How to make money in real estate for beginners

In this video, we’re going to talk about how to make money in real estate for beginners. I’ll also explains the crucial advice new real estate wholesalers need to know before they get their first deal under contract.

What is going on everyone? This is Nathan Payne. We are live with the weekly batch call where I show you how to use batch leads to crush it in your market, how to do business how to get deals right now with the way that the market is changing. It’s so important that you know what a deal is, you know how to use the data from batch to lock up deals to find the right stuff to use your time wisely. So right now, we’re going to talk about today on this weekly batch call, how to determine if you have a good deal, I’m going to show you exactly how to do it and through the Payneless Wholesaling method. That’s why the Payneless Wholesale method is so legit. Because if you have buyers that you already work with, you don’t only have to just guess and run the comps and think you know, some will offer you can ask someone you can ask one of your buyers so let’s get started.

Right now I have they’re on here, Sir, what’s going on?

Hey, how’s it going?

Good. Good. All right. So let’s dive right into it. So you said you’re brand new to wholesaling, really green and you want to start implementing and having the strategy so you can make some more money as a unicorn agent. Right? So let me ask you this, what do you believe is required for it to be a deal at this moment for you to wholesale? I’m just curious, I want to ask you. I mean, the price has to be right, right?

There has to be enough money in it in order for everybody to be happy and make a deal?

Do you have an idea of what that is like because a lot of people as they research or wholesaling, they have like sometimes they hear of like a formula. It’s like 70% Minus repairs minus AR, you know, minus your fees, your wholesale price, what have you heard

I heard now, market shift investors are going down to like unless they 60 to 70. But I’ve also heard at the end of the day, as long as they can make a 10% return.

Alright, so you’ve heard a lot, right? It might be a little confused. Yes. All right. All right. So let me show you what I do. So you can kind of have a good idea of how to determine like, what your offers what is a deal. So I call it the Payneless Wholesaling method. This is the blueprint, it shows you steps one through 10 on how to get a deal every step of the way. But the way I believe you get started in wholesaling is you have to at first mindset is really important because wholesaling. It’s a rollercoaster ride, especially when you get started ups and downs, it’s getting deals falling through. So you have to be prepared mentally to overcome that. So what’s the first thing I tell people the second step is picking a market. It’s really important as you wholesale to pick the right market because if you’re in a market that there’s not a lot of activity, a lot of flippers you’re not gonna have anyone to sell it to so you got to pick the right market. And you can use batch leads I show people how to use batch leads to pick their market. You can do cool things. You can check areas, you can pull lists, you can find buyers, let’s just say you were in Flagstaff, right? You’d be like, Oh, can I start wholesaling like a ton of deals in Flagstaff Arizona like Is there enough volume is there enough cash buyers in this area for me to do deals. So right here you can check if you just go to it filters shows you that there’s quite a bit of cash buyers and that means sales in the last year or so. So Flagstaff would be good by the mount you can see says recent cash and hard money loan purchases of real estate. So they have automatic filters, it’s really easy to determine like if there’s activity if you’re in a major metro because if you’re in a major metro, I’d say 99% of time, like there’s activity just because there’s a lot of people living there. If a population is big, that means that there’s a lot of people moving there. But if you live in a place that’s a little now populated, like 50,000 100,000, that just means there’s less movement, less people moving in and out of the state. That’s like a general rule of thumb.

So the next step after picking your area is you want my goal. And what I tell people is do not just automatically or immediately just go start marketing and just calling sellers and trying to get a deal. Because you still are at this point you’ve picked your market but you don’t know what people are buying markets differ all over the country. So you need to be able to understand your market and what people are buying. So the next thing I teach and this is why I call it the Payneless Wholesaling method is I teach you how to network first to find your cash buyers. Once you understand and have about five to 10 solid relationships, then you can with confidence go out and start making offers. You can talk to sellers so if you go to my mind map I show you exactly how to run comps for wholesalers. So there’s some really easy ways to do it.

But let’s go to step one. So how to find comps All right, so I use batch leads I like batch leads a lot because it gives you a good idea of comps you can just type in the address you want. Let’s just look at this one. It gives you an estimated value runs an algorithm right like most of the software’s it tells you an estimate idea so you get a good idea just immediately like okay what it’s worth even quickly does comparables and it checks a radius within a year square footage it does all that and it shows you a bunch of different comps so that’s a quick way to do comps like immediately is just with bachelor leads so the next one is Zillow and then obviously MLS data trumps all it’s the best way to find comps so that’s how you find the comps. So you want to determine the ARV after you find comps in order to start the process of like okay, what is a good deal you need to find out what is this house I’m looking at? What is it worth it? If it’s at the top of the market, right or it’s fully flipped, so the best thing to do is find flipped comparables.

If you’re just finding a bunch of homes that haven’t been flipped, it’s going to be difficult to determine what it’s going to be worth. If a flipper goes in and makes it really nice, do your best to find comparables. The next thing that’s important after finding the ARV, so let’s just say for example, ARV you find a house that’s worth 200. And you know, it’s worth 300. So that’s the ARV is 300. Now you got to determine Okay, they’re giving it to me at 200. But how much repairs does someone need to put into it to get it up to 300,000? Right, here’s some questions to ask. So this says, are you working with a seller virtually? Are you working with someone your backyard this tells you how to navigate if it’s virtual, what questions to ask and how to get pictures. So this is the easiest way to determine a light average or heavy repairs. So is this square footage of a house, for example, is 1000 square feet times the cost of the light, if it’s light, it’s $18 per square foot, if its average is 24. Or if it’s heavy, which means down to the studs, you got to do the whole thing. It’s 40 equals your rehab costs.

So for example, if you have 1000 square foot house that just needs carpet and paint probably gonna cost $18,000 Because you’re doing 1000 square feet times $18. Very easy. Didn’t need to go dive in deep into like a full rehab estimate spreadsheet. I just need to know square footage. Is it light, average or heavy? And if you’re like, Well, what makes something light Nathan? Well, right here if you don’t have to touch the cabinets or the bathrooms, and all you got to do is carpet, tile, paint, carpet, or flooring, it’s usually light to light rehab. If you have to start venturing into bathrooms and cabinets and kitchens, then you’re talking an average rehab, if you got to do everything from a good job. We’re talking windows, everything, it’s 40. And that’s like a good job. And these are average numbers, right? It could go up, it could be lower, but I would say 4024 and 18 are good. So if you’re talking to a seller, and you’re like, hey, you know, I’m interested in buying your house and tell me a little bit about the property. You’re like, has the kitchen been updated in last five years? No, it hasn’t. Okay, how about the bathrooms? Have the bathrooms been updated? In the last five or 10 years? Yeah, we just updated last year. Okay, so I don’t have to worry about the bathrooms. Right? Then you’re like, Okay, kitchen. Yes, bathrooms? No, those are okay, and carpet and paint. So you’re right in between like an 18 to 24 because you’re not having to do the bathroom.

So again, really easy to determine what you need to get a property for ARV What is this property worth flipped? How much do my repairs need to be? Now we’ve gone over both you’ve looked at flip comparables, you know that it’s worth 300, you know that this house in this example is 1000 square feet, it needs $24 per square foot and this example $24,000 rehab, so you have the rehab and you have the ARV now, okay, so that’s two parts of the formula.

And then now you calculate your offer that you can buy it at. And the way I do it is depending on if I’m talking to an analytical buyer, or seller, I sometimes even show them my rehab calculations and be like, Hey, this is why I have to be here because I gotta make some money, but determining everything we talked about, I can resell for 300. I got to put in 24,000 I need to make 20 $50,000 I hope you understand I’m a business I sometimes walk people through my numbers so they understand why my offers $150,000 less than what they believe their house is worth this is the quickest way to determine if you’re talking to a motivated seller is forget all this noise all the stuff I just showed you look up someone’s house on Zillow and offer them 50% of their estimate.

That’s the easiest way to determine if you have a deal because if someone doesn’t get off the phone with you, then obviously you have someone that you can work with. Right. Another quick way to do it is 70% of the ARV. All you do is you find the ARV you could do this formula. So let’s say the house is worth 300,000 You say okay 70% of that minus we talked about $24,000 in repairs minus my wholesale fee, I want to make $15,000 171 If I offered 171 to the seller and they accept I’m going to make at least $15,000 the flipper will have his costs of 24,000 in there and then the profit the expenses of the hard money all that stuff is calculated in the 70%. That’s what the 70% is the 70% includes the 6% and commissions and fees for relisting it it also includes the closing costs the profit so one thing that everyone needs to know that’s watching this is Do not waste your time running comps on a property where you don’t have the seller on the phone complete waste of time. Well, that was it everybody. I hope that was helpful. All right. We’ll sign off later, everybody