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

The deals are slim pickings...

I am so bummed that I am not rolling in the deals.  My goal for this year is to get at least 4 deals a month - wholesale 2-3 of them and keep 1-2 of them to flip myself. Just late last year we were getting a lot of REO properties - but this year - dang.....its been tough.  I should be a lot more grateful I suppose.  We did get  3 properties in Jan and we wholesaled 2 and kept one for fix and flip.  We just got another under contract - but we are still evaluating it.  So - yes - I am grateful for what we have gotten.... but I want more! LOL!

Another thing... these properties in So. L.A. are getting pretty difficult to evaluate.  There are slim pickings out there and the prices are escalating at record speed.  I don't like this at all.  We are to the point that we are turning down more properties that we are getting - or rather making offers on.    We've been getting a lot of "good properties" presented to us by our broker - but after painstakingly evaluating them - the numbers just don't add up and we pass.   DARN IT!  Why are the numbers not adding up?  Two reasons:  Prices are too  high therefore the margin is too narrow for comfort and not enough comps to justify the rise in prices for these hunks of junks.  We are at a crossroad here.  There are a lot of Active properties with the comps that would justfy these REO prices - but they are not SOLDS yet.  We all know we can't base our ARV on active properties.  This sucks!  I keep knowing that in 2, 4, 6 months from now we are going to have some mack daddy comps (potentially), but until then - we must - simply must be cautious.  It seems like we are pioneering in this particular area.  I don't mind being a cautious pioneer.  But what I dont want - is to be a cowboy.   It is the wild wild west out there in certain areas and it's crazy. 

The ironic thing is that once those comps start popping - the prices are going to be even higher to buy these properties and we will be waiting for a new set up comps to start popping up.... LOL.   Oh the joy of being real estate investors in this market.  Or at least in our high profile areas in Greater LA.

I now have another additional broker finding us properties in my target area and he is one hell of a hustler.  He's this close to landing us a couple of properties.  We've put in several offers with him in the past couple of weeks - so fingers crossed.  Between him and our other broker and some of my friends who are buying at trust deed sales - I hope to get another 4-5 properties in the next month!  From my lips to Gods ears.  

Let's rock and roll!

It's OK to be a newbie... but never an amature.

What I mean by this is that if you're a newbie investor it is expected that you may not know what you are doing in any given situation in doing deals. You are expected to need advice or guidance from more experienced investors and to possibly (absolutely) make some mistakes. For the most part as long as you are humble in your learning, are taking advice and in general are being an earnest student of real estate investing - you will be all right amongst your peers and in your investor community.  

Now...Being an armature is much different in my opinion. It doesn't matter if you are a newbie or more experienced investor.Being an amateur means that you do shit wrong, follow the wrong protocol and in general do not respect the unwritten guidelines and rules of working with your fellow real estate investor.  Bottom line is you act irresponsible, greedy or worse - like you know what your doing, but are really just wasting peoples time. 

Don't be an amateur!  Or you will get a reputation as a pain in the ass and likely shunned by other investors.  If your not totally shunned then you will at least be dealt with at an arms length and you won't be given the same favors as other investors.

First of all an amateur investor will call me and tell me how many deals they have done and how much money they have to invest within the first 3 minutes of conversation.  This is someone who is trying to "buy their way in" with nothing but talk and bloviating.  It has been my experience that the big talkers never perform.  It's the quite ones that you need to be looking for.  They are the ones that have all the money.  They don't have a lot of prove.  They know what they can offer and they don't care who they impress.   

Amateurs don't follow protocol.  What does this mean?  For example.  If you call an investor who is wholesaling a property (me!) and say that you want to buy the property - then by god - you had better done your due diligence by then.  If you say your sending the deposit - then send the deposit!  Don't mess around for 3-4 days with every excuse in the book.   If you call to say you are finally sure you want the deal and are going to wire money today then do it!  Don't call an hour later to say that you just talked to your partner and he decided after all he doesn't want the property!  You just wasted my whole morning asshole!   NEVER call a wholesaler and say you want a property unless you know you want that property! NEVER call a wholesaler and say you are sending a wire only to back out of the deal an hour later!  And never ever act as if dicking around with me for a week on this property and wasting my time and energy was not such a big deal.  You are an amateur and a putz. 

Lastly - don't be a greedy mofo.  My friend and wholesaler Ginger Macias was telling me how one of her newbie students was trying to make a $30K wholesale fee off a property!  Or maybe it was $50K.  And then I think that fee was putting the house at 80% or something like that.  Ridiculous!  What a pig.  Don't gouge.  Take your small wholesale fee and give a good deal to the person who buys the property from you.  Now that "investors" name is written in mud.  She has been blacklisted by at least a few wholesalers now - including me.  All by word of mouth. 

All us investors talk to each other.  It's a small world the investor community. This business is tough enough without having to deal with bozos.  I won't do it I tell ya.

Partners in real estate - ey curumba...

One thing I have realized in the last several months more than anything is that is partnering with people in your own company is a bad bad bad idea. And I am talking about "sweat equity partners".  For christ sakes, how many times must I learn the lesson of not taking on partners in my businesses!  Should I partner with people on specific real estate deals - sure!  You betcha!  But no more sweat equity partners.  Show me the money or show me the deal.  Now, should I partner in a real estate investing company and do all my deals with a partner.... hell no!  What a schmo..  Lord have mercy, I’m the one who has the real estate club, who has worked my butt off, scrimping, scraping, and working my fingers to the bone to build it.  Why oh why, do I think I need to take on a partner to do all my deals with? 

Well for one - I keep thinking I do not have the time to take it all on myself.  I am busy with the Club and now my new LA Meeting & Event Center and just felt like having a partner to carry half the work load - would be a great help to me.  But “half the work load” seems to be a complex, twisted, perception to most people.   I have only one way of defining work load.  Are you physically doing half the work – yes or no?  Are you doing the marketing? Are you bringing in the deals?  Are you bringing in the capital?  Are you managing the job?  Yes or no?  It’s very simple.   If I am going to do all the heavy lifting – then what do I need you for?

Listen people, I have learned the hard way to not be eager to take on partners in real estate investing or any other business for that matter.  And if you do – then for goodness sakes, please please please identify from the very beginning what is expected of each person and put it in writing!  Never make deals on a handshake, good faith, or because someone has a good reputation.   All the above is good to start – but always define it and then put it in writing!  Ask me how I know this.  I am the poster child for trusting people & doing deals on a handshake.  Sometimes I’ve come out fine and sometimes I haven’t.  The times I haven’t are the ones that hurt and they hurt bad.  Sweat Equity Partners = Pain-in-the-Assness.

I have gotten some real good advice from my friend Dave Berens lately on partnerships.   He is very clear with me;  I do not need a partner in my real estate business.  But what is OK is for me to partner up with people on specific individual deals as I see fit.  Nothing more.   So let this be a lesson to myself.  Stop the madness of taking on partners in business!  And if you do – then define it,  tweek it, hammer it out, then get it all in writing! But above all – for real estate deals – just take on a partner – per deal. Learn from me – please.  Don’t do it baby!

 

 

Check your rehab DAILY... don't be stupid...

Or I should say - check it every morning - not in the afternoon.  Even check the end of day if you can.  This is even with good workers on your site!  I have pretty damn good contractors and things still can go down the toilet fast if you don't pay attention!  I walked on my site this afternoon ( yes... I was there yesterday as well and every day) and I noticed the weirdest thing: 

WHY oh WHY would we tear up the walk way in order to lay pour new concrete only to STOP short of tearing out the entire walkway up to the front door? 

Do you see this weird carpet thing here?  Do you see the tile in front of it going in the front door?  Why would you not hammer jack all of this out and poor new concrete up to the door???

We are carpeting inside up until the door opening (Duh)... so what the hell am I supposed to do with this weird entry before you walk in?  Really - this is the most asinine thing I have seen done on this job so far.   So now tomorrow - after the new concrete has already been poured and dried over night - we have to jack hammer the rest of this entry and pour additional concrete.  Is this a big deal?  In the whole scheme of things - no....  but this is mistake/misunderstanding/assumption #78 so far on this 30 day job.  They all add up and when we are trying to be completely done in 3 days from now - this is a really pain in the ass....

The moral of the story... the last week of your rehab - be at your job all the time.  Check on everyone, go over everything, watch it all...  that means go in the morning, afternoon and try to get there before the end of day...  (obviously if you have a mack daddy contractor who you have worked with for years and you trust more than life itself... you only need check on your job at least once a day :)  

No biggy... things could be a lot worse and again this is not a a dire emergency... I should consider myself very fortunate for this being one of the stupidest things that I am dealing with...

To bulk REO or not to Bulk REO?

Well I haven't been writing as much as I would like, but the fact is, is that I have been extremely busy working on putting deals together and giving presentations on "how to be a private lender".  Here's the go:  I've been getting into raising private money more and more.  I want to get into the REO market and have no intention of using bank financing to do so.  I have partnered with a very experienced investor and we are creating an LLP right now. 

So - here we are - to bulk REO or not to Bulk REO?  That is the question.  Well - it depends. 

There are those who say - forgetta 'bout it.  Why? for a couple of reasons:

1.  Trying to put the Bulk deals together with the people who say they have the funds is like chasing feathers in the wind.  Those "big" deals don't seem to be happening.  A lot of hype. 

I think this has been true for a while now - however - it seems like I might be getting closer to these deals actually happening.  I will be able to let you know for sure over the next month or two. 

2.  Way too much work to get bulk deals.  Even if they can be "got" = there are too many houses, in too many areas, in too many states of repair, etc. 

I think this can be true to.  It just depends on how much work you are willing to take on.  I for one -  have taken a liking to putting the two parties together.  Those who have money and those who have the deals.

My bottom line for my personal investing business is to raise the money so that we can buy the REO's "individuallyally" (via MLS, Agents, Auctions). 

BUT - I like the idea of putting together those who have the money with those that have the deals!

No Money for Investors? What are you going to do about it?

I have been spending a lot of time over the last couple of months in the trenches of  “show me the money.”  Right now, there are no loans for investors with 4 or more houses - period.    I did find a bank that is still doing loans for investors with more than 10 homes… but what was the catch?  The laundry list of items that you needed in order to qualify left me shriveled up in ball in a dark room sucking my thumb - NAKED!  It was funny.  I was so excited and told my whole club that I found a bank!  Then I had  to break the bad news - unless you are God, you will not qualify.  Bummer dude!

So here we are. I have to tell you the truth - unless I know that I can sell a home to an end user and they are going to qualify and be able to get a loan - then no go.   I have money lined up to buy REO’s.  We have the 20-30% down and have the hard money all lined up… but we are still so sketchy to buy these properties!   It’s crazy.  I think we will feel way more secure if we were using only private money - which is our goal.   So this is the plan for us- forget the banks all together.  We don’t need no stinking banks.  We have moved away from using banks whats-so-ever and focusing on private money completely.

To finish reading my article please click here to go to Biggerpockets.com

Private Investing in Real Estate Trust Deeds, in Simple English.

Well, that question is what I have spent the last week and half - UNLEARNING.  You see,  I am a real estate investor and I, like many other investors, am always working on raising private money to use to close my deals fast (or, in this hellacious market - to close them at all!)  That is the Buzz word - or rather Buzz Phrase these days…. Raising Private Money! 

Now I thought I knew a good amount about raising private money… But what I learned this past week has given my pretty little head a brain hemmorage.  (And for all the old timers and way smarter investors than me out there - you will probably be like “ah duh - we know that”, but for me - it’s a whole new world and it is very exciting to learn, so please bare with me.)

To read the rest of my article on Biggerpockets.com CLICK HERE

Do You Really Need a Land Trust?

By The Hughes Brothers

Chicago, IL

Wh

at is a land trust?  Why do I need to use land trusts? Both are very important questions.  But let us be straight forward with this article.  You have worked very hard to accumulate property for investment. You put yourself, you family, and your children’s future at risk investing in real estate.

Do you realize that one false move with just one of your properties can cause you to lose all of your hard earned investments. One careless tenant can be injured on your property and the world will fall all around you.  Ask yourself the following question “Can you control what is happening at all of your properties right now – this minute?” Is it possible a careless tenant can be injured or die tonight in your rental property? This happens every day in America.

You need a land trust for each property. You need the knowledge that your attorney does not have on this asset preserving technique. Why work so hard over time to have one uncontrollable tenant event cause you to lose all of your properties?  Come on!  You have worked very hard to build your asset portfolio.  Why lose it now!

Land Trusts are the first safety catch to insulate your self from the millions of lawsuits happening in America every year.  Do you want protection from the contingency fee lawyer or would you rather have a bare knuckle fight with him without any defense guards in place?

You have probably noticed that it is VERY difficult to find any information about Land Trusts and how they operate. That is why people from all over the United States come to our website to find accurate information about Land Trusts. Most attorneys do not know how to set up and administer a Land Trust (they receive only three hours…if any of trust education in law school).

The problem is that most practitioners do not know how to set up and administer Land Trusts so many of them consequently advise people not to use them. However, you were probably told by someone (an attorney, accountant or friend) that you need a Land Trust, but nobody told you how or where to find information to help you get started. The point is, do not trust someone (that gives you advice) who does not have direct active knowledge of Land Trusts and their benefits.

We have been using Land Trusts in our full time real estate investment business for almost 30 years. We live and invest in Illinois (the Granddaddy state of Land Trust law) and use Land Trusts in our business constantly. We have found that often times advisors tell their clients, “You can not do that” with a Land Trust. Most of the time they are wrong!

 

Are you a real estate investor or a Real Estate Investing Busienss?

One of the biggest things I am learning right now is to change my mindset from being “just a” real estate investor (who does a deal at a time) to being a Full-time Real Estate Investing Business and Company.

What does this mean?

CLICK HERE TO READ THE REST OF MY ARTICLE "Being a Real Estate Investor vs. Being a Real Estate Investing Business" on biggerpockets.com

Not enough deals coming through your pipeline?

How many leads do you have coming through your pipeline? Do you have a pipeline? 

Last night Rob Swanson spoke at our Anaheim Monthly meeting (tonight he will be at our Los Angeles monthly meeting!) and I really had an important "kick in the ass".  I don't have enough leads coming in and this is why my deals are few and far between right now. 

Ah Duh!  Don't I already know this?  I have allowed myself to loose my focus on my #1 money maker - which is marketing, marketing, marketing.  Sure I market the heck out of my real estate club, but what about my #1 business?  My Distressed Property Investing Business??? 

For the rest of this post please click here to read it on our Forums.

If you didnt make it to our Anaheim meeting last night - then I highly recommend you get to our Los Angeles meeting tonight!  Rob is one of the best real estate investors that I have met in my whole investing career.  Don't miss him! 

Los Angeles Monthly Meeting - 2nd Thurs of each month
Thursday, October 9th
6:30 - Networking    7:30 Meeting
Am Vets Hall
10858 Culver Blvd
Culver City, CA 90230
1 1/2 blocks West of Overland - between Coombs and Elenda

Taking a house over with no equity? Sure!

I replied to discussion on the Biggerpockets discussion board regarding subject 2 investing and decided that I wanted to post my answer here on my blog:

I live in Los Angeles, so this example is based on deals here.  I understand that there are many areas where homes do not appreciate at the rate they would in L.A..

I think of subject to houses with little or no equity as my long term holds.  I would absolutely take over a house with little or no equity and stick it in a land trust depending on a couple of things:

1.  Area - is it a decent to good area that will go up in value when this market crash is over - say 5,7, 10 years from now?

2.  Is the monthly PITI able to be covered in lease option/owner financing with a minimum of $200 bucks cash flow (more is better obviously).

3. Is the owner willing to hold the loan for at least 5,7,10 years?

If I put someone in the house with owner financing I can also bump up the equity and the monthly payment.

For instance:
FMV:  150K - today
Loan:   140-150K - Fixed - not adjustable.
PITI:     900-1000

For owner financing: I can get 1200-1500 a month for this property depending on the  neighborhood and get a down of 5,10, 20% (or more!) from my buyers now.

Sell the property at $175-200 (depending on area) to be cashed out in 5-7 years. 

Goal:  Have 30-50 (or more! yahoo!) of these homes in 5-7 years that start cashing out.

Remember this is just a portion of the long term subject-to holds.  You will also have sub-to's that have decent equity now, and any other properties you buy such as REO houses that you would be holding.  (additionally if you are doing a lot of marketing, you will get a hold of some houses that you might just wholesale or even be able to retail out now- that is if anyone could get a loan.)   

Additionally some of these folks may cash out before 5 years.  If the house only goes up  "only" 20-25K - so what.  You got a decent deposit up front and several hundred dollars cash flow and you weren't a landlord.

I know there are a lot of very experienced and long time investors that would beg to differ about getting homes with little or no equity - however I really do think it boils down to knowing your exit strategy on the property before you even make the deal.   Make sure you know your area.  Never take a deal just for the sake of having a deal.

I've turned down plently of "deals" that had no equity simply because they didn't fit my formula and exit strategy.  It only took me 2 years to learn this...the hard way!!

So what do you think?  I have taken the house over with no money out of pocket. Am I being too risky here?

Which are the best lists to Market To?

Well I have fell off the foreclosure mailing list wagon.  For some reason, I just stopped sending mailings to Foreclosure lists.  I have been dabbling with a few since I stopped using My Realty Data, but I don't like them.  Additionally, these people are getting so many gosh darn letters from other investors - it just seems to be a pain in the behind.  People do contact me - with a Name like Naked Lady Real Estate - I suppose it's hard to resist to see what I am all about. However, for me, I'm not that interested in getting so many short sale leads.  I don't want to do short sales at all.

My favorite way to market is to do a farm area and my all time favorite way to work my farm is to use a program called RealQuest.  Now the only problem with this program is that it is ginormously expensive.  $300-400 a month is a lot of dough man.   However, I love this program! I have been using it as far back to when it was called Win2Data (Thanks to Mike Cantu for introducing it to me back then!)  I can be a little controlling when it comes to my lists and farm area and RealQuest really gives me all the freedom I need to choose my farm down to every little detail, such as demographics and very specific neighborhoods - not just zip codes. I love that I can look up my propery profiles and comps.  It does it all baby! I think it still works with ACT and I am checking on this now.

Of course going the route of having a title rep print me labels for my farm is still available, but these poor guys are really hurting and a lot of these free services are falling apart.  I know it costs a lot of money to create and distribute all this to us. 

Another list solution that I am looking into is buying from list brokers.  I think I like this, but maybe just for certain things such as raising private money or tax liens.  I am learning how to effectively use these list services.  Dave Berens is great at it, so I'm about to pick his brain and ask his advise on this.

Finally I know of Data Quick.  I like them as well.  It does fall a little short of RealQuest in my opinion, however it is still a good system and relatively inexpensive at $200 a month.

I think it is narrowing down to just using Real Quest.  If anyone has better info on this -I welcome your input!

Bottom line:  Never stop marketing, never slow down, never stop....

Getting money is only part of it!

I had an epiphany this week.  I have been busy setting up my marketing for raising private money so that I can close on deals - which is good.  BUT I have neglected to put the steadfast effort into continuing to marketing and finding the deals!  Hello?  What good is it to have money to do deals if I don't have all the deals lined up?  I have said it before and I will say it again...Being an investor is a lot of work!  Steadfast, consistent work and effort!  One cannot do it half ass in order to be 100% successful.  And by 100% successful - I mean - we are making money every day, every week, every month as an investor!

Are deals easy to find?  Pretty much.  But it all takes work! There are REO's, wholesale deals, out of state properties and of course the beloved "I buy houses Cash" route.  But you know what?  All these deals just don't fall into our lap.  Ah..Duh?  We have to work hard everyday to get these deals.  And by work hard - I mean do what we are supposed to do everyday.  Market, get calls, answer calls, crunch the numbers, get the deal under contract if it is subject to, or buy it from an auction or through the MLS for REO's,  network and make connections with wholesalers, real estate agents & other investors, research out of state properties, etc, etc. and so on and so on.  Do our job everyday!  It's very simple, yet work nevertheless!  We need to be willing to do the job all the time to call ourselves investors. 

It sure is strange how some investors expect the deals to fall in their lap.  For instance - investors who have a huge "buyers list" of people who want to move into a house on lease option/land trust/owner financing type of deals.  They can't swing a dead cat around without hitting another person who wants to move into a home using that program.  Building this buyers list is easy.  But then they just stop there!  They don't work their arse off to go out and get the houses to move the people in them.  So far, all the investors I have asked if they are marketing to buy the houses have pretty much let me know that they are not working to get the deals! 

Give me a cotton pickin break por favor.   

Getting a "deal" doesn't mean it's a deal damit

We looked at two houses this week.  Both seemed like "deals".  One had "100K" in equity with the seller happily agreeing to sign house over into a land trust and hold the financing for several years.  The other the seller is begging us to take over.  No equity, but good price, good monthly payment, seller willing to refinance for better loan... and hold for many years...good deal maybe - Except for the fact that he has a Realtor and for some reason he didn't tell her we were investors who would not be going through her.  So when she showed us house she was talking to us like we were retail buyers.  She'll have to get out of the pic.

House with "100K" equity.  We walked in and there were no floors, no kitchen, 30 year bathrooms that looked like they hadn't been cleaned in 20 years, dead landscaping... basically your typical nightmare or dream depending on how good the price is.    So - 100K in equity?  Nope.  $60K - 100K in work needed.  This house is no beuno.  This guy is screwed.  No one will take on that kind of risk in this market.   But wait - maybe we can put in minimal work - get a kitchen in there, then sell it as a "sweat equity" property?  Hhhmmm...  The seller would have to be willing to foot the bill to get the house up to livable circumstances, then we can sell it in a land trust to someone as a sweat equity property for at least 5 -7 years? Or is this just way to much crap to deal with for one property?  Probably.  Maybe.

Deals are everywhere.  I like the low risk, easy "here take over my house" deals.  Or REO - no homeowner involved deals...  What about you?

Hawking $2K workshops is not making me rich...

"As God is my witness, as God is my witness, they're not going to lick me! I'm going to live through this, and when it's all over, I'll never be hungry again - no, nor any of my folks! ...As God is my witness, I'll never be hungry again."   - Scarlette Ohara

I still have a few seats left for the private money workshop and - I am a bit surprised.  I cannot believe that this sucker wasn't sold out month ago.  Using Private Money to buy deals is the only way to go as far as I can tell.  This and Hard Money is all we have.

Honestly.  I know that spending $2000 is tight for many people right now.  But if there is anyway for you to do this workshop - then please get there.  I know it is going to change the ability for me to do a lot more deals and make a ton more money. And please - do not send me pompous ass emails that state the only reason I care about selling you a seat to "another guru workshop" is that I only want to make money from it.  Give me a freakin break. To know me is to know my plans do not include getting rich from hawking $2000 workshops for "gurus"!  It's one thing if you cannot afford to do this workshop at this time. I totally respect that.  But those who claim they can get this information in a $24 book and don't need to spend money on education like this... well... No tengo tiempo para usted.

As an investor - I cannot imagine not wanting to learn how to raise private money to do my deals.  Are you kidding me?  With this crazy credit crunch - there are 3 choices that I can tell of to aquire property (well maybe 4) :

1.   Private Money
2.   Hard Money
3.   Buying property subject to
4.   Wholesaling(?) Even here you need cash - unless you flip quickly.

ALL of these require cash - let's get real here.  Even buying property subject to - you still need some cash to hold and fix the propery until you exit from it one way or another. Unless of course, you have a lot of deals going at once and you can generate plenty of cash flow immediately.  Otherwise it is feast or famine until the ball really gets rolling.   

Perhaps you won't need much money wholesaling deals - IF YOUR GOOD AT IT.  This way you can aquire a property and flip it before any payments or work are required.

So - can you buy property with no money and no credit?  Yes.  But not every kind of deal and certainly not REO's.  And don't quit your day job until you have plenty of cash flow my friend.  However if you don't have a "day" job (moi) and you are a full time investor - then by god you better have money, be making lots of money, know people with money,  have multiple streams of income and many various profit centers.

Click below to watch a video Rob made last night to tell you about getting us out of FEAST OR FAMINE aspect of being an investor:

Please WATCH THIS VIDEO with Rob talking how we can get out of this rut!

This great information is also going to be part of our training this weekend!  I cannot wait!!

CLICK HERE to Please sign up if you haven't done so - Seats are filling up!

REO's, Short Sales, Credit Crunch oh my....

 

There is so much money to be made in real estate right now - but I have to learn the right ways in this crazy market.  It's not so easy to just go buy an REO and think your going to get a qualified buyer right away.  Sell the house right away - maybe.  Get the buyer who can get a loan… not so much. 

The homes are great deals, they look good, etc.  But how in the heck can you get someone to qualify to buy these great houses?   We can't buy every house subject to.  And I really want to get the REO's as well.

Last night at Sam Sadat’s meeting I heard Nick Manfredi explain in detail about the new law that makes banks contact a homeowner in pre-foreclosure and try and do a work out or rather “due diligence” (whatever that means) 30 days before they file the NOD.  Additionally, banks that are holding REO’s are now required by law to maintain the property or risk being fined a $1000 a day.  Good for investors, bad for banks.  To me this means that getting short sales accepted or doing loan modification is going to be a lot easier. 

After hearing Nick speak and learning that he would service the short sale for me – I might just be interested in pursuing doing short sales now.   But….. hhhmmm… how I am going to sell those mofos once I get them?

Oy – here we go again.   Private money and hard money are going to need to be used to hold the houses until this credit crunch dissipates.  Maybe until next year?  Do you think the credit crisis might start to alleviate by then?  I have no idea - I'm just a pretty little girl afterall...  Maybe I'll check in with Bruce on this.... :)  Or maybe Rob Swanson is going to teach me how to raise millions of dollars so that I don't have to worrry about it! 

Don't accept the counter from an Auction!

Friday June 13, 2008 :  FROM THE DESK OF BRUCE NORRIS   

I just wanted to let you know of an important development. This is extremely important if you have won bids at a Hudson and Marshall auction this week or are planning on bidding at the auction this weekend.

We were the winning bidder at the Hudson and Marshall auction on seven houses. The auction company had countered our offer on five and rejected the other two. We refused their counter offer in each case and stuck with our original winning bid.

On one particular property in Riverside, Hudson and Marshall countered our winning bid of $112,000 at $139,500. We held firm at $112,000. Hudson and Marshall got back to us today and accepted our original winning bid! We also know this has happened to a few other investors that we spoke with today.

This makes me very happy, not just because of the profitable deal but it signals the capitulation of the lenders. The auction produced multiple 60% deals. I think that trend will continue. The fact that the lenders are learning they better take the final bid is very exciting. FINALLY!!!

I wanted to let you know this information in case you are attending the auction this weekend.  From what we've heard of the many days of the auction so far, the audiences have shrunk and the majority of the bids are lower then they have been in the past.

If you win, expect to get countered.  If you get a counter, don't take the bait!

Have a great weekend,

Bruce Norris

The Norris Group

6391 Magnolia Avenue, Ste. C

Riverside, CA 92506

Tel: (951) 780-5856

Fax: (951) 780-9827

www.TheNorrisGroup.com

'Equipping California Real Estate Professionals for Tomorrow's Challenges'

Market and get deals? Ah… ya

Yesterday I met with a real estate investor named Dave Barren to discuss the possibility of having him teach classes for our new real estate club!  My focus is to have online classes as well as in person classes for the club with various real estate investors / experts who are DOERS.   I was very impressed by Dave.  What a great guy.  A fulltime investor for about 4 years now he is out there moving and shaking.  I love it!  He is getting his leads, meeting sellers, getting properties under contract, selling houses and working on out of state deals as well….

Now I ask you – does this sound like it is tough out there for investors when looking at this guy?  No.  And why is he able to get all this business?  Because he is working his business… ah duh.  He is sending out his marketing, he has his ads in the papers, and yes he is even using those dreaded “we buy houses cash” signs.

We talked about how he is able to keep up with all the marketing that has to be done to keep the calls coming in and he told me what I already know and what I have implemented myself… hire an assistant who’s only job is to send out you marketing letters and postcards and to stay up with all your internet marketing! 

All the successful investors I know are doing this one little thing called marketing consistently.   If you get the leads you’re going to get deals. 

Dave is so knowledgeable and I am thrilled to announce that he will be part of our Naked Real Estate Investors Community and he will be teaching and coaching for the club on a regular basis! 

Look for him at our Inaugural Meeting on June 11^th!

Non Performing Notes anyone?

I have been feverishly building my network on myspace and facebook and boy - it's been incredible!  If you haven't joined these networking sites yet -  you should consider it!  Way too much to go into right now, because the point is that I have made a connection with a gal who has a huge portfolio of non performing notes in 1st position.  We are looking them over right now, but the truth is, my friend and colleague Pete Mendenhall is the note specialist - not me. 

But I am anxious to learn and learn fast!  Thank goodness he is good friends with David Butler and now it looks like I must call on him to teach me a thing or two.

For those of you who do not know much about Notes, would you like to have an intensive to learn more?  I do!  I think I will organize one.

Let me know if you are interested and as well - if you might want to get some leads for deals?

Join me on Facebook! 

I just got in trouble cuz I didn't want more leads...

That's very weird isn't it?  But it's true.  I was offered leads from someone who is a very big investor and the owner of a real estate club. But when I gratefully and humbly turned down the offer - I got slammed as not being very ambitious.  Yikes-ola.

Call me crazy.  I just didn't want to take on more than I could possibly handle.  Especially in the format that we would be partners in the deal - therefore taking on a whole 'nother person that I would have to "answer to".  I'm moving out of the game man... no more bosses por favor. I have a steady stream of my own leads coming in that I'm working on and in addition to that I have my own REI Groups to run along with my radio show.  Why in the heck would I take on more leads and projects that I couldn't possibly manage in an efficient way.  There are plenty of other people that will benefit from her passing on those leads to.  I know that.  It's all good baby... 

Ever since I left my position as Club Manager of the largest REI Club in L.A. I have been going through a weird little transition period over here. It seems that I have been getting a lot of offers from folks in "high places" and when I thank them for the opportunity - but turn it down, somehow I am the foolish one.  Would you turn down the opportunity to go work for someone? (hint: work FOR someone.)  Am I crazy?  Or maybe, just maybe I already have big plans and projects in the works.

I would really like to hear from anyone out there who at one time was "working for someone" and started to break out on their own and was encouraged to stay where they were rather than be independent and successful in their own right.  Tell me about your experience.  It's fascinating to watch it play out to say the least.   

Being conservative... priceless.

                                 I’m really having to work my tuckus off getting my house in Taft sold.  They have requested numerous pieces of documentation from the buyer and even at that - they want more.  I think that once we get them the rest of the information which includes a sworn statement that they are indeed a human, that they have sold off their children so that they are no longer an expense and that God has come through with his letter of recommendation, we should be all set.

If this doesn’t work then I don’t know what to do.  The problem is – and please listen long and hard my newbie investor friends; is that I do not have enough margin in the house to lower the price anymore.  Why?  Because I bought last year in August ’07 and the sucker lost a ton of equity the last quarter of the year… duh! Additionally, I admit that I paid too much for the mofo.  At least $20K too much.  That is a lot for a house in Taft! 

It’s all a learning lesson and in this market – I know without a doubt that there is a lot of money to make for investors.  However (!)...  We must tread cautiously and perhaps be overly conservative for now.  Of course we cannot get stuck in a rut and not do any deals for fear of making a mistake, but certainly there is plenty of room for improvement in my evaluations of ARV (I will say I feel a lot smarter since going to Bruce Norris’ REO Bootcamp this year.)  Now I know, conservatively speaking, if I can sell a “$550K” house for $500K in 3-6 months then you better believe that I have it in my budget to sell it for $480K.  Which means $480K (minimum) is my ARV not $500k and ESPECIALLY NOT $550k! 

Please investors – do not use the comps or the last houses sold as your ARV.  Plan for a loss of  price at 2% a month for now. AND of course I am talking generally here.  I know there are areas of L.A. that are not going down that much and a few that are not going down at all.  All I am saying is; be conservative for now my friends.  Now is not the time to be a cowboy (or cowgirl!) – cuz it really smarts when you get tossed around and thrown off the bucking beast!

Business credit is not as easy as it looks?

We have been trying to establish, raise, beg & borrow business credit for a month now.  Or rather - Business Lines of Credit.  It seems if you haven't had your LLC for 2 years - you can pretty much throw most of your options down the toilet.  Wow... it's not easy at all!

My friend Rikki has been turning over every stone and we have come up with about 2-3 options that will give us unsecured BLOC and boy - it's expensive.   It's gonna cost us 12% on the back end!  Wowee kazoweee.   It's might as well be hard money!  I wish it was, it would have been a lot easier to get by now.  We will be using it to build a Real Estate Business which will also include using it for the down payments that are needed for buying REO's with hard money!  We have found a source, but it's going to take 45-60 days minimum to get!  Wow!  Lesson to everyone of us who has an LLC.  Start establishing your business credit right away.  I think these BLOC will come in real handy for down payments.  I am going to hire a company to start establishing my business credit right away for sure!  I think I found a good one, and will let you know. Forgetta 'bout all this nonsense!

Additionally, I was talking to several other investors about the idea of being able to use a BLOC for our down payments. It seems that many of my investor friends have deals right now in L.A. but can't jump on them because they lack the 10% down and the 6-8 months of reserves that most hard money lenders are requiring right now.

Sooooo....I came up with the thought that maybe, just maybe, I should start a networking group that brings people with private money together to network with those who need it! I know that there are a lot of investors with money who would like to partner with those who need it.  Hhhhhmmm.

What do you think? Me likey...

"Paper Condos"

Pete and I talked about a strategy on our radio show the other week that has been the topic of my household.  For anyone that is getting ready to have a kid go off to college this might be something pretty interesting.   It's called "Paper Condos", which is basically a way to hold property in a land trust but taking it a bit further than just one family living in a SFR.   

What this strategy does is take that same SFR and put it in a Land Trust - but now for anyone that already has properties near a college or like us - who are thinking about buying in those areas, we can now give all the renters in that one home beneficial interest therefore giving tax benefits to the parents of those college students!  We take the property and put it in the NARS Land Trust.  Now anyone who is paying "rent" in this home, becomes a beneficiary of the trust, and now reap tax benefits.  This is way cool stuff here. 

Listen to the whole show which aired March 5th on our Internet Radio show The Naked Investors. 

Click Here to listen to show:

I like this idea a lot. Also, think about this.  You can go buy properties and then specifically, market to the parents of college students.  This is a complete strategy in itself!

Bulk sales or just good 'ol auctions?

Do you think that we will be able to buy homes at the auctions and from MLS for 60-65%  minus repairs here in So Cal?  And if so, will we be able to buy many?  Many for me is defined as 1-3 a month for now (might be more).  Or is my best bet to work with bulk REO's so that I can get them for "50%" which is what I am told (how long have we been hearing this?) 

I have been asked by some folks to "join their team" and manage their bulk REO deals "when they start to pop".  It is their position that I shouldn't waste my time on trying to work auctions or mls listings because I will get my best deals through the bulk buy.  After all, "the team" will get first choice at the 50% inventory. Let's look at this excellent offer:

First of all, we all know there are going to be great deals at auctions and the MLS starting this year (already going on in some areas).  The massive inventory is going to set the price- not the banks.  They will have no choice but to start dumping.  Of course they are hanging on for dear life - and are surely just trying to squeeze out every penny that they can right now.  I just wish that these silly folks who continue to buy these houses at the auction for 90-100% would stop the charade.  Half those houses can't possibly be closing.  If anyone has information on the close ratio - I would surely like to see it.   It would be shocking to see if most are closing. And if so - god bless them - but they better be retail buyers hoping to stay in that house for 7-10 years before trying to sell it with any hope of appreciation.   Opsey daisey.  I digress. 

Back to the REO 50% bulk deals.  Let's break this down. They say "I  should be smart" and choose to manage the bulk deals with them, which would then mean that I'm on "the team" (jealous? not so fast..)  The position I'm offered is I would be "managing" the team to make sure each of our "tasks" gets done -including my assigned task, and then also managing the sales process to all the buyers.  Most importantly, I would be reporting status of every house to the money investors in the deal, which sounds like I would have many captains on the ship. Basically a full time job if we are getting 20-30 houses at a time right?  Apparently we'll be buying at 50% and flipping to investor buyers at 60% with the exception of the houses that the team gets first choice at. A good deal for all I agree.

But here is the million dollar question... is all this worth 10%?  Let's be real here.  I am not interested in getting involved in houses over $300K (at 50-65%).  I just don't want to pay that high of monthly payment while I flip it or move it (or hold it).  So let's say I buy a 400K house at 65% on my own - at auction or otherwise. At that price point for every 5% I'm at 20K.  The question is - why in the hell would I want to get involved in having a full time "job" that I don't get paid for - (because after all - I am getting my houses at 50% off) just so I get my 1-3 houses a month at 50%?  Is it really worth the aggravated stress and hesteria that would surely be put through?  Imagine it people.  Having about 3-4 high maintenance people telling you what to do all day long,  calling you, emailing you, asking you "where are we at?", making sure all the tasks get done, and that's just with the team! Additionally, then dealing with all the buyers... Holly Schniekies. Call me a Crazy Dodo Bird, but this doesn't sound like fun at all. What pops into my pretty little head is...  NO FREAKIN' WAY BABY!   I don't want the money that badly. 

I would rather just step up my game and buy an extra house or two on my own to make up for that "loss" from 60% to 50%.  Or better yet, instead of going to the auction for the hope of 60% houses all the time, why not simply get a deal or two from their bulk REO's and just buy what they are selling to investors at 60%?  Batta Bing, Batta Boom.... Now you're talking.

Thank you for the generous offer - and at potentially 10% more profit per deal- it is a very  generous offer. One that I could have only dreamed about two years ago. But for me, I'd rather just manage my own dealings and not have the tension and hassle of dealing with so many head honchos.  It boils down to quality of life baby... In my old age, I am realizing that there is not enough cash in the world to make it worth working in a anxiety ridden environment. No can do my friend.

Life is too short and there're too many fulfilling ways to occupy my time. Like working with my fellow investors and running my own real estate business. Anyways, I have really grown fond of my 2 martini lunches (hic)and would miss them by having to work 50 hour weeks for someone else rather than be my own boss. Yeah Baby!

No Money Down & No Credit… No-can-do my friend.

The days of no money down no credit seem to be gone.  I guess that depends on what your deal is?  Buying subject to and then doing "lease option/rent to own/land trust"- certainly works with this strategy.

But what about buying REO's?   

Easy money is no longer Hard Money.  Of course it is a lot easier than traditional financing, but nevertheless, Hard Money is a good name for it. 

Now - depending on who you use, some or all of these apply to each HM Lender (or at least the 3-4 that I talk to - and please, by all means, enlighten me if I am mistaken):

1. 10 % down minimum seems to be required.


2. 6-12 months of reserves in the bank.


3. Credit of at least 680 required.

This may not seem like a big deal to many, but to some of us (haaheem), it is not possible at this time. Of course unless we are buying properties out of state for under 90K.

For me - even though I may have 10% down - that might be all I have. And it just depends what is going on at that time.  Sometimes I have 30K and sometimes I have 8K in the bank. And I am not yet at the point in my career that I have cash reserves of 6-12months.  AND LET ME JUST SAY THIS - don’t be stupid - PLEASE do have 6-12 months in reserves!  Who needs the stress of not having it…!

Now as far as credit.  I have been rebuilding my credit for years.  Six years ago when I started my career in real estate investing (from someone who was "in the business for 30 years and going to teach me everything he knew and I was going to RICH!"), I basically went bust.  I moved to Palm Springs bright eyed and bushy tailed with my new home and gold American Exp Card and came back to L.A. one year later, broke, homeless and credit down the crapper.   After years of rebuilding my credit "the wrong way", by haggling with the creditors,  getting no where fast, I finally learned that I DO NOT PAY OFF things on my credit report - because that makes it worse! Since then I hired a company to fix it and I think my score went up a whole 10 points after 7months. Thanks for nothing.

So what's a girl to do?  You would think in my position, I would know the answer.  Sure I hear about all kinds of "great companies that are going to solve my credit woes", but who to trust?  Who is actually going to make it happen? 

I don’t care if I have to throw money at the problem!  I'll gladly pay whatever it costs to fix it.  Having a car payment, mortgages, and credit cards has helped a lot for sure.  But I'm still in the mid 5's (from mid to low 400's-so yahoo)!  But at this rate I'm going to be old and senile before it happens. 

True Story:  The other day my friend Joyce Carpenter told me that her friend and her husband had all kinds of toys like boats, cars, big houses and when they got divorced last year her credit plummeted to the low 400's.  With no choice - she had to do a BK.  One year later now her credit is 720!  What in the hell is that all about?  Are you kidding me?  I would never do a BK just to fix my past credit issues.  I don’t need to nor do I want to.  I just think this story goes to show you how screwed up our system is.

So what's the answer People? I get this question all the time from investors with the same problem and I wish I knew the answer for them and myself!

SO - do I just get a money partner for my first 5-10 REO's?  I'm ok to do that but I would like to stand on my own as well.

Give up trying to sell or hang in there?

It's time to face the fact that my "quick flip" in Taft is probably not going to sell and I need to just move on and get a tenant in there. Right? 

I had a talk with my dad today about what my latest dealings and my strategies for investing over the next couple of years.  I was telling him that I just completed a 3 day REO bootcamp with Bruce Norris and how that education was priceless.  It was all good...Then he did it... he asked me about something that we dont talk about right now...  my little house in Taft.  ARRGHHH. 

After beating myself up "because I should have known better", my father did something startling... he actually made me feel better about the situation!  Don't get me wrong, it's not that he usually brow beats me over things, it's just that he tends to take the "me man, not show empathy" approach to situations. He reminded me that sometimes we just learn hard or expensive lessons and that those are usually the best ones of our lives. That sometimes we are just going to have a deal that didn't turn out and we just need to learn the lesson of what not to do the next time.

The fact is that I paid too much - period.  Even though the numbers at that moment told me I was buying at 65% ltv, the market was about 7 seconds from another sharp fall.  My dad and I joked (not really) about my $15K education on this deal.  And I'm one of the lucky ones!  I am not actually loosing that money out of pocket - it's just money I won't be making on this deal.

I think I also listened to too many investors out there.  It was like a feeding frenzy out there. The minute I rolled into town and sunk my sign into the yard, I was getting calls from investors all day long offering me their "great deals". #1 TIP:  if there are more investors selling homes than homeowners and you can't swing a dead cat around without running into investor who is buying homes in that area - then stay the hell away.  The area has run its course.  Run for the hills and don't look back!

So now it's time to make the harsh move - like many investors are having to do right now which is - gag - put a tenant in the home.  I have no desire to be a landlord, so I will put it into a Land Trust and then get a Buyer/Tenant in there.  The most important thing here is to take the lesson and be thankful that it will be the last time that I make a mistake in this business....  LOL…  alright, then hopefully the last mistake I make this year.   

The moral of the story? Know the market, know the numbers, know you exit strategy. Bottom line - Don't be stupid.  Be Smart.  Duh...

REO's coming out of our...

Well - I just finished a 3 day REO Bootcamp with Bruce Norris and I will tell you that it has changed my investing plan for the next year at least. 

I will write about it more in detail over the next couple of days, but since I have been getting many phone and email inquiries about it I wanted to post to answer a few questions quickly. 

I have been apprehensive about dealing with REO's let alone going to those big auctions that are selling 1000 houses in one day!  I will tell you that I am singing a different tune today.  I have changed my investing strategy and I will add buying REO's from both the auctions and from REO listings to my overall plan.  The way that I see it, is if Bruce Norris tells you that this is what his plan is - then who the hell do I think I am to argue?

So my plan for 2008 is to continue to buy subject to and put into land contract and now to buy REO’s using what Bruce has taught me.

As many of us are aware, it’s a whole new world out there and what we see now is nothing compared to what's coming.  I feel so lucky to have learned all about REO's so early in this market. I feel like I am ahead of the game now. Boy oh boy.

 

I highly recommend this bootcamp to anyone who wants to learn the how to buy REO’s at auction and through REO agents.  If you are intersted in learning more about the bootcamp contact Diana at The Norris Group.

Your 2008 Investment Plan? What is it?

I just read Bruce Norris' Jan Newsletter and he has about 3-4 articles in there from expert various investors including Mike Cantu, talking about their personal investing plan for 2008.  Well - it's very exciting for me, because it is exactly what I have been talking about for my plan for 2008. 

Good to know...  Makes me feel like I know what the heck I am doing sometimes!

Click here to read the newsletter.   

Let me know what your plan is in the comments below!

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. 

Determined to Succeed - As god is my witness

Well - about a month ago I decided that I WOULD BE a real estate investor and not just a working my arse off being the club manager for REIC.  Running this investors club is a lot of work yes - but if I am not also being a successful real estate investor then what's the point?  I have so much opportunity and if I don't use it to learn and grow as an investor then I will be the epitome of someone who gets life handed to her on a silver platter and just throws it away.  I think we refer to those lost souls as lehwhooserss....!!

Suffices to say - I am up to my eyeballs in "programs" and setting up my systems.  Not only marketing and follow up systems but also learning what to say to sellers and how to say it!  Jeez louis.  Anyone that thinks being a successful real estate investor is easy is sadly mistaken.  I am lucky enough to have some of the best "gurus" personally offering to help me, and I'm taking them up on it!!  For this reason alone I am up to my eyeballs.  There is nothing like putting yourself in a position to succeed than telling these successful people that I too want to be successful.  Also I have at least 15-20 other investors from our club that also have been told of my commitment to succeed. With all these people looking at me to "DO IT" there is no way I cannot make the full commitment and just do it half ass-ed.

Tonight I will get my first mailing together and start my marketing campaign to foreclosures.  I am using this amazing online program called My Realty Data and it will help me to stay organized and know what my next steps are. 

Tomorrow night I am going to practice my scripts with a group of investors and a workshop.. more on that tomorrow!!