Real Estate Investing Business Blog

I”ve decided to open a mentorship program for those interested in learning real estate. I offer a free 1 hour phone consultation. Go to http://www.reibasics101.com if your interested.

Also I’m pulling my DVD’s from the market for the time being. I’m going to re-evaluate them. There has been such change in the industry any info products I provide should be current and up to date. I will review and repost them if I think they are still current.

Thanks,

It doesn’t matter what you choose to focus on as your career there will always be obstacles, and roadblocks in your path. Its how you choose to deal with these challenges that will ultimately make you successful or a failure.

Here is my latest challenge. I bought 3347 Headrick Circle for $39,000. I paid Cash. I put about $6000 in rehab cost. So I’m into Headrick for about $45,000. I go to my bank to get a credit line. The appraisal is $83,000. The bank will loan me 80% of that which is $66,400. Cool so I’m about to make $20,000.

Here comes my roadblock rumbling in. My banker and appraiser suggested that I get a survey done to see if the home is truly in the flood plain. If it isn’t then I can save a bit on insurance. So I figure no problem lets spend the money and see if I can save some money on flood insurance. If only it was that easy.

The survey comes back and my home is about 5-6 feet on the neighbors property. Unfortunately, no bank will loan on a house that is on someone else’s property. So we have $45,000 tied up in this home and no quick solution to retrieve my money.

I find out who the neighbor is that owns the property next to mine. My attorney contacts them and tells them about the situation. They are real friendly people but they knew nothing about real estate. The property next to me is a mobile home on a lot and they collect lot rent for the full year once a year and thats it. Their primary business is a funeral home that they own and run. They let their attorney handle all of their real estate business and negotiations.

Now you would think that it would be as simple as contacting their attorney and getting the matter taken care of……no life had other plans. In our town we had an elderly man throw a homemade bomb into a law firm in town. Yes, you guessed it the same law firm we’re suppose to deal with and yes the only person who was critically injured was their attorney.

So, I talked to the neighbors on the phone and get them to meet out at the property. I meet with the son of the owners. Two days latter I meet with the son, and the mother, and another family member at the property telling them my situation.

After this I call everyday for a week and receive the same answer. We’ll call you when we come up with an answer. I kept asking them to name a price but after 1 week of not getting anywhere I went ahead and made them an offer. $900 for the .08 acres I need or $5,000 for the whole lot. I offered fair market value of the property. I wasn’t even trying to get a discount. Again I call everyday and again its the same answer we’ll call you back.

So a week later I finally get a call and they want to meet at the property again. I go out there again and they finally make me a counter offer. Guess what the counter offer is??……$10,000……I balked at the offer and told them that was to high. They said they sold grave lots for more then $900 so my first offer seemed far to low for them. After some talking I said can you meet me at least half way at $5,000. I finally got a confirmation that they would the next day.

I’m paying 4-5 times what the property is worth but they know very little about real estate and are basing their price off of their own business. Plus I have the feeling that also know that I have no leverage in negotiating this deal. I have to have the land and there’s no way around it however I am grateful it is only 4-5 times and not 10 to 100 times more then what its worth.

Challenges and obstacles are never ending and particularly in real estate investing they are more costly, and more frustrating when your business is on the line. You have to have the absolute belief that you are going to succeed and you must take action to make it happen. I called just about every single day. If I had choose to just let them call me I would probably still be waiting. I encourage you to take control of the obstacles that come into your life and to move them as efficiently and quickly as you can with no less then 100% of your focus and effort. When big challenges arrive don’t be afraid and don’t hide hoping the problem will go away. You must confront it head on!! Find out what challenges are holding you back in life right now today and take control of them. Find out steps you need to take and go after it.

I have another wonderful lesson from the world of real estate investing coming. It’ll be posted here in the next couple of days. Stay tuned….

 Welcome to another edition of the carnival of Real Estate Investments. I encourage everyone to take the time to visit these sites so that you can learn and grow in your business. Here are the articles for this weeks edition.

admin presents Stupid PMI Tricks, Part 1 posted at Short Sales Riches.

Erica O’Leary presents Combine Sections 121 & 1031 for Maximum Tax Benefit posted at Bankers Exchange Services.

Don presents Pre Construction Investing posted at Tony Travis.

R.Pettinger presents Tips for A Quick House Sale posted at Housing Market.

Joe Manausa presents Property Flipping Re-Energized? posted at Tallahassee Real Estate Blog.

Everything Finance presents Simple Foreclosure Solutions posted at Everything Finance.

Don Conrad presents How to create the kind of curb appeal which attracts good tenants posted at Find That Quality Tenant.

Joshua Dorkin presents You Know That You’re a Real Estate Investor When . . . posted at Real Estate Investing For Real | A BiggerPockets Blog.

Thats it for this week. I’ll post more next monday! Enjoy!

I always want to be upfront when it comes to my real estate investing and I have to admit to taking my first loss on a property this past week. Here is the story with 132 Round Tree.

Last year when the market was selling reasonably well one of my partners found this property. It was a foreclosure. It was listed at $149,900. The tax card had it listed at $152,000 and our comps placed the property in this range as well. With our partnership if he finds a deal and I agree to it then I place offers on the property. After a few offers we had a contract for $120,000.

It took 3 months to close because of title issues so we closed on it in late July 2007. As you well know the market came to a dead halt around this time frame. However, with this particular partnership we only sell the properties. They do not wish to hold them long term.

We actually found a buyer in December. We knew that with the market like it was our main agenda was to sell the property and break even. Their credit was borderline around 580. They moved in and paid us $1100 a month in rent which actually kept the property from losing more money then it did. 7 months later we finally closed the deal. We ended up losing about $6,000.

So why did we take loss. It comes down to my partners. As you know I am only advising a rent to own strategy in this market. They were not interested in that startegy. I decided that it is much better to keep good relations and a good partnership in tact then to argue and try to steer them into a situation that they did not want to be in. Plus, for other reasons one of the partners had to remove as much debt as possible from their balance sheet for other business reasons.

So you win some and you lose some but there is always something to learn. In this case I probably will not be using these partners again until the market turns around. The good news is because of preserving the partnership and not getting hung up on the money I know that when I need them that they will be there. There is plenty of money to be made in this business but its the relationships you build that help you get there.

If you want to make  money in real estate investing in 2008 then its going to take a different approach then when the market was running steadily along. In my DVD REI BASICS 101 basically take the approach of doing rehabs to pay down your debt and to build your cash reserves and then focus on buying rentals and using flips to pay them off.

Unfortunately, I would not recommend flipping to anyone due to all the hassles involved now. Finding a buyer is difficult and when you do find a buyer your only option left to sell on 100% financing is FHA which in combination with lenders being so tight right now its tough to get a home sold. So if you want to invest in real estate how would I recommend you get started now?

I believe as a brand new investor you need to focus on buying 1-2 properties this year and holding them as rentals or rent to owns to eventually resell when the market changes again. Here is the step by step break down on how I would do it as a brand new investor.

1) Talk to your commercial banker. Get prequalified for an 80% loan.

2) Find your source of funds for the 20% down. I recommend an equity line or a private lender.

3) Find your deal

4) Buy your deal and place your tenant in it

5) After 6 months go to another local commercial banker and refinance for what you owe and place a line of credit on your equity. Do not pull out all of your equity. You may want to pull some out for profit but do not pull it all out.

6) In a few years when the market changes sell the homes and take home a substantial profit due to the low prices that are out there right now.

This is how I recommend a new investor who has a stable income and a credit score over 620 to get started. Once the market picks up again then you can revert to my plan in my DVD but for right now be conservative, buy what you can comfortably handle, and understand that any profit you make will come off of credit lines and refinances in these houses.

Now, what if you have no credit and no cash and you want to get started in real estate investing? First, I recommend picking up my No Cash No Credit DVD. This will go into detail about how to wholesale and assign contracts. Here is your guide.

1) Network and get to know every investor in town. Find out what they buy and ask if they would pay you to find a good deal

2) Find out which attorney in town understands investors and how they work.

3) Find a deal and put an escape clause in it.

4) Sell the deal to one of your investors.

5) Build cash and fix your credit with the profits until you can eventually buy a home.

This is how I recommend a new investor get started in 2008. The game has changed but there is always a way to make money if your willing to believe that you can make money, and you supply the action necessary to make it happen.

Here is my first YouTube video post.

Enjoy!