I have a lot of different types of buyers on my buyer’s list, and they came to me from a number of different sources. One of the best places to find cash buyers is at your local REIA group. It only takes a few meetings to figure out who the investors are that will actually look at a property, make a decision right then and there, and be ready to close in 10 days to two weeks. These folks are like gold when you find them!
I found a several rehabbers and landlords for my buyer’s list from an unlikely source; a popular online website for real estate investors. (No one was more surprised than me when this happened). You can write articles, become active in these forums, and just be helpful when other people reach out for advice.
Other ways I have found quality buyers are from sources like bandit signs when I would have a house for sale, Craig’s list and old fashioned networking. Like most real estate investors and especially wholesalers, having a good solid buyer’s list is essential to my business.
Working With Realtors that Are Investors
Over the years, I have worked with a number of Realtors that are also real estate investors. I would put these folks right up on the top of my list. They know the business, and they are easy to work with. In my area, many of them are active in my local REIA. They are well informed about the market and they already understand things like double closings, assignments and other facets of real estate investing that regular folks sometimes find puzzling. You will find that a lot of times they actually make your job easier.
Is There a Downside?
Not really as far as I am concerned. However, I can tell you this. You don’t want to take any marginal deals to these folks. These investors that are also Realtors know how to spot a good deal, and that’s what they are looking for. A good deal! They can also be tough negotiators so be sure you’ve done your homework. Understand what a realistic comp is for the property and what the repair costs will be. You can be sure they will figure this out pretty quickly themselves.
Building the Ideal Buyer’s list
You should never stop building your buyers list. I am always looking to add more cash buyers to my list. Your ideal buyer should know exactly what they are looking for, have the ability to close in 10 to 14 days and they must be able to evaluate the property and make a decision quickly. I have found that this is what separates experienced investors from the “wanna be” investors and the tire kickers. When an experienced investor looks at a house, they can make an immediate decision regarding whether or not it meets their needs and their investing goals.
Other ideal candidates for your buyer’s list are individuals that have “retired” from their first career. These folks have often put in 30 years or more with a major corporation. Often they have a nice pension that they want to invest in real estate, and they can be very excited about this new phase in their life. But, they can also be a little slower to make a decision.
I also love ordinary people that just have a passion for real estate investing. You will find that these folks come from just about every walk of life. They may be looking for a second career, or possibly just looking to earn extra money rehabbing houses. They are often trades people that have good skills and can do a lot of the work themselves.
Really, just about anyone that has a passion for real estate investing and a strong desire to succeed will ultimately find the resources needed to become successful in this business. These are the folks that I want on my list.
Four Types of Cash Buyers
I define a cash buyer as someone that doesn’t get a traditional mortgage and can close the transaction in roughly 7 to 14 days. So where does the cash come from? It can come from a number of different sources.
1. A home equity line of credit or a HELOC. A HELOC is just as good as actual cash in the bank. These folks just pull out their checkbooks and write a check.
2. A self-directed Roth IRA. This is a popular investing strategy for a lot of folks. The money in a Roth IRA is “after tax dollars”. The money earned by this type of IRA is also tax free.
You can only deposit the amount allowed by law each year when making contributions. But did you know that there is no limit to the amount money your Roth IRA can earn? For example, you can make a good faith deposit on a house from your self-directed IRA, and when you sell that house and make $10,000-$15,000 or more it flows into your Roth IRA TAX FREE?
3. Loans from an investor friendly bank. This is just as good as cash in the bank as far as I’m concerned. If your buyer is pre-qualified and takes the deal to their lender, this works as smoothly as any of the other “cash sources” above. You will most likely be closer to the two week time table for closing with this source of funding.
4. Last of all, there are the true “cash buyers”. I am lucky enough to have a couple of these investors on my list. They simply pull out their checkbook and write a check. I have closed deals in as little as 3 or 4 days in these cases.
It should be at the top of your list of goals for the next 12 months, to build a quality buyer’s list especially if you are a wholesaler or a rehabber. You want to be known as the “go to” person in your area when someone needs a house to rehab, or they need to add another rental to their portfolio.
I have a lot of different types of buyers on my buyer’s list, and I am always looking to add more cash buyers to my list. However, not only do they need the ability to close quickly, they need to be able to make a decision quickly. I would put investors that are Realtors right up on the top of my list.
Sharon Vornholt has been investing in real estate since 1998. She is an experienced rehabber, landlord and is now a full time wholesaler and internet marketer. She also has a popular blog for real estate investors that you can find at: LouisvilleGalsRealEstateBlog.com