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Operating Your Business Of Buying And Selling Houses With $1,000 Per Month Or Less

Posted in The Profit May 2015 by Ron LeGrand

There are certain expenses a real estate entrepreneur will have in the business, and the more it ramps up, the more these expenses will increase along with revenue.

Fortunately for us, our overhead is extremely small. And when I say extremely, let me do a few comparisons for you:

When my restaurant was open, my break-even was approximately $100,000 per month. That’s just what it took to keep the doors open, including all the costs inherent in a restaurant and most other businesses like labor, insurance, utilities, product, etc. The food alone was $.40 of every dollar that came through the door. That’s a tough nut to crack for any business, especially when you’re dealing with small numbers like those found on your dinner check. There were many times I wish I could sell a filet mignon for $10,000 like we get out of houses with little overheard and very little work.

In the restaurant business, we’re open for lunch and dinner most of the time. There were always at least 12-15 people on duty with over 50 employees total, open seven days a week, and a manager or assistant manager had to be there 100% of the time. If that manager happens to be the boss, that pretty much sucks up that life.

The biggest problem was not enough revenue, and I could have turned it around but chose not to. Even if I had, it still would have been a golden turd, spending way too many resources into a business that had no chance of ever making any real money.

If you’re going to run a business, make sure it has the ability to make you rich.

Now let’s take a look at your real estate business by comparison. There are only a few things you need to spend money on each month if you’re following my system, and there are two sides of your business—the buying side and selling side.

On the buying side, your outgo is small and, fortunately, there’s very little for you to do thanks to today’s systemization. The big thing you need to do is…

Make Decisions

In my real estate business where I still do a few deals per month on a part-time basis with the help of one assistant, that’s what I do—make decisions. And, that’s almost all I do.

Every once in a while, I go look at a house. I always look at them beforehand if I’m going to pay cash for them. Sometimes I still go into a home and negotiate a deal, but mostly the grunt-work is done by someone else.

In order to get these leads coming to you, there has to be a few things done, but those things should be done by other people. Let’s recap the five steps to success in case you haven’t heard them before:

  1. Locate Prospects
  2. Prescreen Prospects
  3. Construct and Present Offers
  4. Follow Up
  5. Close Quickly

The Buying Side

When you’re buying houses, step one is done mostly by your Virtual Assistant. Today, we use two things:

First, the VAs call leads online from multiple websites and sends us the filled-out property information sheets. They can do the same thing for you, all you have to do is activate them. Secondly, we have people riding around looking for FSBO signs and sending the phone number to the VA to follow up.

We get a few calls from our ads, which the VAs run, but most of the business comes from them calling leads and the FSBO signs sent to us. Every once in a while, we get a lead off of my truck (which is wrapped in advertisements) and other random odds and ends.

So, your first expense will be a Virtual Assistant if you’re going to be in the Pretty House business, and, frankly, you’ve only got three choices:

You’ll either hire a VA, an employee or be your own VA and do the work yourself. That last one, my friend, is not a very smart decision. You won’t be at it long before you realize it’s work you don’t want to do.

So, your first expense is a Virtual Assistant, and your cost on that is about $297 per month, which includes five hours of VA service, a website, an interactive phone service to record calls from buyers (which we’re getting to), your texting service and daily leads sent to you to forward to your VA. If you find you need more than five VA hours, you can add them as you need them for $.35 per minute.

Secondly, you need to set up an account with PATLive. PATLive is your 24-hour answering service that takes calls from sellers. They take calls, collect some information, make sure the house is for sale and forward it to you. All you have to do is then forward the information on to your VA for them to follow up.

The cost is about $150 per month, so put that on your list. So far we have $297 for your VA and $150 for PATLive.

On the buying side, there’s not much else to spend money on because the ads online are free, the VA is already covered and FSBO signs you ride around and find yourself are free. Now when you get to my Quick Start Real Estate School, I’ll teach you how to have those sent to you online by an army of people looking for them at a cost of $10 per lead. For now, especially if you’re just starting your own business, find the FSBO leads yourself and save the cost.

If you’re keeping track, we have $297 for your VA, $150 for PATLive and if you’re having leads sent to you, leave room for $10 per lead for however many you think you’ll get. For example, an extra 20 leads per week would be $200 to get those leads, but I wouldn’t do that unless your VA can’t find enough leads online to work on.

The Selling SideNow that we’re on the selling side, you need an interactive voice response (IVR) system to take calls from your buyers. The good news is it’s already included in the $297 monthly we discussed. We set it up for you so there’s nothing for you to do except activate the service. The bad news is that there’s a small fee per month to run your IVR of $.05 per minute to record information from your buyers, so leave room for $25 worth of minutes each month.

You’re also going to need a website to post houses on so people can come to them, but it’s already done! It’s part of the $297 we’ve discussed, and we take care of the hosting for your website to keep it online. Your VA will also maintain your website, update it and create online flyers for it if you instruct them to and run ads to attract buyers.

You’ll also need pointer signs, 10-15 per house with one or two for the front yard, so throw in maybe $30 per month in signs.

So far we have $297 for a VA with maybe a few extra bucks for overtime, $150 for PATLive, $25 for IVR minutes and $30 or so for signs. That’s it!

Add It All Up

With your costs per month totaled, you know what you’ll find? You have monthly fees that combine for less than the costs of the tablecloths I used in the restaurant. That’s less than $1,000 per month to run a business that can produce you a minimum of $10,000 per deal even if you only do one per month.

This thing called real estate just doesn’t compare to most business models for other industries across the country. We have almost no overhead, no operating costs and no risk if you do it right, and we have the potential for maximum, massive gain. That’s a hard business model to beat.

Setting It All Up

If you want to get your VA service setup, you’ll find a form enclosed with our magazine which you can return to us or you can call our office at 888-840-8389. To set up PATLive, visit PATLive.com. Yellow letters are an additional cost we didn’t mention because they’re only used when you can’t get enough leads doing what we just discussed, but you can get those for about $1.10 a letter at YellowLetterLady.com, which includes postage.

Do the few things I just described, come see me at Quick Start Real Estate School so we can put all the pieces together, set the systems up that we spent years perfecting for you and you’ll find this business takes very little of your time. That’s because the only thing left for you to do is…

Make Decisions

My friend, that’s the way all businesses should be—nothing left for you to do but make decisions. In fact, I want you to get your business to the point where it’s boring. Boring is good. Boring means you’re systemized and you’re profitable.

Source: Operating Your Business Of Buying And Selling Houses With $1,000 Per Month Or Less

About Ron LeGrand

Ron LeGrand

Ron LeGrand is the world’s leading expert in residential quick turn real estate and a prominent commercial property developer. Ron has bought and sold over 2,000 single family homes over the past 30 years, and currently owns commercial developments in nine states ranging from retail, office, warehouse, residential subdivisions and resorts.

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