One of the most important skills you need to
develop in this business is the ability to make
offers. . . NOT just any offers, but offers that get accepted. Unfortunately, there’s no shortcut to acquiring
this skill. The only way you become good at
this is to consistently make offers.
When you're starting out, it's expected to have
offers turned down again and again. Just make
sure you're taking note of the reasons
your offers are getting rejected.
Maybe you offered too low. Maybe you made
a miscalculation on the repairs needed. Maybe
you're leaving too little room for your buyers to
You should take note of all these little things
because, in the long run, this will create a clear guide on the kind of offers you
should be making in your market.
Making The Initial Offer
When making offers, especially through emails,
it is important to make things as easy as possible for the recipient. You do this by
making sure all the necessary documents are
included in your offer such as your proof of funds.
Let's face it: it's a whole lot easier for sellers
to say "yes" to your offer if you can show them
right off the bat you got the goods to back it up, right?
Create some criteria and use it to determine
your threshold for buying. For instance, decide
that you will pay $50,000 TOTAL (initial investment +
rehab costs) for a 3 bed/2 bath block property
and refuse to budge from this stance.
Keep your emotions out of it! You will not be living
in this house. It is strictly a moneymaker as far as
you're concerned, so the floor plan should only
matter from a "Will my prospective tenants like this?" perspective.
Stand Your Ground & Defend Your Offer
When the sellers or bank counters your offer (and they most
likely will!), be prepared to defend your original offer
if you're already at your threshold. I would suggest
sensationalizing the inspection to work them down
on price. For instance, have your contractor/handyman
create an estimate that includes every single possible
repair. Be sure the estimate reflects retail (read: inflated)
pricing as opposed to the investor pricing that he
typically gives you. Depending on the asset manager
handling the file, this may impact their willingness
to work with you on price.
At times you may find that you have a lot of competition
on a particular property. If you get outbid, it may be
worth your time to contact the investor who got it
and see if you can work out a quick deal.
Many times the other investor may want to flip it over
to you for a quick $2k. If the numbers still work for you,
you can move forward. If not, move on. But don't ever
begrudge another investor when they make a profit.
Just be happy for them and move on. You don't
want them begrudging you if you're the one who
closed a deal, right?
So start making offers today. The sooner you get
started, the sooner you hone your skills.