How to Start A House Flipping Business: Part 2 of 3

This is the second article in our hugely popular blog post series on how to start your house flipping business from the ground up. After releasing the first article we got a lot of feedback from newer investors who said they really enjoyed the information and found it extremely helpful in getting their biz off the ground and making money! So in this 2nd of a 3 part series we are going to go even deeper and deliver you some of the best “free” information you can get your hands on when it comes to real estate investing. We are on a mission to help as many investors as we can to achieve a life of financial freedom through real estate investing…..and this series of articles will give you simple step by steps instructions on how to do just that!

Now that we have gone through what you need to do in order to start your House Flipping biz, now its time to start making some major decisions on how you are actually going to make money! What I mean by this is what is going to be your property acquisitions niche? Because eventually you will actually have to buy (or assign) properties if you want to make money! Eventually you want to diversify so that you can constantly acquire properties through a variety of different niches, but when you are first getting started the only way to assure success is to FOCUS on one niche at a time. So here’s the deal…..most new investors start out trying to wholesale REO’s because they are the easiest to get access to. The problem is most of them have no clue what they are doing and end up wasting A LOT of peoples time. Here is an example of a recent phone call I had with a newbie investor who called my office to try and sell us a deal:

Newbie Investor: Hi there the guys at TTM Cash HouseBuyers……I have a great deal for you!

Me: OK…..well tell me a little about it.

Newbie Investor: Its a solid house that needs about 10K in rehab. I am selling it for 120K.

Me: OK…..well can you give me the address and I’ll do some research?

Newbie Investor: Its 123 main street

After doing about 2 minutes of research I come up with the following information: The newbies house is an REO that has been listed for 95 days, the listing price is 115K, its a complete gut rehab, the house is in a sub-par area and sits on a busy road right across from a bus stop (public transportation). So what does this say to you? Well to me it says that this investor has no idea what they are doing and have just ruined their reputation if they decide to shop this deal around to every investor in town they can find. You see wholesaling can be a very easy business if people know you sell a good product (its pretty much like legal drug dealing), however if you are pushing crappy houses at dumb prices this business is going to be really hard on you. Most newbie investors fall into the 2nd category of pushing crappy overpriced REO’s to anyone who will listen… don’t be that guy….and keep reading to learn how not to be!

I always tell people to start off by building their direct mail marketing machine to find deals, but at the same time look at all of the REO’s on the market just to gain experience. Even if you don’t find an REO deal you will be forced to analisys potential deals which will make you a better investor much faster. Now within the direct to homeowner niche (as in properties not listed on the MLS), you should use direct mail to start out generating seller leads for your business. And when starting out using direct mail its my opinion that you should start out by targeting probate leads. The reason I say this is because you will get the highest response rate of any potential motivated sellers you can mail to on the smallest budget. The only challenge is going to be figuring out how you can get probate leads in your market. You won’t have to mail out thousands of pieces of mail in order to get a deal with probate, and the reality is you can likely handle sending out all the letters yourself, since the number of new probates leads in any given month is relatively small.  In my market they actual probate filings are published in a business newspaper which makes them relatively easy to find, but I know in other markets that also happens or they are published online by the county (which makes it even easy to find probate leads).

In addition to probate mailings, I would also suggest that you implement a driving for dollars campaign at the same time, in order to really get your business cranking out motivated seller leads quickly…..that and driving for dollar leads are basically free except for the gas it takes to find them! Now just to clarify when you are driving for dollars you are looking for run down crappy looking houses and then just write down the address. Then once you get back to your computer research who owns the property and send them a letter asking if they are interested in selling the property. I know this sounds way too simple for it to actually work, but the reality is that it works great. I use this strategy (in addition to probate marketing) in my business all the time, and we have made tons of money with them… there you go. All you have to do is copy what I have been doing and you will likely achieve the same results.

So lets circle back around and make sure you I didn’t loose anyone with what your next steps should be in building your house flipping business. You need to start building your direct mail marketing machine…..and the main reason I suggest direct mail is because its extremely powerful and very cost effective. It will also set you apart from 99% of your competition who is only offering on listed properties because they are either too lazy to market for deals, or they are afraid to talk with sellers (yes this really does hold a lot of people back). The market is heating up and competition is increasing, so you need to do what your competition is not, that way you are getting the deals they want! If you take my advise and start marketing for deals….and stick with it… will soon realize it was the best decision you ever made for your business.

Keep an eye out for the third part of this series where we will go into expanding your marketing strategies and scaling your business into a market domination cash machine!

How to Start a House Flipping Business: Part 1 of 3

So this series is going to be dedicated to teaching you how to start a Real Estate Investment business (AKA House Flipping Business) from the ground up……and since I have successfully  done it myself,  I think that should be a good enough reason for you to keep reading and put this valuable information to work. This is one of the greatest businesses on earth, and  to be successful doing something this great is one of the best feelings you can experience in life. On the flip side however, getting your REI business off the ground and building a successful business that lasts can be very difficult…..especially when you are trying to accomplish everything on your own without the help of a mentor. So in an effort to give out some SUPER VALUABLE free content to our followers I am going to go through everything you need to do in order to build your your very own Real Estate Investing business. This will be a three part series dedicated to getting you off the couch and ultimately running a hugely successful Real Estate Investing business! I am going to go through every step of building an REI biz… here we go!

The first question that everyone asks themselves when they get into real estate investing is…..what do I do first? Well here is the answer….set up a damn company! I have read articles from a lot of Gurus who say don’t worry about it until you flip a deal or two….well I say bullshit. You have to treat this like you would be starting any other type of business, and there is no way in hell you would start any other type of business without actually setting up a company first. So the next step is going to be picking a company name… this is actually a very important step, so give it some thought. Pick something that people will remember and that will allow you to stand out from your competition. My companies all start with TTM, and the reason for that is because its easy for people to remember. Now when you are first starting out using a straight LLC is going to be just fine since they are very simple and cheap to set up. After you have been in business for a year or so and are making profits I would then suggest having your accountant file for the S-Corp election. This will allow you to ultimately save a lot of money on your taxes….but consult with your CPA before doing so.

The next step once you have decided on a business name is to get yourself a logo made along with some business cards and letterhead. You may be thinking isn’t this a little much this early in the game? Absolutely not… expect this whole real estate thing to work right? Well then treat it that way and build it like a real business. Next get yourself a facebook business page and/or website so that motivated sellers can find you even if you aren’t marketing for them yet. Setting up a facebook page will take you all of about 10 minutes, and then BAM you have an instant web presence. Eventually you will want to build an actual website if you don’t do it from the get go, but starting with a facebook page is just fine. Lastly you are going to need a business email that matches your business name & phone system of sorts in order to communicate with the rest of world. For email the easiest way to get one set up would be using Gmail… can easily pick your address so that it matches your company name, which will make you look professional. There is nothing worse than trying to do business with some goofy email address that people either cant remember or laugh at every time you give it out. I would then suggest that you get two phone lines: the first being your business cell phone, which you give out to those who you have already spoken with in the past. The second would be a message line that is simply in place as basically an office line where people can leave a message. You may not start out marketing to the general public, but when you do you will need a message phone line like this for them to call. You definitely don’t want to send out 5,000 direct mail pieces with your cell phone number on it for a couple reasons. The first is that your phone will likely be ringing non stop at all hours of the day and night, and secondly you want to be in a good place when you actually talk with motivated sellers…..and that good place is not changing lanes driving down the freeway!

So that is where we are going to call it quits for the first installment of this series on building your real estate biz. If you are thinking about getting into the real estate biz, then start by putting together the few items that I have listed in this article. In the next post we are going to go through how you should start our actually looking for deals as well as getting educated on what your doing. So stay tuned…..and until next time put this information to work!

Subscribe to The MIM Newsletter And Receive The First Chapter of The REO Blueprint Absolutely Free!!