beat out by rental investors. Find out who the major buyers are on the market and adapt.
Have ‘boots on the ground,’ know the market, and have access to the MLS so you know the ARV. Talk to your new market contractors and get an idea of repair costs in the area, get photos of the house so you can run your numbers and plug in whatever formula you use to calculate your offer. Stay patient and open-minded so you can adapt to the new markets needs.