Shock and awe is known as a military doctrine based on the use of overwhelming power for rapid dominance. The way I see it is that shock and awe relates to successful house flipping in two ways.
One relates to having a burning desire to take massive action and succeed in this business.
The other relates to something that isn’t discussed much, if at all. Real estate investors probably don’t even consider it when getting started. It’s not until those first few leads and visits to houses that they become aware of it.
This second one I thought about after looking at a house this week. The house made me think back to when I got started and how this made an impression on me. Could I be more vague? Don’t worry, I’ve even included pictures below (but don’t scroll just yet…you don’t want to ruin the surprise).
I’ll get to it in a minute.
Most people don’t make it in this business because they don’t start out with enough of a burning desire to succeed. They think they do, but they don’t. It really is as simple as that.
With the strong willingness to do whatever takes, you will be able to put in the work necessary to get your phone ringing. You’ll have to make it ring enough with leads that you can have that good deal land in your lap.
In the beginning, you won’t be as good at determining what is a real deal and could lose some because of inaction. This is very common.
If you have enough leads though, it will allow you to succeed in spite of this.
Getting these leads will show you that this business is absolutely possible for you. This will erode your self-doubt and give you the willingness to take more action.
Be in as many places as possible.
In the beginning, you should try to have your marketing message in as many places as possible. This should be done at least until you figure out which marketing to motivated sellers method works best for you.
It’s hard to keep up with doing a lot of different marketing methods. You don’t have to keep up with it. The key is to find what works best for you based on the time and money required for each. Some things might have a lower cost per lead and cost per deal, but they could be time consuming. Only you can figure out what balance you want to have.
Your competition will take notice and you could build some good relationships, especially if you are wholesaling houses. Buyers will want you calling them with deals and sellers will want you to buy their properties. You can have the best of both worlds.
This is what I was alluding to earlier. This is the one that isn’t thought of until you are face to face with it. It makes a lot of new real estate investors feel uneasy and question whether they really want to do this.
This will shock and awe you.
What I am referring to is the level of disrepair, squalor, filth and destitution of many of the houses you will be looking to buy (or wholesale)..
You’ve probably seen plenty of before pictures, but they never do the real thing justice. The combination of the assault on all of the senses can be overwhelming.
Some of these houses are downright disgusting. On occasion you will be tempted to throw up. Other times you will want to cry as you can’t believe how people can live the way they do…especially when there are kids living there.
Yes, not all of the houses will be vacant. Some of them should be, but they’re not.
When getting started, you may well believe that there is no way in hell anyone would possibly want to buy a house like this…including investors. You would be amazed.
At the right price, anything is a deal.
The fact of the matter is that somebody will buy anything for the right price. This goes along with the post I wrote about making an offer anyway.
Many new investors have a hard time thinking that a house that needs as many repairs as some of these appear to need would work for a successful house flip. Notice I mentioned ‘appear’ to need. Sometimes the repairs seem like serious repairs, but are in fact nothing major. Spending time looking at vacant houses that need a lot of repairs with contractors that have worked with other investors (read more about how to find and work with contractors) is a great way to understand what is serious and what is not. Scheduling appointments to see fixer-upper, bank-owed properties is a good place to start.
This is a great way to gain experience with what repair costs are as well.
Sometimes the area the houses are in will not be to your taste. It’s hard for some people to understand that it doesn’t matter what your taste is. These houses are a commodity. Nothing more. Just because you wouldn’t dare live there, doesn’t mean that others wouldn’t be happy to. Many people grow up in these areas and it’s all they know. They don’t know what it’s like to live in nicer areas. To many of them, there is nothing wrong with the area.
After you see enough of these derelict houses, you will start to detach yourself from your emotions and understand that there is serious money to be made by bringing them up to respectable standards.
So when you get that lead and you go to visit the house, don’t let the state of disrepair cause you to shy away from it. These can be the best deals. Keep that in mind.
We as real estate investors should always just be looking at potential. That’s what I tell sellers when they are embarrassed to show me their house. I’m not there to knock the place or show disgust. I’m there to see what potential there is.
Just so you can get an idea of what some of these houses may look like, take a look at some of the ones we’ve bought:
Hope you enjoyed the ugly house buffet. If you are so inclined, you can leave a tip by hitting the ‘like’ button. Thanks.
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As you said, some of those are”shocking”! I guess being only a week into getting into this business, what shocked me was the number of Investors in my city! A quick web search pulled up over 30 “We Buy Houses” websites. But I know tenacity, perseverance and MARKETING can overcome competition!
Thanks for the inspiration!
Don’t worry about the competition. Most of them are probably not doing much business.
You hit the nail on the head with: “I know tenacity, perseverance and MARKETING can overcome competition!”
I like that attitude!
I wholesaled a property last month where the kitchen was similar to picture #9 and the rest of the house was just as bad. The worst part about it was people were living in the home while we were doing the walk through. I’ve learned to put my emotions aside in situations like that but I’m always in shock and awe how some people can live in such conditions.
This one was as you said. The whole house was filled with stuff and you could barely get around. The carpet was so filthy as to be indescribable. I could not breath in this house. The guy living there and his ‘buddies’ were all smoking. That and the smell of all the old food and garbage really combined to become a force for evil. 🙂
I think my wife promptly walked out of the house as soon as she stepped foot in it. We had to demo it all out before she would come back.
I have had an easy run the last couple of years doing Rehabs in FL. Was buying REOs and Short Sales from Brokers. Well the PARTY IS OVER. Now BIG institutional $ has come to town. I either find other ways to find properties or fade away. I choose the former and am considering doing a Mailer. The issue is it is “Like” a partnership but the partner has no Skin in the Game. The deal is .55 cents letter, paid by me, targeting people with a LOW LTV. The Partner is a Large Wholesaler who handles the calls and then sells to me with a built in profit of $13K. OF course he says he will get the properties to meet my projected margin of Approx. $25K. per deal. I’m I crazy for considering this? Is there another way the deal could be structured?
Not sure why you wouldn’t just do the marketing and analysis yourself. Find a relative or friend that could do the letters for you if you don’t have time or desire to do it. Shouldn’t cost very much.
The ‘partner’ should just do his own marketing and deal finding and send you deals he gets on his own. Just hate to see you paying for marketing and him doing things with the majority of leads that won’t fit his 13k profit and your profit. Just doesn’t make sense.
I would love to see the after pictures on this house!
Those are pictures from several houses. I could have easily put up a lot more, but I’ve been pretty busy lately. Some of the houses were wholesaled so I don’t have afters.
Maybe I’ll try to do a huge before and after picture gallery of some of our best ones. I’ll add that to my list of things I’d like to do.
Any before/after pics you could put of your work would be great.
I’m thinking that would be a great post for a coming week. I’ll see what I can do.
Oh my, I thought my first rehab was bad.. and this was after the banks had “cleaned up thenplace ” . If you don’t mind my asking what were some of the sale prices on these.
Thanks for the post. I think the emotional aspect of this job is often overlooked .
Off the top of my head, first one wholesaled as-is for about 12k, second one (3 images) rehabbed and sold for about $79k, next one wholesaled for about 15k, next one was wholesaled for about $40k, next two images were from same property that rehabbed and sold for about $75k, next one rehabbed and sold for about $120k, next one rehabbed and sold for about $85k, and I think the last two images were from the house in the first picture (just didn’t put them all in order).
I actually had Melissa try and remember which properties each of these were. Fun game after so many years it can be hard to remember all of them.
Hey Danny –
Those pictures make wholesalers feel warm and fuzzy all over don’t they? Money, money, money. It would of course be better if they weren’t quite that bad.
Absolutely. I tried to pick some of the really gross ones. Didn’t even get a third of the way through some of the old pictures.
Wow, I wouldn’t even know where to start on some of those.
Yeah. Some of them are just total remodels. These are where you make your repair budget and then double it.
I was thinking when I get a house under contract with contents, the material could be donated to charity. There’s just no way in a situation like these.
Danny, lol @ a force for evil. I’m going to enjoy that for a while to come.
‘a force for evil’ I sometimes amaze myself with what ends up in some of these posts…
Yeah, I don’t think charities would appreciate that stuff as a donation. But, you’re right, there are a lot of cases where you will have stuff that would be great to donate to the salvation army etc.
Donating to Charities was going to be my question. Do you donate anything like appliances, windows, sinks, etc that are in okay shape from any of the housed that you buy in order to use a tax right off to reduce your overall tax?
Also, when you buy homes like this, do you have all the demo in the contract with the contractor or do you hire an actual demo or cleaning crew like Servpro or similar?
Thanks for your amazing blog.
We’ve donated to things from houses to Salvation Army, but that’s about it. I tend to let the contractors have a lot of the stuff as they either can use it or sell it and make some extra money.
The contractors include demo for the job in their bid.
Glad you are enjoying the blog.
What you recommend for someone just starting out to form a company or just do a Sole Propr. as myself?
I talk that about here: http://www.flippingjunkie.com/2012/how-to-start-a-house-flipping-business-step-by-step