Saturday, April 4, 2009

Emerson Update: Progress to Date

We are starting to get our pricing on Emerson. We have one more contractor we are getting pricing from and we will be ready to begin.

We will also be starting a series of videos that will have two purposes.
  1. The first is to show exactly what work will be done to the property. This video is intended for the prospective buyer. We have found that a video showing the rehab progress creates excitement about the property but also shows the buyer exactly what work we have done. A lot of times a buyer comes into our property and they see the new paint & carpet, etc and it does not show the full story of what we went through to rehab the property. The video does that for us.
  2. The second is a learning aid for those investors that have not done a rehab or those that want to compare notes on how we do it. There are many ways to do rehabs and we are constantly learning and refining our process. We will show the process we go through rehab a property. All the steps and missteps we take to get a property ready for sale or lease.
Today we will be going out to Emerson and begin filming our progress on the project. This first video will be a site survey and overview of the property. Please let us know if you have and questions or comment as we go through this process. We want to provide relevant information to you.

We Are Moving to New Digs

We started this blog in 2008 and we have learned a lot. One of them is that there are a variety of tools to help reach more people. So we are updating our blog and moving to a dedicated domain. So you will find us at this link Two Average Joes .

Please go visit our new website and register so you can stay informed about what we are doing and learning in real estate.

"Most successful men have not achieved their distinction by having some new talent or opportunity presented to them. They have developed the opportunity that was at hand."
–– Bruce Barton

See Ya,

Friday, April 3, 2009

Why You Need a Realtor

If you have been an investor for any length of time and have gone to any real estate seminar you will hear how real estate agents are the scourge of the industry. I have been to dozens of bootcamps and workshops and everyone loves beating on the real estate agent. Like they caused all the problems the investor had on their last deal.

Yes, like in every profession, you have people who are not professionals and do not know what they are doing. Real estate is no different. But I am here to tell you that you need and want a professional Realtor on your power team. A professional is someone who understands how an investor thinks, knows to ask what they are looking for and not afaird to say when they do not kow something. They know their market and can bring deals to the investor. A good realtor will save you money and time.

I can relate a costly mistake we recently made. We were selling a house and it was a good house with a good profit margin on it. But we gave thousands of dollars based on a disclosure. A simple disclosure that we signed and left off limiting laungage about the max amount of the repairs we would agree to pay. A typical thing to do according to a realtor friend of mine. We missed it and we had to do the repairs that we could have split with the buyer. All to save 3% on the deal. By the way, the cost of repairs is more than the 3% we would have paid the realtor.

So have a real estate agent on your power team and tell them up front what are your expectations. If they do not meet those expectations then let them know ad find another one.

Tuesday, March 31, 2009

Real Estate: Emerson Update

So pricing for the rehab we will be doing in Tracy has started to come in and frankly I am a little surprised. The first price is landscaping.

The scope of work is as follows:
  1. Clean front and back yard
  2. Install sprinkler line and heads
  3. New sod in front and back yard
  4. New bushes
  5. Repair fence in back yard
The rice we got for the scope of work was $11,550. WOW!! That seems very high. I am hoping the other numbers will come in more down to earth (pun intended).

I will keep you updated as we continue the rehab in Tracy. Visit our website, JM2 Sells Houses, to get more information on this property. We are offering it as a Lease Purchase Option.

Friday, March 27, 2009

Modesto Housing Market About to Fall.....

With all the that has hit Modesto, CA over the last few years, it is nice to have a laugh at ourselves. Monsters vs Aliens, due out today, starts off with Modesto being hit by Aliens. While I am sure that the initial effect will be negative for the housing market, I believe it will reduce the number of houses for sale and the inventory of foreclosed homes. Check out the story at the LA Times.

So today I am suspending all bad news. Forget the economy or the credit crisis or housing crisis or any other crisis that is affecting our country and world. Take a couple of hours and go see how Modesto is destroyed and smile.

Have a great Friday,

Wednesday, March 25, 2009

Real Estate: 410 Emerson Ave Rehab

Now that we are getting another rehab project going, I should step back-up and give you a little back ground on. I mentioned in my last post that the house is 1050 square feet in size with 3 bedrooms and 1 bath. The house was built in the 1950s. Good, solid house that has seen better days but it is in a neighborhood that has held up well. It is certainly the worst house in a good neighborhood.

We purchased the house from a woman who needed to get out. We will now spend the next five weeks preparing the house to be leased by a future homeowner. The budget is tight on this one, but this economy is getting us some fantastic prices from contractors. I believe we can get the price down to $15,000. That would be great.

You can check out the house at our website JM2 Sells Houses.

See Ya,

Real Estate: Next Rehab Project

We have looked at how we should, in theory, perform an inspection. Now I will go through a rehab to show you the actual steps and missteps we make. There is always something we over look in the initial inspection. That is why we have a fudge factor in the estimates to allow for something that is overlooked or hidden to our original inspection.

Emerson is a 3 bedroom, 1 bath single family residence with 1050sf. We are going to rehab it so we can Rent-To-Own (Lease Purchase Option). I estimate rehab time to be 3 weeks from start to finish. Estimated start time is April 30th. Here is our scope of work & my estimate for the rehab at 410 W Emerson Ave:

Basic Rehab

  1. Landscape:............................................................$1500
  2. Paint: Exterior & Interior......................................$3738
  3. New gutters............................................................$250
  4. New roof.................................................................$5175
  5. Repair fence south & east side of property............$500
  6. Repair holes in wall................................................$500
  7. New flooring...........................................................$3450
  8. New cabinetry.........................................................$350
  9. New countertop......................................................$750
  10. Repair wall heater..................................................$250
  11. Replace doors: kitchen, garage & entry door........$375
  12. Replace outlets and switches.................................$750
  13. Replace toilets (2) & tub (2)..................................$350
  14. Replace vanity........................................................$350
  15. Replace appliances................................................$1000
  16. New hardware.......................................................$575

Price out
  1. Replace interior doors.............................................$867
  2. Replace windows (vinyl).........................................$1500

So my initial budget is $19,850 with $2367 for additional work. We will see how I did in a day or two. I am having a contractor give us a price to do the work. In the meantime I will be doing videos of our progress. I will be posting those soon.

See Ya,

Monday, March 23, 2009

Real Estate: Property Inspection Day (Part 2)

Here are the steps you will use to inspect a property:
Start outside
  1. Landscape
  2. Foundation
  3. Exterior surfaces
  4. Check trim at windows & doors
  5. Check the eaves
  6. Check roof shingles and surface
Move inside
  1. Check for cracks in walls
  2. Look at ceiling
  3. Check plumbing under sink
  4. Check plumbing fixtures
  5. Check cabinets & countertops in kitchen
  6. Check windows
  7. Check flooring
  8. Check faucets in bathroom & kitchen
  9. Check HVAC
  10. Look at electrical outlets.
Start outside:
  1. Landscape: Note condition of the landscaping; we are looking for curb appeal. Is the automatic sprinkler system working?
  2. Foundation: Any cracks larger than ¼” in width and go from top to bottom. If you see this condition, call for further inspection by a structural engineer.
  3. Exterior surfaces: Does it need paints (for us that is always yes)? Note repairs that need to be done. Are there holes the siding or stucco? Does the house have gutters? Note these conditions.
  4. Check trim at windows & doors: Check the trim for dry rot. Does it need repair or replacement
  5. Check the eaves: Condition of eaves – cracks or dry rot. Are there any gutters? Are they any leaks or rust stains on the gutter?
  6. Condition of the roof - is moss growing on it? (It certain does around here). If it is asphalt (or composition shingle) look for turned-up corners this is a sign of ware. Try to determine the age of the roof. Asphalt shingles can last 25 to 50 years depending on the type. If it is wood shingle 20 years is about max. Spend some time on the roof because it can be a big expense if you need to replace it.
  1. Check for cracks in walls: Large, wide cracks can be a sign of settling in the house. Some cracks are to be expected but never wider than a ¼”
  2. Look at ceiling: Looking for stains from a roof leak. If you see a large stain then have a roof inspection by a roofing contractor
  3. Check plumbing under sink: Check all the sinks to see that the plumbing is OK. Look for stains under the sink for signs of a leak. Rotten wood is a clear give away.
  4. Check plumbing fixtures: We replace all fixtures so this is not a big deal. But check for leaks around fixtures
  5. Check cabinets & countertops in kitchen: Can the cabinets be used again or paint. If the countertop is tile, it can be painted (by companies that paint tubs) this will save money over retiling.
  6. Check windows: Leaks around the windows. Do they operate
  7. Check flooring: We always replace the flooring. Check for stain marks on floor – if necessary lift the flooring
  8. Check faucets in bathroom & kitchen: We will replace these items
  9. Check HVAC unit: Locate the unit. If it is old – have it inspected to see if you need to replace.
  10. Look at electrical outlets: We replace all the outlets and switches with new when we paint the walls. It gives it that fresh look.
This is the preliminary inspection we do before we buy a property. After we have made an offer and before we close we will have a property inspection done by a 3rd party to confirm our initial inspection. Anything that we missed or that will impact the purchase price and our profit we will renegotiate with the seller. Don't force the numbers to get a deal. A deadly and common aliment with investors who really want to get a deal. Whether if its your first or 50th it is always lurking. Follow the numbers and they will never lead you astray.

See Ya,

Saturday, March 21, 2009

Real Estate: Property Inspection Day

Making progress everyday in your business requires certain activities that you need to do. Establishing a routine helps to keep you moving forward. Saturdays are a good day to do property inspection. We frequently go look at property on Saturday because the pace is slower. The calls are less on this day and we can concentrate on the job at hand.

When you go out bring a clip board to make notes or a worksheet that is marked up as we go through properties (email me and I will send you our worksheet). You will need this worksheet or notes because after a day of looking at property, even if you look at three house, they all start to swirl around in your head. Inspecting a property will take time at first because you may be new to the process and want to be very thorough. But after a few times you will notice that a lot of the same improvements are needed on houses. You will always want to paint the interior and exterior of the hosue. Replacing the flooring is a must. All the items that make a house sparkle must be replaced or repairs to like new condition. Here is the list you will always want to repair or replace:
  1. Paint inside & out
  2. Flooring
  3. Electrical outlets
  4. Light switches
  5. Light fixtures
  6. Toilet
  7. Tub/shower (repaint at least)
  8. Paint kitchen cabinets
  9. Paint or replace countertop
  10. Landscaping (Front new sod and scrubs & sod in back)
  11. Door hardware (if it does not match)
There are other items we will consider replacing:
  1. Windows
  2. Interior doors
  3. Garage door
  4. AC Condenser
Tomorrow we will review the steps when inspecting a property and what to look for.

See Ya,

Thursday, March 19, 2009

Can You Still Make Money in Real Estate as an Investor?

I know I wrote about this last November but I realized that I did not answer that particular question. I was derailed into the real estate market. But the question asked here is "Can You Make Money in Real Estate?" especially in the economy we are in.

My answer is still YES! But how you make money has changed radically in the last six months. I will relate what changes we have gone through to illustrate. In May of 2008 we were running a good direct marketing campaign to a lot of different people (Out of area owners, high equity owners, distressed owners, etc..). We would get a good response from our mailings. But around August we started to see a change. The number of calls were decreasing. We compensated for this by increasing our mailings and the number of calls stabilized. But we kept having to increase our mailings to keep the number of calls coming in the same each month. Also the number of appointments to talk to sellers fell also. As the economy started to sour, people decided that change, any kind, was bad. Everyone wanted to stay in their homes instead of making a moving.

Meanwhile the number of closing we did each month was decreasing. Also the exit strategy changed very quickly. We discovered, fortunately for us, the exit strategy we were basing our business model on was not going to work. Any business model that relied on a retail buyer (average Joe in the market place - that needed a loan to buy) was not going to qualify for a conventional loan unless they had a sterling credit rating. Fewer and fewer were in this category everyday. We switched our buying & selling model to a buy and hold model. We buy, with private money, with the idea of cash flow each month. The big payoff will occur years down the road. We still pull a small amount out at closing, but the primary focus of the property is positive cash flow. We stiff offer our properties with owner financing (8% down payment) and Lease Purchase Option (3% Option Fee) which generates lots of calls.

The days of buying a property for 60% on the dollar, rehabbing it and selling it for 95% on the dollar to a retail buyer are gone for now. We need the credit market to stabilize first and then resume a reasonable practice of lending before we can think about that again. I do not know when that will be, but I will be watching for it and as soon as I see it I will let you know.

See Ya,

Monday, March 16, 2009

How to Combine St Patrick's Day and Real Estate

(Before you read this – go get yourself a green beer and speak with an Irish brogue (that is a fancy word for accent)) I was going to title this blog "How to Use a Leprechaun to Sell real Estate", but I just couldn't get it to work. Anyway..... Aahhh St Patrick’s Day – my Irish side always comes out on this day – well everybody’s Irish side comes out on this day. I have been thinking of how I can sell more houses and St Patrick’s Day is a perfect day. What better day to sell than on a day that is so GREEN. Our slogan for today should be: “You Don’t’ Need the Luck of the Irish to Buy One of Our Homes” We have programs for anyone who wants to own a part of the American Dream today.

But I want to think bigger. There was no ground swell for my “Forget the Flowers, Buy a House” Valentine’s Day program. In fact I got a few nasty emails from florists on the suggestion at all. But everyone is Irish today and they love green. I was thinking of having a slogan for today: Don’t Go to the Pub – Buy a House & Save the Money. But I like to go to the pub. So maybe I should modify it to be: Go to the Pub after you Buy the House and Celebrate with Friends” Everyone wants to celebrate when they buy a house and with today’s prices you cannot go wrong. In fact I believe if you let everyone know you just bought a house at the local pub you would get more than a few pints on the house or from other patrons.

So plan your day by calling your Realtor and tell them what type of house you are looking for and go buy a house. The economy will get an immediate boost. Much quicker than the stimulus package that was approved last month.

Maybe we need some help and I do not mean Washington DC. I was thinking more in the form of a Leprechaun. I have heard that if you trap one they have to reveal the location of their pot of gold and with the price of gold I am sure we could purchase many houses. So I did some research on how to trap a Leprechaun (the internet is a wealth of knowledge… isn’t it). You can use a box, net or any other clean container. The bait is very important. Yes you guessed it – Leprechauns love Lucky Charms cereal. So make sure you add them to your bait. Since Leprechauns are greedy, money is always a good thing to use and lastly they like four leaf clovers. Placement of the trap is critical to success. Rainbows are good to use on or around your trap. Set the trap and wait for the Leprechaun.

So we have our game plan.
1. Trap a Leprechaun
2. Get his pot of gold
3. Call a realtor
4. Buy a house
5. Go to the pub to celebrate

Well maybe just the last three items on the list, but it is fun to think about the other two. As we all know home ownership is the fastest way to better self-worth. We could use that today.

Irish Toast: May the roof above you never fall in,
And those gathered beneath it never fall out.

Irish Blessings; author unknown:
May the road rise up to meet you, may the wind be ever at your back. May the sun shine warm upon your face and the rain fall softly on your fields. And until we meet again, May God hold you in the hollow of his hand.

See ya at Mike’s Roadhouse on Dale,

You're Crazy if You Buy Real Estate

I hear that a lot from people I run into. I hear from people I don't run into. Just mention real estate anywhere and someone has an opinion. The majority of them use the same quote: "You're Crazy if You Buy Real Estate" I then have to stop and give them the same speech I will paraphrase here. Let's look at the facts; I will take my area - Modesto, CA because I know it better. You have to admit that it is by far the worst area to buy real estate in or is it.

First the bad news:
1) The median sales price for homes in Modesto CA for Dec 08 to Feb 09 was $130,000. This represents a decline of 8.5%, or $12,031, compared to the prior quarter and a decrease of 42.2% compared to the prior year. Sales prices have depreciated 43.9% over the last 5 years in Modesto.

The average listing price for Modesto homes for sale on Trulia was $229,216 for the week ending Mar 11, which represents a decline of 22.1%, or $65,042, compared to the prior week and a decline of 1.5%, or $3,578, compared to the week ending Feb 18. Average price per square foot for Modesto CA was $104, a decrease of 32.9% compared to the same period last year. (Source taken from

2) Modesto also has been overwhelmed with about 5,200 foreclosed homes, more than 8 percent of its total housing market. The new foreclosure statistics, provided exclusively to The Bee by MDA DataQuick, show how widespread the crisis has become. Every ZIP code in the region has been hit, from rural hamlets such as Keyes (14 percent) to commuter meccas like Lathrop (21 percent). Homeowners defaulted on nearly $3.9 billion worth of mortgages in Stanislaus since 2007. (Source taken from Article Date Jan 18, 2009)

If you bought a home in 2006, it doesn't get much worst than that. So while this affects current home owners it represents an opportunity for new homeowners and investors.

Now some good news:

Affordability is up:

Stanislaus County (which Modesto is apart) homes are the most affordable in California, followed by Merced and San Joaquin counties, a study released this morning showed.

The new calculations show that Stanislaus's median-income families now can afford to buy 71.1 percent of homes on the market. Three years ago, just before the housing bubble burst, only 3 percent of Stanislaus homes were affordable to median-income families. (Source taken from Article dated Feb 19, 2009)

With the median price of homes down (as shown above) more people can afford to buy a home. Homeowners get a tax credit of up to $8,000 is now available for qualified first-time home buyers purchasing a principal residence on or after January 1, 2009 and before December 1, 2009. Unlike the tax credit enacted in 2008, the new credit does not have to be repaid.

What is not to love about buying real estate. While I took the Modesto market, the price slide has hit every market. Lets look at it from the investor side. The median price of a home in Modesto is 130,000. We would buy a home like that for $81,000 (assuming repairs on a foreclosed home), pay a private lender 8% interest only ( loan amount would be $100,000) $667 per month. We could rent the house out for $1150. A positive cash flow from a house in California, WOW!. We could pay a higher price purchasing it from a seller with equity if they could wait for their money, but that is another blog post. We are not selling any property to a retail buyer (Are You Expecting a Retail Buyer). All of our properties are available as either Owner Financing or Lease Purchase Option. This helps fill our properties much quicker.

So the next time someone says to you: "You're Crazy if You Buy Real Estate" just refer them to this post. Now go out and buy some property. Email any questions you have.

See Ya,

Sunday, March 15, 2009

Real Estate: Are You Expecting a Retail Buyer?

I know I was. Let me back track a little. What I mean by this title is you think you buy a property, do a little rehab and resell it. I mean that is what I have seen on TV. Well that is not how it works. We had a property just like that. If you expect to do some work on a property and resell for top dollar, I am here to tell you that will be a tough road even if you give the buyer a great price. Let me explain with our example.

We purchase a great piece of property. We bought @ 60 cents on the dollar and we were looking to sell at 75 cents on the dollar. Great profit for us and a great deal for the buyer. Well it is not as easy as that. We do have it sold but what we went through to get it sold was more than I thought we would need to do.

We put the house on the market for a great price. We posted it on craigslist everyday. We got lots of calls while we were still in escrow. We got so much activity that we did not fix the property up. We just cleaned it out and thought people would come by the carpool. We held our Open House and people showed but a lot of them came with their realtors and they were not happy that we did not list the property and were not paying any commission. We did not think we needed to - big mistake. It will not cost us money but it did cost us time. So no offers after the first open house.

Plan B: We spent two weeks cleaning, repairing, painting the house. We put in a new floor and cleaned the backyard. We also did a flat fee listing with a 5% commission for the buying agent. We raised our price to compensate for the listing and repairs. Second open house: We got a few people through the house. Not as many as the first open house. But the agents did start to notice the property. We also had agents going to the property during the week to preview the property for their clients. We got questions about the rehab and why the kitchen was not done or that there were no blinds on the windows or dual windows. We acknowledged all of these items but pointed to the fact that the house was well below market value. But this pointed to the way the market is right now. Buyers can be very picky and want it all. They want the price lower and the property in pristine condition and and and... you get the idea.

So we answered all the buyer's questions and gave allowances for some rehab, but the house is sold and we can move one.

What have we learned:
  1. Perform full rehab on property
  2. No retail selling (unless you are selling at 50 cents on dollar)
  3. Sell with owner financing
  4. Lease purchase option

So sell at your own risk but it would behoove you to sell with owner financing and not rely on a retail buyer. It will help you sleep better at night. Now that we have that property sold I know I will. Our focus will switch to an owner financed property we have in Ripon. Anybody want to buy or lease a 3 bedroom/2 bath, give us a call or visit our website: JM2 Sells Houses

See Ya,

Friday, March 13, 2009

Real Estate: Part 3 of How We Analyze REO Properties

Hey everyone,
Here is the last part of my 3 part series on how we analyze foreclosed properties in minutes. In the first one we showed on we enter the basic information and how it is used by the software; the second one showed the repair estimate module and how you just have to select what is needed and the costs are calculated with a fudge factor.

This last module will show the reports and forms that are in the software and how we use them to make offers on foreclosed homes. So watch the video below and let me know what you think. I want all the feedback I can get.

See ya,

Thursday, March 12, 2009

Real Estate: Part 2 of How We Analyze REO Properties

Hi Everyone,
I got a good response to the video yesterday about the software we use to analyze foreclosed properties, Thank-you. Today's video shows how we estimate repairs based on square footage. This estimate completes the other half of our calculation for our Maximum Allowable Offer (MAO).

So enjoy the video and let me know what you think. I would appreciate you input on the program. I am looking to improve it so I can offer it for sale. I would certainly offer it as a discount to those who offer constructive suggestion.

See Ya,

Wednesday, March 11, 2009

What We Use to Analyze Properties

We have been making a lot of offers for foreclosed properties. It helps being in the foreclosure capital of the world. We developed a program called JM2 Deal Analysis. We use the program to quickly see if the property is going to fit our criteria for buying and selling. Once we see that the property fits our criteria, we continue to use the program to refine our deal and send out PDFs of our offer to private lenders.

The video below (from our YouTube channel: mdsarch) walks thru the intro and property entry part of the program. Over the next two days I will be adding videos showing features of the software.

Let me know what you think of the program. Email me with any suggestions you may have,

Saturday, March 7, 2009

Saturday in the Real Estate World

Still working on the move today. I almost have it done. I actually unplug my computer network at my old office and reassembled it at the new location and it worked right out of the box. No technical tweaking needed. I think that is pretty good.

I have a URL I want to share with you. I found it very good in explaining the credit crisis.

The Crisis of Credit Visualized from Jonathan Jarvis on Vimeo.

It shows that our problems are very complicated and it will take some time to work itself out. We will need to be patient. But as real estate investors we can help the system by buy properties and offering to people who need housing. We offer houses with Owner Financing or Lease Purchase Option (Rent-To-Own). The people who defaulted on their loans will need a place to live. The number of people that need housing has not decreased. It is the pool of people who can qualify for a loan that has decrease. So this creates a niche for creative real estate investors to buy property and offer it to hard working people who need housing.

So research your market, see what is listed and at what price and look for value. Yes, even in this market you can find value. It maybe be a little beat up but we can look beyond that. What is the median price in the neighborhood. Microsoft's Streets and Maps can help you visual quantify your market. I will load property values and their address and see what trends show up. I may see a cluster of properties that have been reduced in an area that has stabilized. The values are out there; it just takes some work. A good realtor can be a tremendous asset. Make sure you include a realtor in your power team.

See Ya,

Friday, March 6, 2009

Modesto Real Estate Market

Today's post will be brief. I am in the process of downsizing my office so I have not had much time to research. But I did look at Yahoo Real Estate site for information on the Modesto market. Wow is it amazing. Here are the numbers:

Listing Type ---------------Number -----------Median Price ----------Price Change from Feb

Homes for Sale: ----------- 414-------------------$164,900------------------ (-1.8%)
New Homes: ---------------- 5 --------------------$352,000 -------------------0.0%
Foreclosures ------------3,972 --------------- $194,000 ------------------(-3.0%)

If you want to see the website here's the link: Modesto Real Estate Is there anyone who thinks we are near a bottom. I believe the median price (for foreclosures) is so much higher than "Homes for Sale" is the banks have been holding the properties 1) because they have cash from the first bail out and do not have to liquidate their inventory (at least until the regulators show up) 2) they are holding out hope that another government program will help them with their inventory. Well we are seeing that the program will help homeowners who can not make the payments by lowering their payments. But it will not affect people with loans larger than their property value. We should start to see the banks lower the price of the properties so they can get them off the books. When that happens you will see the price of the property drop again. Even if that was not the case, we are still seeing property values drop almost 2% in one month, wow 24% a year. It is no wonder that the median price in Modesto, CA is $164K down from $369,000 at it high.

So get your private lenders ready and make your offers as if you are selling several months in the future (i.e. 4-6 months x 2% (drop per month)). The bottom will come but I do not believe it will be from the cash flow (rents - expenses) from the properties. There are just too many of them. We continue to work with people who want to own a home and can make a rental payment( for a period of 3 to 5 years). That is how we will stabilize this make.

I guess I was not that brief. Have a great weekend.

See Ya,
Follow me on Twitter: MDSArch

Thursday, March 5, 2009

The Name of the Game is Change in Real Estate

Change is the name of the game here in California's Central Valley. And after reading the paper today we may be stuck with it for a while. See Modesto Bee article: Housing programs could have little impact here The reason why the program will not help the central valley is the big price drop. The median price in the Central Valley has drop over 50% from its high. The Government's plan only deals with payments not values. So hundreds if not thousand of people who are upside down have to decide if it is worth the wait and continue to pay a large mortgage on a property that is worth 50% less than when they bought. Most people are going to walk away. One home owner I spoke with has a $500k mortgage on house that they purchased for $700,000 in a neighborhood with house selling for $200k. There is no incentive to stay. Well a foreclosure on your credit report is bad, but there will be so many people in the same boat that the credit market will have to adjust.

So what does that mean for us investors. We have to buy better and better, translation lower and lower price. As long as we have foreclosures, the median price of homes will continue to drop so the banks can sell their properties. Couple that with the unemployment rate and you have a lot of change. But that is exactly why the market needs investors. It needs individuals who will take the risk to buy the properties, rehab them and sell or rent them to people. In fact there are going to be a lot of people who had adjustable rate loans that will need to rent. Better yet - do a Lease Purchase Option and you begin to restore their dignity and self-worth of former homeowners who lost everything. While giving them the chance to owner a home.

That is why Countrywide's new policy on not allow a purchaser of a foreclosed home to resell it in the first 30 days puts one more roadblock in the marketplace. I know why they did it (fraud being a big part of it) but to throw a large wet blanket on a complicated transaction does not help the situation. What should you do? Get all the private money you and go buy foreclosed homes from banks and lower prices so you can Lease Purchase Option them. That is what we are doing.

If you have the money but do not want to go through the process of buying, rehabbing and renting then email us. We can handle all that for you and give you a good return that is secured by the property. We are always looking for private lenders.

See Ya,

Wednesday, March 4, 2009

What's Working Now in Real Estate

With the current economy, we have had to adjust our buying model almost daily. Creativity is the key word today. I know it is a word from the past, but one that applies today. You need to be creative to adjust to all the changing markets. Flexibility is another word I would use to describe how we are working today. One day you may use direct mailings and the next you are looking at Foreclosed homes. You can't set you self up in one part of the market for long and hope to continue to grow.

The two markets that are working for us are Foreclosed house & high equity. Foreclosed because when you live in the foreclosure capital of the world you have to look. After a year of making offers to bank who are trying to sell homes that need $25k in repairs for retail, we are starting to see banks make an effort to move properties. House that we made offers on a couple of months ago only to be rejected are cutting prices to below our original asking price. A side note: I find it interesting that listing agents of these properties do not call investors back that made offers on the properties to see if they still want them. I think I would do that before I lowered the listing price, Hmmmm. Oh well that's just me. So we are going back to properties that we made offers on several months and seeing if the property is still available. If they are we recheck the comps (usually lower) and resubmit a price (usually lower). Our market is still dropping from 2 to 5% each month.

High equity homes can be really fun if the seller can wait for their money. Our definition of high equity is 60% and above (i.e. a house worth $100,000 and the owner has a loan on for no more than $40K). We have purchased many homes from sellers who need to sell but can't find a buyer and will provide owner financing. We frequently get that owner financing at 0% interest. How? By asking them for it. When that happens you can pay a higher price for the property because every payment is paying down principle.

Using this deal structure we frequently put a small 1st Deed of Trust, from a private lender, to pull money out of the property to run our business. The seller is in the 2nd position. Again you ask why would the seller do that, because we asked. So our private lender is in a very secure position, the seller is getting payments on a house they could not sell and we have a property that because of the deal structure we can repackage and offer owner financing to a buyer or a Lease Purchase Option (see previous post) and still make a positive cash flow. Throw in substitution of collateral and you have a sweet deal (But I will save that for another post).

See Ya,
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Tuesday, March 3, 2009

How Much is That House Worth

Buying properties today require you to know the value of a particular property. It can be the toughest thing to determe. Tough if your Realtor is not available to give me a quick price. How I do it is using the Internet. In the video below I go through the steps I do to get a quick value of a property. Remember in this environment to be conservative. I would rather lose a deal by being too low then buying a property for more than its worth.

So the video will show you how to get a value for a property so you can start to evaluate the property to see if it is one you want to buy.

I hope the video was helpful. Let me know if you have any questions.

See Ya,
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Monday, March 2, 2009

Stop Being a Landlord for Your Rentals

Who wants to be a landlord? Not many people enjoy those later night calls from their tenants letting them know that the roof is leaking right on their head. Especially on a Saturday night at 11:30pm when you can't get anyone to the property before Monday and the tenant wants to know what you are going to do about it.

Well I have a solution for you that does not require you to sell your house right away, a Lease Purchase Option otherwise known as Rent-To-Own. In my last blog post I described what a Lease Purchase Option was and how we use to sell houses but you can also use it to get tenants in your properties, paying a higher rent and avoid the late night calls. Will you have to sell the house? Yes if the tenant exercises their option but you will be getting a high rental rate and peace of mind. You also help someone attain home ownership.

How does a Lease Purchase Option help me get out of being a Landlord. When we lease one of our properties we impress on the tenant that they will be owners of this property and they need to start taking care of it. This is their home and the maintenance issues are things they would have to do if they owned the home. We have not had a tenant argue with us on this issue. So we collect an Option Deposit (non-refundable) that we use as the down payment for the purchase of the property if they exercise their option and a higher rent (we will credit a portion of the rent towards the deposit). The purchase price of the property is locked in with the agreement so your know what you will be getting for the property. The property will remains yours if the tenant decides not to exercise their option. Does that happen, yes more often than you would think.

So next time you need to rent your property, especially after you just evicted the last tenant, think about a Lease Purchase Option. You will find that the tenant is more committed to the property, will require less of your time and the tenant will be happier.

See Ya,
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Sunday, March 1, 2009

Lease Purchase Option

We just completed our latest house sale and it was not a conventional sale. We did a Lease Purchase Option. You may be asking yourself what that means and that is OK. We get a lot of questions about that and I have added a video about Lease Purchase Option or Rent-To-Own to answer those questions.

So please review the viseo and let me know what you think. What have I missed? What s not clear?

See Ya,

Saturday, February 28, 2009

Hooray Orangeburg is Leased

You need a strong constitution for real estate because of the roller coaster rider. But I can definitely tell you today is an up day (see next paragraph). You buy a property and you do repairs on it and you assume (right or wrong) that you will move the property in one day. OK maybe that is mostly wrong. But I can dream. Realistically you need 60 days from the time you offer the property until it is sold or leased. Why? Because it is a big purchase and people need time to think and ponder on the purchase before they can say yes. Even if it is a great deal.

That brings us to Orangeburg. A property we purchased last December 08. We spent several weeks getting it repairs and in livable shape. We held an open house and very few people came. We offered the house at a great deal but the people were not ready. We continued to market the property in the newspaper as a Rent-To-Own in the rental section. The calls came in and in less than a week we have leased the property to a great family.

The woman is a single mother with three kids who is renting in a not so good part of town. One of her daughters commented when she entered the house "...that it was a castle". Maybe not a castle to me but that is why I love this business. We were able to take a property that was ripped up, rehab it and lease it to someone who would not have gotten a second look from a bank. Another person who feels more secure now that she has a home of her own. Truly the American dream even in this economy.

So lessons learned: 1)It takes more time than you thnk to move a propery; 2) Boy it is fun to help people; 3) We need to do more of this.

I have been getting questions about what is Rent-To-Own and how our program works. I am going to put together a video and post it here on the blog tomorrow explainig our program ad how you can use it to gain home ownership. Even if you can not buy a home today, you can lock in today's prices for a future purchase.

See Ya,

Wednesday, February 25, 2009

Ouch That Hurts!!

Wow, sorry guys and gals! I just reviewed the last couple of posting I have done on this blog and I see that I have fallen into the same trap everyone else is in. As Eor would say "'ll never work". That is where we are in the economy but we do not have to participate. In fact I am standing up right now and going to my window and shouting - "I'll mad as hell and I am not going to take it any more."

OK, so the I borrowed the line for the movie "Network" but it still applies. We are looking down and thinking how can we reach the stars. Well the first way is to look up. I do not want you to think that I am down on Real Estate - I'm not. Real Estate is the ultimate wealth building business in the world. It is simple but not easy. So life will throw all kinds of curve balls at you and you just have to hang in there. You will get your pitch to hit. (Sorry baseball season is coming).

So don't let the news of the day bring you down. In fact throw the paper away and turn off the TV (well maybe leave it on for Life and Lost) and work on your action plan. Send out letters to motivated sellers; return seller calls; talk to buyers. Talk to positive people and remember the incredible buying opportunity we have today. People will be talking about this time for decades to come and you will be able to say... "I bought several income properties for my retirement in Maui" (or any other exotic place you choose). Because that is what we are doing ;-)

See Ya,

Tuesday, February 24, 2009

Follow-up, follow-up, follow-up!!!

Follow-up is the word when it comes to selling properties. In fact follow-up is the word in buying properties also. You must not rest on your leads. Even if you get tons and tons of leads (I actually don't know how many tons and tons of leads are but it sounds like a lot) you can not wait for them to call back. As my mother says "He who hesitates is lost" and that can not be more true. The buyer or renter has too many options for you to sit back and wait.

Do not count the property sold or rented until you have cash and a contract in hand. Otherwise the property is still available. Let me tell you a tough example on that note. Our first property we purchased, and I will admit we purchased it wrong. We paid too much and were optimistic about selling it quickly. We poured all kinds of money in the home. We took it from a REO nightmare to a beautiful home. We had our open house and we got a few people through it. We were priced to high for the market. We continued to market the property to avail. Then a woman came by and said the house was perfect for a program she was putting together. In fact she wanted buy it with owner financing and pay it off in 7 years. That worked out to $3300 per month. Well we got the agreement drawn up and she sign with a earnest money deposit. We found out later that the check she gave for the earnest money bounced. We asked her and she said that an investor pulled his money early but she would have the money in there soon. Meanwhile she paraded interior designers, furniture reps, etc through the house to begin to get the house ready. Well many months passed and no closing. Finally we told her to put up or shut up. We canceled the escrow and realized that we lost 3 months of marketing for the house. We lost all the momentum. We never recovered. We gave the house back to our private lender and learned a very expensive lesson.

The deal is not closed until we have the money and the contract in hand. Otherwise the property is always available.

Monday, February 23, 2009

Weekend Happenings

Well as you can see I have changed my blog layout. That is the problem when you have an architect writing a blog. I am still looking for that perfect layout but in the meantime this layout looks good.

The Open House over the weekend went pretty well. We had more people show-up on Sunday than Saturday which goes to show that I do not know how the market will react. I would have thought the it would have been the other way. We got a few people who are interested in the property. We did discover that the flat fee listing we had done did not display in the local MLS. We are still learning things everyday. We have corrected that problem and we got a bunch of calls from realtors asking if the property was still available.

So the house maybe sold by the end of the week. That would certainly be good news. Once we have this sold we will concentrate on the next property. Hey anyone want a fixer in Tracy $165k all fixed up make offer as is, owner will carry.

See Ya,

Sunday, February 22, 2009

Open House Reality

Open Houses are boring. You prepare very hard for the flood of people that will come through the house and very few come. That is just the way the market is right now. We spent a lot of time on clean and fixing and prepping to show the house to 8 people. For a four hour open house that is one person every 30 minutes. Let me tell you that is a lot of sitting around. I find that I look over all the things maybe I should have fixed. By the end of the day it is a long list and can be discouraging.

But in the end we did get one or two people who were interested in the house. Managing expectation is key. I always think we will sell the house in one day. A house is just too big a purchase for someone to walk-in and say "YES, I'll take it" There are just too many houses on the market. The prospective buyers need to see it, usually more than once, and compare it against other houses on the market. So I am preparing mentally for day two of our open house and we will be looking for those people who came through on Saturday to return and start talking price.

I will let you know how it goes.

See Ya,

Friday, February 20, 2009

Real Estate: Retail Selling Today

Can you sell retail today? Yes, of course you can. We are working on a property today for an Open House that starts in a few hours. Go to our website JM2 Sells Houses and click on 303 Duke, Livermore, CA for more information. We purchased this house right (50% on the dollar) but to get a retail buyer I am selling at 80% of market value.

You can not today sell at 95 -100% of market value if you want to sell the property in 60 days. There are just to many properties out there for buyers to look at and they can be picky about the property. So if your property is not perfect you have to be ready to discount the price to the buyer. Also you need to position the property better. A Home Stager is a must. A stager comes in and dresses the house up to accentuate the positives and help the buyer see how their life could be in the home. We have done it twice and it has helps.

So I am off to finish prep for our Open House I will let you know how we did.

See Ya,

Wednesday, February 18, 2009

The Real Estate Market Waits for No One

Hi everyone,
I am just getting back on my feet after being sick all weekend and I still have the same problem I had last week. Being sick did not make it go away. In fact today is my cut off day. I will either find a source of funding for our latest property or I will end escrow and work out getting my deposit back. That could be a fight. I still working with several private lenders but the problem is timing. I may not have enough time to get the funds here without paying a penalty (which I do not like to do).

The market - any market is running scared right now. There is so much uncertainty that people would rather do nothing for the time being then lose money. I can't say I blame them if you read the paper or listen to the news. My job is to help them to look beyond that and look at the long term return they will get from a investment that is secured by real estate. Property values are down in California but they will not remain there for long. Too many people like to live in this state and there are too many jobs for them not to. That means housing demand will grow sooner rather than later. It will take time for people to realize that they have a job and can spend money again before we see any recovery. But that means we have an opportunity to increase our investment portfolio. I don't know about you but we are buying houses that cash flow in California. Something that was unheard of only 12 months ago.

Meanwhile we are doing what everyone else is doing in this economy. We are cutting expenses and limiting spending to only what we have to do on the properties. That is the new model. You need to hold properties for a longer period and have them cash flow. I see holding the properties for many years. Though some we will hold forever as a great source of cash flow. Ultimately reaching our goal of 15 to 20 houses that are free and clear with a great positive cash flow.

Let me know what your model is and how it is working.

See Ya,

Friday, February 13, 2009

New Valentine's Day Tradition

Happy Valentine's Day!!! Now I know it may be tough to be happy and uplifting with the way the economy is today but I say we start a new tradition. They say: "Home is where the heart is.." but I want to revise that to "The Heart is where the home is". So with that theme I am starting a new tradition: Forget the flowers but a house.

Yes, don't waste your money on flowers that will die; buy something that your spouse, partner, significant other will remember forever: A House. With prices so low, now is the best time to be buying. You say you can't qualify for a loan for the house, that's OK I hear only the bank presidents can qualify. Don't let that stop you. When it is tough to sell houses sellers become motivated and will deal. Ask for owner finance; we do and you would be surprised how many people say yes. We offer owner financing on all our available properties with no bank qualifying. If you do not have the down payment, then do a Lease Purchase Option ( also known as Rent-To-Own) the house. You do not own the house but you lock in the price of the house in today's value and you can get credit towards a down payment to purchase the house in the future.

So don't wait go out today make that offer on a house and get it gifted wrapped for your loved one. You say you do not have a loved one well then buy it for the most important person in your life - YOU!! An additional benefit from National Buy A House Day (trademark pending) is it will give one hell of a boost to the economy. Way better than any bail out that will come and a lot cheaper in the long run.

Happy Valentine's Day: now go get that house and then buy the flowers. If you need one just visit

See Ya,

Thursday, February 12, 2009

Working under the gun in real estate is stressful

Wow the days have gone by since the last time I posted on my blog. Monday I told you about our setback on our latest deal. Well today I still have that challenge. I have been talking to all kinds of people about private money. That is why I spent so much time on it in the 30 Day Action Plan (see previous blog posts). It is vital because once you have it and can keep a constant flow of it you can make real estate deals with confidence. If you have to find the money after you have a deal signed then you live in the land of stress and that is not fun.

We continue to talk to people about the possibility of earning 8 - 12% on their money secured by real estate. But what we are finding is while people like the interest rate they are fearful of the economy and do not want to make any changes until it settles out. So we keep talking and meeting until we have what we need.

So I will keep at it and let you know more tomorrow.

See Ya,

Monday, February 9, 2009

Real Estate - One Step Forward & Three Back

Wow what a weekend. I am glad to be back to work (like I take the weekend off). One of the many things I have learned in running our real estate company is that things change on a dime and you just have to be ready for them. Some days it is "One step forward and two or three steps back" That is what happen this past weekend.

We have a great property we have an offer in on that we are buying with private money cash. We have everything all set to close this coming week. Well I heard over the weekend from him that his money is not available for 2 to 3 months. Why? it really does not matter. That happens and you have to move quickly. All my plans last week for the property and what we were going to do to it are gone or at least in jeopardy. I did not get much sleep last night as I formulated what I would do this morning to resolve this challenge. That is how you need to look at it. It is a challenge that I need to over. You will get a lot of them in this business and you either fight or run. Well I have too much on the line to run so I am fighting as hard as I can. Do I need this challenge? - probably as much I need a hit in the head but I will learn from it.

So I have my plan for the day to fill this gap and I will be talking to a lot of people today to try and save this deal. This is the life of a real estate entrepreneur and I need to always be ready. This does show me that I do not have my business model completely set. If I had all the private money I needed then this would not be a big deal. That is why you need to talk to everyone you know more than once and then expand out form there.

Well I am off. I will let you know how I did tomorrow.

See Ya,

Friday, February 6, 2009

Real Estate Nightmares

You are sleeping soundly when it happens: you find yourself sitting straight up in bed, your heart beating fast and sweat breaking out all over your body. Congratulation you are officially a real estate investor with properties for sale or rent. It happens suddenly. One night the world is in order and peaceful and the next you are awake at 3:00am in the morning. I know because it happens often for me. Mike what does it mean?

It means you own more than the house you live in. It is that simple. You can't prevent it because once you own more than one house that asset now needs an occupied (preferably one that is paying a monthly rent), maintained, rehabbed and it will generate bills (electrical, water, gas, sewer, insurance & taxes). You start this business with big dreams about buying and selling houses and making big money but it is the details that will drag you down each and everyday. You can over come this - in fact if you are still reading this blog you probably already know this- with commitment and persistence. Because there are days that the crap hits the fans and usual ends up on you. You have to wipe yourself off and keep going. My motto is "Keep moving forward". It's like walking in mud if you stop it takes twice the effort to get moving again.

Another valuable asset for you will be your support team. This maybe a spouse, friends, family or employees. I am fortunate that I have all of these and I use them. I have a very supportive wife who listens and challenges me everyday. I work with my brother to bounce ideas or just dump on him if I need to and lastly I have a great staff. My staff take care of a lot of the details so I can focus on the big pictures items like private money and buying properties.

So when you wake up in the middle of the night - remember to be grateful for the challenge of the day to come and welcome to the club. Also I find it helps to have a pad by the bed to write down what is on my mind to get it out so I can go back to sleep. Have a god night sleep.

See Ya,

Thursday, February 5, 2009

In Real Estate it's about Implementation

Implementation. A key word in real estate; actually in any business but very important in real estate. Why? Because there are so many great programs in the market to buy and sell real estate but it does not do any good if you do not implement. That is one thing no one really talks about. Sure you can watch the shows on TV - buy a house for $50,000 - fix it up for $15,000 and sell it for $125,000. That sounds fantastic, right? And it is possible to do, but what they do not say is that the real estate investors saw over 100 houses and made 15 offers and talked to countless people before they got the deal. Not to mention that it took four months of effort. Yes, you can get lucky and get a deal right off the bat, but that has never been my business model.

Typically my model is based on the longest time it takes to do something and that is after some dead ends on the bumpy road. Hey, don't get me wrong, I love real estate. It is fun to take something that no one wants and turn it into the pride of the neighborhood. Just be prepared to work like a business that is if you want to do more than one a month.

So dust off the program you have on your shelf (I have them also) and commit to implementing the strategy for a period of time longer than 7 days. You have to give it six months and see if you results are not better.

Hey drop me a comment and let me know what programs you have and what's working for you.

See Ya,

Tuesday, February 3, 2009

Real Estate Course: Day Thirty of 30 Day Action Plan

Day 30
  1. Review last 30 days

Day Thirty: The last day of the 30-Day Action Plan and now you are asking yourself what do I do next? You start all over again. By now you should have at least one property under contract. You have seen many properties and written over 20 to 30 offers. So the numbers say that you should have at least one if not more and with the number of people you have talked to about private money you should have the money to purchase the property.

Once that is done what next? Do the same all over again – but this time enjoy the process. This is a can be a frustrating business, but it can also be fun. Like I said at the beginning of this action plan I said it was simple but not easy. You have to do the steps everyday. So commit to doing the steps that are required to successful in this business. Look at property , make offers & talk about private money. There are many steps in between from rehab to exit strategy. Keep learning – network with other investors share information. The pie is very big and there is enough to go around. I believe in the BNI motto “Givers Gain”. So help others and it will come back to you.

Good luck! Please let me know of your questions or successes. Let me know how I can help you in your business.

Monday, February 2, 2009

Real Estate Course: Day Twenty-Nine of 30 Day Action Plan

Day 29
  1. Private Money
  2. Next batch of mailing
  3. Talk to sellers

Day Twenty-nine: Private money! I promise this will be the last time I bring it up. If you have done it over the past 29 days you should have had some successes. Go back to those that liked the idea. If they has lent to you thank them. They are helping your business grow. See if they have any additional funds they would like to lend. Ask them if they know anyone who they think would be interested in the same program. Above all, take care of this person.

If you purchased a large list last week (Day 5), you should be preparing a second mailing or a third if you did one earlier. Why do you want to break-up a large list into two mailings? Simple logistics is the answer. You or someone else has to answer the phone and if you sent a large mailing in one batch you could get a bunch of calls all at once (over several days). You may miss some calls. Dividing it over two mailings will make it easier to take the calls. You will repeat this mailing next month following the market rule of multiple mailings.

Go look at five property leads from the realtors you have met. You are evaluating them for equity (market value – repairs – loans = equity).

Sunday, February 1, 2009

Real Estate Course: Day Twenty-Eight of 30 Day Action Plan

Day 28
  1. Day of Rest
  2. Make note of accomplishments
  3. Enjoy your accomplishments
  4. Read real estate section of the paper
  5. Review action plan for coming week
  6. Spend time with your family

Day Twenty-eight: Sunday, a day of rest for you. If you have followed the plan up until now you have established your business and talked to several people about your business and about your private money program. So look back and pat yourself on the back. You have taken the preliminary step to starting your career in real estate. Look at what has gone right and what has gone wrong. What can you change to make the next week better? What can you delegate to others (staff or virtual assistance)? You want to spend your time on items that make you money.

Spend some leisure time reading the paper. Look at the real estate section, read the articles and the real estate for sale ads. Review what you will do the coming week, and most important, spend time with your family because that is why you are doing all of this work.

Saturday, January 31, 2009

Real Estate Course: Day Twenty-Seven of 30 Day Action Plan

Day 27
  1. Talk to one person every day about your private money program
  2. Lunch with an expert (realtor/title officer/mortgage broker)
  3. Follow-up with everything

Day Twenty-seven: Private money! We have been talking about this for the past four weeks. That is how important this is to your business. It is absolutely vital. If you have not done this over the past weeks then you might as well quit now because you need the money to continue your business. Yes you can get some from a bank, if you have god credit and a large down payment but that will only take to two or three properties. I do not know about you but my business model involves many more properties than four. So go pull out your warm list and review how everyone on it responded to your offer. Compile a list of people who said no because you will go back to these people. We want to give them five opportunities to say no.

You have had some good lunches over the past four weeks. Though your lunches you have been talking and building your power team. Continue to talk and network with these people. They can help you in the success of your business so help them with theirs.

Remember to follow-up on all the properties you have written offers on. Follow-up is a key to the success. Check in with sellers you have talked to and made offers on. Things change over time and they maybe more receptive to your offer.

Friday, January 30, 2009

Real Estate Course: Day Twenty-Six of 30 Day Action Plan

Day 26
  1. Talk to one person every day about your private money program
  2. Lunch with an expert (realtor/title officer/mortgage broker)
  3. REOs – Talk to realtors
  4. Talk to Title Company
  5. Make more offers

Day Twenty-six: Private money! Review your warm list and how they responded to your offer. You may have to modify your presentation. You are selling an opportunity. You are not asking the person to buy anything. They are lending their money and getting an interest payment.

Have lunch with an expert. Make sure you rotate your list of experts so you grow your list of real estate experts and contacts. Remember you can also talk to them about your private money program. That will help with the action item above.

You should be constantly talking to your realtor network about REOs (Foreclosed homes) in your farm area, researching them and making offers. Any offers that were rejected should go in a file to be resubmitted in 30 days if it is still on the market. Do not go chasing deals; let them come to you.

You should also be talking to your Title Officer about deals you have in escrow. Reviewing preliminary title reports, checking documentation and removing any roadblocks and challenges that come up during the escrow. Do not assume that no news is good news.

Continue to make offers on properties that meet your criteria. It is a numbers game. Look at 100 properties for 10 offers to get one deal. That is why you tell house finders, realtors, etc. what you are looking for to cut down the time needed to find the leads. The numbers do compress, as more people know what you do and begin to refer properties and people to you.

Thursday, January 29, 2009

Real Estate Course: Day Twenty-Five of 30 Day Action Plan

Day 25
  1. Talk to one person every day about your private money program
  2. Review all offers made so far (follow-up)

Day Twenty-Five: More private money. By now you have had some success that will build up your confidence to go out and get more. After you have a private lender or two, give them your information packet. Yes they have seen it before, but have them look at it with the eye to explain things more clearly. What questions did the booklet answer and what did it leave out. This is valuable feedback. The information they give you will make the booklet better for the next person you give it to. Remember you can make no guarantees about rates of return. Check with you attorney to verify that you are complying with the local, state & federal laws for private money. You may have to register with the SEC. Your attorney can help you there. OK, enough with the disclaimer and warnings.

Remember to follow-up on all your offers you sent out. There is a deal in that pile.

Wednesday, January 28, 2009

You Can Do More with Your IRA than You Think

Hi Everyone,
One of the many ways we fund our real estate deals in through private money. We have talked to a lot of our family and friends about lending so we can purchase income properties. We get the same first answer: "I don't have $50,000 laying around to lend or I would" We understand, we don't either. The vast majority of people in America today don't. Oh but they do they just don't know about it. The rich have been using this tax saving advantage for years. It is called the Self-directed IRA.

Now I hear you out there saying "I have a self directed IRA already and that is where I buy my stocks and bonds. I can't lend it to you to purchase real estate" That is where you are mistaken. They are right; the average IRA account at Schwab or Fidelity is not set-up for lending on real estate. Why would they? They make money on trading stocks that is what they know. But Americas are allowed by the IRS to set-up a truly self-direct IRA that will allow them to lend money on real estate. The one catch is the account has to be set-up at a firm that has an approved IRS plan for the IRA, like Equity Trust Company. Here how it works.

You contact a company with a Self-Directed IRA plan. Transfer the funds you want in the account. You contact a real estate investor, like us, and let them know that you have funds that you would like to invest in real estate. You lend the money to purchase the property that is secured by a Deed of Trust on the property for a fix rate and term. The investors either makes payments into your IRA account monthly or at the end of the term (deferred). This way your money is secured by a hard asset, the property, earning a fixed rate, that is usually higher than a bank's CD.

Now a few warnings: you want to work with a reputable company that has been around for many years. There a several companies (Equity Trust Company & The Entrust Group) that can service your needs. Also you want to make sure you are dealing with reputable real estate investor. Contrary to the newspaper articles there are reputable real estate investors. Check to see that they have done this kind of funding before. Ask for references and other private lenders they have worked with. Ask how they do on payments? Are they on time? What documentation to they give the private lender? The real estate investor should never take the money from you directly. It should always go to a Title Company. When we use this form of funding, we never receive the money until the private lender has a Promissory Note, a Deed of Trust, Title Insurance & property insurance (with the private lender listed as an additional insured).

This is a fantastic way to invest money buy you need to do your homework on it before you lend your money. To learn more about this form of Self-Directed IRA you can go to Equity Trust Company website and sign-up for a free webinar called The Purpose of a Self-Directed IRA or get a free report titled Self-Directed IRAs Growing in Popularity. You can always drop us a question or comment.

See Ya,

Real Estate Course: Day Twenty-Four of 30 Day Action Plan

Day 24
  1. Recruit bird dogs
  2. Talk to one person everyday about your private money program

Day Twenty-four: Now that you have relationships with other professionals, you want to start building relationships with other people who will look for properties. They are called bird dogs. I like to call them House Finders. They are your eyes and ears in the community. They can be places where you cannot because of time or money. They stake out a particular area and look for houses based on your criteria. The key to using House Finders effectively is giving them good and clear information about what you are looking for. Where do you find them? Everywhere you go. The mail carrier, the UPS driver, the newspaper person can be a house finder or anyone who is working in the neighborhood as part of his or her job. The landscaper who goes from neighborhood to neighborhood could see houses that are falling in disrepair that may be a sign the seller needs to sell. They make contact with the seller and collect the information and pass it on to you. You finish the research and negotiation and close the deal. You pay the house finder. There are many programs to help you with this part of the job. I recommend Andy Poper’s TeamWork Lead System. He has a system set-up to help you find and manage House Finders. Because once you have a network of House Finders you need to manage and keep in contact with to help them learn and grow.

Next you need private money and you get that by talking to everyone you know. So go and spread the word on your program and collect the money.

Tuesday, January 27, 2009

Real Estate Course: Day Twenty-Three of 30 Day Action Plan

Day 23
  1. Answer calls from sellers based on direct marketing
  2. Talk to one person every day about your private money program
  3. Lunch with an expert (realtor/title officer/mortgage broker)

Day Twenty-three: You should still be getting calls on your direct mail piece you sent out. Start talking to sellers! Have a property information sheet and just go down the sheet. Now remember, this is an opportunity to build rapport with the seller. They may have to sell their property, but they do not have to sell it to you. People want to do business with someone they know and like. So be friendly and upbeat. Be confident that you can help them out of their problem. Don’t forget to stand when you talk to someone on the phone. You will have more energy and that will come through the line. Most of all do not worry about failing. Do not expect to be prefect in fact I have found that helps when people realize that you are human. If you have never talked to a seller about their home you will blow it big time. Just know that now. You will be nervous. You will worry that the seller will know that you never purchased a home before or closed a deal on investment property or that you wear different colored socks or shorts all the time. So just make the call.

Private money! Repeat after me-“Private money is the life blood of my business.” Now go get it.

Then have a good lunch and pick the brain of someone in the field. This is another item that will repeat over and over. This helps spread the news of what business you are working in and helps you establish relationships with other professionals.

Monday, January 26, 2009

Hey where's Day 21

Hi All,
There is nothing wrong with your browser. I missed Day 21. Fortunately it was a day of rest and playing with the family. So I skipped the day. It would be similar to Day 14 if you want to read it.

I have been spending the weekend reviewing my business and its finances. We have purchased a lot of properties and the tendency is to get lazy with the finances of the property and the business. The Real Estate Bootcamp has really got me thinking about what we spend and where. As we continue to buy property we want to keep our cash flow in mind. In the past we have purchase property that had a small negative flow because property was appreciating. Well I do not know where you are, but in California I am still waiting for the bottom of the median price to appear. We have dropped 35 - 50% in 12 months and more to come in 2009. So now is the time to buy for the long term. We are holding our properties and looking to extend our owner financing as long as we can. Private Money is even more critical as banks are making it harder and harder for buyers to qualify. Our ext strategy is Rent to Own and Owner Financing and I can only do that with seller financing and private money. So keep your toolkit update and use all the tools in it.

Well I am getting back to work buying and financing properties. Let me know if you have any questions or comments.

See Ya,

Real Estate Course: Day Twenty-Two of 30 Day Action Plan

Day 22
  1. Follow-up on all calls and property visits
  2. Talk to one person everyday about your private money program
  3. Lunch with an expert (realtor/title officer/mortgage broker)

Day Twenty-two: By now you have a list of properties you have looked at and made offers on. Take time to follow-up on those properties. In fact you should go back to those properties at least once a month. Follow-up will get you a lot of deals. Your offer may have been rejected the first time, but time can soften a seller who needs to sell. Your offer maybe the only offer they have received. Following up may give you an opportunity to buy the property. Check your comparables for the area again and rewrite your offer. We often find that the offer will be lower because property values have dropped. We always want to buy better that will make a Lease Purchase Option or a Rent to Own much easier to cash flow.

Private money! The same old story but vitally important.

Then have a good lunch and pick the brain of someone in the field. Pick someone you may have met but do not know. You can talk about the real estate environment and how their business is being impacted. How do they see it changing in the future? You are building relationships with these people that will pay off in the future. Refer work to them or use them. If you run out of people to talk to ask people you have already met who you should be talking to about your business.

Sunday, January 25, 2009

Real Estate Course: Day Twenty of 30 Day Action Plan

Day 20
  1. Ad for property
  2. Talk to one person every day about your private money program
  3. Lunch with an expert (realtor/title officer/mortgage broker)

Day Twenty: Now that you have a property tied up, review your exit strategy and implement your procedure for selling the property. Remember it is about price and terms. You attract buyers by price and/or terms. Your ad on craigslist should reflect this.

Private money! Enough said.

Then have a good lunch and pick the brain of someone in the field. Pick someone you may have met but do not know. You can talk about the real estate environment and how their business is being impacted. How do they see it changing in the future? You are building relationships with these people that will pay off in the future. Refer work to them or use them.

Friday, January 23, 2009

End of the Real Estate Bootcamp

Hi Everyone,
Jeff and I are back from RoopDoran's Real Estate Bootcamp in Florida. What a week! We saw a lot great investors. We spent the week discussing how the old rules are gone. Flipping is almost entirely dead. We cannot rely on a retail buyer. We are now buying and holding for two to five years. While there is a lot of bad news to think about; we are focusing on the opportunity to help our communties by buying properties that are distressed and repairing them and reselling them with Owner Finaincing or Rent to Own to people who do not have the greatest credit and can't qualify for a loan.

We had a night when we got together with 10 investors from across the country and talked about our experiences and how we leverage our knowledge. That was a great session. I learned a lot about myself and how I should run my business. That was another theme during the bootcamp. Get your finance house in order. Streamline your operation and watch the bottom line. So the world of real estate has changed again. The fudamentals still work it is the buying and the selling that have to change. We are buying for the long term and we need to buy lower to account for the dropping prices in our market.

We will continue the 30 Day Action Plan because the it represents the fundamentals. We need to focus on the fundamental. Have a plan for each day and following it. Implementing everyday to reach our goals.

See Ya,

Real Estate Course: Day Nineteen of 30 Day Action Plan

Day 19
  1. Talk to one person every day about your private money program
  2. Lunch with an expert (realtor/title officer/mortgage broker)
  3. Purchase one property

Day Nineteen: Private money! Enough said.

Then have a good lunch and pick the brain of someone in the field. Pick someone you may have met but do not know. You can talk about the real estate environment and how their business is being impacted. How do they see it changing in the future? You are building relationships with these people that will pay off in the future. Refer work to them or use them.

With all the offers you have made over the last three weeks you should have gotten one accepted. The law of averages says you will. Now what do you do? First stop and celebrate your little victory…..ok, now back to work. With all the people you have talked to about private money you should have a couple of sources for it. If you do not, get on your horse and talk to everyone you have already talked to. Get more “Nos.” You need that money to close the deal. Do not use your own money in the deal. I know it is tempting to do that but that is not your job. You bring value to the deal that attracts the private money. So get out there and get the money. You can control the closing to make sure you have the money for the deal. What is your exit strategy for the property?

While you are getting the deal closed, you are going to place an ad to sell the property on craigslist. It is fast and cheap (free). Look how other people have placed their ad and how it attracted you. Copy the good ones and make sure you have pictures for it. This will get your phone ringing. Collect as much information as you can about the potential buyer. If they do not want this property you can look for other properties they might like. You are creating a buyers list. Anyone who calls about property goes on the buyers list.

Thursday, January 22, 2009

Real Estate Course: Day Fourteen of 30 Day Action Plan

Day 18
  1. Talk to one person every day about your private money program
  2. Lunch with an expert (realtor/title officer/mortgage broker)
  3. Continue to answer calls from sellers
  4. Look at properties to buy

Day Eighteen: Private money! Enough said.

Then have a good lunch and pick the brain of someone in the field. Pick someone you may have met but do not know. You can talk about the real estate environment and how their business is being impacted. How do they see it changing in the future? You are building relationships with these people that will pay off in the future. Refer work to them or use them. Considering joining a local BNI group. This is another way to extend your group. This is a group of business people who refer work to others in their group based on relationships.

Your marketing through direct mail should be getting some calls from sellers. Take those calls live and talk to sellers. Get the information on the property and check for equity. You should also be calling sellers who advertise on craigslist. You are collecting the same information as stated in the paragraph above. Work on structuring your deals and write offers. That is the name of the game.

Real Estate Course: Day Seventeen of 30 Day Action Plan

Day 17
  1. Talk to one person every day about your private money program
  2. Lunch with an expert (realtor/title officer/mortgage broker)
  3. Review craigslist ads
  4. Review rentals in newspaper
  5. Look for equity

Day Seventeen: Private money! I hope you enjoyed your day off. But you can never really have a day off (well except Sunday). Review your warm list and how they responded to your offer. Compile a list of people who said no because you will go back to these people. We want to give them five opportunities to say no. There is no business without private money.

Lunch with an expert. Make sure you rotate your list of experts so you grow your list of real estate experts and contacts. Remember you can also talk to them about your private money program. That will help with the action item above.

Post an ad on for your area. This is exposure for your business. In fact review craigslist under the real estate section and see what others are posting. How is it written? How can you adapt that to what you are doing? I have looked at other items people are selling and how they worded their copy and adapted that to what I want.

Spend some time reading the paper. Look at the real estate section, read the articles and the real estate for sale ads. Call on the houses for sale and for rent. The rentals may be landlords who no longer want to own rental property. Look for opportunities.

Go look at five property leads from the realtors you have met. You are evaluating them for equity (market value – repairs – loans = equity).

Wednesday, January 21, 2009

Day Two of Real Estate Bootcamp

Hi Everyone,
Yesterday's bootcamp was so good that I missed my post for the 30 Day Action Plan. Sorry about that. I will post Day 17 later to day. But the interaction with other investors was well worth the delay. I will be digesting it over the next several days and sharing it with you. One thing that is coming through loud and clear is that you need to work harder to achieve the same results as you did last year or the year before. I have met investors from all over the US and last year took them by surprise as much as everyone else. We are all having to adjust to the new environment.

Though the news maybe bad we as investors look at it as the best time to buy and hold real estate then right now. All the models and shows about Flip This House are gone because that model does not work. You have a hard time finding a buyer that can qualify for a bank loan to buy a house. Most of those people are going through a realtor. Our model has changed from flipping and selling retail to holding or selling with owner financing. Prices have dropped so much that properties, even in California, can be purchased and rented for a positive cash flow. So we are going out and buying properties that we will hold forever. Our retirement will be the cash flow off multiple properties.

I was in a discussion group last night with other investors and the word mentioned the most was leverage but I will save that for the end of today or tomorrow morning. Look for Day 17 of the 30 Day Action Plan later today also.

See Ya,

Real Estate Course: Day Sixteen of 30 Day Action Plan

Day 16
  1. Marketing in your farm area
  2. Research properties
  3. Make offers

Day Sixteen: No Private money! Take a break from talking to people. But if the opportunity presents itself, then do not hesitate.

Today is the day to increase your marketing effort. Marketing is the lifeblood of your business and you cannot stop it. You can adjust the size of it but never stop it, since it takes such a long time to get the momentum going. You start a marketing campaign it takes time for people to notice it and respond. Once they do respond you do not want to shut it off, because you will have to start again and it is about momentum. You are already doing direct marketing to homeowners, now you want to extend that reach. Bandit signs are the little 18 x24 signs you see on the side of the road that say “WE BUY HOUSES” with a phone number. You see them everywhere because they work. So today check into ordering 100 plus signs and arrange for someone (not yourself) to place them. Unless you think your time is better spent putting up the signs instead of talking to sellers. You can advertise for someone to place the signs on craigslist. Also check with your local government to see if they have any sign ordinances against putting up the signs. You can also buy a bench sign. It is simpler to do but can cost more ($100/mo). It is also stationary to one location, so pick a location careful. You are building your name in the community. There are many other ways to advertise. Brainstorm more ideas and keep your eyes open to what attracts your eye and why.

You should be constantly looking at and researching properties. Talk to your network, look on craigslist and drive your farm area.

Monday, January 19, 2009

Day One of Real Estate Bootcamp

Hi all,
Day one of the real estate bootcamp is over and the best part is the after seminar network party. I was with a group of ten real estate investor talking about what is going on in the market. The watch word here is private money. You think I am making it up in the 30 day action plan, but you need private money to survive and thrive. So take your warm list and start making lunch appointments. You need to offer everyone you know what opportunity you have for them. With private money you can go out and make offers. You will have confidence to make great offers and you will get acceptances.

So go do it.

See Ya,