Today, Jim Ingersoll explains what types of houses are best for fix and flips.
Learn more about what to do if you’re not an expert rehabber after finding the perfect home to flip.
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.
Jim: Hi, I’m Jim Ingersoll and I want to welcome you to the REI Classroom today. I’ve got a great topic with great content I’m ready to deliver to you. Let me tell you a little bit about myself really quick. First, I’m Jim Ingersoll and I live in beautiful Richmond, Virginia where I am active on the street doing deals as an investor every day.
My background is electrical engineering and I used to climb the corporate ladder. I got off that about ten years ago. I do real estate full-time. I started off wholesaling and then went into some fix and flips and then I learned really how to do creative real estate, with buy and hold and build long-term wealth and that’s what I really like to focus on now.
I’ve published two books you can find on Amazon and I’m really excited to have you along for this REI Classroom today.
Mike: This REI Classroom real estate lesson is sponsored by VirtualStaffNow.com.
Jim: Hi, everybody. I’m Jim Ingersoll and I’m really excited to talk to you about some exact steps you can take to find your next fix and flip deal. I’m seeing a lot of investors around the country right now struggling with this because up to this point they’ve been able to really rely on the MLS.
Well, the MLS is going dry, everybody, so it’s time to go back to old fashioned real estate investing where you get to go out there and make deals directly with motivated sellers. Now, the difference is when you’re buying your fix and flip, of course you want to be able to find the worst house in a great neighborhood. And that can sometimes be a challenge for people.
The other challenge I’m seeing a lot of investors make mistakes on right now is they’re actually becoming sort of speculators. And by speculators I mean they’re overpaying. They’re not following their max offer formula and they’re going to get themselves in trouble because when they buy off the MLS or they buy off the HUD Homestore you’re bidding against all the other active investors in your market. So today I want to give you three or four ways you can go out there and find that worst house in a great neighborhood that you can fix and flip and make a lot of money on.
The first thing I want to talk to you about is getting some help. If you’re looking for a fix and flip property, and that is really your focus and you’re really building that as a business, one thing you might want to do is outsource that activity to a wholesaler. Now, wholesalers are very easy to find. Just go to your local REIA meeting, your investor’s club meeting, and let everybody know that you’re a buyer. Give them your buying criteria and instruct them to go out and find that worst house in a great area for you within the parameters that you’ve got.
Another way you can do it is outsource it to bird dogs. I love using bird dogs. They work really well. What I like to do is build a team of them and I just go to craigslist, I go to the Jobs section and I post a job saying, “Work with me as a property locator and I’ll pay you $500 on every house you help me find.”
Put a little bit of a message in there, the type of house you’re looking for, that you’re not looking for a house listed by realtors, you’re looking to buy houses on a good cash discount basis, and you will get flooded with people that want to be your bird dog. Then you’ve got to train them to go out there, find people that are motivated, and so on.
Another really good source for leads right now lately for me has been expired listings, and it’s easy to go out there and get them. Just have a realtor send them to you and then you go out and connect with the people. These are people that are already looking to sell and they haven’t been able to do it.
I just bought one like this a couple of weeks ago and it was a house that was inherited by the kids, it went through probate and all that good stuff. They had it listed at something like $75,000. It did not sell. One brother in particular needed cash very badly so they agreed to sell it to me for $55,000. I’ve now got that house rented out for $1,245 a month. That’s called creating cash flow for yourself and that’s one of the reasons you need to look at expired listings. So that works really well.
I’ve always loved to go after probate and I’ve always loved going after burned out landlords. And one tip that I can give you when you’re building your list for your direct mail marketing is go after the age of the person that owns it. Of course, you’re going to go after non-owner occupied property, but also put a filter in there for people that are over 65 years old. Their family starts pressing them to sell off their property.
I just bought another house just a couple weeks ago that way. The daughter is the one who got in contact with me. She told me her father is 80 now. He owns 20 houses and they’re worried about having to take 20 houses through the probate and everything at the end when he passes on, and they’re sick of fixing up the houses for him because he can no longer manage them. So we bought one, but she’s got many more to go and she’s getting ready to send me a couple more.
So burned out landlords, aging landlords, bird dogs, and the last one I want to tell you about is code violators. These work really well. This is where the city or town is on somebody’s case because maybe there is something wrong with the house. It could be that the house is open, it could be vacant, it could be something as simple as high grass for a vacant house. These are people that are about to be fined by the city or county and they often don’t have time or the money and resources to go out there and fix up their houses.
Contact them. Send them a letter, reach out to them and find their number on Google. Call them up and offer to buy their house. You’ll solve their problem. Drop in a nice house that you could go out and do a fix and flip on and that’s what it’s all about. Find that really tore up, bad smelling house in a great location with a really good price margin on it direct from a seller that you can negotiate in the kitchen. Write a contract, get it closed, fix it up, make it look like a million bucks, a beautiful home, sell it and collect your paycheck.
That’s how you fix and flip houses and that’s how you’re going to find them in today’s market. Thanks for enjoying this segment on the REI Classroom. I’m Jim Ingersoll.
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