Daisy Chains

Posted on November 28, 2012 by

More and more often there are real estate investors that advertise, “Please no daisy chains!” To clarify, daisy chains exist when seller A contracts a property to seller B who then contracts it to seller C and so on until it finally reaches you the buyer. I will admit that I too was not a fan of them myself. Typically, these daisy chains ended up not closing because the property was never really under contract or someone in the daisy chain sold it and did not inform the rest of the daisy chain. If you have ever attempted one of these you know what I am referring to. If you have always avoided daisy chains I would encourage you to attempt one. After changing my mentality about them they have became profitable.

While other investors advertise that they are not interested in daisy chains I advertise that daisy chains are welcome. However, I do set a few ground rules of how I work with these sorts of deals. The number one rule is that I must speak directly to the principal/owner of the property or in some cases the person who originally contracted the property directly from the owner. This will turn a few of these sellers away but this lets me know that they never had a deal under contract or do not know what they are doing. The daisy chain sellers that agree to this understand the reason and want to see the deal close. As you may already know, the reason for meeting the principal is to make sure a contract on the property exists. Before all this occurs you may be asked to sign an NCND so be prepared to do so. This will protect the person that brought you the deal if his seller is known to have multiple properties. Did you read that, “MULTIPLE PROPERTIES!” Who cares if you have to pay a middle man a few hundred or a few thousand for access to an inventory of properties? I do not, as long as the numbers fit what I am looking for. So guess what happens if you perform on all your contracts? The person with the inventory will come directly to you as the performer. The person that made the introduction with whom you signed an NCND will continue to be compensated until the expiration of the contract. This is a win, win, win across the board.

Now that an established relationship exists with the principal you may begin to know about deals before they are marketed to the general public. This is great because there is very little to no competition at this stage. Go out and give daisy chains a shot and make the connections needed to assure a long working relationship with a principal of multiple properties.

Michael VazquezMichael Vazquez has been offering properties to real estate investors significantly below market value since 2006 in both Texas and Georgia. Michael taken on projects starting with just 4 brick walls (literally) to managing his own rental portfolio. When it comes to investing in real estate he has done much more than many twice his age. Michael is always looking to for more investors to work with.

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