How do I find investors to buy my houses at wholesale prices?
If you want to make money flipping houses, you need to clear your inventory fast. The wealthiest wholesalers expect to sell their real estate investment in hours, not days or weeks. Their mantra is, "$5,000 in one day is better than $10,000 in two months." In order to sell their property quickly, they build a database of investors waiting to buy from them at wholesale prices. The more investors in their database, the faster they sell… and the more money they make. Here are three tips for building your own database:
1) Network at Your Local Investor Associations
Most cities have a Real Estate Investor Association (REIA), where investors gather to network with each other and listen to speakers on real estate investing topics. The majority of them are people working full-time jobs that want to build a nest egg or retirement through real estate and eventually quit their jobs. The only problem is they don’t have time. If you can do the legwork to find and buy a good deal, most of them are more than happy to pay you a nice premium.
You’ll also find full-time investors that specialize in either selling houses at full market value or renting them out for cash flow. They don’t like the "nickel and diming" of negotiating with banks or motivated sellers. By sparing them the time and anguish, you can expect a modest fee for your trouble. If you decide to target this group, research and display the retail and rent values. You’ll probably make more money from beginners, but full-time investors make great backups.
2) Advertise Investor Specials in the Newspaper
Beginners and experienced investors alike read through the Real Estate Classifieds for motivated sellers. It’s a great opportunity for you to advertise your own deals and build your subscriber base. Most investors read through the classified section of every town or city newspaper, so advertise in the smaller ones first. You’ll pick up almost as many investors for about half the price of a metropolitan newspaper. Sometimes it will still cost a few hundred dollars, but if you pick up a dozen hungry buyers, you’ll make thousands of dollars from them in the long run.
The key to newspaper advertising is writing effective copy. You can find dozens of books about writing copy at your local bookstore, but the general principle is to grab the reader’s attention and convince them to contact you. Here are some examples:
- INVESTOR SPECIAL. Houses at 80% below FMV. Call Jim at 777-777-7777.
- MOTIVATED. Selling at deep discount to FAST buyer. Call Jim at per 777-777-7777.
- REHABBER SPECIAL. House needs work but offering great price. Call Jim at 777-777-7777.
3) Call Bandit Signs and Other Advertisements
Have you seen those bright, cardboard signs stapled to telephone poles and planted on busy intersections? They’re called bandit signs. Investors use them to attract motivated sellers, but most of the time, they don’t care where the deal comes from, as long as the numbers are right. Drive around your city and the surrounding areas for a while and you should pick up at least a dozen phone numbers for investors looking for properties. Call and ask to add them to your e-mail list.
Also watch for other advertisements from investors. Occasionally, you’ll see a car with "We Buy Houses" painted on the side. Some investors also advertise in the major newspapers, hoping to pick up more motivated sellers. I’ve even gotten a direct mail piece from a rather desperate investor. Keep your eyes open and you’ll find dozens of people to add to your list.