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Sounds like an oxymoron doesn’t it?

I bet as you read this you’re thinking you wish you had that problem, but truthfully having too many houses is one of those back room secret problems that happen to investors who are hyper-powered and load up on properties without figuring how to sell them.

The finance term is called “Inventory Turnover”.

I know about this intimately because when I was first starting out, my bandit signs were working like gangbusters. Before I knew it I had 6 deeds..YIPPIE! The problem occurred when I couldn’t sell the houses fast enough and had to cover the mortgages. As you know, that can easily be $2000.00-$3000.00 a month..PER HOUSE.

Luckily that didn’t push me under, but it nearly did. I was scrambling paying my own mortgage, plus 6 more for houses I wasn’t even living in. Eventually, I was able to install a decent tenant/buyer that gave me a $5000.00 deposit that helped ease some of the pressure, but even that’s only a temporary fix.not to mention you may be installing a problem tenant that’s going to cost you even more down the line.

-Eviction

-Make ready

-Marketing for new tenant/buyer

-holding cost before and after the eviction..

..see what I’m getting at?

It took a bit of time and A LOT of trial and error, but I eventually found a solution for the problem. I devised a simple system where I could wholesale deals that I knew I could fill to other investors. This was a double reward for me:

1. I no longer have to cover that mortgage.

2. I receive a $2000.00-$3000.00 assignment fee from the other investor.

I wish I could turn this into a course that I could sell, but it’s honestly so simple I’d feel bad if I tried. So to that end here’s how it works.

1. Make sure each purchase and sale agreement you sign says “And/or Assigns beside your name as the buyer.

2. Start calling bandit signs. Huh? You heard me right, call other investor’s bandit signs and tell them you have a property you want to get rid of that has $30,000-$40,000; however much equity. Tell them you have comps to prove it (and you should as part of your own due diligence) and all you want is a small assignment fee.

3. You’re going to want a record the Purchase and Sale Agreement in case this individual will try to go behind you and get the seller to deal with them instead of you. I find the best way to handle this is to tell whomever you assign the deal to that you’ve already recorded the Purchase and Sale agreement. Truthfully, you already have the deed (assuming you’re doing a subject-to) so this may be overkill.

4. If they agree you can either arrange a separate closing with them at Starbucks (I wouldn’t) or go to the Title Company and close with them there. I’m an advocate of using the title company in closing because it keeps everything legal and neat. If a third-party (judge) hears about you closing at the dining room table he’ll think you’re up to something and may refer you to the attorney general.

One of the main reasons I like this technique is because it helps me recover my cost of marketing.

How do you keep yourself from getting “deeditis”?  Let me know in the comments.

-Kelly

Related posts:

1. Real Estate Agent- Free or Foe?
2. “We Buy Houses” Bandit Signs Don’t Work!
3. The Absolute Best Way to Handle Tenant Repair Calls?
4. Religion, Politics, and SEX- 3 Secret Ingredients For Designing Killer Bandit Signs In The New Economy
5. The Definitive Guide To Having Someone Else Place Bandit Signs For You.