Naked Lady Real Estate, The Bare Truth About Real Estate Investing

Buyers - that's all that matters.

I had several conversations today about some seemingly good deals and all I can think of is "who's going to buy them?"

The potential hold time of 6, 9, 12 months is really freaking me out.  You would think that getting a house at 65% minus repairs would make me jump for joy, but I have to tell you, I am kind of getting the "dear in the headlight" syndrome. I'm at a point now that buying any house (in L.A.) that I would need a hard money loan on and then have to sell to an end buyer within 6 months is a complete turn off. Retail loans for these buyers are just to sketchy right now.

The only strategy that isn't scary right now is getting houses "subject to" that will be flipped, or for houses that have no equity; held in a land trust for at least 3, 5, or even 7 years before being refi'd. Additionally, I'm looking into out of state investing which brings a whole list of other considersations.  I'm still in Taft CA right now, with my $150K property. I just put it on the market with 4% being offered to selling agent, a nice big ad in the paper and I'm putting a great big banner on the house that says: 

FOR SALE:  Bring Me A Buyer, Earn $ Thousands $ Today!

If a non-agent brings me a buyer I will pay them $2000 cash. I want to get the whole city of Taft working on for me!

I had a conversation with a hard money lender today, who is also an investor in Taft and he made me feel a little more optimistic about that area.  However - I must keep in mind that he has many properties available for wholesale there and he certainly isn't going to tell me Taft sucks right now if he's trying to flip me a few deals right?  I already fell for that song and dance once.

Hold on - I do have a point here. The point of this post is GET Buyers First!  It'a time to get serious about creating my buyers list.  I have a couple of marketing plans that I will partner with another investor on.  We'll split the cost and the pool of buyers.  Bascially they will be in a database and whoever has a house that is right for them - go for it!

I will report on our marketing ideas in the next couple of posts, once we get them off the ground.

"Get rid of a 2nd" without doing a short sale?

I have no idea - but Bill Gatten knows.

Someone asked me what the answer was to this and I had no idea.  He asked it in such a way that it made me think that he was trying to learn this so that he could tell his sellers that he could do this without ruining their credit completely by them having a short sale on their credit.  His view was; if we need to do a short sale, then why would anyone want to stick their house in a land trust for the next several years and have the "bad credit" of a short sale on their record. My answer was because their choices are:

1.  Let the whole house go into foreclosure and lose it completely.  You will have a foreclosure on your record.

2.  Let us "salvage" as much as we could and if we have to short the 2nd in order to make the payment somewhat reasonable, then we would have to do it.  Otherwise a $4000 payment for a 1500 sf house in Van Nuys was never going to hold. 

Now he says that he heard Bill Gatten teach something on this subject that says that there is something else you can do with the second - without shorting it.  So is it buying the note - but at a discount?  It's not a forbearance.  I don't think it's reconveyance. 

Hhhhhmmm.  I am going to email Bill and find out and let all of us know the answer. 

Denial: $50K. Knowing What Your Doing: Priceless...

Well - I have never been one to boast (ahhemm), but sometimes when you're right, you're... well, you know.

The saga begins...

In June 07 we were given a 30 day notice by our Landlord after she decided that since her house had been on the market for months with no sale in sight, that we, the tenants were the cause of this conundrum. She was adamant that an "empty house sells much better than an occupied house."  Interesting... I had always thought the opposite was true - but OK.

The back story... 

We sold our house in April 2006, right at the very beginning of the down slide. I saw it coming and advised my boyfriend that we needed to sell the house NOW or we were going to loose all our equity.  Thank goodness that was one of the times he took my advise and we put the house on the market immediately.  We did all the right things, emptied it of all our personal chatchkies, redid the back yard landscaping, priced it 10k below all other houses in neighborhood and made it as cute as a button. We got 10 offers in 1 week.  Bam - Sold for asking price. 

We were going to rent for a couple of years after the sale, so we picked this lovely house in Woodland Hills, that was "perfect" for us in every way.  Our new landlord promised she would not be selling her house for at least 2 years since she had only owned it for 6-7 months at that point.  Great!  We moved in July 06.

Fast forward to Feb 07 when she called to inform us that, regrettably, she would have to sell due to personal reasons and she needed the money out of her house now.  She asked if we would like to buy it and she even offered to carry the paper for a year, as long as we could give her at least 50K down now.  What price would you sell it to us for, we asked earnestly?  Well... since we had been such great tenants she would be willing to let it go to us for only $730K.  After all, she bought the house for $689K in 05 and put 40K into improvements and just wanted to get her money out of it....  Let's see - we pay you $730 for this house, when every other house in the neighborhood is listed between 680-690K....  Hhhmmm... Thanks for the generous offer, but we'll pass.

At the time, she offered to wait until our lease was up before she would list the house.  And at the time, I was still in a "helping mood" so I advised her that no - she should list the house now since it was February and well before the summer when the market would be inundated with homes.  Plus the market was really taking a dive and she should get moving fast.  And by the looks of it - it would probably take 6-7 months to sell - if she was lucky!  She was grateful for our willingness to accommodate. She went ahead and listed it for $740K and so then the saga of the "quintessential seller in denial" began...

February, March, April, May, tick, tock, tick ,tock. She starts to get really antsy...  why was no one coming by to see the house?  In four months only 4-5 people came by?  It must be you guys. She would call us weekly to check to make sure everything was OK on our end...CODE for "what are you doing to prevent this house from selling?" Now I'm starting to become annoyed. She has not lowered the price at all, the market has crashed and she is blaming us.  So after I received an irritated email from her, I "encouraged" her to consider lowering her price to what the other houses were listed for which was $680K at the time.  Well - that was it, she was insulted beyond comprehension and she advised me that she knows more about the market than I do, since she used to be a real estate agent and her best friend - the listing agent knows what he is doing.  And another thing! Even though she lived in San Diego now - she was well aware of what the market was like in our neighborhood!  Well... I guess she told me...!

Well that was pretty much the beginning of the end of our saga - hers on the other hand, still goes on today. After that email, for the month of May, she was unbearable. The message was sent on June 1st that she wanted us out in 30 days.

At the point I was eager to leave her tangled web, so without hesitation we went out and found a bigger, better house up the road and all was well.  On June 29th she called us to let us know that she had reconsidered the 30 day notice and that she would be OK if we wanted to stay until the end of July.  We advised that she was too late, we had found a place and we are moving in that weekend! 

Now October - the house sits empty still.

I Drove by the house the other day...

There was sincere sadness when the "I told you so" thought came to my mind, when I saw how desperate the For Sale sign looked - with it's hand written yellow message and new 24 hour recording banner.

She has now lowered the property to $670K...

Now - no one can even qualify for a $670K loan.....

Oh yeah,  after we moved her agent called us with some questions about the house, and he let it slip that she actually received an offer two weeks after she first listed. The offer: $720K.  He said he begged her to accept the offer and she flatly refused.  She wanted full price - period! 

This week in Real Estate!

Well it has been a very busy week in Real Estate Investor world - or more like it - real estate networking world.  It is truly amazing how many people you can meet - when you actually get out there and talk to people!  Imagine that...

There are people out there with deals and people with money just waiting to get in on deals.  Right now - what is very fascinating - DEPENDING on who you talk to, is Detroit... What the heck is this place all about?  One side says wow - great opportunity to get houses for cheap, that you can; 1) rehab and flip relatively fast(3-6mos), or 2) buy, repair and hold for a couple of years.  If I would buy and hold, then the only way to go would be to put in Land Trust and "sell" with "no bank qualifying" for the duration of the hold.

But back to the flip... I have been talking to a gal who has done a couple of flips in Detroit and she has a deal for me that looks good on paper... however when I talk to the experienced real estate investors such as Phyllis Rockower - the owner of REIC, she says stay away from Detroit!  She doesn't care what kind of "deals" are there - the headaches will out way any reward in the long run....  She let me know that early in her career of being an investor - she did many, many homes in neighborhoods like these and she did them all "rent to own", which in theory, would alleviate many of the headaches that come with being a landlord.  And even though she made a lot of money of these deals, they are not worth getting involved in again.  Actually now that I think of it - she was saying SHE wasn't interested in going down that road again, and that she is way beyond this in her career...  but I'm surely not!  Hhhhhmmm.

Let's think about this... do I have the stamina in my "old age", to put up with these types of "headaches" so early in my career as an investor - just like she did when she started?  I don't know... Additionally - I have been talking to someone who has bulk REO's in Detroit that is selling them for .23 on the dollar.  You can buy as little as 5 houses...  would these be candidates to buy and hold for a couple of years? Yes - she says - OF COURSE!  The scariest bit, being why the heck would I want to deal in property so far away from me?

What do you think?

Networking and more networking

Jeez I am tired.  Last night I went to a huge networking event given by a company called Property Shark for real estate people and services.  There must have been 500-600 people there!  It was at a really cool place called Social Hollywood and while it was a perfect venue for a social gathering - it thought they were a bit extreme in their prices... I mean common' $25 for two glasses of wine?  Next time - bring a flask!  So anywho.... all in all a great time had by all.  Networking is so important in our business - it's amazing what you learn when you get off your arse and go out and meet people.... (you know who you are...)

I met so many people  - investors, agents, appraisers and of course lenders! The most important thing I talked about last night was Detroit... now that is something interesting... I've been talking to someone abot Detroit for a couple of weeks now.  I'll let you know more about this area as it comes in but I must say - it's been eye opening to hear about...  looks like rehabbing a house two hours away from me didn't scare me quite enough because now it looks like I am going to Detroit!  What the hell am I thinking?  Well... I'm a good person and I do a lot of nice things for people... so please God - watch my back...

Tonight another networking event for the PACRAT's Group.  A group of us who get together to mastermind about doing deals with Land Trusts!  Sounds boring to all of you out of the know...but let me just say this - this is an absolute MUST for investors to learn and do in this market.   Click here for more information on how it works....  LAND TRUST

The problem with newbies...

Because of my position at the Real Estate Club, of course I am asked all the time which speakers products I recommend and which ones are duds.  Even though I am completely honest and upfront with everyone in one on one conversations on this topic, I have hesitated in writing about it on my blog. 

But the fact remains that I started this blog so that I can share the immense amount of information that I am lucky enough to be a part of.

There are several issues and misconceptions that are the same for every newbie or newer investor. 

Before I get into this - I know there is the rare bird who studies what he needs to know to get started and goes and there in the real estate world and starts doing it!!  I was not one of them - nor are hundreds of newbies out there. I write this blog for us :)

Misconception #1:  There are many speakers out there that have what seems to be a similar product.  Let's take short sales and foreclosures. The question I get most often is which product should I buy and study?  The truth is that we should study as many different speakers programs as possible. If you want to learn everything that there is to learn on the subject then you should study everyones approach.  Most everyone has a slightly different take and in the programs I have studied so far - I have learned something new from all of them:   Dwan Tywfords, Ron Legrand and Jeff Kaller, Michael Quarles, Lee Arnold.   And there are more to follow!

Misconception #2: Once I buy and listen to a product then I'll know everything I need to know and will be ready to go out and make millions doing it! This is the most harmful misconception to any newbie.   

More than likely - now that you have a little bit of knowledge you are probably even more nervous or scared to get started and you don't know where to begin - so you don't!  We become like a deer in the headlights. Have you ever heard of the term Paralysis of Analysis?  Or we do start to brave the new world and discover there is so much more than what is taught in most (or let's be real - ALL programs), that we start to make mistakes or worse - get into some real trouble that potentially could stop us from venturing out on our own for sometime.  Quoting a famous "guru": Ask me how I know this?

Misconception #3: If I go to a meeting once a month and talk to one or two people I am creating a team and a network.  It is amazing to me that there are folks who are desperate to be an investor, but only come to a meeting every other month.  They don't talk to people and network, and then month after month, they are still in the same position.

If I can accomplish anything at the club manager of REIC, I have come to realize that this is what I am here to change.  From my experience - I have realized one of the most important reasons why I am able to "get out there and DO IT" is because I am constantly talking and networking with other investors.  I start study/masterminding get togethers which help us all learn from and encourage each other to DO IT!

The information that I get when I network with people is imperative in my learning and growing as an investor.

But the bottom line to all this is that no one will ever be an investor until they get out there and start doing it!  Sure you will make mistakes, sure you will be scared, and sure you will probably not make the amount of money you thought you would on your first deal.  But who cares!  If you don't get off your butt and get out there and start SOMETHING now - you never will. Believe me - it took me 6 years from the time that I was last in real estate investing to now when I am "back in the game".  Why?  Because I was scared to make any more mistakes, I wasn't sure I knew what I was doing, and I didn't have a network of real estate investors and mentors who I could count on.  Now that I do have my network and mentors and have a lot more education - I have no excuses!

The Big Crash! And I dont mean real estate...

Well I've been gone for over a week now because, in all truthfulness, there has been almost too much going on to handle and quite frankly I crashed last week.  I have a tendency to take on too much (uh duh...) and then every so often (not that often thank god -because I don't have time), I just crash and burnout.  I probably don't collapse as much as I really should, but for me - it's good enough.  Actually what happens is that I start to loose all capabilities of being about to carry on a conversation or to be able to take in any new information and I kind of just have a blank, glazed over look for about a week... (it could be the Wine, or the Martini's... but I doubt it).  Then one day - I just don't get out of bed - like I did the past Saturday...  But hey - it could have been worse...  I had my two puppies sleeping next to me and I got to play with my new Blackberry Curve all day (just what I need another website to obsess over: Crackberry.com)...   Look at these dogs....  I think they are what inspired me to just stay in bed and do nothing.

Now would you get out of bed with these two next to you?

Also what helped me this week is that I took off half a day on Wednesday and just chilled down at Shutters on The Beach in Santa Monica...  Basically I had no choice, I literally, could not speak or think.  So a lovely day sitting at the ocean having afternoon totties with friends was just what the doctor ordered....

And yesterday - just for good measure, I finalized an important agreement with one of my endeavors that will prove to be well worth a 3 hour drive each day!!  Yippee Kai Yay!

So... for now... I'm back in the game!  Good because I have a lot to report on!  There's houses to deal with (Taft for one- don't get me started..), there are events happening:  PACRATS, Members Only Meeting and Sensei Ron all in the next 5 days, and much much more!