What type of properties can you use

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Subject: The Target Profile: Identifying Properties for High-Profit Novation Deals

Course Module: Advanced Deal Structuring

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1. Mission Briefing: Beyond Wholesaling

This training is not about replacing wholesaling. Wholesaling is fast, clean, and effective. If you can wholesale a deal for a solid profit, do it. End of story.

This is about the deals you’re leaving on the table. The leads you paid for, the sellers you talked to, but the numbers didn't work for a traditional wholesale. This is about adding a precision tool to your arsenal that allows you to monetize two to three more deals for every one wholesale you’re currently doing. We're talking about a "bolt-on" strategy, not a replacement. This is for operators who refuse to let good opportunities die.

We will dissect the exact property and seller profiles that are perfect for this on-market novation strategy.

2. Target Properties: The Two Primary Profiles

This strategy works on two opposite ends of the property spectrum. Don't think in terms of "good" or "bad" houses; think in terms of marketability.

Strtegy

Strtegy

A. The "Cash-Only" Wreck

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The "Move-In Ready" Gem

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Case Study: The Flagstaff Land Play

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3. The Ideal Seller Profile

The property is only half the equation. The seller's situation is what makes the deal possible.

Required Element #1: The Seller Has Time.

This is non-negotiable. The process takes time. If the seller is facing foreclosure in two weeks, this is not the right play.

From the moment you get a retail buyer under contract, you're looking at a minimum of 30 days to close if everything goes perfectly.

Realistically, you should plan for a 60-day timeline from when you sign with the seller. This accounts for finding an agent, minor prep work, listing, finding a buyer, and the buyer's financing period.

Required Element #2: The Property is Off-Market.

This strategy is for sourcing your own deals. You cannot apply this to properties already listed on the MLS by another agent. Your value is in bringing a hidden, off-market property to the retail public.

4. Execution & Financials: The Reality on the Ground

This is not a zero-cost strategy. It requires more management and some capital.

You will spend money. Be prepared to invest a few thousand dollars per deal for minor improvements that have a major impact on marketability. This includes:

Trash-outs and professional cleaning.

Paying for the seller's moving expenses.

Landscaping and curb appeal.

You are NOT a flipper. This is crucial. You are not remodeling a kitchen or re-roofing the house. You are performing "real estate lipstick" to make the property presentable for a retail buyer.

Wholesale is Plan A. Remember the hierarchy. If a deal presents itself where the profit margin for wholesaling is only $5,000-$10,000 less than a novation, just wholesale it. The speed and simplicity of wholesaling are worth it. This strategy is for capturing the deals with a significantly larger profit spread that would otherwise be lost.

You are being paid to solve bigger problems and manage a more complex process. The reward is a higher profit and a massively expanded pool of potential deals.

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COURSE DOCUMENT: ADVANCED DEAL ANALYSIS

MODULE: The Art of the Deal: Structuring & Negotiation

SECTION: Tactical Investments & Risk Mitigation

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1. Core Concept: The "Move-In Ready" Litmus Test

This lesson dissects the critical decision-making process when evaluating a property's condition. We'll explore the difference between a truly problematic property and one with cosmetic flaws, and when it's strategically sound to invest your own capital pre-sale to maximize returns.

The fundamental concept is differentiating between aesthetic issues and functional deal-killers. A property is considered "Move-In Ready" or "Rent Ready" if the core systems are operational, regardless of cosmetic appearance.

The "Move-In Ready" Checklist:

Roof: Is it sound and free of active leaks?

HVAC: Does the heating and air conditioning function correctly?

Electrical: Are the systems safe and operational?

Plumbing: Is the system free of major leaks and functional?

Flooring: Is there flooring in all the rooms (even if it's old)?

⚠️Key Insight⚠️

A house with a 20-year-old green carpet or a kitchen from the 1980s is still considered "Move-In Ready" if the above criteria are met. The property is not under active construction and is habitable. Your goal is not to create a perfect house, but to secure a sellable asset.

There are no rows in this table

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2. Tactic: Navigating the "Minor Repair" Trap

A common mistake is falling into the "minor repair" trap. A student asked a critical question: If the carpet is ugly, should I replace it to get a better price?

The General Rule: DO NOT FIX IT

Resist the urge to fix minor, cosmetic issues. This path is a slippery slope. Richard refers to this as the "If You Give a Mouse a Cookie" problem:

You replace the carpet.

Then you think, "We might as well paint the cabinets."

Then, "We might as well replace the hardware."

Suddenly, you are remodeling, which is not your business model. You are a dealmaker, not a contractor.

The Better Alternative: Your leverage is in the negotiation. If the carpet is old and ugly, that's a tool to get the property at a lower price. You then sell it for less, passing the cosmetic issue to the next buyer.

The Exception to the Rule: You should only intervene and spend money if an issue is so significant it becomes a barrier to the sale itself.

Example: A severe pet odor from a destroyed carpet that makes the house physically unpleasant. This is a "gross" issue that will actively repel buyers. In this specific case, the cost of replacing the carpet is less than the value lost by trying to sell a house that stinks. The repair is a necessary evil to make the asset liquid.

3. Tactic: Strategic Financial Intervention

Sometimes, you must spend money to make a deal happen. This often involves helping a seller who is "stuck." The key is to do this with surgical precision, maintaining control, and ensuring a massive return on your investment.

Rules

Rules

Rule #1: Never Give Cash. Pay for Services Directly.

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Rule #2: Insist on a Massive Return on Your Capital.

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Rule #3: Protect Yourself Legally & Psychologically.

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Case Study: The Scottsdale, AZ Deal

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Conclusion: Success in this business requires a disciplined framework for evaluating problems. Differentiate between functional and cosmetic issues. Avoid the "minor repair" trap by negotiating a lower price. When you must invest capital, demand a 10x return, maintain control of the funds, and lock in the deal with proper legal documentation.

If you’re looking for novations, Prexium is where you’ll find the right leads to close more deals. 👉 Start today

The Cowboy Marketer⁠

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