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Want to see step-by-step how to get your first deal?

Flight Path to Financial Freedom

Your step-by-step guide to doing your first deal and beyond!

Wanting to get into flipping houses and real estate investing but just don’t know where the heck to start?

There’s so much information out there is almost impossible to cut through the clutter to determine the correct path to take to get started!

That’s what this guide is intended to do.  This is your starting point.  Congratulations!  You now know where to start! πŸ™‚

Don’t worry though.  I won’t leave you hanging.

I’ll also show you where to go from here to actually start taking ACTION!

What’s Covered in this Roadmap

After flipping/wholesaling nearly 1,000 houses since 2003, I’ve been through it all.   I’m here to show you:

  • The path to your first deal (including finding and analyzing deals)
  • Expected time to get your first deal
  • How to flip houses when you don’t have much money
  • Where to go from here

Listen and Learn

If you prefer to listen to this roadmap in audio format, you can listen to it here: [link to listen to podcast episode…coming soon…]

The Goal

What will that first deal show you?  The purpose of first deal, while it is to make some money…of course…but it’s more about showing you:

  • That it’s completely possible for YOU
  • That you can put fear aside, take action, and succeed
  • That real estate investing is the key to financial freedom

Why do you want to flip houses?

Yeah, yeah…. I’m sure you’ve heard there is no better vehicle for creating true wealth than through real estate.

As a real estate investor you don’t have to have hundreds of thousands of dollars in capital to create a manufacturing plant and hire a bunch of engineers and workers.  You don’t have to start with huge amounts of overhead.

You can simply find a distressed piece of sh…. real estate, fix it up and sell it for a large profit.    Yeah, you’ll need money to buy the house and fix it but don’t worry, I’ll show you how to get that later in this guide.

Beyond the money though, why do you want to flip houses? 

This is massively important because you are going to be required to get out of your comfort zone to take action and do what it takes to succeed as a real estate investor.

That doesn’t seem like such a big deal while you’re still in the learning phase… and this is exactly why so many wanna-be house flippers NEVER MAKE IT PAST THIS PHASE.

[GRAPHIC β€œToo many of us are not living our dreams because we are living our fears.” -Les Brown]

My Mission

My ultimate mission in hosting the Flipping Junkie podcast and posting info on the blog is to help you move beyond learning so that you take action and actually achieve the success you long for.

I want to eventually receive an email from you telling me you did your first deal!

I want to hear about the mistakes you made and how much you learned by taking the risk and actually doing it.

I want to hear about how you did more than one deal.

I want to hear about how you quit your job (after getting to where you are consistently doing deals of course).

I want to hear about how you now can take vacations for as long as you want and to wherever you want.

I want to hear about how you never miss a thing when it comes to your family and your kids.

I want to hear about how you are planning to use your time freedom and financial freedom to help others.

I want all of this for you.

It will require hard work and determination.  Too many are selling people on how “easy” this business is just to sell a product on how to do it. 

Don’t be fooled. There will be work.  There will be challenges.  There will be fear.  There will be mistakes.  But the reward is worth it.

In order to punch through the fear stage and take action, you will need the reason (beyond money) that you are doing this.  That is what will drive you with a passion like you wouldn’t believe.

You might be feeling a little anxiety even right now.  That’s normal!  Especially if you don’t consider yourself an outgoing or people person.

The idea of being in business and having to communicate with strangers was scary as hell to me.

Don’t let that stop you.

I made it through and found I enjoyed it.  I’m confident you’ll find the same to be true.

Let Me Know

If you already know, AWESOME!!! Let me know in the comments below why you want to do this!  Writing it down and putting it out to the world has a magical effect in solidifying your resolve.

Now let’s get right into the path I recommend to accelerate your way to your first deal!

The Path to Your First Deal

We’re now at the meat and potatoes of this guide.  Yummy!  Let’s dig in.

There are dozens (probably 100’s) of different strategies to use to make money in real estate.    It wouldn’t be helpful to show you all the different ways to do your first deal.

You’d end up with analysis paralysis!  There would be too many options!

Instead, I chose a path that allows you to do that first deal as soon as possible with as little risk as possible.

How does that sound?

I thought so.

The steps outlined below are EXACTLY HOW I GOT MY FIRST DEAL.  

What I love about the steps I recommend here is that you will learn so much and gain so much more than just the deal you do.

Some of the other things you’ll be getting following these steps to your first deal are:

  • Knowledge of the areas and types of houses you’ll be buying and selling
  • A list of ready and willing cash buyers to buy houses as-is from you for good profit
  • How to find owners of vacant/run down houses
  • What to mail to get the owners to contact you
  • What to say when motivated sellers call you
  • How to analyze a potential deal to know what to offer
  • Contracts to use to put the house under contract and then to assign that contract to a cash buyer

Yes, you read that right.  You will NOT be closing on the house and fixing it up. 

That requires money and resources.  That will come later.

For now, I want you focus on having the safety of not taking on a lot of risk by buying a house.

This strategy allows you to avoid all of that risk!  You will find a deal, put it under contract and then sell the contract to another investor.  You should be able to sell the contract for anywhere from $5,000 to $20,000 or more.

Later in this guide, I’ll share with you how to progress to fix and flipping quickly from here… also without taking on a lot of risk.

Step 1: Determine Your Farm Area

The first step is to determine where the goldmine of houses are.

Goal: Find the neighborhoods where rehabbers are fixing and flipping houses

What to Avoid: War Zones – DO NOT go into dangerous neighborhoods where every other house is boarded up and prostitutes are walking the streets in the middle of the day.

The neighborhoods you want to create as your ‘Farm Area’ are the ones where there are some vacant and/or run down houses.

These are areas where there is a lot of deferred maintenance on the houses…basically they need paint and they have broken windows.

These are areas where a fixed up house will be desirable for a family to move into.

These are where other investors are already doing deals.

This is where they want to buy more deals.

How

  • Print out a map of your city from maps.google.com
  • Determine where the working class neighborhoods are (usually up and coming areas, older areas)
    • If you’re not sure, you can call some real estate agents or other real estate investors and ask them where real estate investors are doing a lot of rehabbing.
    • Alternatively, you can visit the National Board of Realtors website and find the median home price for your area: click here to find the current median home for your area
    • Armed with the median home value, check out Zillow.com for your city and find the areas that are just below that median value.  These are typically areas that are great for flipping because this is usually where the largest number of buyers that can qualify for a bank loan are looking to live.
  • Circle those areas on your map.

If you’re still not having luck determining this, just get out there!  Drive through different parts of town and look for neighborhoods where there are roll-off dumpsters in the driveways because the houses are being fixed up.

This is the first actionable  step.  It’s a low barrier to entry.  You might be getting out of your comfort zone a little, but you’ll find some interesting parts of town you may not have ever been to.

Step 2: Drive For Dollars in Your Farm Areas

Take a pad of paper and a friend…

Yes.  Don’t be a lone wolf.

You will be driving slowly down neighborhood streets and really don’t want to have to swivel your head from side to side constantly to be able to scan both sides of the street.  Have your friend keep their eyes peeled on the right side and you on the left side.

Types of houses you are looking for (distressed and likely vacant)

  • Insanely overgrown lawn
  • Boarded up windows
  • Newspapers and door hangers piled on the porch
  • No car in driveway
  • Peeling paint, rotted wood, broken windows[GRAPHIC: Pro tip: Drive the area on trash day in the morning.  Many times the houses you want are the ones that won’t have a trash can at the curb!]

What to expect

Each driving for dollars adventure should yield about 50 to 100 addresses and take about 2 hours if you are in the correct areas.

While You’re Driving For Dollars

Whilst looking for vacant/rundown houses, you will also find the following:

  • Contractors – when you see a rolloff  dumpster in the driveway and contractor trucks, get out of your car and go talk to them! Get their business cards! Look at the quality of work they are doing and whether they’re keeping the job site clean.  Make note of all of these things.  These are the perfect contractors because they are likely already working for real estate investors.  Ask the contractor the owner buys a lot of houses.  Ask if you can get their contact info.  They are a perfect addition to your buyers list because they have already proven they actually buy houses and in the area you are going to buy in!
  • Investors – If a junkie house is being fixed up write down the address and attempt to find the owner.  You can employ the skip tracing method discussed in the next section to find them.
  • Landlords – Look for ‘For Rent’ signs.  The really good ones are the ones that are the red ‘by owner’ type sign.  These real estate investors love rentals and would make perfect end buyers for your first deal!  Landlords can sometimes pay more than fix and flip investors because they use a long term investment strategy.

Skip Trace the Owners

Here are the steps to take the addresses you’ve collected and find the owners of each house.

  1. Google ‘[your county] appraisal district’ (this will help you locate your county appraisal district’s website)
  2. Look for a property search and search for each address
  3. This is where you’ll find the name and address of the owner (as this is who and where the property tax bill goes to!)
  4. Now you’ll want to find potential phone numbers for homeowner. You can use a free service like AdvancedBackgroundChecks.com to find the phone number of owners.

If you value your time, and you should, you can use a professional service like SkipForce.

Call/Text/Mail the Owners

Now, it’s time to make contact!  Don’t worry I’ll tell you want to say if someone picks up the phone in Step 3.

Your options to make contact are:

  • Call them – My favorite.  Do what others are afraid to do.
  • Text them – Still good.  Send a quick text like ‘Are you the owner of the house at X?’
  • Send them a letter – Another favorite of mine this is how I got my first deal!
Click here to get the letter template you can use to send to owners of vacant/distressed houses

Step 3: Work Leads

What to do when someone answers the phone or calls you

  • Get information about the house like number of beds and bathrooms
  • Don’t worry so much about square-footage or lot size as the county appraisal district website has all of that (heck even Zillow has the number of beds and baths…but we want to start the conversation with things easy for them to answer to get them talking)
  • Ask what repairs and updating the house would need to get it into sellable shape
  • Find out why they are wanting to sell the house
  • Dig more into why they want to sell as sometimes the first answer isn’t the core reason they are selling
  • Ask how much is owed – you’ll want a good idea of whether to go and see the house – PRO TIP: ask this just like you’re asking how many bedrooms and bathrooms the house has…it’s only awkward if you make it awkward and beat around the bush when asking this. 
  • Set an appointment to see the house – yes, go ahead and set it.  After we analyze the potential in the deal, we can always cancel so we don’t waste their time…or ours.

PRO TIP: Take the time to be conversational.  Do NOT just ask the questions firing one after the other without actually talking with them.  This is where you build that likability and trust.  Don’t blow it!

Click here to get the seller script that gives you exactly what to say and ask when a motivated seller calls you!

(pssst…The seller script includes the Golden question that almost always results in the seller taking thousands off of their asking price!)

How to analyze the deal

Now we need to figure out how much we can pay for the house!

The typical formula for calculation the max offer is:

Maximum Allowable Offer (MAO) = After Repair Value (ARV) X 70% – estimate repair costs – your wholesale fee

This is basically the 70% Rule Real Estate Investors Use.

Let’s do an example.

After Repair Value (basically what similar houses, aka comps, sold for): $200,000

We don’t know what repair estimate will be yet so we leave that empty.

We should shoot for a $10,000 wholesale fee.

MAO = $200,000 X .7 – repair estimate – $10,000 = $130,000 – repair estimate

Do they owe too much?

Now, we know that if the seller owes much more than $150,000 it’s going to be able to hit the numbers we want.  This is where you would call back and cancel the appointment.  If you know a real estate agent, you could recommend that agent and see about getting a referral fee from them.

If they owe less than $150,000 there is potential.  Go see the house!

PRO TIP: I’d say even if they owe too much, go ahead and see the house anyway.  It will take the pressure off of you because you’d feel like there’s not really a possibility of a deal anyway.  You can get comfortable talking with a seller face to face and estimating repairs without any pressure to do the deal.

Step 4: Put House Under Contract / Follow Up

Now you going to an appointment!  Yay!  Congratulations!

Not to put too much pressure on you, but this the most important moment in the whole acquisitions portion of doing a deal.  We spend a lot of time, money, and energy getting to this very moment.

I’m laying it on thick so that you treat each and every appointment with the respect it, and the seller, deserves.

Go in with an intention to really help the seller with their property problem.   They are looking for someone to come in and save the day for them.

As hard as it is in the beginning, you’ve got to show confidence.

This is no way means acting like you know the answer when you don’t.  

If the seller asks you a question you don’t know the answer to, simply tell them, “You know, I really don’t have an answer for that.  But I’m going to find out and get back to you.” 

Here are some important tips (gained from having thousands of meetings with motivated sellers since 2003):

  • DO NOT TEAR THE HOUSE APART.Seriously, they’re very aware of all the issues.  Just talk about the potential. Don’t make them feel ashamed and embarrassed for letting it get like that.
  • Take pictures.Nothing is worse than forgetting what something looked like.  Believe it or not, I once made an offer on a house thinking it was 3 bedrooms.  For some reason, that night while laying in bed, I walked through the house again in my mind….OH CRAP!!  It only has 2 bedrooms.  I confirmed with the seller the next day and lowered my offer.  I told the truth about what had happened. He understood.  I still bought the house. πŸ™‚
  • Make conversation about things you see in the house.This is all about building rapport.  Don’t do it if you’re not interested though.  They’ll know you’re not being genuine.   Jerk. …just kidding. πŸ˜‰

Now that you know what repairs are needed, it’s time to calculate repair costs.  For that you can take advantage of the repair estimates list I provide earlier.  Oh, you didn’t get that yet?  No worries.

Click here to get repair estimate guide and a house inspection checklist!

With the repair cost estimated, you can calculate what you can offer the seller.

To return to our previous analysis example, we’ll just plugin the $25,000 we estimated it will take to fix up.

MAO = $200,000 (ARV) X .7 (70% rule) – $25,000 (repair estimate) – $10,000 (our intended wholesale fee)

MAO = $105,000

Now that you have the most you can offer, don’t offer it!!  DON’T DO IT!

You will be tempted.  But don’t!

Offer less so that you have room to negotiate.

I’d offer $101,530 at this point (just to keep it above $100k as that seems like a lot more than something below $100k).

Now your mind is going to start making assumptions about what the seller might take and might not take.  DO NOT LISTEN TO YOUR MIND HERE!  You are not the seller.

Simply state how much you’re willing to buy the house for as if you didn’t care whether you got it or not.  DO NOT start rambling on about why the offer is what it is.

Important note: If you are wholesaling (which is the strategy I’m showing you here), be upfront with the seller that you will be working to find an end buyer to fund the deal.  I’d set the closing date at least 30 days out to give you time to find the buyer.  

For earnest money, I usually only give $10 or $25.  It’s really just to make it a binding contract.

Seller Says Yes

Congratulations!

You can use the contract provided in the bundle of documents and scripts I’ve offered multiple times in this guide to put it under contract.

Seller Says No

It happens.  Don’t beat yourself up over it.

Now you will need to follow up…religiously…until they either sell it or tell you to stop contacting them.

Seriously, I’ve bought a house before that took over 5 years to buy.  That’s 5 years of follow up!  And it was a hell of a deal!

Step 5: Assign the Contract

We’re almost there!  You’ve got the contract and now it’s time to find an end buyer.

Typically, this end buyer is another real estate investor.

And if you bought the house using the 70% rule, you’ll have no problem moving this deal!

Did you build your buyers list while driving for dollars?

If you did, now is the time to call them!

If you did not, no worries.

Here’s how you can find a buyer

  • Have a real estate agent pull up all of the cash bought fixer uppers in the area over the last 6 months.  You can likely skip trace or simple Google the company names that bought the houses.  See if any of these want another deal in the area.
  • Post the deal on Craigslist
  • Go to local real estate investor Meetups and Real Estate Investor Associations (this is where investors gather…many newer investors…but if you ask around you will find out who the bigger players are and you can tell them about your deal).
  • Google ‘We buy houses [your city]’ and call all of the top websites

They will want to see the house

Did you get those pictures I told you to get while at the seller appointment?  I hope so.  It’s best to upload these to Google Drive or Dropbox and then share that link with interested cash buyers.

After they’ve seen the pictures, they should have enough to go on to give you a consider earnest money deposit to lock up the deal.  They might want to view the house.  If you have a great deal, I’d recommend getting the deposit before seeing the house (especially if the seller is still living there –  you don’t want to be having to schedule a ton of showings to see the house).

How to choose which buyer you sell to

Again, if you bought right (using the 70% rule), you should have no problem finding a lot of interest in this deal!

With a great deal, you get to choose who you’re going to sell to.

To choose who to go with, you figure out who is most qualified to pull the deal off.  You don’t want someone that will flake and leave the original seller hanging.

Here’s how to vet your cash buyer:

  • First with a serious non-refundable earnest money deposit (usually $2,000 or more)
  • Someone that can close within a week (you don’t want your contract with the seller to expire before it closes)
  • Someone that doesn’t ask you silly questions about the house.  They need to do their own due-diligence.  When they ask a question about the house, you can just tell them that you’ve never lived there nor owned the house and they’ll need to verify everything for themselves.

Use the assignment contract you get when you subscribe to FlippingJunkie (it’s free)

Now you just need to wait until it closes!  The good thing is, the assignment of contract basically just swaps you as the buyer of the original contract with the seller to the end buyer that you found.  You no longer have any obligation in the deal.

YOU DID IT!!! NOW CELEBRATE!

Expected Time to Your First Deal

I could tell you that it took me about 6 months to find my first deal.  But that doesn’t really help you.

It’s not so much how much time it took, it’s what I did to get that first deal.  How much work did I put in? How did I handle the leads?

You’re armed with how I found that first deal.  Now it’s just a matter of how much work you need to do to get yours.

If you put in a ton of work and are passionate, getting that first deal within a month is within the realm of possibility.

It’s a Numbers Game

It’s about the number of leads you generate not the timeframe.  It’s simply a numbers game.

Being new, you might not be able to negotiate and put a deal under contract that someone more experienced would.  That’s just a given.

With that said, an experienced investor can usually turn 1 out of every 5 motivated seller leads into a deal.

Being new, that number is likely to be something like 10 or even 15.

So now the goal just becomes getting those 10 to 15 leads!  

To get those leads, you need to get those property addresses driving for dollars and make contact with the owners.

Do not focus on the 1 deal or the 10 to 15 leads yet.  Simply focus on getting those addresses.  Lots of them!

That’s seems a lot less stressful, right!

You’ve got this.  I have faith in you.

How to Flip Houses with No Money

You’re probably thinking, “I really want to FLIP houses”.

You probably want to buy that piece of crap house and turn it into a showplace.  Something like you see on HGTV.

I get it.

There is so much fulfillment in taking an eyesore and turning it into someone’s dream home.

So how do you go from wholesaling houses (what I showed you earlier to do your first deal without much risk or money), to being the flip king or queen you know in your heart you want to be?

Again, I’m going to show you how I did it.

And again, it’ll be in a way that allows you to do with without much money or risk!

How does that sound?

I thought so!

How I Started Flipping Houses Without Much Money or Risk

The reason I’m showing you this AFTER showing you how to get your first deal, is because you’ll need that track record.

You will need to show you are willing to put in the work and find motivated sellers!

Who will you need to show this to?

A mentor.  That’s who.

Finding a Mentor and Money Partner

My first fix and flip deals (actually well over a hundred of them) were done with my mentor.

He put up ALL the money to do the deals and kept me from making any big mistakes.  This gave me the confidence to go all out!

What was in it for him?

He didn’t have to find the deals, he didn’t have to find the contractors, he didn’t have to manage the contractors, he didn’t have to sell the finished flip, he didn’t have to do anything but put up the money and advice.

We split the profits from the deals 50/50.

What was in it for me?

The confidence that no matter what I would not lose money.  I didn’t have any money in each house!  This didn’t mean that I went crazy and over rehabbed houses or didn’t try to complete the rehabs quickly.  I wanted to make as much for both of us as possible.

It meant that I have full faith I’d be able to close on anything I put an offer on (as long as it was a truly good deal).  If there was a house that scared me, I could call my mentor and get advice on how to move forward.

If I ran into a snag on a rehab, guess who I’d call?

How to Find Your Mentor

Talk to other investors!

When you are driving for dollars and you spot houses being worked on, did you ask the contractor who the investor is that owns the house?

Did you go to your local real estate investor association meetings and talk to other investors?  Did you ask them who the bigger players were in your market?

If you answered no, now is the time to start planning and doing those things!

How to Approach a Potential Mentor

Here are some of the “Don’ts” when talking with a potential mentor:

  • Don’t ask them questions about how to do things you can easily learn online
  • Don’t ask them if they will mentor you right away – a relationship needs to be built
  • Don’t ask them where to find deals

Here are some major “Do’s” when talking with a potential mentor:

  • Show them deals you have or are currently wholesaling
  • Tell them you have found a way to consistently get deals and want to start rehabbing
  • Tell them you’ve found some contractors that work for other investors and want to start rehabbing (if you have)

Once you’ve shown them you are putting in the work to find deals, offer to buy them lunch.

Take time at the lunch to just get a feel for how you might work together.  Seriously, this is a big deal.  If you feel the investors is a sleezeball, you don’t want to waste your time with them.  You want to both like each other because you’ll be working together.

DO NOT FOR ONE SECOND BELIEVE YOU ARE IN THE INFERIOR POSITION!

You are a potential gold mine for this investor as he is for you.  You bring a ton of value to the table and I give you permission to own it.

Confidence.  You deserve it if you’ve made it this far.  Just don’t go too far with it and become a jerk.  πŸ™‚

Where to Go From Here

It can be tempting to just read this and then move on to looking for more material to devour.  You’ve probably already been doing that for a while.

What you’ve learned in this guide is enough to get you going to work at getting those addresses!  Then finding the owners and getting your first deal!

Start taking action today!  Do not put it off until tomorrow.

Work on Your Fortune

Get excited about working on your fortune! That’s what you are doing.  You won’t be working a job doing this.  You will be working on your future and on your fortune.  Don’t forget that.  Go back to your “why”.

Have Questions

You will encounter situations you didn’t anticipate.  If you haven’t found a mentor yet, you can take advantage of the Flipping Junkie Facebook Group.  There you can talk with experienced as well as new investors.  Last I checked, we had X members.

[Click here to request being added to the Facebook group]

Educate Yourself While Driving for Dollars and/or Going to Work

I’ve put together a list of podcast episodes I did that are like an audio training course.  These are in a specific order to help you progress as a real estate investor and house flipper.

These episodes start with mindset and your foundation.   They then go into different ways to find deals. Then it progresses to more advanced topics like deal structuring, rehabbing, joint venturing, etc.

Subscribe to the Flipping Junkie Podcast and start going down this list of podcast episodes while driving to work or driving for dollars.

[Playlist of podcast episodes to listen to]

Make sure to a review on itunes if you feel you’re getting value from the podcast!  [You can leave a rating and review here]

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