Millionaire in the Making – Cindy & Phil Salazar

Our mentors, knew we were trying to market on a shoestring budget so they suggested we put up Bandit Signs in a high traffic area.  They said that Bandit Signs are one of the most effective types of marketing yielding one of the best “bang for your buck”!  No sooner did I have them up and before I arrived home, the phone rang with our first Seller.

The Seller had 6 small rental houses on one tax parcel that he wanted to sell.  The price was a little unreal and I thought he might be joking.  He offered 6 houses at $250,000.  Because some of them need fixing up, it fit in the wholesale profile.  The seller met us and I soon found it difficult to get straight answers from him.  We discovered later that he was an “investor wanna be” trying to sell these houses for the owner without having a written contract or agreement.

I found and contacted the property manager, who informed me that this self proclaimed seller was basically dealing without a license.  So, I raced home and wrote up my offer like my mentors had instructed us to.  And as Ron pointed out, the more dollars you waller in the more will stick to ya’!  We took that as “Write up contracts… and lots of  ‘em!”

Our offer was ridiculously low.  I sent it in for the property manager and owner to review. Three days passed and I pretty much determined that they thought my offer was a joke and anticipated to never hear back from them.  On the 4^th day, I received a phone call from the property manager who said, that the Owner accepted my offer of $125,000!  Half of what the previous “investor/seller” was trying to sell it to me for.  So, I am now marketing this to local rehabbers and investors, who are looking to buy, fix up and rent out.

Here are the numbers:

Two of the six houses needs some fix up to get them in a rent-able condition.

Two of the six are currently rented with long term tenants.

Two more units are rent ready.

ARV:  $400,000

60% of ARV:  $240,000
Estimated repair costs $70,000

MAO :  $170,000

My Offer to Owner: $125,000 – ACCEPTED!

Rents per unit:
1) 1940 built 720 sq ft 1 bedroom rent: $600
2) 1950 built 400 sq ft 1 bedroom rent: $575
3) 1925 built 432 sq ft 1 bedroom rent: $575
4) 1935 built 660 sq ft 2 bedroom rent: $700
5) 1950 built 672 sq ft 2 bedroom rent: $700
6) 1930 built 808 sq ft 2 bedroom rent: $775

Title has been ordered, inspection has been performed
Projected rents: $3925.00
Loan payments (If you are using private money) approx. $1000.00
NET CASH FLOW (approx) $2925.00

We will Assign for $25,000.00   (Our payday)

Total purchase price to the end buyer is $150,000

PS:  My mentors asked us how much we were paying for the bandit signs and gave us the link to a website to order online for a much better rate.  On the first order of 50, we saved $75!!   Our mentors helping us keep an eye on the bottom line.

PPS:  We currently have between 20 – 40 signs up at any given time and we get at least 2 to 3 calls per week on our signs. They are GREAT lead generators for motivated Sellers!  We also occasionally get Buyers who call on our signs. They gave us examples of what kinds of buzz words to put on the signs to pique seller interest.  We currently are using “We Buy Houses – FAST” ) with our phone number on the bottom.  I was at the post office the other day sending out fliers and the PO Employee wanted to look at the flier.  She said – “Oh you’re the We Buy Houses Fast people!  I see your signs everywhere.”