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,
Mike

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,
Mike

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,
Mike

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,
Mike

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,
Mike