What’s A Better Investment Strategy? Wholesaling Or Buy And Hold

USA Today ran a story yesterday that shows we may be now moving into a buy and hold market instead of a quick turn wholesaling market.

Is it true? Well, I guess it’s where you are and who you are. It seems that the available supply of buyers is dwindling. That is unless you are doing deals that are suited for landlords and those who are looking for cash flow on a long term basis.

We are finding that the right properties taken down and sold to landlords are flying off of the shelves. However, I guess your success depends upon a number of different factors.

As USA Today reports, whether the housing market is in another free-fall or not, just the thought of a double dip is forcing real estate investors to re-think how and where they spend their money. And maybe even if they should spend it at all.

Story continues below…

“The days of flipping real estate, commercial or otherwise are pretty much over,” says Tom Casey, a certified financial planner at Casey Thomas & Associates, who advises his clients on real estate. “There are very few hot markets for flipping with so many people unemployed and property values down. It’s really a time for renting property, not trying to sell it for a profit.”

What’s forcing the shift to buy and rent is a depressed U.S. housing market that can’t recover its once sky-high values. From 1999 to 2006, housing prices doubled. But those days are gone and the doubling is now in the opposite direction.

“Housing is entering a double dip in prices,” says Paul Dales, chief economist at the research group, Capital Economics. “They are headed down even more over the next 18 months by as much as 5%. Anyone looking for a short term gain by selling a property is heading for trouble.”

That’s not to say flipping isn’t going on — it is. But fewer investors are taking the plunge, according to the National Association of Realtors (NAR). The group says that only 4% of transactions this summer were for homes owned less than a year.

But that number is absolutely flawed as many Investors never report their sales to any Realtor. When adeals are done by experienced investors, there are a number of ways that these deals get done that are not known by Realtors or MLS boards.

One reason for that low figure — flipping a property now comes at a much higher cost to the investor than it did during the housing boom and with less of an immediate return.

“Flipping in 2010 means having to have much more cash on hand than in the recent past,” says Greg McBride, chief economist at Bankrate.com. “Before, you didn’t have to put in capital to fix a place up. You could borrow all the money for the purchase and wait for the price to go up and sell. Now prices aren’t really going up. You have to add value to the property, as they’re not gaining it on their own.”

So if buy, hold and rent is the advised strategy, does it provide a good return on investment? That depends. Both residential and commercial rents in many parts of the country, like California, remain low while New York City and sections of Florida are seeing slight increases in rental fees. Property prices across the country are still on a roller coaster ride as are vacancies.

So what it really comes down to are the expectations of the investor.

“Interest rates are so low that the bar is lowered for investors on what they want from rentals whether it’s an apartment or second home,” says Diane Saatchi, vice president of Saunders and Associates Realty in New York. “If you are getting a 4% return on a rental property, you’re still beating what a bank or even some other types of investments would return.”

With sales of existing and new homes declining, due to falling prices and high unemployment, analysts say more people are turning to renting instead of buying and that’s spurred investors.

“Housing prices have gotten so low that people have banded together to buy properties,” says Marlene Graham is a real estate agent with Downing Frye Realty in Naples, Florida. “We have a group from England looking to buy foreclosures to rent them while waiting for appreciation. Investors are here in droves.”

Banks slowing down loan process

Whether in droves or not, it’s investors with cash that will close a deal, says Mark Goldman, professor of real estate at San Diego State University.

“It’s brain numbing to close on a loan from bank,” says Goldman, who invests in California real estate. “The hoops you have to go through these days. Lenders have increased requirements and restrictions on loans that almost make it impossible to get one. You’re better off having cash to close a deal.”

But even a lot of cash is not a guarantee in today’s market, says Paul Sorbera, who has invested in commercial real estate for the past 10 years.

“I offered a bank 72% of the $320,000 asking price on a property to take it off their hands,” says Sorbera, president of Alliance Consulting, an executive search firm. “The property is still sitting there after two years. Banks don’t want to take the loss and are taking their time when it comes to selling. I’ve been turned down on at least 10 properties I’ve bid on with cash.”

Whatever the roadblocks, investors are still investing. The latest available figures show that 14% of all real estate transactions in May were from investors, according to the NAR. The majority of those are distressed or undervalued properties that would still be sitting empty if not bought up by investors.

And as unfortunate as it is — depending on your point of view — there may be even more buying opportunities, both commercial and residential, if the expected increase of foreclosures enters the market in the months to come.

“It’s a volatile market but there’s no better time in the last 10 years than right now to find deals,” says Sorbera. “If you look and shop you can find opportunities and I think there will be more chances ahead.”

But whether it’s now are in the near future, investors are warned to have a good head and big wallet.

“Real estate investing is not a sport for amateurs these days,” Diane Saatchi says. “It’s hard to get financing, you have to look at whether renters can cover your mortgage if you’re looking at a second home. You can’t just quickly buy and sell a piece of property like in the past. As an investor, you need a lot of cash and even then you can’t guarantee that you’re going to get out what you put in.”

Assignment Of Contract: How To Make Money In Real Estate Without Having Any I hear it all of the time. I want to start real estate investing but how do I make money without having any? Easy, you neophyte! Most of us started in the biz without money or credit. We mastered the art of the Assignment of Contract.

I’m Selling Houses I Don’t Own…And It’s Totally Legal! Is it Illegal to Sell a Property You Don’t Own? Now before you answer that question think real hard…and I mean real hard. The answer you come up with will more than likely depend upon whether or not you have a little blue “R” on your lapel. *** Before you read … 

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Wholesale Real Estate | Wholesaling Homes And Houses For Profit The wholesale real estate market has changed dramatically over the last few years. Originally, wholesaling simply meant buying from homeowners who were in distressed situations and flipping them to other investors who would rehab and resell them to the retail market. However, it was not uncommon to find and “flip” …

Do You Really Want To Make Money In Real Estate? Can you believe I’m actually asking this question? Well it seems that a lot of people may want to make money but they spend their hard earned money taking one course after another.

I’m pretty sure that Einstein felt that this kind of activity was insanity defined.

There’s one real simple way to make money in real estate and it doesn’t matter whether you’re a real estate investor or a real estate agent.

Watch the video to find out the one reason you’re not making the kind of money that you want to from your real estate investing or real estate agency business. [watch the video and read the transcript]

Seriously, I need to ask you point blank, are you really interested in making money in real estate? It’s a very simple question but with everything I have been seeing lately it has given me cause for concern.

From the side of the street where Realtors reside on, it’s hard to get a straight answer. I find myself reading over and over that making money isn’t the primary concern for most Realtors. If you’re one of them, go ahead and close the browser and move on to something else.

I’m not knocking your objectives. I just don’t understand them. I mean you don’t need to get a real estate license to be a charity. We all have causes that we donate to and support with time or money or maybe even both. We just don’t look to do it in our profit generating activities.

As an Investor making a go at real estate investing, I have to ask about your commitment level. I recently went to a meeting here in South Florida at the local investment club. I mingled with many of those in attendance and I started each conversation with two softball questions.

1. How many meetings have you come to?; and

2. How many deals have you done?

While the response I often received for the former indicated a willingness to learn, the response to the latter spoke volumes about the audience’s ability to actually make money in real estate. It was pretty much non-existent.

You see there are so many different ways to make money in real estate that I don’t understand why people are not availing themselves of these methods and strategies. I know that there are some real estate agents out there killing it and I know that there are some real estate investors out there pulling down 6 figures per month.

So why aren’t you pulling down your fair share? Am I consistently pulling down 6 figures in a month…no! But there have indeed been some months like that. My objective is to make that kind of profit consistently and we’re doing a lot of different things to get the money machine rocking towards that.

So what are you doing? Are you doing anything? Please don’t tell me you’re a Realtor still applying lame listing and prospecting methods hoping to have a closing 6 months from now.

And don’t tell me you’re an Investor out there driving for dollars every weekend but not actually buying anything. What’s the problem?

I’ll tell you what the problem is. Or actually the two problems. Fear and training. You’re afraid to learn and implement sound principles and training to make real money in real estate.I’m not pulling any punches here and you know that I’m right.

Think that I’m wrong…prove it. Tell me in a comment below what you can do in the next 30 days to make $100,000.00 and then tell me what you did in the last 30 days to make it happen.

Now that we have that out of the way and we all agree that you don’t know how to make 5 or 6 figures per month in real estate, do you want to know how? Now that’s one heckuva no-brainer of a question. But think hard before you answer it to yourself.

Actually walk over to a mirror and look yourself in the face and ask yourself directly. Would you want to know how to make some serious coin in real estate? Do you want to know how to consistently make 5 or 6 figures per month in real estate?

Now what’s your answer? I’m thinking you answered affirmatively. So what’s stopping you? Like I said earlier. Fear and training.

What if there was a way for you to alleviate your fears and to implement some sound principles, do you think you would then be able to generate some serious dead presidents? Well that’s a trick question. Because I don’t think you can.

You see you could get your courage and motivation up all day and night before skydiving and you could have all the training you could want and you still ain’t jumping out that perfectly good airplane all alone.

You see when you take that first jump you’re gonna be strapped to someone who has done it over and over again. Do you think you could make 5 or 6 figures per month in real estate if you were strapped tightly to someone who has done it over and over again?

I’m betting you can. No, I’m actually sure of it. So if there was a way for you to learn what you needed to know about making serious money in real estate would you be willing to strap onto someone and let them guide you to a nice cushy landing?

If so, show yourself you’re serious and ready to do so and aren’t afraid of a tremendous challenge that is accompanied with a big dose of ideological change.

Right now all you have to do is enter your name and email below and we’ll see f we can’t find a way to make it happen for you. You have one move to make right now. Are you willing to take it or not?

Don’t forget to leave a comment and subscribe to our You Tube Channel!

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Making Money In Residential Real Estate Even in a down market, local real estate properties have inefficiencies that investors can exploit.

What started out as one simple blog post has now evolved into a full fledged series that keeps growing. I guess our readers, listeners and viewers like it because we keep getting more and more requests for videos.

So if you guys don’t get tired of our mugs, we’ll keep putting them out for you. Barry and I really enjoy it and we love the opportunity to provide all of this free content for you. Stick around, you won’t have to buy any courses, we’ll show you how all of this is done.

I do have to say one thing that’s been bothering me. We are producing our content for those who are interested in making money. I don’t care if you’re an Investor or a Realtor, if you want to learn how to make money in real estate, we are eager to help you. What I am not going to do is apologize for our methods.

Nothing we say is illegal. While some of the info may not be comfortable for Realtors to hear, our methods have allowed us to succeed. I’m not an agent trainer and I gave up a long time ago trying to make agents see the light. So we moved back into our comfort zone and decided to simply focus on making money in this business. We’ll leave the Realtor training to those who have the patience to do so.

One thing I can tell you for sure is that we’re not interested in CONVINCING people that our methods work. We’re not even interested in debating people who have a problem with our methods. You either want to try and implement them or you don’t.

That being said, let’s get to today’s episode which I am sure will ruffle the feathers of some in the Realtor brethren yet again. Today we’re going to show you how we write our contracts for short sale offers.

Please understand, this video is about Short Sale offers only. We use a different contract when we work on REO’s and conventional sales. We’ll get to those in the future but for right now, we’re going to talk to you about our Short Sale contract.

You’ll see how we take a boilerplate real estate contract and craft it into a bulletproof document that ensures our profitability and protection once accepted. Do all of our offers get accepted? Of course not, but we know that the ones that do mean big bucks for us.

So watch the video, let me know what you think and look for the next episode in a few days wherein we show you how we find Cash Buyers and close one of these deals and re-sell it immediately for some serious coin.

*** Just so you know…this ain’t some quick Youtube video. It’s a full fledged lesson on How To Write A Short Sale Contract. Depending upon the speed of your Internet connection it may take a few minutes to load..maybe 7 seconds or so at the most on a really slow connection. This video was designed to play on fast connections. If you are on dial-up or on a slow connection it may not play for you. The running time on it is about 45 minutes…and no…NOTHING is sold or pitched. It’s all free content ***

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I don’t want to enter into any sort of discussion about Tiger woods’ indiscretions. I’ll leave that to he and his wife. What I do want to point out is the sheer marketing genius behind this new Nike commercial which began running last night.

If you have not had a chance to watch it, then take a moment and watch this video:

Nike, based in Beaverton, Ore., said the ad was created by Wieden+Kennedy, an advertising agency based in nearby Portland, that the company has partnered with for years.

In the stark, black-and-white ad, a solemn Woods looks directly into the camera without speaking while a recording of his late father is heard, speaking about taking responsibility.

Woods’ father is heard as if he is speaking to his son. “Tiger, I am more prone to be inquisitive to promote discussion. I want to find out what your thinking was. I want to find out what your feelings are, and did you learn anything?”

I’m a marketing guy and I just happen to be marketing real estate right now. I look at this ad and see so much of what it does within the conception of simplicity. Simplicity is not confining when you know how to make a statement.

Over the last week I have created quite the stir because of a marketing piece that I released. I had some who loved it and some who hated it, but it was passed all around the Internet and it has worked out very well for us. You see marketing doesn’t have to be liked. It doesn’t have to be approved. The best marketing brings out emotion.

In our case, the emotion on our piece brought considerable traffic, a ton of subscribers and a good deal of Adsense revenue. It also helped us begin some new relationships.

I think the same will happen with this Tiget ad, on a much bigger scale. You see, many will love it, many will hate it but in the end the publicity it will generate is extremely valuable for the Nike brand and for Tiger himself.

Do I condone what he did? It’s none of my business. Do I applaud Nike for having the chutzpah to jump all over this like a cheap suit…you bet you bottom dollar I do. This video is going viral as we speak and regardless of what side of the Tiger fence you are on the Swoosh can not be avoided.

I ask you this..what are you doing right now in your real estate business as an Investor or a Realtor to stand out from the pack? To be bold and agressive in your approach? Think about it. Can anyone say anything special about you? Do they even know who you are? Are you a faceless drone existing in a pool of investors and agents?

Like Earl Woods said to his son in the video above, I am more prone to be inquisitive to promote discussion. I want to find out what your thinking was. I want to find out what your feelings are, and did you learn anything?

Or will you conduct business the same way you did yesterday, and the day before that…and the day before that…

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We have been getting lots of emails from both Investors and Agents as to how we structure our offers on Short Sales. So we decided to use today’s show to discuss how we do it.

Maybe after watching the video you’ll understand how it is that we say you make your money when you buy. Realtors are going to hopefully understand that there is no such thing as a lowball offer but rather we proffer some detailed explanation as to how an offer price WELL below the listing price is actually substantiated.

In the video we take you on a gritty tour of a foreclosure and we show you what we look at and you get a rare glimpse into the mind of an Investor. You’ll see how we calculate the actual offer based upon our knowledge of the market and some other very important variables.

If you’re a Realtor, you may be surprised to learn how an Investor values a property and if you listen you may actually learn the difference between a low-ball offer and a valid offer with data that you can support and present with confidence.

If you’re a homeowner, now you can see how to truly value your property and how you need to instruct your agent to price the home so it moves. You don’t have a lot of time if you’re in foreclosure and as such, pricing a Short Sale should not be a cat and mouse game.

Lastly, if you’re an investor, or contemplating becoming an Investor, learn how to price your offers for maximum profitability.

*** Depending upon the speed of your Internet connection it may take a few minutes to load..maybe 7 seconds or so at the most on a really slow connection. This video was designed to play on fast connections. If you are on dial-up or on a slow connection it may not play for you. The running time on it is about 25 minutes…and no…NOTHING is sold or pitched. It’s all free content ***

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Since 1922, The Harvard Business Review has been published as a monthly digest of research-based articles written specifically for high ranking business practitioners.

It is an esteemed publication and is revered by the icons of global business management and is highly regarded as being quite authoritative in scope by the leaders in the fields of academic research as well as upper level managers, executives, and management consultants of a wide array of major industries.

Its worldwide English-language circulation is 240,000, and there are 11 licensed editions of the magazine, including two Chinese-language editions, a German edition, a Brazilian (Portuguese-language) edition, and an English-language South Asia edition.

In it’s January 2008 Special Edition issue, which I had the pleasure of reading on a long flight recently, there is an article that speaks of how a business, any business, can increase profitability if they understand the role of competition in its strategic approach.

The article, The Five Competitive Forces That Shape Strategy,is written by renowned Harvard business expert, Professor Michael E. Porter.

Dr. Porter’s credentials are unsurpassed and is widely recognized as a leading authority on competitive strategy and the competitiveness and economic development .

Real Estate, being a business industry, most assuredly can benefit from the understanding and implementation of the precepts Porter details in the article.

Porter’s basis for the article is that a business that is aware of the “five forces” will be much better suited to understand the structure of its industry and can create a position for itself that is more profitable and less vulnerable to attack.

In looking at the Five Competitive Forces That Shape Strategy we can see how appropriate these strategies are from the perspective of a real estate professional.

Here is how the diagram of the “five forces”, would appear in relation to the Real Estate industry.

In understanding his theory, it can be concluded that the National Association of Realtors may not be working in the best interest of the real estate industry.

As the NAR is NOT the real estate industry, it is quite odd that a trade association or lobbying unit of an industry is defining the national policy and procedural strategy of the real estate business.

In its ongoing attempt to fulfill its stated core purpose of helping its “members become more profitable and successful”, NAR seems to believe that the best course of action for establishing its mission is to stifle or eliminate competition for its rank and file members.

This may prove to not be the best plan. The job of the business strategist is to understand and cope with competition, not seek to eliminate it.

Eliminating rivals is a risky strategy. A profit windfall from removing today’s competitors often attracts new competitors and backlash from customers and suppliers.

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The competition in the real estate industry that is sparked by new arrivals like Zillow, Redfin, Trulia and the like can actually help profitability for all involved.

The strongest competitive force or forces determine the profitability of an industry and become the most important to strategy formulation. The most salient force, however, is not always obvious

Let’s take a look at how the Five Competitive Forces That Shape Strategy can impact the real estate industry as we know it today.

Threat of Entry

Porter makes an excellent point relative to how competition can increase the success and profitability of an industry. If you have to become better at what you do to stave off being overtaken by competition, the consumer truly benefits.

The diversification and implementation of technologies forces you to up your game.

New entrants to an industry bring new capacity and a desire to gain market share that puts pressure on prices, costs, and the rate of investment necessary to compete. Particularly when new entrants are diversifying from other markets, they can leverage existing capabilities and cash flows to shake up competition, as Pepsi did when it entered the bottled water industry, Microsoft did when it began to offer internet browsers, and Apple did when it entered the music distribution business.

The Power of Suppliers

Renamed in our business to read the Power of Sellers, details how the entity that is in control of the “product” is not reliant on the industry to drive its revenue. This is very important when you realize in an up or down market, it is the Seller who has the sole power to set market prices and to set the level of inventory of a product.

The Power of Buyers

As can be expected, the Buyer is the antithesis of the Seller. There is no such thing as a low ball offer. No reason for anyone to think that. The Buyer is exerting their power in the transaction just as the Seller exerts theirs by setting the price. It’s business people!!

Buyers can capture more value by forcing down prices, demanding better quality or more service (thereby driving up costs), and generally playing industry participants off against one another, all at the expense of industry profitability. Buyers are powerful if they have negotiating leverage relative to industry participants, especially if they are price sensitive, using their clout primarily to pressure price reductions.

The Threat of Substitutes

When the threat of substitutes is high, industry profitability suffers. Substitute products or services limit an industry’s profit potential by placing a ceiling on prices. If an industry does not distance itself from substitutes through product performance, marketing, or other means, it will suffer in terms of profitability, and often growth potential.

It’s not competition that hurts business but rather the perceived threat. If you find Redfin or any of a number of newcomers to the industry to be a threat then you are looking at things the wrong way.

What you must realize is that the obsolescence and perceived antiquity of the current real estate industry business model has made the industry ripe for the invasion of substitution and of course…advancement.

A substitute performs the same or a similar function as an industry’s product by a different or better means.

Rivalry Among Existing Competitors

Rivalry is especially destructive to profitability if it gravitates solely to price because price competition transfers profits directly from an industry to its customers.

If it were just a matter of offering a cheaper service or product then perhaps the Redfin’s of the world would indeed be a problem for the existing real estate industry business model. However in reviewing what Redfin, Zillow and many new entrants to the business offer the consumer, there are many features, and amenities afforded a consumer that are valuable far in excess of just price.

Competition on dimensions other than price, on product features, support services, delivery time, or brand image, for instance, is less likely to erode profitability because it improves customer value. Rivalry can be positive sum, or actually increase the average profitability of an industry, when each competitor aims to serve the needs of different customer segments, with different mixes of price, products, services, features, or brand identities. Such competition can not only support higher average profitability but also expand the industry, as the needs of more customer groups are better met.

Since the entry of new competitors or substitutes is not solely based upon price, then their entry should be applauded and heralded, not met with disquietude.

You are licensed by the state, you are an independent contractor under a broker, or you may be a broker. Why is the NAR running your business and telling you how to conduct your affairs? They are a lobbying organization whose interests may not necessarily mirror your own.

If the NAR does not have your business plan, should you be managing your affairs according to what they say?

I often get responses wherein agents across the Country want to debate substantiated fact with rhetoric opinion. This time, the facts may be hard to debate. They definitely can not be refuted.

The subject of this post, Dr. Porter’s article the Five Competitive Forces That Shape Strategy, deserves much more study and attention than I can write here.

I urge you to read the article in its entirety and try your best to comprehend and implement the precepts he describes to meet the challenge of today’s real estate business model.

It may very well be the catalyst that allows you to turn from conventional wisdom and embrace the future of real estate.

I hear it all of the time. I want to start real estate investing but how do I make money without having any? Easy, you neophyte! Most of us started in the biz without money or credit.

We mastered the art of the Assignment of Contract. I was going to write a long article on it, but Barry and I are in the studio getting ready to launch a bunch of new videos.

Luckily our bud at the Broward Investment Club penned an article today on the subject. So check it out…

The Best Method of Doing Deals With No Money, No Credit and No Risk
by Dave Dinkel

I get the question from newbies and especially realtors® all the time, “Is it really possible to legally do deals with no money, no credit and no risk?” Realtors® tend to believe that it is frankly impossible to do real estate transactions without borrowing money or having cash to close a deal.

Actually, there are many ways to do deals with no money, no credit and no risk including the more common ones: options, “subject to” (special situations and changing laws may apply), owner financing (new regulations may apply), combo of owner financing and subject to, partnership agreements with sellers, and an assignment of contract.

For the “execto-mos” out there – yes, we do a $100 deposit but you could use a $1.00 deposit if you wanted. Just remember if you are in competition with a professional investor, he will be putting up $100 so how will that look against your measly $1.00 deposit? The answer is ten thousand times better!

So for the picky readers, yes, there is a cost to doing a deal (deposit) but I consider a $100 no serious money when the return will be tens of thousands of dollars, or millions of dollars over the years.

The purest form of doing these deals is using an Assignment of Contract. This is an agreement (contract) between two or more parties that simply states that the end-buyer will step into the investor’s position as buyer of a particular property and complete the terms of the original Purchase and Sales Agreement.

There could be five investors each behind one another (daisy chained) in a transaction, but ultimately there is only one end-buyer who pays the original seller for the property and any investors involved.

In most states, any contract is assignable unless it specifically states otherwise. If or when you write the contract you add to the buyer’s name “and/or Assigns” and the contract stipulates it is not assignable elsewhere in the contract, you have just created a “contract ambiguity”.

If the contract is challenged in court, often but not always, the judge will side with the seller, so read anything you send to a buyer or seller so you know what you are getting into contractually or it could be a really big surprise later.

Let’s examine the life cycle of a “sample” deal where the seller is a homeowner and he agrees to sell his home to an investor for a specific price, let’s assume $100,000 for this example. Let’s further assume that the contract will also stipulate a closing date of 30 days away from the date of the signing of the contract and the buyer must close with cash and no contingency for funding (financing) the deal.

The investor may have agreed to who pays what closing costs such as title insurance and possibly even all the closing costs to get the deal. Immediately upon the seller signing the contract, the investor uses his or other investors’ buyers’ lists to find an end-buyer for the property at a markup of say $10,000 for a purchase price of $110,000.

The end-buyer “steps into the shoes” of the investor because he has to comply with the terms of the investor’s contract, including the purchase price, closing date, funding, and closing costs that were previously agreed upon. The contract price for the property remains at $100,000 but on the closing statement (HUD-1) there is an entry on the end-buyer’s side that is for $10,000 as an Assignment Fee.

The closing agent is given written instructions prior to the closing and the actual Assignment of Contract so he knows how to make the check out – just as a realtor® would be cut a check for his commission at the closing. However, this profit spread is for the sale of an “equitable interest” in the property and is not a commission.

The end-buyer should have given the investor a deposit for the Assignment of Contract and let’s assume further that it was for $3,000. The HUD-1 Statement would reflect the Assignment Fee of $10,000 and another entry would give the end-buyer a credit on the HUD-1 for the $3,000 deposit.

This amount would have the letters “POC” in the description meaning it was Paid Outside of Closing and to whom – in this case it should have been paid directly to the investor who got the original contract from the seller.

The non-refundable deposit for the Assignment of Contract is very important if the end-buyer doesn’t close because the investor can still make money on the deal. In the above example, if the investor gave the homeowner a $100 deposit and the end-buyer didn’t close the investor would still make $3,000 – $100 = $2,900 on the deal that required no money ($100), no credit and no risk outside of the $100.

If you read most standard real estate purchase and sale contracts, they generally stipulate that the buyer is only liable if he doesn’t close to the extent of his deposit – in this case $100. However, if the seller doesn’t close he can be liable for extended damages under a Breach of Contract lawsuit.

What if the investor can’t find an end-buyer in time and his closing date is fast approaching? If the investor isn’t familiar with how to automatically extend the contract by contractual language he may be at risk of losing his deposit.

One very simple way of getting the date extended is put language in the original contract that allows for an extension in the event of something happening; i.e. buyer’s inability to have his hard money in place timely – denote specifically how much additional time (extension) the seller must allow the buyer.

This is your choice, but I tell the seller that I am not buying the property for myself and am re-selling it for a profit. I go on to explain that the end-buyer may come to the closing late because of inspections or getting his funding in place and I may need a few extra days to close.

Be truthful with the seller and never tell him the people that will be coming to see the property are “inspectors” because one of these investor/investors will talk to the seller about dealing with him directly and you likely lose the deal.

Remember, we don’t want to have to close using our money, most likely because you don’t have any, don’t want to risk yours, or can’t find a hard money lender who will finance the purchase.

When the transaction is completed the investor will make a net profit of $10,000 plus he will get back his deposit of $100. This “return of deposit” is often overlooked by newbie investors especially if the amount is $100 or less, but you are entitled to it if you made it to the closing and/or the escrow agent.

What happens if the end-buyer decides not to close? You have choices, if the property is a deal; you can immediately start reselling it and go through the closing process again – assuming the seller is with you.

In a really problematic situation if there is a lot of equity, you could offer to partner with the seller if he extends your closing date or just offer him an additional $500 – $1,000 extra for another 30 days – payable at closing since we don’t want money in the deal.

So anyone who wants to be an investor and thinks he has a deal can simply have the homeowner sign a Purchase and Sale Contract and start looking for a buyer. It is best to get a buyer’s list in place to find them first, but you can always go to a local REIA or online to Craigslist.com to find your buyer.

Have them sign an Assignment of Contract with a deposit of 2% – 5% of the purchase price, and go to closing to get a check. No money ($100), no credit checks and lender requirements, and no risk ($100).

So, what are you waiting for to get started?

Wholesaling Real Estate Step by Step Real Estate News | BiggerPockets.com (blog), on Thu, 11 Feb 2010 05:16:21 -0800 Once you’ve found an end buyer and agreed on a purchase price, you will need to assign your contract over to them by executing an assignment of contract …

Try Out Assignment of Contract Many new real estate investors can run into problems when they attempt a simultaneous close on a property they are interested in.

Hundreds – if not thousands – of negative news stories have been done in the last year discussing just how bad the real estate market is, how homeowners and real estate investors and those involved in real estate investing as a business have lost their shirts, and how these terrible conditions are likely to continue for the foreseeable future.  You’re only getting part of the story.  Let me play Paul Harvey for a minute and give you the rest.

While it’s true that in the next two years or so more than 2 million homeowners stand to lose their homes to foreclosure.  I want you to be aware that many of the areas hardest hit by the foreclosure and credit mess are in areas that saw the most dramatic increases in values when America was riding high on the real estate market “bubble”.

Parts of California, Florida, and Texas – which saw annual double digit real estate growth – have seen unbelievable drops in property values and massive foreclosures.  These are also areas that had a lot of subprime mortgages written – and foreclosed upon.

Yet, in more rural areas – parts of the Midwest and in parts of the south – values have remained somewhat stable (in comparison).  Times have been tough and will be for awhile.  Tough times call for you to step out of your comfort zone and take advantage of new opportunities.

If you sit on your couch with a remote control and listen to naysayers like Wolf Blitzer talk gloom and doom for the next two years, not only will you get terribly depressed about Western Civilization’s chances of surviving this market, you’ll also miss out on a once in a lifetime opportunity to join the ranks of the super rich.

Serious real estate investors are not only continuing to do deals through this “unprecedented financial calamity” – they’re turning huge profits while they do it!  So what do these investors know that you don’t?  Is there a secret handshake that gets them into a secret passageway to profitability?

Savvy real estate investors don’t have a secret club, handshake, or access to an underworld of real estate profitability.  Real estate has traditionally been about finding the right property at the right price at the right time in the right location – and knowing when to cash in on their profits.

That’s the answer.  Actually there are two answers.  Knowledge and contacts.

If you can put yourself in the right place at the right time and you have pertinent information, you can turn an immediate profit on the front end of your real estate transactions.  Then, you can hold your property and weather any storm that comes along while enjoying positive cash flow from your property.  Then, when the market comes back to life you can sell your property to a buyer for a tidy backend profit.

In order to make this happen you need to know who to talk to and where to turn for lucrative investing investing opportunities.  Are you still unclear about how to move forward with your career?

If you are you’ve got a couple of different opportunities available to you.  You can stick your head in the sand and wait for the perfect time to invest, or you can grab life by the horns and do something about it.  (Remember there are massive piles of bones of people still waiting for the perfect time for a multitude of opportunities!)

There are people that can line you up with lucrative real estate investing opportunities.  If you don’t know the ins and outs of what to do or who to talk to during this process, you need to explore your available options more carefully and then get the process started.

Don’t you just love the guys over at the National Association of Realtors? They don’t seem to have any clue whatsoever as to anything about the real estate market. Hang around long enough and you’ll hear them sticking their foot in their collective mouths in what seems like weekly fashion.

However, their ongoing Keystone Kops routine means Christmas may come even earlier these days for those who are prudent and wise in their real estate investing endeavors.

Much to our delight, the National Association of Realtors reported the worst sales data…EVER! The median price of U.S. resale homes dropped 11.3 percent year-over-year in October which represents the largest ever drop since the National Association of Realtors began tracking the statistic over 40 years ago!

In the past four months the median price of resale homes has dropped 14.8 percent — from $215,100 in June to $183,300 in October 2008.

While this may seem like more bad news for real estate agents and even worse news if you are a home seller, buyers and investors have just been served up with a great big helping of Grandma’s Sweet Potato Pie and it’s not even Thanksgiving yet.

I mean seriously, this news couldn’t be better for us who understand what this data means to those involved in serious real estate investing. I mean it’s like going to a Sadie Hawkins dance where none of the other guys show up and all of the girls look like the Obama Girl (by the way…I would never have voted for him…but she sure could have convinced me otherwise.

But anyway…back to real estate investing (but ya gotta watch that video), this is what we all have been waiting for. I mean it’s like the “running of the bulls” with fat kids!

This is everything you want. It’s literally time to go for the jugular out there and make yourself a fortune through real estate investing.

Trust me, I am not on an island here. This is one of those signals that shred investors look for. Billions, literally BILLIONS will be made over the next two years.

The way to make money is to buy when blood is running in the streets.” – John D. Rockefeller

I could not have said it better myself!

Well it’s been almost a year to the day since we launched Real Estate Radio USA. I have to say that it’s been a lot of fun and along the way we have had the opportunity to meet and speak with some very fine people in the world of business and in the real estate industry.

We have amassed over 400 hours or interviews in addition to the thousands of articles on the site. We also have had the great fortune of having some of the best contributing authors that one could hope for.
It’s truly been a pleasure catering to the real estate industry.

But (isn’t there always a but?), the times they are a changing and as such so is Real Estate Radio USA. You may have noticed over the last few months that our frequency of blog postings and posted interviews has dwindled somewhat.

The reason being is because we have done a lot of introspection and research and talked exhaustively to many trusted advisors and colleagues and have come to the conclusion that we wanted to make a change. A change for the better.

We wanted to be sure so we took our time in coming to a decision. Now it’s time to let everybody know what that decision is.

Effective January 2, 2009 Real Estate Radio USA will be a subscription only site. Additionally, our programming will be decidedly different. We will be catering exclusively to an audience who wants to know how to make money in real estate.

Accordingly our focus will be more towards those who view real estate as an investment commodity rather than towards the real estate agent industry.

Over the last 12 months we have taught thousands of agents and real estate investors how they can better position themselves to seize the many opportunities that exist and will become even more abundant in the real estate industry.

It has been as educational for us as it has been for those who have taken our classes, online courses and seminars.

We are going to be incorporating a lot of resources on the new site to help and guide those looking to create wealth by investing in real estate. We are most assuredly steadfast in our bullish outlook on real estate.

Those of us in the investing side of things realize that there is an absolute goldmine out there. The positive outlook that we see and hear from those making money by investing wisely in real estate is refreshingly infectious.

We want to surround ourselves with positivity and cater to those who embrace the challenges of a volatile economy.

I think that there is precedence for our belief that NOW is the time for great financial opportunity. There have been great minds in business that have told us to be prepared for times like this.

Now is the time when fortunes are made and financial greatness is achieved. These men have shown us what spoils may await the victors in this economic race.

• “I buy when other people are selling.” – J Paul Getty
  
• “The way to make money is to buy when blood is running in the streets.” – John D. Rockefeller
  
• “Think of yourself as on the threshold of unparalleled success. A whole, clear, glorious life lies before you. Achieve! Achieve!” – Andrew Carnegie

This is the attitude that we at Real Estate Radio USA will be taking in 2009. We hope you join us. We’re going to have a lot of fun. We’ll also make a lot of money and help you make a lot of money as well.

Getty, Rockefeller, and Carnegie had it right. It’s time to reach for it all!