01 Mar How to get the best deals
In today’s show we answer a common question about how to find the best deals.
We talk to deal maker Nhan Nguyen and he gives us some examples.
Read the transcript here:
Kevin: One of the most common questions we’re asked is, “How do we find deals?” I got an email the other day, “Where do I look? How do I go about it?” Nhan Nguyen and I talk about this quite often. Nhan is from AdvancedPropertyStrategies.com. He joins me.
Good day, Nhan.
Nhan: Good day, Kevin.
Kevin: That question – ways to find deals – how do you go about it, Nhan? I know this is how you make your living.
Nhan: There are many, many ways to do it. A couple of key ways that I focus on is looking for properties that have owners with problems, not necessarily properties that have problems. Yes, you may have looked at renovators’ delights and properties that are half falling down that people want to get rid of it. Well, that’s one way, but I like to find property owners with problems, where you can come in and come up with a solution.
A couple of examples could be a deceased estate where someone’s passed away, passed it down to half a dozen or so siblings, and they just want to get rid of it. A motivated seller is another one. It could be a divorce situation where people just want to get rid of their assets to move on. Bank repossession is another common one where banks have auctions just to get their money back. At that point in time, there really is no negotiation other than, “Okay, are we going to cover the bank debt?”
Looking at motivated sellers, and talking to agents and telling them, “I’m looking for a motivated seller, someone who will happily give us a discount on the property.” That’s definitely one of the ways that I look for properties.
Kevin: Those scenarios you gave us there, the last thing that I’d want to do is find them at the same time as everyone else, which is about the time when they give it some publicity. How do you go about finding it before it hits the market?
Nhan: That’s quite critical. It’s building up a relationship with agents. I call it “getting onto the agents’ hot lists.” You have got to build up relationships with agents. Love them or hate them, I’ve worked with agents for many, many years, and some of them you would never want to talk to again, but some of them have really got a good skill of giving you good deals.
Agents are like anything; they’re people, so you have to respect them, build a relationship with them, and tell them what you’re looking for. You need to look at their properties, give them honest feedback. They may like it, they may not like it, but I always give them feedback. I might say, “It’s a bit overpriced, mate. This would be my price if you were to be able to move it,” and they appreciate that feedback.
Getting onto the agents’ hot list is quite critical, going to open homes, putting in offers, and agents, even though they come and they go, there will be a handful of them who will stick around for decades, and those are the ones you need to build the relationships with.
Kevin: That raises another question, I guess, and that is how best to work with real estate agents. You’ve given us a couple of ideas here, and it’s all about communication or keeping in touch with them. Any other tips you’ve got in that vein?
Nhan: Yes, I’ve got a handful of tips. One of the things I often do is I put in a lot of offers, and they’re often quite low, or they’re quite long. What I mean by long is there might be a six- or 12-month settlement – or longer – because I might need approval to be in the council so that I de-risk the project.
Having said that, I’ll warn them, my offers are going to be low. If you’re going to do something that’s going to be a discounted property or a long settlement, definitely let them know that your offers are going to be sharp so that they’re not annoying or angry at you when you lob in the offer.
The other part is you’ll find agents who want to work with you because they can see what you’re up to. You’re wanting to see if you can do a buy-and-sell transaction. For example, I bought a block of land where I wasn’t the most money at the time, but I said to them, “I’m going to cut this into eight or nine blocks, and if and when I do, I’ll give you the first opportunity to sell it once it’s developed.” So this agent was not only looking at one round of comms; he was looking at two or three rounds of commission. In that instance, you’ll want to work with them in a long-term environment.
Having said that, there are other agents you would only buy through because they’re happy to take discounted offers, and other agents that you would only want to sell through because they only like to sell at top dollar.
There are different variations to the theme, but you have to find your angle and the agent’s angle to work together with them.
Kevin: Yes, and it’s all about communication. Just listening to you there, you’re obviously very frank with them. You have a business plan in place. If you explain it to them, some will go with you, some won’t, and I guess you’ve just got to accept that that’s going to be the case.
Nhan, I want to thank you for joining us and giving us that advice. Nhan, of course, is from AdvancedPropertyStrategies.com. Thanks for your time, mate.
Nhan: My pleasure, Kevin. Any time.