So you’d like to buy a bank owned property?
As a person who has worked on the listing agent side, the buying agents side, and the investors side of Bank Owned Properties, I have had a lot of questions asked about REOs and Foreclosures.
People who had just watched the late-night infomercials and are ready to do the bank “a favor” and take a problem off their hands. Plus, they expect to make "a killing" in the process. Sounds great and it can happen, but first take a look at some facts and get prepared.
REO vs. Foreclosure
An REO (Real Estate Owned) is a property that goes back to the bank after an unsuccessful foreclosure sale or auction. Many foreclosure sales do not generate any bids because there was not enough equity to pay off the loan and leave a profit for a buyer (if there had been the foreclosed owner would have sold it). That is why the property ends up at a foreclosure or trustee sale.
The sales usually begin with a minimum bid that includes the loan balance, any accrued interest, plus attorney's fees and any costs association with the foreclosure process. In order to bid at a foreclosure auction, you must have a cashier's check in your hand for the full amount of your bid. If you are the successful bidder, you receive the property in "as is" condition, which may include someone still living in the property. There may also be other liens against the property.
Since what is owed to the bank is almost always more than what the property is worth, very few foreclosure auctions result in a successful sale. Then the highest bidder is usually the bank, and the bank buys the property at the sale and it becomes an REO, or "real estate owned" property.
REO Properties For Sale
The bank now owns the property and the mortgage loan no longer exists. The bank will handle the eviction, if necessary, and may do some repairs. As a purchaser of an REO property, the buyer will receive a title insurance policy and the opportunity to investigate the property. Sometimes you do need to ask for the title insurance policy as it is not always automatically provided such as in the case of a HUD owned REO.
A bank owned property may or may not be a great bargain. Do your homework before making an offer. Make sure that the price you pay (if you’re successful) is comparable to other homes in the neighborhood. Consider the costs of renovation, including time to complete them. Don’t get caught up in a ‘bidding war’ and pay over market value. It’s an old myth that “foreclosures” are a bargain.
How Banks Sell REO's
Each bank/lender works a little differently, but they all have similar goals. They want to get the best price possible for the property in the current condition. They may decide to sell as is and they may decide to do repairs. Generally, banks have an entire department set up to manage their REO inventory and these departments list the properties with area realtors. Some of the smaller banks will turn their inventory over to a 3rd party servicer to market and sell.
Once you make an offer to purchase to the listing agent, the banks generally present a "counter-offer." It may be at a higher price than you expect, but they have to demonstrate to investors, shareholders and auditors that they attempted to get the highest price possible. You should expect this counter offer and determine your initial offer accordingly. You may also receive a counter offer in an auction form where they have multiple offers and the banks request from all bidders a highest and best offer by a certain time. They make then select one of the highest and best offers or they may come back again with another blanket counter offer.
Your offer or counter-offer will probably have to be reviewed and approved by several individuals (like at the car dealership) or even several different companies. So be prepared for some time for negotiations. Even once an offer is accepted, the bank may insert wording like “..subject to corporate approval with 5 days."
Property Condition
Banks always want to sell a property in "as is" condition. They are going to state that they will not make any repairs. They will allow you to get all the inspections you want (at your expense), but they may not agree to do any repairs.
Your offer should include an inspection contingency period that allows you to terminate the sale if the inspections reveal unanticipated damages that the bank will not correct. Be sure to do all inspections and make the required notices because in most cases after the inspection period the earnest money deposit becomes non-refundable.
Even though you agreed to “as is," if you find any needed repairs, always give the bank another opportunity to make repairs or give you a credit after you’ve completed your inspections. Many times they will decide that they will re-negotiate to save the transaction instead of putting the property back on the market and disclosing your inspection to the next buyer.
Banks also don’t want to get sued, so expect large amounts of addendums in addition to the local disclosure forms that the area realtors use. The local forms more often than not will be crossed out, and signed only because the agent requires it and all parts of the local realtors contract can be over ridden by what is written in the banks “seller’s addendums”.
Most banks will not provide financing on their REOs but it doesn’t hurt to ask. Especially if the property has extensive damage and you are purchasing it "as is." And some such as Country Wide may require you to be pre-approved with their company before they will even look at your offer.
Making an Offer
Before making an offer, be sure to contact the listing agent and ask the following:
· Are there inspection reports?
· What work has the bank agreed to?
· Is there a special "as is" form?
· How long does it take the bank to accept an offer?
· How does your agent deliver the offer?
Offers are usually FAXED to the bank. The listing agent often will need the originals. There is no formal presentation. In most cases the listing agent will summarize your offer through email or an online submission form. Keep in mind: nothing happens evenings and weekends (banks are closed).
Since there is no face-to-face presentation to the bank, provide the listing agent with a pre-qualification or better yet, a pre-approval letter and buyer biography. Make your offer easy to accept.
Hopefully these tips will manage your expectations. Remember that REO's sell at pretty close to full market value and are not the deals presented on late night television.
The are not usually a property that you would want to buy and turn right around and resell. Most bank addendums state that these contracts can not be assigned and many sellers are including deed restrictions on the new deeds provided with the buyers. For example on a Fannie Mae owned home they usually include a deed restriction to keep the buyer from selling or financing for 120% of the investor’s purchase price on the home.
But if you are looking for something to buy and fix up, then the better and cheaper you can do your rehab, the easier (lower costs) your financing, and the more exit strategies you employ, then an REO property can be a great deal. For the first few years of our Real Estate Investing here at Tucker One, 9 out of 10 properties we purchased were REO.
And as we saw in the front page article in this newsletter, the banks are inventorying a lot more properties these days in the past and they are not in the house business, they are experts at lending money and we are experts in houses.
So get those lists of REO properties from the listing agents and from web sites, go look at properties and make offers. Who knows you might catch the asset manager on a day that he or she just needs one more sale for the month to make bonus and they might take yours.
About the Author: Kim Tucker and her husband Don have bought and sold or rented over 100 houses. Their first 3 years were spend purchasing primarily bank owned properties to rehab and retail, and currently are managing an inventory of signle family rental homes while wholesaling one or two houses a month. See their current inventory for sale at http://www.tuckeroneproperties.com/.
Wednesday, September 30, 2009
Need a Million Dollar line of credit?
For the last 5 years one of our business partners has been showing investor's an incredible shortcut to money. You can quickly get access to huge business lines of credit in today’s tough market if you know these shortcuts.
The Shortcut To Money Secrets program was just released. Tom Kish is the creator of this system and has trademarked a simple 4 step recipe to show you how to get new unsecured business lines of credit for any purpose.
The system about to be revealed on this training call is an amazingly simple way to get $200,000 to $300,000 in cash and business lines of credit no matter what kind of income, assets or credit score you currently have. Then we will show you how to double or triple it.
Please join Tom on a special LIVE call to learn all about his Shortcut To Money Secrets method of getting business lines of credit in today’s brutal market place.
You must know these techniques to thrive now!
The training call will be held -
Thursday Oct. 1st
6pm pac./8pm central/9pm eastern
You must register in advance to receive the call in codes for this training call.
It doesn't cost anything to attend this call. Just enter your name and email address on the site.
Register at the website:
https://m353.infusionsoft.com/go/pcall/MAREInet/
Why should you listen to the call -
Because Tom will explain how you can get your hands on CASH and a new line of credit for all your investing needs.
This is critically important information for business owners and investors that want to take advantage of the opportunities that today’s markets have revealed. We may be in a once in a lifetime profitable opportunity as investors and business owners. But you must have access to Tom’s sources of plentiful business credit and funding if you want to win.
So go to the website:
https://m353.infusionsoft.com/go/pcall/MAREInet/
The Shortcut To Money Secrets program was just released. Tom Kish is the creator of this system and has trademarked a simple 4 step recipe to show you how to get new unsecured business lines of credit for any purpose.
The system about to be revealed on this training call is an amazingly simple way to get $200,000 to $300,000 in cash and business lines of credit no matter what kind of income, assets or credit score you currently have. Then we will show you how to double or triple it.
Please join Tom on a special LIVE call to learn all about his Shortcut To Money Secrets method of getting business lines of credit in today’s brutal market place.
You must know these techniques to thrive now!
The training call will be held -
Thursday Oct. 1st
6pm pac./8pm central/9pm eastern
You must register in advance to receive the call in codes for this training call.
It doesn't cost anything to attend this call. Just enter your name and email address on the site.
Register at the website:
https://m353.infusionsoft.com/go/pcall/MAREInet/
Why should you listen to the call -
Because Tom will explain how you can get your hands on CASH and a new line of credit for all your investing needs.
This is critically important information for business owners and investors that want to take advantage of the opportunities that today’s markets have revealed. We may be in a once in a lifetime profitable opportunity as investors and business owners. But you must have access to Tom’s sources of plentiful business credit and funding if you want to win.
So go to the website:
https://m353.infusionsoft.com/go/pcall/MAREInet/
Will Facebook & Linked in bring me more business
In reality, to see results, you must already have strong business fundamentals and a solid marketing plan, says Matt Dollinger, a real estate performance coach who helps practitioners integrate new technologies into their business. "If you're not a great agent, don't worry about social media right now. It's not the silver bullet for your business," says Dollinger, who works for @properties in Chicago. "If you're a bad agent or even an average agent, you won't be able to fake it on the Web. People will be able to see right through you."
Reality 1: You have to be a great agent first.
Reality 2: Using social media is like riding a bull—getting on is the easy part.
Reality 3: You don't have to be a tech whiz to participate.
Reality 4: The Web is in constant flux.
Reality 5: You can't fake it.
Reality 6: The Web is so much more than a prospecting tool.
Read full article on Realtor.com
Reality 1: You have to be a great agent first.
Reality 2: Using social media is like riding a bull—getting on is the easy part.
Reality 3: You don't have to be a tech whiz to participate.
Reality 4: The Web is in constant flux.
Reality 5: You can't fake it.
Reality 6: The Web is so much more than a prospecting tool.
Read full article on Realtor.com
Web 2.0, Social Networking, Social Media, and Your Real Estate Business
The month of October, here at MAREI we are looking at online networking, this article came across my desk today and fits right in with our theme. If you want to learn more about using the internet to market your business, be sure to attend the October MAREI Meeting.
Web 2.0, Social Networking, Social Media, and Your Real Estate Business
There are plenty of people singing the praises of Web 2.0, Social Networking, Social Media, and what they can mean to your real estate business…but what do they really mean to your business, and the future of your business? How do you begin the process of integrating social networking into your life and your business, and should you even bother…or is this just one more thing for you to do with no real potential for tangible results?
This article is meant to help you begin a journey which over time may change your business entirely. NAR’s recently updated e-PRO® Technology Certification course and their new Web 2.0 & Social Media Course can both help you continue that journey. Both courses can help you address the use of these new technologies in the context of the real estate business and changing consumer expectations.
Don’t be intimidated by the terminology, or by the technology. Social Media is important, but it is not an “emergency.” It is not something you need to do before the end of the week. It is something you need to think about, and work methodically and consistently into your business. Step one is to gain an overall understanding of the subject and then to create a Social Media Plan that is consistent with your Marketing Plan and your Business Plan.
What is Web 2.0?
Web 2.0, the second generation of web based services and behaviors, includes such things as social networking sites and communication tools that emphasize collaboration and sharing. Web 1.0 can be described as the Static Web, and Web 2.0 can be described as the Programmable Web.
Think of Web 1.0 as a digital newspaper. You can open it and read, but you cannot add, change or interact, except perhaps by sending an e-mail to the editor. Web 2.0 sites are dynamic, and change frequently with people adding, creating, sharing, and socializing. When you offer information or opinions in an online social media site, or using social media software, you are in essence being published.
What is Social Media Software?
Social Media software allows sharing and online collaboration. Examples are blogs, wikis, and sites that encourage comments and social interaction and networking.
Social networking technologies can expand the reach of your brand and connect you into existing and developing social groups
People - friends, connections, friends of friends Interests - common activities, hobbies, clubs
What is Meant by “Create a Social Media Strategy?”
At the entry level, Social networking sites such as FaceBook and MySpace make it easy for old friends and associates to find you. All you need to do is set up a free account and fill out a profile. The sites will find others who have attributes similar to yours in their profile. If you enter your high school and year of graduation in your profile, the site will find others who graduated from your high school the same year as you and suggest that you may want to “connect” or become “friends.” How many of your old friends from high school own their home, or may be looking for a home, or have a friend looking for a home? The idea is not to overtly prospect, but to connect, and the connection may lead to business…just as in the “real world.”
Contact with people creates opportunity and Social Networking creates a variety of ways to contact and connect with people. The Internet is the Network of Networks, and real estate is a networking business.
A large part of the job for any sales professional is prospecting and "working a territory" - be it geographical or a circle of friends and acquaintances - sometimes referred to as a sphere of influence. The Internet is a vast, relatively untouched territory, which can easily and effectively be reached on even a modest marketing budget. Get involved with the end in mind, and an understanding of the dynamics, including generational differences.
What about Online Communities?
Online communities give people with similar experiences and interests the opportunity to come together - freed from the restraints of time and space - to form beneficial relationships. An online community is a network of people sharing and collaborating with one another. There are many online groups and clubs you can join, just as you join groups and clubs offline for the purpose of meeting people who may someday bring you business.
RealTown.com is an example of a real estate industry social networking site that can connect you to other real estate professionals for possible referrals and for a wealth of knowledge not available anywhere else on all real estate subjects imaginable -- all created by members of the site, sharing and collaborating. RealTown even has an account on FaceBook, helping more people (those who listed real estate as an interest in their FaceBook profile), find RealTown. This is a key point…social networks help people find people. Social networks help people connect and communicate with people…without leaving the comfort of your home.
Major benefits for real estate professionals from participation in online communities include referrals from other real estate professionals, leads for listings and sales, a resource for information at your finger tips, and collective power with vendors.
How Can e-PRO® and the NAR’s new Course help me make sense of all this?
In July, the National Association of REALTORS® released its new and improved e-PRO® Course as well as an online course available to all REALTORS® that will make sense of Web 2.0 and the marketing and sales aspects of what is being referred to as Social Media and Social Influence Marketing. From a recent student: ” I, personally, found this training incredibly valuable with all its info, amazing links I never
knew about and also the FEEDBACK given by many seasoned and new agents at the bottom of many course pages. I also learned how important it is to truly take the time and network on Community websites where so many people tend to socialize & exchange great ideas. THANKS for everything!” L.D.
Don’t Wait
We have only scratched the surface here. There is so much more, and lots of business waiting for you online. It is time to take the next step. For more information on the new e-PRO® course and the Social Networking Course, and to learn about a special pricing offer, go to http://eProNAR.com.
Saul Klein is the CEO of InternetCrusade® (http://InternetCrusade.com) and Point2 Technologies (http://Point2.com), splitting his time between both companies. InternetCrusade is a technology solution provider and creator of both the content and the technology delivery platform for the e-PRO® online technology certification program of the National Association of REALTORS®. Point2 Technologies is a leading website provider with more than 200,000 clients worldwide.
Web 2.0, Social Networking, Social Media, and Your Real Estate Business
There are plenty of people singing the praises of Web 2.0, Social Networking, Social Media, and what they can mean to your real estate business…but what do they really mean to your business, and the future of your business? How do you begin the process of integrating social networking into your life and your business, and should you even bother…or is this just one more thing for you to do with no real potential for tangible results?
This article is meant to help you begin a journey which over time may change your business entirely. NAR’s recently updated e-PRO® Technology Certification course and their new Web 2.0 & Social Media Course can both help you continue that journey. Both courses can help you address the use of these new technologies in the context of the real estate business and changing consumer expectations.
Don’t be intimidated by the terminology, or by the technology. Social Media is important, but it is not an “emergency.” It is not something you need to do before the end of the week. It is something you need to think about, and work methodically and consistently into your business. Step one is to gain an overall understanding of the subject and then to create a Social Media Plan that is consistent with your Marketing Plan and your Business Plan.
What is Web 2.0?
Web 2.0, the second generation of web based services and behaviors, includes such things as social networking sites and communication tools that emphasize collaboration and sharing. Web 1.0 can be described as the Static Web, and Web 2.0 can be described as the Programmable Web.
Think of Web 1.0 as a digital newspaper. You can open it and read, but you cannot add, change or interact, except perhaps by sending an e-mail to the editor. Web 2.0 sites are dynamic, and change frequently with people adding, creating, sharing, and socializing. When you offer information or opinions in an online social media site, or using social media software, you are in essence being published.
What is Social Media Software?
Social Media software allows sharing and online collaboration. Examples are blogs, wikis, and sites that encourage comments and social interaction and networking.
Social networking technologies can expand the reach of your brand and connect you into existing and developing social groups
People - friends, connections, friends of friends Interests - common activities, hobbies, clubs
What is Meant by “Create a Social Media Strategy?”
At the entry level, Social networking sites such as FaceBook and MySpace make it easy for old friends and associates to find you. All you need to do is set up a free account and fill out a profile. The sites will find others who have attributes similar to yours in their profile. If you enter your high school and year of graduation in your profile, the site will find others who graduated from your high school the same year as you and suggest that you may want to “connect” or become “friends.” How many of your old friends from high school own their home, or may be looking for a home, or have a friend looking for a home? The idea is not to overtly prospect, but to connect, and the connection may lead to business…just as in the “real world.”
Contact with people creates opportunity and Social Networking creates a variety of ways to contact and connect with people. The Internet is the Network of Networks, and real estate is a networking business.
A large part of the job for any sales professional is prospecting and "working a territory" - be it geographical or a circle of friends and acquaintances - sometimes referred to as a sphere of influence. The Internet is a vast, relatively untouched territory, which can easily and effectively be reached on even a modest marketing budget. Get involved with the end in mind, and an understanding of the dynamics, including generational differences.
What about Online Communities?
Online communities give people with similar experiences and interests the opportunity to come together - freed from the restraints of time and space - to form beneficial relationships. An online community is a network of people sharing and collaborating with one another. There are many online groups and clubs you can join, just as you join groups and clubs offline for the purpose of meeting people who may someday bring you business.
RealTown.com is an example of a real estate industry social networking site that can connect you to other real estate professionals for possible referrals and for a wealth of knowledge not available anywhere else on all real estate subjects imaginable -- all created by members of the site, sharing and collaborating. RealTown even has an account on FaceBook, helping more people (those who listed real estate as an interest in their FaceBook profile), find RealTown. This is a key point…social networks help people find people. Social networks help people connect and communicate with people…without leaving the comfort of your home.
Major benefits for real estate professionals from participation in online communities include referrals from other real estate professionals, leads for listings and sales, a resource for information at your finger tips, and collective power with vendors.
How Can e-PRO® and the NAR’s new Course help me make sense of all this?
In July, the National Association of REALTORS® released its new and improved e-PRO® Course as well as an online course available to all REALTORS® that will make sense of Web 2.0 and the marketing and sales aspects of what is being referred to as Social Media and Social Influence Marketing. From a recent student: ” I, personally, found this training incredibly valuable with all its info, amazing links I never
knew about and also the FEEDBACK given by many seasoned and new agents at the bottom of many course pages. I also learned how important it is to truly take the time and network on Community websites where so many people tend to socialize & exchange great ideas. THANKS for everything!” L.D.
Don’t Wait
We have only scratched the surface here. There is so much more, and lots of business waiting for you online. It is time to take the next step. For more information on the new e-PRO® course and the Social Networking Course, and to learn about a special pricing offer, go to http://eProNAR.com.
Saul Klein is the CEO of InternetCrusade® (http://InternetCrusade.com) and Point2 Technologies (http://Point2.com), splitting his time between both companies. InternetCrusade is a technology solution provider and creator of both the content and the technology delivery platform for the e-PRO® online technology certification program of the National Association of REALTORS®. Point2 Technologies is a leading website provider with more than 200,000 clients worldwide.
Tuesday, September 29, 2009
Wholesale Investing - an Introduction for Kansas City Real Estate Investors
I get many calls from people who have recently read a book or attended a seminar and they have decided to be real estate investors. I received on just last week that I swear the guy just heard a commercial on the radio as he was driving down the road; somehow he found my number and dialed it up as he was on his way to where ever he was going.
He wanted to know where he could buy a good deal, and if I could help him find them. He planned on buying several and flipping them for quick cash, and could I help him with that. The more he asked questions, the more I realized he either wanted me to teach him how to be a wholesale investor on the phone in 5 minutes or he wanted me to do everything for him for a real estate commission as a Realtor.
So this article is for the gentleman who called me the Monday after Christmas.
First of all if you are going to buy and flip a house for quick cash, you need to do a bit of homework up front. A Realtor is not going to be able to necessarily tell you what a good deal would be that you can buy and then sell for quick cash. If the Realtor has that knowledge more than likely they will be buying and flipping and making the quick cash themselves rather than working for a paltry 3% commission that they have to then split with their broker.
Second, you can learn how to be a wholesale investor in a short 5 to 10 minute phone call. And if you are going to try to learn something from someone in such a short call, please make it from a place where you can take notes, not driving down the road where you have a strong possibility of driving up a tree or running over a little old lady.
To learn how to wholesale houses you need a little bit of education. Myself, I have gone through several different training programs from Scott Rister, Larry Goins, Kathy Kennebrook, and Than Merrill to name a few. I have taken the best from each of these programs as well as stuff I have learned first hand from some of the bigger wholesale companies in the Kansas City market such as observing HomeVestors and the old Ridgemoor Company. And I have also learned from experience in the past 10 years. So sorry to say, it can’t be condensed into a short phone call, but I will give you a brief intro.
There are several steps you need to take:
1. Educate yourself on the area & the properties
2. Educate yourself on estimating repairs
3. Figure out how much to offer
4. Find the money
5. Find the right title company or attorney
6. Build a list of buyers
7. Develop a team of service providers
8. Create YOUR plan to find deals
9. The start doing deals.
First of all if you are going to be buying and selling houses in a particular area it would be worth your time to do a little homework. I would start by developing a relationship with a Realtor or an appraiser and get them to email you live links to everything listed, pending, sold, expired, etc in the MLS system for the past year in the given area. If they can convert this to PDF as well so you can save it as a reference to look back at later, this will give you a really good idea of accurate values of properties in your area. Also take time to look at the live links they send and review the interior photos so you know what the “typical” house looks like on the inside.
Secondly you need to have a way to accurately estimate repairs on a home. If repairs are totally new to you, you might want to hire a contractor or an inspector to walk through several fixer upper houses that are typical for your area and show you the all the items that need repaired, what they look like, and a rough estimate of what it would cost to repair. Do this two or three times and you will be able to come up with a rough estimate of repairs needed on a give house.
As a wholesaler, you may end up selling the fixer upper wholesales with a recommended contractor, so you may be able to develop a relationship with a good contractor in your area who will actually go do a repair bid for you that you can use in marketing the property with the hopes that the person who buys your wholesale property will use the contractor’s services to make the needed repairs.
After you know how to figure out what houses are worth through the neighborhood values and the needed repairs, you are now in a position to start figuring out what you will offer. As most wholesale investors sell to other investors, you can roughly figure that the average investor buyer will pay up to 70% of the After Repair Value less Repairs.
So if the “typical” house sells for $100,000 and it needs $30,000 in repairs, the average investor would pay $100,000 x 70% or $70,000 less $30,000 in repairs. Or they would pay about $40,000 for the house. The number you will need to verify in your area is the 70%. In some areas, like mine here in Kansas City, in areas where there are high numbers of foreclosures, you might find that the 70% factor might be 60% or 50%, so figure this out before you start making offers.
So once you know what the typical investor will pay for a house, then you are all set on your Third task of figuring out what to offer. Just take the number we figured above that the investor will pay, subtract out your profit and maybe just a bit more for a cushion and you have a number to target for your purchase price.
But before you start actually making offers, your fourth step is to find your money. I know, many of you are saying that if I am wholesaling houses I am going to assign the property or double close, what do I need money for?
So let’s step back a minute and define what assign or double close means.
With an assignment, you get a property under contract to buy a house at a particular price. Then you get a contract with someone who wants to pay you a fee to take your place at closing.
An example might be that you have 123 Main St under contract to purchase at $25,000 with Suzie Seller and Larry Landlord who is willing to pay up to $28,000 for the property. You have a purchase contract with Suzie Seller to buy at $25,000 and hen Larry Landlord signs an assignment that says he will pay you $3,000 at closing for the right to close in your place and pay Suzie Seller $25,000. In this transaction on the HUD, both Suzie Seller and Larry Landlord will know that you Willie Wholesaler are making $3,000
Where the need to have money comes in would be when Larry Landlord backs out the day before closing and you have to either close on the property or extend the contract with Suzie Seller.
With a double close you have the same house at 123 Main St under contract to purchase at $25,000 with Suzie Seller. You find Larry Landlord who is really excited and ready to buy at $35,000 because the property is rented for $750 a month. But because you don’t really want Suzie and Larry finding out that you are making $10,000 in the middle as the wholesaler, you want to Double Close. So you have two contracts: one for you to buy from Suzie Seller and one for you to sell to Larry Landlord. You, Suzie, and Larry all close on the same day and the funds that Larry brings to closing to buy pays Suzie for your purchase with about $10,000 left over for you as profit.
But again, what if Suzie has to sell on that particular day or she will back out of the contract with you and sell to someone else. Further Larry wants to buy the house, but can’t quite get his funding put together until a few days after you are supposed to close. If you don’t have the funding ready to go, you loose out on doing the deal and making $10,000.
So you need to pay particular attention to step number 4: Finding the Funding. You also need to find the funding, because many times your buyers might need help in financing the purchase. If you have funding lined up that your buyer can use, you may be able to turn lookie lou phone calls in to actual buyers. So spend a large portion of your time calling lenders at your Investor Club, your networking groups, and out of your local phone books to line up some funding. I would try to find one or two of each of the following:
1. FHA Lender for those few houses that could be sold directly to the general public.
2. Hard Money Lender that would be willing to lend you funds for a few days to a few weeks.
3. Mortgage or Bank Lender who will lend you the funds for a longer term for those houses you might need to buy and do a few minor repairs and sell in a few months.
4. Private Lenders should be your main focus because these will be your best source for cheaper funding if you need to buy a property. Private Lending will be a topic for another article on another day.
As you call and talk to all of these lenders, tell them what you are doing, what kind of funding you might need or that your buyers might need, and if they can’t help you ask them for referrals to other lenders who might be able to help you.
You have one more homework step before you are ready to deal with buyers and sellers and that is number six, finding the right title company. If you don’t have a title company that is willing and able to double close for you or to close an assignment contract, then you will be very hard pressed to do deals. It is much better to have this title company lined up in advance than trying to find one to put a deal together for you quickly at the last minute.
Further your title company needs to be investor and for sale by owner friendly. Many companies in our area charge an extra fee if there are no realtors involved and that could eat into your profits. You also want a title company that is good at solving problems. If you wholesale more than one or two houses a year, you will run into some major title issues sooner rather than later that need to be dealt with.
Now you are ready to start the fun part of wholesaling. Building your buyers list. I would start at your local REIA and if possible using the old fashioned phone. If at all possible get a list of the members and start calling them and asking them a few basic questions:
1. Do you buy houses?
2. Do you have 5 minutes to talk?
3. Where do you buy?
4. What do you look for in a house?
5. Price range?
6. How many a year?
7. What is your end use? (Rehab flip, section 8 rental, lease to own)
8. If I have a good deal how fast can you close?
9. How do I get a good deal in front of you?
10. Get their name and contact information.
I have tried email and found that it just does now work. You can send out 1000 emails and you will more than likely get a 2 or 3 people respond back. Use the above information to build a contact database online and devise a way to email out your deals as you get them.
I would also invest some time in calling all the “I Buy Houses” ads in the newspaper as well as the for rent by owner ads. Then I would learn how to market houses through your local REIA group both at meetings and online and find some national online outlets for marketing properties. The best online place I have found is craigslist.com.
On your buyer’s list you want to add everyone who says they would like to be notified of properties, but I would also try to build a special buyers list of people that are cash buyers and could close in less than a week if you find them a good deal. As you do deals, add to this special list the people who do buy houses. I would contact this special list first and give them a 24-hour head start before sending out the property to your full list.
Along the way in getting this far you have probably talked to a lot of people: contractors, inspectors, lenders, realtors, property manager, etc. Be sure to keep all of them in a database of service providers so when your buyer’s ask, and they will, you have some key contact to share with them.
Now at step number 8 you need to figure out how you are going to find deals. If you look at all the training programs out there, this is where they devote the majority of their time in training you.
They talk about what a motivated seller is and what they do to find that very motivated seller:
· Larry Goins mainly hires buyers to sit and call For Sale and For Rent by owners in the newspaper.
· Scott Rister likes to mail a series of letters and postcards to out of stat owners, code violation lists, and owners in eviction court among others. He is focusing mailing on rental properties and junkers.
· Kathy Kennebrook also likes the direct mail approach also and mails to out of state owners on higher end homes, homes in probate, and nicer areas.
· Than Merrill program takes a multi approach from direct mail to people in foreclosure, to bandit signs, to buying leads.
There are virtually 100’s of ways to find motivated sellers and getting them to call you. For example as I am writing this paragraph above, Larry Goins has an autodialer to call up people who have given him their contact information in some way and this autodialer just called me to promote his latest training. You could set up an autodialer with a message on how you buy houses and set it up to call all the for sale and for rent buy owners and direct them back to your web site for more information.
Take a little time and review all the articles and teleseminars online devoted to wholesaling and finding motivated sellers and you will get a very good idea of things you can use to find the deals. Then pick three or four methods based on the money you have to devote to finding deals and implement them. Don’t get discouraged if a deal does not fall in your lap.
It could take 2 to 3 months or more to get the right deal in front of you. This may be because your marketing plan or your finding plan needs to be learned and you need to practice a bit. Also many times a person may not call you the first time you contact them or they see your sign. They may need to “hear” from you through a sign, letter, phone call, email, web site several times before they get up the courage to call you.
Now this last part in getting the sellers to contact you is probably the most important. You need to have a phone number (local if you are working inner city), a web site, and an email to provide them several ways to find you and learn more. And be sure that if you get a phone call or an email to contact them back as soon as possible, because if they are ready to sell today and you don’t call them back, they will find another potential buyer or a realtor and go with them. Once they raise their hand and say, please help me with my problem, you have about a 12 hour window if that to get back with them before they either change their minds or go with someone else.
Now you have all the basics you need to decide if you want to wholesale houses. I would still recommend doing a little more homework with a book from the book store, information from online or a training course or two. My team and I bought and sold about 23 house in 2008 and 17 in 2007 on a part time basis and we have been working on perfecting the first 8 steps since the year 2000. We have attended many training events and purchased several training courses and talked to other active wholesale investors in order to tweak our system and we continue to make improvements. Take the time to utilize the free or low cost training offered by your local Real Estate Investor Association and don’t be afraid to ask questions on those online networking boards.
As you can see you can’t do it all in a 10-minute phone call and a Realtor is not going to be able to do it for you. So far with this brief overview I see we are up to about 3 pages. So set aside some time and start working on the steps.
About the Author: Kim Tucker is an Investor and Real Estate Broker in the Kansas City Market. Along with her husband Don, they have been investing in Kansas City Real Estate since 1999. You can find more about Kim online by visiting her blog at http://www.tuckeroneproperties.com/or you can reach her by phone at 816-523-4400. Currently in 2009 the Tuckers are buying and wholesaling a house or two each month and focusing their efforts currently on building their real estate brokerage http://www.realtyresourcekc.com/that caters to the Kansas City Real Estate Investor.
He wanted to know where he could buy a good deal, and if I could help him find them. He planned on buying several and flipping them for quick cash, and could I help him with that. The more he asked questions, the more I realized he either wanted me to teach him how to be a wholesale investor on the phone in 5 minutes or he wanted me to do everything for him for a real estate commission as a Realtor.
So this article is for the gentleman who called me the Monday after Christmas.
First of all if you are going to buy and flip a house for quick cash, you need to do a bit of homework up front. A Realtor is not going to be able to necessarily tell you what a good deal would be that you can buy and then sell for quick cash. If the Realtor has that knowledge more than likely they will be buying and flipping and making the quick cash themselves rather than working for a paltry 3% commission that they have to then split with their broker.
Second, you can learn how to be a wholesale investor in a short 5 to 10 minute phone call. And if you are going to try to learn something from someone in such a short call, please make it from a place where you can take notes, not driving down the road where you have a strong possibility of driving up a tree or running over a little old lady.
To learn how to wholesale houses you need a little bit of education. Myself, I have gone through several different training programs from Scott Rister, Larry Goins, Kathy Kennebrook, and Than Merrill to name a few. I have taken the best from each of these programs as well as stuff I have learned first hand from some of the bigger wholesale companies in the Kansas City market such as observing HomeVestors and the old Ridgemoor Company. And I have also learned from experience in the past 10 years. So sorry to say, it can’t be condensed into a short phone call, but I will give you a brief intro.
There are several steps you need to take:
1. Educate yourself on the area & the properties
2. Educate yourself on estimating repairs
3. Figure out how much to offer
4. Find the money
5. Find the right title company or attorney
6. Build a list of buyers
7. Develop a team of service providers
8. Create YOUR plan to find deals
9. The start doing deals.
First of all if you are going to be buying and selling houses in a particular area it would be worth your time to do a little homework. I would start by developing a relationship with a Realtor or an appraiser and get them to email you live links to everything listed, pending, sold, expired, etc in the MLS system for the past year in the given area. If they can convert this to PDF as well so you can save it as a reference to look back at later, this will give you a really good idea of accurate values of properties in your area. Also take time to look at the live links they send and review the interior photos so you know what the “typical” house looks like on the inside.
Secondly you need to have a way to accurately estimate repairs on a home. If repairs are totally new to you, you might want to hire a contractor or an inspector to walk through several fixer upper houses that are typical for your area and show you the all the items that need repaired, what they look like, and a rough estimate of what it would cost to repair. Do this two or three times and you will be able to come up with a rough estimate of repairs needed on a give house.
As a wholesaler, you may end up selling the fixer upper wholesales with a recommended contractor, so you may be able to develop a relationship with a good contractor in your area who will actually go do a repair bid for you that you can use in marketing the property with the hopes that the person who buys your wholesale property will use the contractor’s services to make the needed repairs.
After you know how to figure out what houses are worth through the neighborhood values and the needed repairs, you are now in a position to start figuring out what you will offer. As most wholesale investors sell to other investors, you can roughly figure that the average investor buyer will pay up to 70% of the After Repair Value less Repairs.
So if the “typical” house sells for $100,000 and it needs $30,000 in repairs, the average investor would pay $100,000 x 70% or $70,000 less $30,000 in repairs. Or they would pay about $40,000 for the house. The number you will need to verify in your area is the 70%. In some areas, like mine here in Kansas City, in areas where there are high numbers of foreclosures, you might find that the 70% factor might be 60% or 50%, so figure this out before you start making offers.
So once you know what the typical investor will pay for a house, then you are all set on your Third task of figuring out what to offer. Just take the number we figured above that the investor will pay, subtract out your profit and maybe just a bit more for a cushion and you have a number to target for your purchase price.
But before you start actually making offers, your fourth step is to find your money. I know, many of you are saying that if I am wholesaling houses I am going to assign the property or double close, what do I need money for?
So let’s step back a minute and define what assign or double close means.
With an assignment, you get a property under contract to buy a house at a particular price. Then you get a contract with someone who wants to pay you a fee to take your place at closing.
An example might be that you have 123 Main St under contract to purchase at $25,000 with Suzie Seller and Larry Landlord who is willing to pay up to $28,000 for the property. You have a purchase contract with Suzie Seller to buy at $25,000 and hen Larry Landlord signs an assignment that says he will pay you $3,000 at closing for the right to close in your place and pay Suzie Seller $25,000. In this transaction on the HUD, both Suzie Seller and Larry Landlord will know that you Willie Wholesaler are making $3,000
Where the need to have money comes in would be when Larry Landlord backs out the day before closing and you have to either close on the property or extend the contract with Suzie Seller.
With a double close you have the same house at 123 Main St under contract to purchase at $25,000 with Suzie Seller. You find Larry Landlord who is really excited and ready to buy at $35,000 because the property is rented for $750 a month. But because you don’t really want Suzie and Larry finding out that you are making $10,000 in the middle as the wholesaler, you want to Double Close. So you have two contracts: one for you to buy from Suzie Seller and one for you to sell to Larry Landlord. You, Suzie, and Larry all close on the same day and the funds that Larry brings to closing to buy pays Suzie for your purchase with about $10,000 left over for you as profit.
But again, what if Suzie has to sell on that particular day or she will back out of the contract with you and sell to someone else. Further Larry wants to buy the house, but can’t quite get his funding put together until a few days after you are supposed to close. If you don’t have the funding ready to go, you loose out on doing the deal and making $10,000.
So you need to pay particular attention to step number 4: Finding the Funding. You also need to find the funding, because many times your buyers might need help in financing the purchase. If you have funding lined up that your buyer can use, you may be able to turn lookie lou phone calls in to actual buyers. So spend a large portion of your time calling lenders at your Investor Club, your networking groups, and out of your local phone books to line up some funding. I would try to find one or two of each of the following:
1. FHA Lender for those few houses that could be sold directly to the general public.
2. Hard Money Lender that would be willing to lend you funds for a few days to a few weeks.
3. Mortgage or Bank Lender who will lend you the funds for a longer term for those houses you might need to buy and do a few minor repairs and sell in a few months.
4. Private Lenders should be your main focus because these will be your best source for cheaper funding if you need to buy a property. Private Lending will be a topic for another article on another day.
As you call and talk to all of these lenders, tell them what you are doing, what kind of funding you might need or that your buyers might need, and if they can’t help you ask them for referrals to other lenders who might be able to help you.
You have one more homework step before you are ready to deal with buyers and sellers and that is number six, finding the right title company. If you don’t have a title company that is willing and able to double close for you or to close an assignment contract, then you will be very hard pressed to do deals. It is much better to have this title company lined up in advance than trying to find one to put a deal together for you quickly at the last minute.
Further your title company needs to be investor and for sale by owner friendly. Many companies in our area charge an extra fee if there are no realtors involved and that could eat into your profits. You also want a title company that is good at solving problems. If you wholesale more than one or two houses a year, you will run into some major title issues sooner rather than later that need to be dealt with.
Now you are ready to start the fun part of wholesaling. Building your buyers list. I would start at your local REIA and if possible using the old fashioned phone. If at all possible get a list of the members and start calling them and asking them a few basic questions:
1. Do you buy houses?
2. Do you have 5 minutes to talk?
3. Where do you buy?
4. What do you look for in a house?
5. Price range?
6. How many a year?
7. What is your end use? (Rehab flip, section 8 rental, lease to own)
8. If I have a good deal how fast can you close?
9. How do I get a good deal in front of you?
10. Get their name and contact information.
I have tried email and found that it just does now work. You can send out 1000 emails and you will more than likely get a 2 or 3 people respond back. Use the above information to build a contact database online and devise a way to email out your deals as you get them.
I would also invest some time in calling all the “I Buy Houses” ads in the newspaper as well as the for rent by owner ads. Then I would learn how to market houses through your local REIA group both at meetings and online and find some national online outlets for marketing properties. The best online place I have found is craigslist.com.
On your buyer’s list you want to add everyone who says they would like to be notified of properties, but I would also try to build a special buyers list of people that are cash buyers and could close in less than a week if you find them a good deal. As you do deals, add to this special list the people who do buy houses. I would contact this special list first and give them a 24-hour head start before sending out the property to your full list.
Along the way in getting this far you have probably talked to a lot of people: contractors, inspectors, lenders, realtors, property manager, etc. Be sure to keep all of them in a database of service providers so when your buyer’s ask, and they will, you have some key contact to share with them.
Now at step number 8 you need to figure out how you are going to find deals. If you look at all the training programs out there, this is where they devote the majority of their time in training you.
They talk about what a motivated seller is and what they do to find that very motivated seller:
· Larry Goins mainly hires buyers to sit and call For Sale and For Rent by owners in the newspaper.
· Scott Rister likes to mail a series of letters and postcards to out of stat owners, code violation lists, and owners in eviction court among others. He is focusing mailing on rental properties and junkers.
· Kathy Kennebrook also likes the direct mail approach also and mails to out of state owners on higher end homes, homes in probate, and nicer areas.
· Than Merrill program takes a multi approach from direct mail to people in foreclosure, to bandit signs, to buying leads.
There are virtually 100’s of ways to find motivated sellers and getting them to call you. For example as I am writing this paragraph above, Larry Goins has an autodialer to call up people who have given him their contact information in some way and this autodialer just called me to promote his latest training. You could set up an autodialer with a message on how you buy houses and set it up to call all the for sale and for rent buy owners and direct them back to your web site for more information.
Take a little time and review all the articles and teleseminars online devoted to wholesaling and finding motivated sellers and you will get a very good idea of things you can use to find the deals. Then pick three or four methods based on the money you have to devote to finding deals and implement them. Don’t get discouraged if a deal does not fall in your lap.
It could take 2 to 3 months or more to get the right deal in front of you. This may be because your marketing plan or your finding plan needs to be learned and you need to practice a bit. Also many times a person may not call you the first time you contact them or they see your sign. They may need to “hear” from you through a sign, letter, phone call, email, web site several times before they get up the courage to call you.
Now this last part in getting the sellers to contact you is probably the most important. You need to have a phone number (local if you are working inner city), a web site, and an email to provide them several ways to find you and learn more. And be sure that if you get a phone call or an email to contact them back as soon as possible, because if they are ready to sell today and you don’t call them back, they will find another potential buyer or a realtor and go with them. Once they raise their hand and say, please help me with my problem, you have about a 12 hour window if that to get back with them before they either change their minds or go with someone else.
Now you have all the basics you need to decide if you want to wholesale houses. I would still recommend doing a little more homework with a book from the book store, information from online or a training course or two. My team and I bought and sold about 23 house in 2008 and 17 in 2007 on a part time basis and we have been working on perfecting the first 8 steps since the year 2000. We have attended many training events and purchased several training courses and talked to other active wholesale investors in order to tweak our system and we continue to make improvements. Take the time to utilize the free or low cost training offered by your local Real Estate Investor Association and don’t be afraid to ask questions on those online networking boards.
As you can see you can’t do it all in a 10-minute phone call and a Realtor is not going to be able to do it for you. So far with this brief overview I see we are up to about 3 pages. So set aside some time and start working on the steps.
About the Author: Kim Tucker is an Investor and Real Estate Broker in the Kansas City Market. Along with her husband Don, they have been investing in Kansas City Real Estate since 1999. You can find more about Kim online by visiting her blog at http://www.tuckeroneproperties.com/or you can reach her by phone at 816-523-4400. Currently in 2009 the Tuckers are buying and wholesaling a house or two each month and focusing their efforts currently on building their real estate brokerage http://www.realtyresourcekc.com/that caters to the Kansas City Real Estate Investor.
Real Estate Education: Not so Top Secret
Real Estate Education is the key to success in Real Estate Investing. But there are no top secrets to reveal, no secret pills, or magic resource. But there are 10 things you can do to become educated:
1. Online Study & Networking: There are several top online resources you should tap into. Personally I like http://www.creonline.com/ and my own web site http://www.mareinet.com/ but there are 100's of online sites for real estate investors that you can tap into.
2. Join Local Association: This is absolutely vital to join a group so you have a resoruce to go to for questions, answers, vendors, and sounding board. For Kansas City area investors or out of state investors who invest in Kansas City Real Estate, I would recommend Mid-America Association of Real Estate Investors or for groups in other areas visit http://www.nationalreia.com/.
3. If real estate is totally new to you, a good intro for first time investors will be very useful to get a broad overview of all the types of investing, asset protection, finding motivated sellers and more. Your local group will probably offer this class for a small fee in the $100's of dollars vs the big flashy gurus that come to town and teach it for $1000's of dollars.
4. Your local group or your online group if you can find anything local should also have a ton of resources to access for teleconferences, ebooks, forms and documents. Absorb all of these that you can.
5. Key areas of study including: types of investing to find your niche, funding deals, and finding motivated sellers. If you know what you want to do, learn how to fund your deals, and learn how to market for motivated sellers, then the deals will all come together but you need to know these key areas first, then worry about asset protection, book keeping, and all the other mundane business owner tasks.
6. Learn your market - you need to know the market where you invest, what prices are, what rents are, what a typical house looks like inside and out.
7. Build a team of advisors - you can't do it all, you you need to find people to be on your team: realtors, lenders, contractors, title people, attorneys, support staff, etc.
8. Set your Goals and write them down - you can't acheive anything unless you know what it is you want to achieve. Be specific with what it is you want to do, put values to the goals, and deadlines.
9. Then break your goals down into workable steps in a to do list - I need to do these 10 things to achieve this one goal.
10. Take action, one of the best ways to learn is to do that first deal. If you do all of the past 9 and take an educated stab at investing, you will learn more with that first deal than all the online web sites and books that you read.
Our group - MAREI in the Kansas City Market will be offering a fast start to success workshop as part of their Educational Series. Visit http://www.mareinet.com/ and click on education for more information.
1. Online Study & Networking: There are several top online resources you should tap into. Personally I like http://www.creonline.com/ and my own web site http://www.mareinet.com/ but there are 100's of online sites for real estate investors that you can tap into.
2. Join Local Association: This is absolutely vital to join a group so you have a resoruce to go to for questions, answers, vendors, and sounding board. For Kansas City area investors or out of state investors who invest in Kansas City Real Estate, I would recommend Mid-America Association of Real Estate Investors or for groups in other areas visit http://www.nationalreia.com/.
3. If real estate is totally new to you, a good intro for first time investors will be very useful to get a broad overview of all the types of investing, asset protection, finding motivated sellers and more. Your local group will probably offer this class for a small fee in the $100's of dollars vs the big flashy gurus that come to town and teach it for $1000's of dollars.
4. Your local group or your online group if you can find anything local should also have a ton of resources to access for teleconferences, ebooks, forms and documents. Absorb all of these that you can.
5. Key areas of study including: types of investing to find your niche, funding deals, and finding motivated sellers. If you know what you want to do, learn how to fund your deals, and learn how to market for motivated sellers, then the deals will all come together but you need to know these key areas first, then worry about asset protection, book keeping, and all the other mundane business owner tasks.
6. Learn your market - you need to know the market where you invest, what prices are, what rents are, what a typical house looks like inside and out.
7. Build a team of advisors - you can't do it all, you you need to find people to be on your team: realtors, lenders, contractors, title people, attorneys, support staff, etc.
8. Set your Goals and write them down - you can't acheive anything unless you know what it is you want to achieve. Be specific with what it is you want to do, put values to the goals, and deadlines.
9. Then break your goals down into workable steps in a to do list - I need to do these 10 things to achieve this one goal.
10. Take action, one of the best ways to learn is to do that first deal. If you do all of the past 9 and take an educated stab at investing, you will learn more with that first deal than all the online web sites and books that you read.
Our group - MAREI in the Kansas City Market will be offering a fast start to success workshop as part of their Educational Series. Visit http://www.mareinet.com/ and click on education for more information.
Monday, September 28, 2009
Private Lending
While working on my New Year’s Resolution to actually utilize the treadmill in the extra bedroom for something other than a dust collector, I decided it was time to kill 2 birds with one stone so to speak. I have been collecting more and more real estate training teleconference calls but have not had time to listen to them. I also have not been able to find time to actually exercise, so here’s the plan. Set aside 30 minutes 2 or 3 times a week to listen to a teleconference while taking a walk on the treadmill. So won’t you join me in getting more exercise on your own treadmill and listening to some training teleconferences at the same time.
On this particular day I was listening to the call in our past TeleSeminar / Webinar Replays from Mike Moulton and Courtney Jones. If you have not had a chance to listen to one of our teleconference, this might be the one you should start with in 2009. MAREI members can log into the member area at www.MAREInet.com to gain access to our Teleseminar Archives (click on GURU and do a little investigating and you will eventually find this call)
I was very impressed with the call as they had some great ideas for people looking for funding for their real estate investing business, especially in this time of very tight lending practices from traditional lending institutions. Everyone should take the time to cultivate several private lenders both for short term loans and long term holds.
Think about it! What if you had a very close friend, family member, or business associate who had $100,000 sitting in the bank. They did have $200,000 but when the stock market tanked, their investments went south and they pulled out at $100,000 and dropped it into the bank in a CD making 4% interest. What if you further had a great duplex that you could buy for $100,000 if you only had the money. You could go to the bank to get a loan, but sorry you already have 4 loans in your name so you can’t get any more plus as you are self employed and write off all your expenses, your tax return looks pretty bad. But if you had $100,000 you could buy a great duplex with great cash flow. What if you could get together with your friend with $100,000, they could lend it to you, secured by real estate, and earn 6%, 8% , 10% on their money, what ever you decide.
Much better than their 4% interest, you could buy the property and start cash flowing now, and then in 2 or 3 years when lending loosens up you could refinance and pay your friend back with a balloon payment. Or maybe they might be happy getting 6 to 10% interest for a full 30 years, who knows.
You never know until you ask, and that is one of the things that Mike and Courtney talk about, getting over asking for money. Many people feel like they are begging for money, but they advise us to think more along the lines of we are helping people by telling them of an alternative place of investing their money.
The then discuss how to set up and implement a Private Lending program in your business and what they do on a daily basis to set one up and keep it running in their business. They talk about creating your program and marketing pieces and your 30 second elevator speech, just in case you are on an elevator with Bill Gates or someone else who could be a potential lender.
They talk about then taking your program and your elevator speech and talking to people you know about what you do and over the course of time, many of the people you know will come around to you. Courtney gave an example of a family member she had who acted like they were broke and had no idea how they would pay for their next meal. In the course of conversation one day she was talking about what she did in investing, how she borrowed money from private individuals, and the kind of return these people were getting on their money. Her penniless family member it turns out had a substantial funds to lend and wanted to get in on the action and do a deal or two with her. So don’t rule anyone out, they may have funds available or they may know someone who has the funds.
Another idea they had was a soft sell to people you know. The idea being that you create a short presentation either on power point or an audio cd and you give it to a few key friends that you think might have an interest. Tell them that you have put this presentation together and are getting ready to send it out to the masses and would they please review it and let you know what they thought of the presentation, critique it if you will, so it could be improved upon. They said that invariably they would get some interest from some of the people doing the review.
They had quite a few ideas and from Courtney and Mike as well as a few other sources I have found that many people are putting together the “elevator speech”, and then a one on one or group presentation to do at a lunch or a dinner. And recording the presentation on a CD. Then they are going to networking groups that are outside of real estate – groups for anything, just so they can meet people from all walks of life, professionals, doctors, attorneys, retired people, what ever. Through out the networking events they meet people and as you do at these things you talk a bit about what you do, share with them your elevator speech. If they are interested, you have handy the CD for them to take home and listen to, and then if they want more info you can set up a one on one meeting.
Another source also recommended that as you go to these networking events, that people may want to provide a presentation to their one special group that may not be at the event: a select few clients for an accountant who might want to learn about self directed IRAs, the doctors in a doctors office, a retired professional with his golf buddies, the retired school teacher with her retired school teacher friends.
If you take the approach that you are teaching people about an alternative way to invest their money – into mortgages secured by real estate or teaching them about self directed IRAs, you will find that you don’t really have to ask so much for the money.
So my plan for 2009, besides the treadmill and the teleconferences is to polish the elevator speech, update my presentation and get it onto a CD, make a few copies and then find some new places outside of real estate to network. I hope to find a way to squeeze at least 2 extra events in a month and share my elevator speech and find an extra $1,000,000 for 2009.
About the Author: Kim Tucker is an Investor and Real Estate Broker in the Kansas City Market. Along with her husband Don, they have been investing in Kansas City Real Estate since 1999. You can find more about Kim online by visiting her blog at http://www.tuckeroneproperties.com/or you can reach her by phone at 816-523-4400. Currently in 2009 the Tuckers are buying and wholesaling a house or two each month and focusing their efforts currently on building their real estate brokerage http://www.realtyresourcekc.com/that caters to the Kansas City Real Estate Investor.
On this particular day I was listening to the call in our past TeleSeminar / Webinar Replays from Mike Moulton and Courtney Jones. If you have not had a chance to listen to one of our teleconference, this might be the one you should start with in 2009. MAREI members can log into the member area at www.MAREInet.com to gain access to our Teleseminar Archives (click on GURU and do a little investigating and you will eventually find this call)
I was very impressed with the call as they had some great ideas for people looking for funding for their real estate investing business, especially in this time of very tight lending practices from traditional lending institutions. Everyone should take the time to cultivate several private lenders both for short term loans and long term holds.
Think about it! What if you had a very close friend, family member, or business associate who had $100,000 sitting in the bank. They did have $200,000 but when the stock market tanked, their investments went south and they pulled out at $100,000 and dropped it into the bank in a CD making 4% interest. What if you further had a great duplex that you could buy for $100,000 if you only had the money. You could go to the bank to get a loan, but sorry you already have 4 loans in your name so you can’t get any more plus as you are self employed and write off all your expenses, your tax return looks pretty bad. But if you had $100,000 you could buy a great duplex with great cash flow. What if you could get together with your friend with $100,000, they could lend it to you, secured by real estate, and earn 6%, 8% , 10% on their money, what ever you decide.
Much better than their 4% interest, you could buy the property and start cash flowing now, and then in 2 or 3 years when lending loosens up you could refinance and pay your friend back with a balloon payment. Or maybe they might be happy getting 6 to 10% interest for a full 30 years, who knows.
You never know until you ask, and that is one of the things that Mike and Courtney talk about, getting over asking for money. Many people feel like they are begging for money, but they advise us to think more along the lines of we are helping people by telling them of an alternative place of investing their money.
The then discuss how to set up and implement a Private Lending program in your business and what they do on a daily basis to set one up and keep it running in their business. They talk about creating your program and marketing pieces and your 30 second elevator speech, just in case you are on an elevator with Bill Gates or someone else who could be a potential lender.
They talk about then taking your program and your elevator speech and talking to people you know about what you do and over the course of time, many of the people you know will come around to you. Courtney gave an example of a family member she had who acted like they were broke and had no idea how they would pay for their next meal. In the course of conversation one day she was talking about what she did in investing, how she borrowed money from private individuals, and the kind of return these people were getting on their money. Her penniless family member it turns out had a substantial funds to lend and wanted to get in on the action and do a deal or two with her. So don’t rule anyone out, they may have funds available or they may know someone who has the funds.
Another idea they had was a soft sell to people you know. The idea being that you create a short presentation either on power point or an audio cd and you give it to a few key friends that you think might have an interest. Tell them that you have put this presentation together and are getting ready to send it out to the masses and would they please review it and let you know what they thought of the presentation, critique it if you will, so it could be improved upon. They said that invariably they would get some interest from some of the people doing the review.
They had quite a few ideas and from Courtney and Mike as well as a few other sources I have found that many people are putting together the “elevator speech”, and then a one on one or group presentation to do at a lunch or a dinner. And recording the presentation on a CD. Then they are going to networking groups that are outside of real estate – groups for anything, just so they can meet people from all walks of life, professionals, doctors, attorneys, retired people, what ever. Through out the networking events they meet people and as you do at these things you talk a bit about what you do, share with them your elevator speech. If they are interested, you have handy the CD for them to take home and listen to, and then if they want more info you can set up a one on one meeting.
Another source also recommended that as you go to these networking events, that people may want to provide a presentation to their one special group that may not be at the event: a select few clients for an accountant who might want to learn about self directed IRAs, the doctors in a doctors office, a retired professional with his golf buddies, the retired school teacher with her retired school teacher friends.
If you take the approach that you are teaching people about an alternative way to invest their money – into mortgages secured by real estate or teaching them about self directed IRAs, you will find that you don’t really have to ask so much for the money.
So my plan for 2009, besides the treadmill and the teleconferences is to polish the elevator speech, update my presentation and get it onto a CD, make a few copies and then find some new places outside of real estate to network. I hope to find a way to squeeze at least 2 extra events in a month and share my elevator speech and find an extra $1,000,000 for 2009.
About the Author: Kim Tucker is an Investor and Real Estate Broker in the Kansas City Market. Along with her husband Don, they have been investing in Kansas City Real Estate since 1999. You can find more about Kim online by visiting her blog at http://www.tuckeroneproperties.com/or you can reach her by phone at 816-523-4400. Currently in 2009 the Tuckers are buying and wholesaling a house or two each month and focusing their efforts currently on building their real estate brokerage http://www.realtyresourcekc.com/that caters to the Kansas City Real Estate Investor.
Sunday, September 27, 2009
Meet the Vendor: Accurate Title
Accurate Title Company is a full service title company that services the Kansas counties of Johnson, Wyandotte, Leavenworth, Douglas and Miami and the Missouri counties of Jackson, Clay, Platte, Cass, Johnson, Henry, Clinton, Benton, Morgan and Camden. The experienced staff we have assembled brings you many years of professional top-quality customer service.
Our subsidiary, ATC Exchange LLC, assists real estate investors with Section 1031 of the Internal Revenue Code, which allows investors to defer capital gain on real esatate sales.
If you have a questions about closing a transaction, an assignment, a simultaneous close, be sure to call Jackie or Tina at Accurate Title.
7011 W 121st ST, Suite 100
Overland Park, KS 66209
Phone: 913-338-0100
http://www.AccurateTitle.com
Our subsidiary, ATC Exchange LLC, assists real estate investors with Section 1031 of the Internal Revenue Code, which allows investors to defer capital gain on real esatate sales.
If you have a questions about closing a transaction, an assignment, a simultaneous close, be sure to call Jackie or Tina at Accurate Title.
7011 W 121st ST, Suite 100
Overland Park, KS 66209
Phone: 913-338-0100
http://www.AccurateTitle.com
Saturday, September 26, 2009
Learn Short Sales from a KCRAR Panel of Experts
Working with short sales is one of the hottest topics in real estate today. KCRAR has partnered with mortgage lender Wells Fargo and private mortgage insurance provider GenWorth Financial to offer a REALTOR® education program focused solely on short sales and foreclosure prevention. The program will be held in two locations Wednesday, Nov. 18.
The program will feature a panel of experts on this growing concern in real estate: REALTOR® Russ Bouknight with Reece & Nichols Liberty; REALTOR® Tameka Bryant with The Real Estate House; REALTOR® Paul Surles with Realty Resource of KC; Rullah Price with Wells Fargo Home Loans; and Eileen Pritchett with GenWorth Financial.
This panel of experts will cover the following topics:
Foreclosure prevention organizations and programs available in our area.
Buyer issues, such as presenting multiple offers, expectations, etc.
Short sale procedures for some of the major lenders in our area.
Seller issues, such as credit, possible ongoing financial obligations to lender, expectations, etc.
Educating buyers and sellers about short sales, including the estimated timeline from offer to closing and the approval process for short sale offers.
BPO preparation, the importance of listing at fair market value and encouraging lenders to obtain other valuable opinions at the time of listing rather than after an offer.
Due to the overwhelming need for members to become educated on short sales and foreclosure prevention, KCRAR will be offering this program in two convenient locations on WEDNESDAY, NOV. 18. Members can attend the program at whichever location is most convenient.
Here are the details:
KANSAS
8 to 11 a.m. (breakfast will be provided)
Sheraton Hotel Overland Park (6100 College Blvd., Overland Park, KS 66211)
$5 registration fee prior to Nov. 11. After that, registration is $10.
MISSOURI
12 to 3 p.m. (lunch will be provided)
Harrah’s Casino & Hotel (1 Riverboat Drive, North Kansas City, MO 64116)
$5 registration fee prior to Nov. 11. After that, registration is $10.
Don’t hesitate – registration is available NOW! Just click here. For more information, contact Cristalle Bozarth at 913-266-5908 or cristalleb@kcrar.com.
The program will feature a panel of experts on this growing concern in real estate: REALTOR® Russ Bouknight with Reece & Nichols Liberty; REALTOR® Tameka Bryant with The Real Estate House; REALTOR® Paul Surles with Realty Resource of KC; Rullah Price with Wells Fargo Home Loans; and Eileen Pritchett with GenWorth Financial.
This panel of experts will cover the following topics:
Foreclosure prevention organizations and programs available in our area.
Buyer issues, such as presenting multiple offers, expectations, etc.
Short sale procedures for some of the major lenders in our area.
Seller issues, such as credit, possible ongoing financial obligations to lender, expectations, etc.
Educating buyers and sellers about short sales, including the estimated timeline from offer to closing and the approval process for short sale offers.
BPO preparation, the importance of listing at fair market value and encouraging lenders to obtain other valuable opinions at the time of listing rather than after an offer.
Due to the overwhelming need for members to become educated on short sales and foreclosure prevention, KCRAR will be offering this program in two convenient locations on WEDNESDAY, NOV. 18. Members can attend the program at whichever location is most convenient.
Here are the details:
KANSAS
8 to 11 a.m. (breakfast will be provided)
Sheraton Hotel Overland Park (6100 College Blvd., Overland Park, KS 66211)
$5 registration fee prior to Nov. 11. After that, registration is $10.
MISSOURI
12 to 3 p.m. (lunch will be provided)
Harrah’s Casino & Hotel (1 Riverboat Drive, North Kansas City, MO 64116)
$5 registration fee prior to Nov. 11. After that, registration is $10.
Don’t hesitate – registration is available NOW! Just click here. For more information, contact Cristalle Bozarth at 913-266-5908 or cristalleb@kcrar.com.
Member Benefit: General Meeting Archives
Members have you missed a meeting in the past year that you really wanted to attend?
Maybe saw the meeting, but wanted to revisit the presentation?
Wanted more information about the speaker?
Well we have two ways to get more info:
(1) Newsletter Archives: Go to www.MAREInet.com, click on newsletter archives, and read the newsletter for the month in question. You should find several articles that pertain to the guest speakers presentation and the speakers contact information.
Note that the a year of newsletter's is open to the general public, but newsletters since 2006 are in the member's only library, just log in and click on library, look in the newsletter catagory.
(2) General Meeting Archives: We have also been recording our meetings since 2007. You can log into the member's area, click on General Meeting Archives to listen online or download an MP3 file.
Check them out.
Maybe saw the meeting, but wanted to revisit the presentation?
Wanted more information about the speaker?
Well we have two ways to get more info:
(1) Newsletter Archives: Go to www.MAREInet.com, click on newsletter archives, and read the newsletter for the month in question. You should find several articles that pertain to the guest speakers presentation and the speakers contact information.
Note that the a year of newsletter's is open to the general public, but newsletters since 2006 are in the member's only library, just log in and click on library, look in the newsletter catagory.
(2) General Meeting Archives: We have also been recording our meetings since 2007. You can log into the member's area, click on General Meeting Archives to listen online or download an MP3 file.
Check them out.
Cool Tool -
Do you have a particular topic you want to keep an eye on?
Ceck out Google Alerts
Enter the topic you want to watch and your email, google will send you an email when ever it appears online.
Ceck out Google Alerts
Enter the topic you want to watch and your email, google will send you an email when ever it appears online.
Wednesday, September 23, 2009
Good Web Site Design = Search Engine Optimization
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Website Job Description
Good Web Site Design = Search Engine Optimization
Your web site has several jobs that it must do in be Optimized with Search Engines, Be Found By Your Customers, and Convert Viewers in to Customers or Leads. You need to do a job review on a regular basis to make sure your website is doing it’s job, make changes where needed, and keep up to date. Or it may be time to fire your current website and hire a new one.
So what is your web site supposed to do?
Your website should be held accountable to your business and to creating a profit for you, in a very similar fashion to your employees. You should take a look at the following six primary responsibilities and if your site is not living up to your satisfaction, then it’s time to make some changes:.
1. Educate your audience
2. Brand your company and image
3. Establish your company as authority in your industry
4. Generate sales and leads
5. Build lasting relationships
6. Empower your audience to buy more
So let’s break this down and compare it to a web site like HomeVestors.com. (no we are not affiliated with HomeVestors in anyway, but they do have an excellent example of a highly paid web site)
Your web site should educate your audience in a way that is easy for them to understand and allows them to make a decision to buy from you or use your services right there on the site without any further interaction from you or your company. Check out HomeVestors online and you will find tons of information about many topics and testimonials, all designed to get their customer to buy or sell or to become a lead.
Your web site should back up your company brand and image. Have your branding and image consistent from your primary web site on all pages to alternative sites. Have it flow through to signs and office / store décor. Match your business cards and company stationary. You want to present a cohesive image and message all across the board. HomeVestors does a great job of this, from web site, to billboards, to shirts, they all match and keep their brand front and center. Who does not know that they “Buy Ugly Houses” or recognize their mascot “Ug”.
Your web site should also allow you to establish yourself or your company as a leader and authority in the industry. A quick look at HomeVestors will show you that they do this in well, with content on the various pages, testimonials, and articles from the News Media.
Your web site if it does not directly generate sales, should generate leads. Go back and see each section on the HomeVestors site and you will find that almost every page generates a lead. The main page directs you to what you want to do – Buy, Sell, Invest, or Own. Then each of those pages directs you to sign up where you become a lead. They do this very well.
Building lasting relationships with your audience, is a very important role and is often overlooked. If you sell something that you would buy over and over again, like books, you want to find a way to get book readers to come back to your site on a regular basis. If you buy houses, you want potential sellers to come back and visit your site as their situation changes and their motivation to sell gets stronger.
One way to do this is through subscription sign ups that allow your viewers to subscribe for more info and your site sends them new information automatically. Historically this has been email newsletter lists, but today more sites are directing visitors to sign up for their blog, to become their fan on Facebook or Twitter. And by becoming a fan, they become advertisers for you as the fact that they are your fan shows up on your page on the social networking sites and it shows up on their page.
If we look at the HomeVestors page, they have the sign ups for the email newsletters, but they have not caught up with the growing use of social networking. I read in the paper just today that there are 700,000 new users on Facebook every month. You have to catch up with this fact or you will be left behind – and guess what, this is almost FREE advertising, it just takes a little more skill.
Your Primary site should also empower your audience to buy more frequently, consistently and or become your customer more often. By showing value and the fact that other people use your products or service, you can give them this power. And the more you educate your audience, the more likely they will buy. Just think about that insurance company that invites people to come to their site to see what the competition is charging, this was their entire marketing message for quite a few years.
So in a nutshell, that’s what your Primary Website should do for you, but what are some things that it will not do:
1. It will not magically generate traffic. You have to take steps to direct people to find your site. Believe me, when I say, “the Build it and they will come concept, just does not work”. We will be talking at the October 2009 MAREI meeting on ways to generate traffic to your web site through search engine optimization, organic searches, blogs, articles and more. But let’s not overlook one of the easiest ways – include your web site in all your other marketing: business cards, signs, letterhead, print media, etc. By telling people to go to your web site in all your other marketing efforts you will generate some traffic.
2. Replace personal attention and connection. Ok some web sites are designed to be 100% online sales generation sites, but even they have a back end help desk for when things go wrong. But the majority of our businesses in the real estate arena are relationship based. Your web site and online tools will help you be able to connect more with your customers, but it is important to remember that just because your web site will interact with people does not mean you can stop. You still need to have good solid customer service and interact with them on a personal level.
3. Can’t take the place of good effective marketing and message. Just because you can build a web site, does not mean to just throw one out there and it will work. Take some time to plan your message and test and adjust as you go.
If you want to learn more, be sure to read October 2009 Investment News posted in the Newsletter Archives at www.MAREInet.com and be sure to attend the October 2009 meeting of Mid-America Association of Real Estate Investors. Article author Kim Tucker will be talking about what the internet, your market, and your competition look like in 2010. What your web site needs to do to do a good job and online marketing strategies using social networking pages like Facebook and Twitter, Blogs like Wordpress and Article Submission to raise your search engine rankings with search engines like Google.
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