how to wholesale to another investor: the art of the deal blog by RJ Palano for Personal Real Estate Investor MagazineIn 1992, I went to my first Tony Robbins event, in Dallas, called “Unleash the Power Within.”

Robbins’ events are powerful, insightful, motivational and absolutely useless – unless you take action.

He spoke of his initial entry into public speaking by stating, “Most people involved in public speaking will have one event per month, so I decided to get three years’ experience by doing speaking events every day for 30 days.” Basically, he suggested that he fast-tracked his speaking career, and we can do the same thing in our careers.

I had an epiphany back then that I was similar to Robbins in this regard: The reason I have experienced so much success in my life is due to my ability to act on the courage of my convictions and take action. Not just a little action, but massive action.

I’ve written the above to drive home this point: If you want to put profitable real estate transactions together, you need to review a lot of opportunities and practice negotiations with sellers of their properties.

If you’re trying to build a real estate investing business you need to plan your work and work your plan.

There are many moving parts in this market, and when you’ve done more than 3,000 transactions in the last 35 years, like I have, negotiation becomes second nature to you. The good news for you is that negotiation is an acquired skill and can be learned. But in order for it to become second nature, you must practice. In order to have opportunities, you must have leads to work on!

Lead generation is what brings us the opportunities to acquire houses and by working the leads, you become a skilled negotiator.

Perhaps in a future article we will come back to lead generation but for now, let’s get on with one of my latest opportunities:

How I sized up the deal and how I generated a profit

The owner of the above property at 134 Turning Point in Stockbridge, Georgia contacted my company directly to ask me to buy his home. Upon obtaining important information about the house by leading the seller with questions, I made an appointment to meet him. Initially, we ask questions such as:

  1. Who is the owner and decision maker? It’s imperative to have all the decision makers present when making an offer.
  2. What is the reason for selling?
  3. Are there any current loans or liens?
  4. What is the time frame for moving?

My personal assistant quickly determined all the following:

  1. The owner wanted to move back to Detroit.
  2. He had heart issues.
  3. He didn’t owe any money on the property.
  4. He wanted to close in two weeks then remain in the property for two weeks following the sale.

When discussing what he wanted for a quick sale in “as is” condition, she determined that he would take $40,000 for the house.

A careful review on the Internet allowed us to determine that current sales were in the $63,000 range for this three-bedroom/two-bath house without a garage, located in this neighborhood.

I made an appointment. Now, the most important thing upon meeting a seller is to develop a rapport quickly. You want the seller to like you so he or she will ultimately trust you and only then can you arrive at a mutually beneficial agreement.

Somehow we both started talking about pranks we pulled in high-school as we walked around the house. I’m laughing now as he “outpranked me” by putting Saran wrap under the seat of the toilet so when the principal went to use the same restroom each morning, he would do his thing, and I think you get the picture! We traded stories, and I finally made him an offer of $35,000 cash to close on the day he wanted, and agreed to leave $5,000 in escrow so he could stay in the house and leave it broom-swept after closing.

He flat out told me he had another offer from HomeVestors for $32,000 and he could easily play them against me to create a competitive situation. But because he liked me and was comfortable with me, he signed the contract on the spot.

Before I made that offer I had to know what my exact plan was going to be. Candidly, I hated the filthy, dirty house with no garage, and I inherently dislike low-income neighborhoods. We don’t buy and hold this type of property, and we don’t want to sell it to investors and manage a “low income home.” The area had a lot of rentals, and retailing the house to a homeowner was not a viable option.

Thus, I knew instantaneously our exit plan would be to wholesale to another investor, not offering property management services.

We immediately marketed the house on Craigslist and the Multiple Listing Service, where several investors showed interest. We listed the house initially for $45,000 as we knew this would attract a lot of investors. Our intention was to do highest and best. We received offers from $40,000 to $53,500.

See the two videos here, and you’ll know what we did. Take a drive through the neighborhood with me and then a walkthrough of the home. Click here to view the neighborhood video.

Then click here to to go inside the house with me.

Identifying your exit plan upfront is critical to profitable transactions. Wait until you see the next few transactions I have lined up for you.

To your success,

RJ Palano

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  • R J Palano

    RJ Palano is the acquisition director of BuyCashFlowProperties.com, a Tampa, Florida-based company that primarily provides turnkey houses for investors in the metropolitan Atlanta and Tampa Bay areas. His property management experience spans more than 35 years, and he has been involved in more than 3,000 real estate transactions in 12 states and more than 50 cities. Contact him at 813-495-3006 or rjp@buycashflowproperties.com.

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