In many ways I've come a long way from the small northern California farm
where I grew up in a doublewide trailer surrounded by old Quonset Huts that
served as rentals. In other respects, it's as if I've never left.
Farm life teaches you a lot of values that are lacking in today's society. It
has a way of keeping you grounded, no matter how successful you become. Our
family raised cows, pigs, goats, chickens, and many others and everyone had to
learn many skills on the farm since very few things that needed doing were hired
out. At a young age, farm life taught me many innovative ways to complete any
task; and that part of farming had a lot of similarities to the skills I’ve
learned as a real estate investor.
My real estate investing started while I was an Air Traffic Controller in the
Marine Corps. It was the early 1990’s and I studied all the books, tapes, and
courses could find. I even became a Realtor while I was a Marine but it was only
after being honorably discharged and moving to a small timber town in Oregon
that I really start investing.
Paolla, my wife of 12 years, and I opened a franchise real estate office and
we acquired a lot of rentals over the years. We did everything ourselves from
rehab to property management and after a few years we were equity rich and cash
poor. You know, we had money on paper, but not a lot in the bank! Tired of small
town living we sold everything and ended up moving to Phoenix, Arizona to start
over.
We studied everything we could on real estate and with our newfound knowledge
things really started to happen. In December of 2002 we had our first month
where we earned over $105,000 cash from three little houses. Now, for a kid that
grew up milking goats $105,000 in quick profit in one month was a lot of money!
HEADLINE
As much as I enjoy making money in real estate, I get a bigger rush from
helping others make money! It might sound corny, but when you help someone get
there first 5K, 10K, or 30K check a certain feeling comes over you like a proud
parent and you know their life will never be the same. Once you taste that kind
of success it’s hard to go back to a job and earn peanuts. I live for that
feeling and the adrenaline rush that comes with it!
You Can Make Money Or You Can Make Excuses!
The truth is most of the real estate deals I do are with less than $100 of my
own money and I don’t use my credit or banks. That’s right; I make well over 6
figures a year without writing big checks or taking a big risk. The key to
making big profits in real estate is understanding how to have a buying system
in place where the system does the work for you.
You see, I know that you can be successful in real estate because if someone
that grew up in a doublewide trailer milking goats and plucking chickens can
learn how to invest in real estate without using money, credit or taking big
risks then I know with all of your God given talents you can make it as big as
your dreams allow.
For this book’s chapter, I’d like to discuss the 7 key components of an
offer.
WARNING: Making An Offer To Buy Real Estate Without The 7 Key Components
Is Like Playing Russian Rolette with 5 Bullets!
As a real estate investor your success is based on your ability to make
offers! We could talk about a hundred other things, but it all comes down to
making offers and getting them accepted. This is the most important part of
being a real estate investor and it’s unfortunate because most investors can not
name two of the key components, let alone all seven!
Just imagine that you have found a house that’s worth $100,000 and you’re
about to offer $60,000. Do you see a problem? Going from $100,000 to $60,000 is
a huge leap and unless you can support your position the likelihood of getting
an accepted offer is slim. But, there’s hope, what if you could gently walk the
seller down to $60,000 and have your offer supported in black and white? Do you
think that would help get more offers accepted? You bet it does.
Let’s start with what you don’t want to do in most cases. Don’t give a seller
a lowball offer (without justification) when they are expecting a much higher
price. A low ball offer without justification is an insult and their natural
reaction is to pull away or in this case say no to your offer. By using the
seven key components you are able to justify your offer and the seller
understands your offered price and why it makes sense for them to agree to your
offer. We’ll briefly cover the 7 key components, but full explanations can be
found in the Real Estate Profit Pro System. By providing on offer with the 7 key
components we can let the offer do the work for us. I have bought properties by
fax and mail using this format and you can too!
- Cover Letter. A simple letter that tells the seller you are making them a
cash or terms offer, or both, and that you are including a repair cost estimate
and an offer price breakdown.. The cover letter sets the stage for your 7
component offer and shows the seller you are a professional.
- Repair Cost Estimate. Unless the house is brand new there will be repairs on
the house and many sellers will not think of them unless you point them out.
Most houses a few years?old need new paint and appliances to compete with other
homes on the market. Just listing the repairs on paper ensures the seller is
taking the expenses into consideration when they sell the property.
- Offer Price Breakdown. Breaking down your offer price can be critical to
getting an accepted offer. Few people realize the expenses associated with a
sale until they see them in black and white. Start with the lowest comparable
sales and include the following expenses: real estate commission, buyer’s
discount, closing costs, repair cost estimates, holding costs, profit margin,
marketing, property taxes, and property insurance. These are all real costs
associated with the property that need to be taken into consideration for either
you as the buyer or by the owner.
- Purchase & Sales Agreement. You have to give the seller a written offer
that is easy to accept. Make sure your offer is short and easy to understand. If
it is long, hard to understand, or has a lot of legal jargon the seller will be
intimidated. And, an intimidated seller says no.
- Comparable Sales. Many sellers do not know current property values. By
providing comparable sales, the low ones, you are helping to justify your
position and providing important information to the seller. Not providing
comparable sales will often cause the seller to get ask a Realtor for an opinion
of value and next thing you know the Realtor has a listing and you never hear
from the seller again.
- Seller Financing. Most of the time we want to give the seller two options, a
cash price and a seller financing price. With limited space I don’t have room to
explain seller financing on properties fully finance by banks, but trust me when
I say it can be done without qualifying for the loan. We want to explain to the
seller how we can make a seller financing offer at a higher price than our cash
offer. Most sellers will choose the cash offer, but giving them a choice of
accepting two offers is much better then giving them one offer where they feel
like they have to take it or leave it.
- Purchase and Sales Agreement, Terms Offer. This offer goes with #6 above.
You always want to give the seller the ability to accept your offer. An offer
that is not in writing doesn’t mean a thing in the real estate world
If You Are Ever Going To Make Any Real Money You Must First Put Yourself
In A Position To Do So.
For those skeptics who are hesitant to believe that something as simple as
what we’ve discussed could be so lucrative they need to understand there is
little or no risk because if you don’t write big checks, you aren’t taking a big
risk.
I get a rush helping people get out of a 9-5 and get to where they want to be
in life. One of my favorite quotes is “You can make money or you can make
excuses, but you can’t do both!?I believe it with all my heart and hope you
reach the same conclusion.
It’s simple and it’s true.
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Gerald Romine is a very successful real estate investor with an honest direct
approach and an old fashioned set of values that is rarity in today’s society.
Gerald is an active investor, educator, and speaker and can be contacted at www.azpig.com, gerald@azpig.com or by calling 480-461-6059.
