The 12 Month Millionaire
The key to a millionaire in 12 months is through real estate. If you take a look at the wealthiest people in the world, a large majority of millionaires got rich through real estate. You don't need to invest $1,000's into real estate to become a millionaire; I am going to show you my own road to becoming a 12 month millionaire by brokering real estate deals! This technique requires little to no investment!
The key to becoming a millionaire real estate broker is having 1) stock, i.e. properties to sell and 2) investors.
I am going to explain that it is quite easy to have both. By helping both the buyer and seller of the property, you can be paid by both sides. And when you're dealing with houses that are worth a lot of money, your profits will skyrocket rather quickly and you can reach millionaire status just as quick!
So you need as many properties as possible. In the beginner while you are learning, this will be slow at first, may be it will take time to get your first property but after some practice, you should be able to get a new property every week, even every few days!
You need properties in order to sell them to investors later on so you need to find property owners that are willing to sell them. I'd recommend starting off easy with smaller houses worth around $100,000 because there are more of them and a lot of owners are willing to sell. Once you get more experience, then you can try for the $300,000, $500,000 and even $1,000,000 homes!
As a broker, you specialist job and where you get paid the most money is find profit-generating properties for your investors. To find these properties, your job is to focus on find "below market value" properties or BMV. Put simply, in real estate terms, investors make their money when they buy and not always when they sell. If a property's market value is $200,000 and they buy for $150,000 then they've made money the moment they bought the property. Technically, they can then sell that property the next day and they would have already made $50,000 in profit minus expenses. That's over 30% return on investment in a mater of days! Some investors prefer this technique of buying and selling quickly, others prefer to hold for months and years, improving it and profiting from the increase in value as well as rent. The point is that all investors want BMV properties and if you have it, then you've become extremely valuable in their eyes!
You are not an agent who is just selling properties, you are a specialist broker that specializes in brokering deals for profit-generating BMV properties. Estate agents are retailers that sell at retail price, you are more like a wholesaler selling at special wholesale prices!
Reasons for selling
So how and where are you going to find these BMV properties and why would property owners want to sell their property for below the market value?
Most people think that if a house is worth $500,000 then the owners will always sell at that price.... WRONG!
It's not about the market value, it's always about the motivation of the seller. Focus less on the market value and instead focus more on the motivation of the seller.
We need to seek out motivated sellers. These are sellers that want to sell the property quick for whatever reason:
- Made redundant or dismissed from employment
- Moving to another city or country
- Family moved out
- Became ill
- Passing in the family
- Need to buy another property quick
- Can no longer afford to maintain the property
Each of these reasons gives the owner the motivation to sell the property quick and at a lower price because they want to get rid of the stress or responsibility connected with the property. If you are able to offer them a buyer then they are likely to sell at a good price.
When speaking to a motivated seller, you should aim to sell for 20-30% below market value. So if a property is worth $200,000 then you should negotiate with the owner where they are prepared to sell for between $140,000 to $160,000 to create a good investment opportunity for the investor. The more urgent the reason, the more motivated for the owner to sell at a lower price, so it is important to identify the owner's reason to sell as listed above.
How to find motivated sellers
There are literally many ways to find them. I will offer you three that I use myself.
Estate agents - agents have a large database of properties and while they sell properties on a daily basis, there are always plenty that they don't sell, either because they cannot find interested buyers for the property or they don't like to work with the owner etc. You can contact and number of agents in your local area and ask if they have properties that have not sold for a while. Offer to sell the property for them and owner if they can offer a good price. As part of the deal, you can offer them 10%-20% profit share of your own fee. This works well because it means that you can sell the property for the agent without them doing any extra work and if you are able to find an investor to buy then the agent will trust you and keep sending you more properties. I tend to get a lot of properties every month through working with agents.
Contacting the owners - you can always ask the owners themselves. Always keep an eye out when walking or driving around in the streets for "for sale" signs outside properties. I make a habit of keeping an eye out for signs when I'm out, even if I am shopping or driving to see friends and family. And I take a picture to remind myself of where those properties are. When you see those signs, knock at the door and speak to the owner. Offer to sell the property for them. Most agents used by sellers charge 3-5% commission. You can offer to charge the seller 1% or even 0% and instead just charge the investor, and the seller will likely be happy to let you sell because they are going to sell their property cheaper or even free!
A great way to contact the owner is to write them a letter and post it in the letterbox. Your letter should offer to help them to sell their property cheaply and conveniently, and that you already have a large list of investors with available funds ready to make a purchase (it doesn't matter if you don't already have investors at this stage as you can build up a list quite quickly!)
You can either write this letter yourself or use a letter template we created that we use ourselves to send to owners on a regular basis. Our letter template can be found inside our 12 Month Millionaire PLUS Document Pack. Click here to pick up our 12MM PLUS Document Pack!
Networking - a LOT of people own their own home, no matter what their background or professional and a good percentage of those people are also looking to sell their home. ALWAYS make people aware that your job is to find buyers for owners. So when you visit any events, especially networking events, there's a good chance someone is looking to sell heir home. Even when you are with friends and family, there is likely a friend that is looking to sell their home. The more people you meet in any situation, the better you chances are that someone will let you know they are selling their home even if you are having a casual conversation, someone will ask you about what you can do.
How to find investors
So now you have a list of properties to sell, you need to find investors that are willing to buy them. There are literally many ways to find them. I will offer you three that I use myself.
Networking - the best investors are the ones with large disposable income and those are the highly paid professionals, i.e. business owners, lawyers, doctors, accountants etc. All highly paid professionals are interested in property and investment but not all of them will know where to invest. This is your chance to put your property deals in front of them! Your best bet is to attend events where they will gather. Real estate is always a topic of interest to any professional, so iwereou was to talk about your services to an accountant or doctor, they will almost always want to know more and perhaps even be interested to see what properties you have available. This is your chance to discuss the details of the property including the BMV purchase price!
Existing landlords - I say about 65% of all landlords are serial property investors. These individuals are always keeping their eye out on good property deals. Most of these investors simply do not have time to be searching for good property deals, so this is where you come in. By offering them good deals and saving them time, they will be happy to pay you for your service. Any good investor will be happy to pay you a fee for a property worth $200,000 at the asking price of $140,000! Because that is an instant return of over 40%! Landlords are easy to find, simply find properties to rent on any site that advertises properties and contact the landlord directly and ask if they are looking for BMV properties to invest. If you contact a list of landlords, there will be a handful that will be interested in discussing the deals you have available!
Estate agents - agents also have a large database of investors and buyers where they are unable to provide the right properties for them to purchase. You can politely ask agents to provide you a list of their investors for you to contact and to offer them your deals in return for splitting 10-20% of your fee to those agents. This gives agents another income stream without them doing any further work and in return, you get a large database of investors.
Before you do any deals with anyone, you have to make sure you all understand what is expected of each other, otherwise, there will be confusion and deals can fall apart, potentially costing you time and money. You can save a lot of trouble by planning ahead. ALWAYS make sure everything agreed is in writing so everyone understands their deal. It is important to have an agreement with the following people:
- the investor/buyer
- the owner/seller
- the estate agent
The agreement should outline your service and your fees. It should also contain a confidentiality term to protect yourself and your deal. If you have none of these within your agreements, your deals can easily fall apart. In the beginning, when resources are limited, a simple written document is enough to outline everyone's position, it doesn't need to be legally binding.
You can spend the time and draft these agreements yourself, or you can use the template agreements we have created ourselves. Our 12MM PLUS Document Pack includes all the agreements that you need to cover everyone so you save time, money and trouble. Click here to pick up our 12MM PLUS Document Pack!
I would not recommend working with any investor, seller or agent unless you have a written agreement with them, otherwise, it can cost you wasted time and money!
Putting the deal together
So you have one or several properties available and you have several investors talking to you and you have written agreements in place with them. Eventually, an investor will find one of your properties suitable and offer to make a purchase. Your job now is to arrange for the seller and buyer to meet together to speak with each other, to answer each other's questions and to move forward with the deal. The hardest part of your job is now done! Now you simply have to finalize the deal.
Once they have agreed the terms, each party will appoint their own lawyer to carry out the transaction and to do due diligence on the property before completing the sale/purchase. At this point, there isn't much you need to do unless the buyer or seller asks for your help. Make sure you find out the date of completion (i.e. the date when the property finally changes ownership) because that is the day you should be paid for your service.
Important point - a lot of students ask me "if you put the buyer and seller in direct contact with each other, can't they simply just do the deal together and cut you out of that deal and not pay you?" That is a good question. The bad news is that occasionally that can happen. The good news is that it doesn't happen very often. I have only come across this very rarely. Most buyers, sellers and agents want to do honest business and understand that doing things unfair is not good for long term relationships. If you treat everyone very fairly then they will also treat you equally fairly. Most buyers, sellers and agents will see you as a valuable person to work with because you are presenting them with good opportunities, and no-one wants to lose those opportunities long-term. When investors buy from you, it is likely they will want to buy from you again. And when owners are able to sell through you, some are likely to want to sell another property through you again if they own more than one. No-one wants to lose a good partner through dishonest deals. Yes there may be rare occasions where you will lose out on a deal because the buyer and seller decide to cut you out but treat it as a lessoned learned because you know to never work with them again and they lose out long term because they will never get other good opportunities from you again!
You should charge the buyer and seller on the day the property deal completes. I would recommend your fee to be 2% of the property price because it is low enough for everyone to be happy to work with you over other people and agents but also high enough to make a good profit. So if the property was sold for $200,000, then your fee is 2% ($4,000) from the buyer and 2% ($4,000) from the seller. So your total fee is $8,000!
Your fee amount is your choice entirely and you can choose how to structure your fee in order to get the deal done, either:
- charging both the buyer and seller
- charging only the buyer
- charging only the seller
There are advantages for each, e.g. some sellers won't allow you to sell their property unless you do it for free so you just have to charge only the buyer. Or you can choose to only charge sellers in order to give the buyers a better return on investment so they are likely to buy from you again. Experiment with each deal and find out which payment structure works best.
Your job will be to grab as many properties and investors as possible. Not every property will sell immediately and not every investor will buy immediately but make sure that you are able to speak with them. In the beginning, it may take some time to get your first deal together, but just like a snowball, once you have successfully completed your first deal, you can get your second deal done quicker than the first. Then the third gets done quicker than the second and so on. You will need to be patient but pretty soon, you will become so efficient with the process that your pipeline can include at least 1 deal done a day!
If we assume we keep doing smaller deals where the properties are worth $200,000 each and you charge 2% from both buyer and seller:
- 1 deal a day is worth $8,000 to you in profits!
- $8,000 x 5 working days is $40,000! In less than a week that is more than the average salary!
- $40,000 x 4 weeks is roughly $160,000 per month!
- $160,000 x 12 months $1,920,000!
So even doing smaller deals you can do over $1,000,000 in profit, even under $2,000,000 in 12 months! This is just a basic pipeline, your pipeline may be different, you may be doing:
- 2 deals a day
- 2 or 3 deals a week
- larger properties worth $400,000 or $800,000
- charge 1% or 3%
Even if your pipeline is different you can reach millionaire level rather quickly. If you decide to broker larger property deals or charge a higher fee then you can reach millionaire level in a matter of months!
And for that profit you've made in real estate, what is your own investment? ZERO!
Now go and be a 12 Month Millionaire!
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