Larry Goins simplifies how it’s possible to buy and sell a property on the same day and all the preparation that has to go into it.
While day trading within the real estate market sounds daunting, it’s a process that when done right, can be completed without a large financial investment and will actually be a 30 day timeline.
Mike: Welcome back to the FlipNerd.com REI Classroom where experts from across the real estate investing industry teach you quick lessons to take your business to the next level. And now, let’s meet today’s expert host.
Larry: Hey. This is Larry Goins and welcome to today’s REI Classroom. I’m really excited today because we’re going to talk about real estate day trading. After all, I’m the guy who wrote the book. It’s in bookstores everywhere called “Getting Started in Real Estate Day Trading.” Now, what is real estate day trading?
Mike: This REI Classroom real estate lesson is sponsored by VirtualStaffNow.com.
Larry: Everybody thinks, “My gosh. I’ve never heard of this before.” It’s basically buying a house and selling that same house the exact same day. We might buy it at 10:00 and sell it at 10:30. Real estate day trading.
Now, there’s a lot that leads up to that day where you buy it and sell it the exact same day. For example, we might buy a house for $50,000, have a buyer lined up that’s going to pay us $60,000, and we make the $10,000 minus closing costs, of course. And there are a lot of different ways you can do it with no money.
And that’s the key because I know so many people starting out in real estate have no money. So let’s do this. I’m going to show you the time line of how this works because that confuses a lot of people. Here is day one and here is day 30. Day one is the day you get it under contract. Day 30 is the day that you’re going to close and buy it and sell it.
Now, day one there’s a lot that leads up to day one, mainly the three most important things in real estate: make offers, make offers, and make offers. Those are the three most important things in real estate. It’s not location, location, location. It’s make offers, make offers, make offers.
So you make a ton of offers. And the way we analyze our deals to know how much to pay is we take the ARV, which is after repaired value, times 0.7 or 70% and then we subtract out the repairs and the closing cost and how much we want to make and that’s the number you can pay for the house.
Now, if that’s the number you can pay for the house you’re not going to start out with that as an offer. You’re going to start below that so you can work your way up. Because in negotiating they’re asking this. You’re offering this. Your first offer is here. They counter here. You go back and forth and back and forth and meet here on some of them. Do you get them all? No. You don’t get them all. Absolutely, you don’t.
But you make all your offers. Then, once you get an offer accepted you get a 15-day inspection period, halfway between day one and day 30, 15-day inspection period. During those 15 days, you’re going to do several things. You’re going to drive the street on the property on Google Earth if it’s not close by because we do stuff in about 12 different states. Or you can go out and see it if it’s local.
You’re also going to have a rehab contractor go out and give you a free price. You’re going to get a CMA, a comparative market analysis. You can get an appraisal if you want. But you need to pull comps and you need to know what are the repairs and what’s the after repaired value. Then, once you know that, you make sure that all your numbers fit.
So then, what we’re going to do is we’re going to start marketing the property. We’re going to put it on Craigslist. We’re going to email it out to our buyer’s list. We’re going to even put signs out. We have these signs that say “Foreclosure”. And the signs go all around the neighborhood, not in the yard if it’s listed on the MLS. The realtors don’t like that. But you can put it in the yard if it’s from a for sale by owner.
And you put them all over the neighborhood and on that side of town and Walmart, in front of the CVS, in front of the convenience stores, anywhere there’s a lot of traffic, at the intersections. Then you put all those signs out and then you have all the calls come into a system like Freedom Voice. That’s what we use. It’s a voicemail system, and then you can get the calls off and call those people back and you get the property sold.
So our goal between day one and day 15 is to do our due diligence, make sure it’s a good deal, market the property and find a buyer during those first 15 days. Now, the last 15 days is simply working toward the closing, making sure your buyer has their money. Make sure you’ve got your money lined up. Make sure you’ve got the title search, you’ve got a title company or an attorney or whatever and line it up. And then, on the day of closing, we’re going to buy it at 10:00 and sell it at 10:30, aka real estate day trading.
So I hope you really enjoyed this. I’m looking forward to seeing you on the next training in the REI Classroom and thanks a lot for watching. If you would like more information from me, visit LarryGoins.com. Thanks a lot and have a great day.
Mike: VirtualStaffNow.com is the leading virtual system provider for real estate investors. As busy real estate investors, there’s nothing more valuable than our time. And VirtualStaffNow.com not only helps you find the right real estate virtual system for your business, they train them on an ongoing basis, manage them daily to make sure they’re staying productive and effective, and in the event they’re not the right fit or need to be replaced, they handle that for you too. Whether you need one or 100 virtual assistants for your team, start the process right now at VirtualStaffNow.com.
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