Investing in Real Estate

The Wholesale Deal

2006-07-07T21:57:00.000-05:00

Just FYI, you can view the property online that I am about to talk about here. It's at http://nuvisionhomes.home.comcast.net/ - just click on the house in the right hand column marked 'Light Rehab For Sale'.

Alright... I got the title search and binder back from the title company. Jenny over at American Title is awesome. They got it done in 3 days - God bless her! We closed Thursday with the owner at her bank. A teller there was a notary so we got the docs signed up (the estoppel letter, the warranty deed, and the homeowner affidavit). She got a check for $30k. One of my partner's (my Dad) lined up the funds so our company could honor our obligations with the seller. It is very important to be able to fund your wholesale deals especially if your end buyer backs out. Flipping wholesales are tricky. The idea is to get a property under contract and flip it to another investor for a profit. Your next investor funds the entire deal for you. In essence, they buy from you and you buy from the seller in a double closing. Unfortunately, our buyer fell through. Now it's time to find another buyer. But before I discuss this further, I need to bring up another matter...

My partners and I had a meeting late yesterday and a bomb was dropped. My Dad, who is the finance manager for the company, advised my brother-in-law and I that we need to sell the wholesale deal ASAP. He told us that those funds that were used to purchase the wholesale were going to be used towards the rehab project we have going on right now. Basically, we have one weeks worth of work left on the rehab before we run out of cash. That's not good. We need to sell the wholesale quickly so we can get that cash back and finish the rehab project.

This is a bad situation to be in - for any business. To fail to remain liquid is cause for failure. The problem is we agreed to go into the rehab project by funding it ourselves. We've paid for the property, the labor and materials thus far. Because the project is going over budget, we are even shorter on cash. The reserves we had went to another purchase and now we are facing an impass. NOT good. After further discussion in the meeting, I explained that we must use bank financing for any project (rehab or new construction) in the future. This way our cash reserves will not get tied up like they have here.

When it comes to wholesale deal, I've developed a new plan. We have another line of credit with a private lender - up to $35,000. It's tapped right now but once it's paid off we will put it to use in another fashion. So if we meet with a seller to check out property we want to wholesale, we can get it under contract for purchase (if we like it), get it appraised, get the title search and title insurance policy, and then close directly with the seller with cash (from the private lender) in just a few days. Then we can resell the property after we've actually bought it. Here are the reasons for doing it this way: 1) As we've learned, some lenders have a problem with how much we are making on the deal; 2) I found out recently that back-funded or rear-funded double closings are no longer legal - most attys won't do them now unless a "clean closing" can be done first (you the investor pays the seller and then your end buyer pays you in a double closing). Our plan will cost us about $400 for the appraisal, $437 for title search and policy, and $500 to $800 for financing for a total of about $1600 to do a single wholesale deal (on the frontend). When reselling, if our buyer's lender requires a closing attorney, it will require additional closing costs on the back end then. Most of our wholesale deals are going to be sold for less than $40,000 so the likelihood of it not being an all-cash sale is low. So we won't need a closing attorney, our buyer will simply need a title search done.

Enough of that, let's get back to selling this thing! I have marketed via our website, email messages, deal faxes, online discussion forums, and mailed postcards. We got one call today where an investor offerred $50k cash. That's $12k below our asking price. We declined. Sure we need to sell the property but I've only had it out there for a day or so. To wait a few days will be good. The only thing is the anxiety level is terrible. I hate that part. Hurry up and wait. But as my partners and I agreed on yesterday, we must rely on God to handle things in His will. We try too much to control things on our own - and most of the time mess things up doing that. So we really need to pray and have faith...

Time to Catch Up

2006-06-29T23:53:00.000-05:00

Well, both my wife and son are asleep... it's almost 1am, and I am up typing. What is wrong with this picture... Well, I figured since SO many people wanted to read my blog after mentioning it on Flippinghomes.com, that I better update this thing to today... So here it goes...

In my last post I mentioned that I left my full time job just after I put my LLC together. That was about six months ago. I had almost a years salary in the bank at the time so I figured we would be okay. My wife kept her rat race job - just in case. Allow me to say that, from experience, you NEED to have more than a years salary in the bank before you go for it. We are okay, but it could have gotten thin - real thin. And that is a dangerous place to be in. We've relied upon God to guide us and carry us through. That has worked thus far and we know He will continue.

So let me go over what the company has been through since my last post. First of all, my company consists of three individual partners. I handle acquisitions and sales, my dad handles the finances and the books, and my brother-in-law handles the projects (he is a Class C contractor).

From January until May, we concentrated solely on preforeclosures. We marketed using direct mail. I plowed through the newspapers online looking through all of the Trustee Sale ads. I then sent mail directly to the defaulting homeowners. A few calls came in, a few deals we attempted. Number of successful money making deals - zero. After three meetings between the partners of the company, we reevaluated and switched gears. On to rehabs and wholesales...

I began marketing via direct mail to owners of abandoned, vacant, empty, condemned, nasty tired houses. We wanted a moderate rehab project. We looked at many - probably 40 homes - turned away all the major rehabs (just for now) - and decided to buy a duplex in okay condition. It looked perfect for the company's first.

We bought the occupied duplex for $21,000 and got the month-to-month tenants to move out after 30 days. In the beginning we estimated a $25k rehab. Today we are looking at spending about $70k on it - a major rehab for this area - exactly what we did not want to get into. We will make a little money off this thing - very little as a matter of fact BUT the lessons we have learned from this experience alone is priceless. We learned we will get a home inspector in before purchase. The reason being is we would have found that the house was completely ate up with termite damage. Because of that, we had to rebuild the original building plus we are having to remove all of the additions and replace them with one new one that is a little bit larger. Secondly, we under estimated our repairs (obviously). Third, a well known plan of attack was needed. We spent too much time planning as we went along. That just does not work. Too much time was wasted and too much money was spent. Fourth, we paid too much for this thing (because of the reasons I mentioned already). Fifth, we should have gotten a rock-solid After Repair Value via an appraisal before purchase. Once it's complete, somebody is going to own a REALLY nice duplex. It, in all practicality, will be brand new. See this monstrocity at http://www.nuvisionhomes.net

Ahh... the lessons learned... how about some money?!

In the meantime, now that the rehab project is moving along (cha-ching, cha-ching), I am busy working wholesale deals. Hopefully this will keep us afloat irregardless of the unsinkable Titantic that I mentioned above.

We are in the process of buying another house that is in need of updating. It is a simple, quick and light rehab. It is a 3 bed 1 bath in immaculate condition. The elderly owner wanted only $30k for the property. I didn't even bother to negotiate. I got it under contract immediately. We had this thing inspected and it passed. We then had an appraisal done and it came back at $107k after repair value. We had a buyer who was going to double close with us for $65k but their hard money lender had a problem with my company making "too much money" on the deal. WHATEVER! But go figure... at the last minute, a day before the closing, our buyer had to back out because of the lender. These are the breaks and they will happen. That's why it is SO important for you to have funding available to close with your seller.

Not to worry. I ordered another title search and policy from another title company. They should have it after the 4th. Once I get an "all clear" verbally from them on the phone, I will go meet the owner to issue her a $30k cashiers check and get her to sign a Warranty Deed (which I've already drawn up). I'll file the Deed myself next week as well as obtain a title insurance policy from the title company for our protection.

I've already begun to advertise the deal through my local REIA. I sent out the following ad:

Light Rehab For Sale - Petersburg
3 bedroom/1 bath

$107,000 ARV (We have an official appraisal in-hand)
$15k in repairs (estimated - could be less) - repairs should take less than a month!
$30,000 Profits Available in this Light Rehab!

Price: $62,000 (firm) - all cash transaction only - we will not wait for any loans to process.

Warranty Deed from us will be made available - clean title search and insurance policy available for review as well.

My company will be gone for the July 4th weekend, so if the numbers peak your interest, please call me for more details sometime next Wednesday.

So we will see what happens next. I plan to go ahead and put out some more bandit signs and send out more direct mail postcards soon. Hopefully, we can work some more wholesale deals to bring in that much needed cash.

Another business strategy that we are working on is building brand new homes. Here is how this idea came about...

We found a small local bank that is willing to fund our rehabs (full acquisition price and rehab costs). Their terms are the best I've seen. They fund based on the deal and your credit. We got a pre-approval from them subject to one requirement - that we have or use a Class A contractor. So we decided to go get our own Class A license. The wheels began to turn and we went back to the same bank and asked about new construction loans. They said we could get that funding too if we got our Class A. So we are preparing to take the test in the next few weeks. And that is ALOT to study for! There are about 6 to 8 required texts for the test. I am happy it is an open book test but good grief!

Our project manager is excited about building new homes. He has previous experience with that as a sub. We found 84 Lumber has affordable home packages for about $45k. Those same houses could sell for $125k all day long in the area we work. And guess what? No termites are included! ; )

Day 110

2006-02-15T15:35:00.000-05:00

It's been over a year since I have logged in here and posted anything. Pretty sad! But I have alot to say in a short period of time.

April 8th, 2005: My second son was born!

June 22nd, 2005: I reorganized the investors association I ran into a paid membership organization. RCIA was closed down and RREIA was born.

December 14th, 2005: I created a new company (an LLC) for my real estate investing. NuVision Homes was officially opened.

January 17th, 2006: I quit my full-time job with the police department to invest in real estate full time.

We are STILL working on our farmhouse. The first rehab stage was completed before our son was born. So a ton of stuff has occurred since my last post here. But I will update things moreso tomorrow. Note: my blog has been updated to allow people to post comments plus I am using a brand new template.

Day 109

2004-08-02T19:00:00.000-05:00

Day 109:

Last Saturday... wait a sec... I need to add this in here... My wife is PREGNANT! Yes, we have been trying for a couple of months now and we got a confirmation on Friday and Saturday morning (thanks to Clear Blue Easy). So we REALLY need to get this house gig done. Our 934 square foot home right now is not cuttin' it. We need a bigger house and this one came along just in time. Now, back to what I was saying...

Last Saturday, we met with one contractor about the woodwork we wanted done. We need the back porch roof repaired (minor) and the lower level porch flooring replaced. We talked about extending the porch into a deck. Also we are getting a privacy fench all the way around the rear yard (for the dogs). Last we have some joist work to do under the kitchen floor. The price? $5000. It's my brother-in-law that offered to do it for that price and it's a steal! Thanks Chris! Basically, he is charging for materials. I know already that the fence alone at retail would be four grand! Whew!

Today I called the FHA rehab "consultant". This is the guy that comes in, says whether or not the house is "feasible" as a rehab and "assists" throughout the rehab (verifys work is done for the draws). We are meeting tomorrow evening to see about what needs to be done (to comply with FHA).

I've lined up the money for our debts. Those will be paid off as soon as possible so those red flags will be removed. Thanks Dad!

We have figured out what we want done (at a minimal). We need the porch fixed, fence added, floor joist fixed, exterior painted, and HVAC installed. I think it will cost about $22k. My goal is to lower our payments some instead of trying to max out at $30k renovation costs. I can do the other stuff as time goes on. Hell that's half the fun! (Hey that's my opinion and I enjoy stuff like that anyway)

So we shall see what will happen next. We are excited about creating a really nice nursery for our soon-to-be newborn (okay... 9 months out).

I suppose you want to see what the fuss is all about, so let me plug the web addy in here:

http://troyross.home.comcast.net

Day 108

2004-07-28T05:16:00.000-05:00

Day 108:

To be quite honest with you, I post this day's entry with great reservation... for fear that things will not pan out for us... I'd rather not face the embarrassment if it fails.

Before I get into this any further, allow me to say that what we are embarking upon is not necessarily "creative" but moreso it's "conventional." Maybe it's hybrid... a combination of the two, but I doubt it.

We got a call from a man last week who said he wanted to "get rid" of his house. I learned more by listening to him. He said he was in the middle of a divorce and he needed to let go of the home. The house is this country farmhouse (pictured below). He said he saw one of our signs on along a main road, which turns out to be one that my wife insisted that we place there.

I asked him what he wanted for the home and he said around $100k. I checked the recent sales of homes in the area and found most homes were selling for $150k on up. So we went to check it out. I was not prepared for what I was about to see. The interior of this house, built in 1905, is about 80% complete. His brother is living in it right now but packing to move (owner really wants to sell). We walked around and I saw it needed general cleaning, repainting, some carpet, maybe a floor or two refinished.

The entire house had been gutted years ago so all the lead paint is gone, new insulation was installed (as well as electrical), and new drywall was put up. What was the most interesting of all was the wood details throughout the house. The living room has marble on the bottom sills of each window. In addition, there is wood inlay (half-height) along each wall. The doors throughout the house are beautiful as well as the trim. The bathrooms (which are already complete) have details cabinets in them. One bath even has a clawfoot tub in it.

So I asked if the details were original. His brother told me it wasn't. They work the demolition of a very old but extravagant hotel in my town. Before it was demolished, they removed any wood items that they could to put into the house. It turns out that the european-flavored hotel was designed in 1911 by a well-known architect. By adding all of these items, they have reflected the era and style in the home very well.

We ended up breaking the golden rule of real estate investing: "Never fall in love with the house." We decided WE wanted the home for ourselves. We could not help it!

There are many other things that need to be done to the home - too many to list here. However, I may post them later. Anyway, last Friday we decided to make a call to a mortgage broker and friend of mine. He said he wanted to work an FHA 203k rehab loan for me. This program is great! One can buy a house and renovate it with one loan. So he told me to get it under contract (which we did on Saturday). The contract has a financing and inspection contingency. The sales price - $100k.

So he got to work on the docs. Yesterday I had a meeting with him and was hit by a major roadblock. We learned that the lender would not go forward unless our collections and/or judgements were paid off. Grand total - $5000. Believe it or not, that is all we owe to anyone in this world (except for the Jeep). The broker told me that our credit scores went up since last year and were acceptable to the lender. Our debt-to-income ratio came in at 39% - just below the 41% maximum allowed by the lender. He told me that he could definitely get the loan through IF we paid off the mess on our credit records.

SO close... and yet so far... Isn't that ALWAYS the way it is?

Needless to say my wife and I were upset. I called the only person I know who could remotely help - Dad. Let me tell you, it's hard to ask for money. But noting ventured - nothing gained. After we spoke, I was left with some hope... at least he is considering it. My parents (retired) are barely making ends meet themselves. But they do have access to some money. So it's worth a try. If they do not come through, I have two other options (less likely than my first choice but worth a try).

Meanwhile I have a ton of documents to provide to the lender (W2s, bank statements, etc). In addition, I have to come up with a Scope of Work to be done on the house. The lender must see it to know what costs must be included in the home. Inspections must be done as well as the projected-value (ARV) appraisal must be done.

So I shall continue to push forward until I can't go any further. "Never give up..."

Day 107

2004-07-08T23:42:00.000-05:00

Day 107:

I bought two new books just the other day (pictured below). I figured since I wanted to learn more about rehabbing I'd get another book on the subject (you can always learn more from many books on one subject). In addition, I want to be "smart" when it comes to creating my business entity and how to hold assets properly so the Bronchick book will serve well.

Adding to the Arsenal!

From what I have read so far (in the Bronchick book), I can see that this book will be an excellent guide for business formation. The tips regarding holding assets and dealing with liabilities are immense. I strongly recommend this book. I can't wait to get to Jay's book. The man has been in the rehab business for years!

Day 106

2004-07-06T21:52:00.000-05:00

Day 106:

Well we finally decided to go out and post some signs. First stop - Starbucks. I know... so yuppie-like. But it was 9pm and we needed to wake up some for the trip. We rode around and decided to post signs on utility poles around areas where homes are around $225k and up. I want to explore the possibility of using the lease option and sub2 techniques.

Our Jeep full of Signs!

We posted about 10 to 15 signs. I hate this part of the business simply because it's time consuming (2 hours tonight just for 10 signs) and I hate for people riding by to see me post these signs (yes, it's illegal here). But I got to get leads somehow and this is the only way right now.

Tonight's trip got cut short. My original goal was to post signs until 1am but my wife fell ill. The Caramel Latte Frappacino did not settle well with her, so we went on home. Something new we tried tonight was posting signs within a 2 mile radius of our own home. I am simply trying these ideas to see what happens. We also decided to post the signs with the phone number on it versus the web address. The signs listing the web site address brought NO leads. As a matter of fact, the only leads the site got us were ones that were out-of-state, and I can't do those.

This part of the business is so hit-or-miss, the "shotgun method" if you will, that I think it really does not matter where you post a sign. I have had people tell me that they saw my sign on one side of town and had a house to sell on the other side of town. Really, as long as people see them, it probably does not matter where the sign is posted.

Now for the tricky part - dealing with the complaints. Either the police, the power company, the phone company, or a concerned citizen from the neighborhood watch program will call. Signs bring negative attention (as you have read here before). I try to be very respectful and watch where I post my signs. I make sure that I do not select a pole that is right in front of someone's home. That's why it takes so long to post signs - being selective and careful. Should we get any complaints, I'll just have to deal with it.

My wife was upset that we had to stop short tonight. We plan to go back out tommorrow evening and post more.

On a last note, no one has sent in any email regarding my last post (the HML post). Please, if you have ANY comments, send them in! Thanks!

Day 105

2004-07-03T09:15:00.000-05:00

Day 105:

Alright, I am going to publish some information here in the hopes that I get some feedback from readers. I will omit certain info (identity information) since I am not sure that I can legally print it here. This information came from a hard money lender and I need to know - Is this a good deal for investors? Here we go:
-------------------------------------------------------------
(begin information)

Required Docs to Close:
1. Copy of sales contract + Subject property info
2. Cost of repairs (itemized list)
3. Projected sales price
4. 3- MLS Comps (comparable properties)
5. Property / Client info sheet (available upon request- to be faxed)

Comps:
Provide (3) of your best comparable properties (MLS) pulled in order of weighted preference:
1. Recent sales in same neighborhood
2. Same "style / model" & approx age of home
3. Same quantity of bed / baths
4. Same number of levels
5. Similar square footage

* Condition & upgrades will be carefully adjusted for value and area. CMA's (Comparative Market Analysis- MLS) are great if available but not required.

Subject Property Info:
Always supply (MLS) subject property info. If property is not listed as "For Sale" provide MLS "Public Records" info. If not listed "For Sale" on MLS then please take a picture (digital if possible) and email it to me at ----@------.---- Emailed pics should always be taken using a low resolution email setting (640 X 480 best). Take a straight-on frontal view, a side view, a rear view if possible, and also a elongated street view showing other houses along with what the neighborhood looks like. If photos are not provided I can take the pics myself for a fee but can delay your loan process by 1-2 days.

Min / Max $ Loan Amount:
Max $1 mil (call if higher !)
Min $65k (call if lower !)

LTV Calculation:
(purchase price) + (repair costs) divided by (projected sales price) = LTV

We like to see a projected LTV of =/<75% (usually indicating a profitable property for you!). If it's a good property deal you shouldn't need any money ay close. If the profit level is tight or lower than normal, we can still probably assist in the financing but you'll need to "kick-in some cash a close and maybe for repairs. Loan / property values <$100 require LTV <75% to be profitable.

Repair Money:
Held in escrow until work is completed. Once completed contact us and we will do a physical inspection then cut a check for all repairs as agreed. Multi-draws are only available on large repair-cost jobs at a draw fee of $250-350 depending on area (how far away) and must be negotiated and provided with initial docs.

Approval / Commitment Letters (for offers - contracts):
I'll provide an actual "bank commitment letter" (indicating guaranteed financing) Just email (best) or call me with:
* Purchaser's correct spelling on name(s) or company
* Property address to include zip
* Purchase / offer amount
* Fax number to send it to

Property Analysis:
I'll be glad to run an "Internal property Analysis" on any deal you're interested in. Please provide by email (best) or phone message the following:
* Your name & best phone number to reach you
* First line of property address (ex: 1234 Main St)
* Purchase price
* Repair costs (and is financing required on repairs: yes / no ?)
* Projected sales price
* Realtor commissions on final sale (0-7%)

General Loan Terms:
- 5-pts / 12% (accrues monthly- calculated as "Interest Only") / No mortgage payments (included in 12% !!!) *Call for pricing on loan amounts under $100K
- 6-Month loan term
- Non-owner occupied properties only - no rentals

General Lending Info:
We lend up to 80% of the "Projected Sales Price" which under most circumstances covers 100% of purchase price + 100% of repair costs + lending fees + any closing fees.

Typical Scenario:
- Option A -
* Contract a property
* Email or call w/ the property details / #'s
* Fax required docs (see list of req docs) w/ preferred close date
* Provide "proof of insurance" per instructions prior to close (see closings)

- Option B -
* Email or call w/ the property details / #'s
* Request by email (best) or call for a "Commitment Letter" (see approvals)
* Contract a property
* Fax required docs (see list of req docs) w/ preferred close date
* Provide "proof of insurance" per instructions prior to close (see closings)

Title Companies:
For speedy and hassle-free closings we request that you use one of our approved title companies:
(list omitted)

Closings:
Upon loan approval have your settlement agent / attorney contact our Closing Agent xxx xxxx at (xxx) xxx-xxxx or xxxxx@xxx.xxx to process your loan documents and set-up your settlement. Once satisfactory-required docs have been provided we can normally close within 5-10 days. At that time we suggest providing a reasonable-preferred date of closing. On occasional circumstances a "re-review" or an outside independent appraisal may be required and will delay closing until the results can be analyzed. If you're confident of your deal you may contact ahead of time, one of the approved title companies and have them get started obtaining a "title search". Although not required, it will speed up your closing- just let us know if you've done so. Once approval and a closing date has been set, you will need to provide "proof of homeowners" or "builders risk" insurance policy prior to closing (see "Closing Agent" contact info below).

Pest inspections, surveys, and home inspections are not required.

All Title work & proof of insurance is to be sent directly to our CLC closing agent.

HUD-1 / CLC Fees:
Fees on the HUD from CLC will include $475 doc prep fee and $375 internal appraisal fees. Written appraisals will not be made available unless a "upfront" outside appraisal is required and paid for in advance. Properties over $1mil in value or any commercial properties will require an additional independent appraisal- non-refundable and paid for in advance ($600-$1000).

Can I use my company name to obtain financing?
Yes. New or existing LLC's, corporations are acceptable but must be legally registered and recognized by the state in which they are obtained. Whatever name or names or company is listed on the ratified sales contract will be the same name listed on your financing. On the "Loan Request Form" provided, list your name & ssn as the borrower and your company name and Fed I.D. as the co-borrower. Any changes to names will require a "updated" and initialed-ratified contract to be furnished when initial documents are submitted. Provide the following:

* Federal I.D. number
* Letter of "Good Standing" from the State Corporation Commission
* "Corporate Resolution" showing authority to purchase property under corporation's name (required by title attorney)

What states do we lend in?
Primarily VA - MD - DC (No Baltimore city or Richmond row homes under $110k projected sell price- also see min/max loan amts)

What defines a profitable "quick-sale" Investment Property?
Any residential or commercial property purchased at a distressed price, for the sole purpose of re-selling for a fast profit. A profitable property is normally determined by any opportunity that can produce an immediate LTV of =/<75% based on the projected sales price and can be proven by supplying similar comps. Loan/sell amounts less than $100K normally require a better (lower) LTV. For LTV's >75% see "LTV Calc".

Apartment-to-Condo Conversions
(info available on request)

Tear-downs / Total Rehabs / New Construction
(info available on request)

Other Financing for Investment Rentals or "Final-Sale After Rehab" Loans:
Although I no longer have time to service these loans myself, I am happy to refer you to an associate that can assist you. They offer up to 95% financing on "Investment Rentals" with no mortgage insurance and no seasoning required. They are a lender / broker with programs originating from over 73 banking sources. Min loan amount on these programs is $100K.

Repair Costs (examples: average basic house)
- Roof $5k
- Kitchen "basic rehab" $10k
- Kitchen "high-end rehab" $20-25k
- Kitchen "high-end custom home" $50k
- Bathroom rehab / add $5K
- Carpet $3k (add'l $1k for basement)
- Int. Paint $2500
- A/C add (no ducts) $7k
- A/C add (duct) $5-6k
- Windows $350
- Window (bay) $700
- Gutters w/ flashing $1500
- Concrete porch w/ 10-steps (rehab) $3k
- Chimney repair $1500-3000
- Total rehab / tear-down $120-150 /sq-ft

I hope this answers most of your questions. Please call me with any additional concerns.
(end of information)
-------------------------------------------------------------

Okay, after reading this information that was sent to me, does anyone out there have any comments? If you have used a hard money lender before, would you suggest that this HML is reasonable? Please send comments to me via email at new2rei@comcast.net. I am seriously thinking of working through this guy to finance my rehabs. Thanks!

Day 104

2004-06-28T20:27:00.000-05:00

Day 104:

Email from readers are wonderful. I love getting opinions from folks that read my blog. Here is what one investor had to say about my previous post (edited for content):

...but I see a big RED FLAG regarding your published email response.

Option #2? What kind of deal is this? You don't own the home. You don't rent or live in the home. But you have to make payments on it and fund it's repair?

Option #3? You're fronting 50% of rehab costs and the guy stays on title. Are you really getting a hard money lender, or is he hiring you as a general contractor to work on HIS house?

In every real property lending situation I've heard of, the lender secures their position with a promissory note coupled with either a mortgage or a deed of trust giving them the power of foreclosure. If things are turned around as this guy suggests, what is securing your position...a contract? With the guy on title, he can sell the place, pocket the money and run leaving you high and dry. What's the statute of limitations on something like that, and how long could he hide?

Once your guy has it under contract he's secure and you should find out where this property is. Then do your own due diligence to verify the ARV and rehab costs, look into the "cleanliness" of title, figure out your exit strategy, etc., etc...just proceed very cautiously.

Have you considered finding another HML and cashing this guy out as per Option #1? I mean, I have nothing at stake here and yet even I would feel better if you were the one on title. At least take title in an entity where you're both 50% owners of that entity.

Definitely run this by some pros in the business, but this newbie wanted to throw his $.02 in. Don't be a motivated buyer.

Take care...and really good to see you on the move again!

I replied to him with this response:

I want to say I agree with you 100%. I don't like options 2 and 3 simply because I don't have and can't obtain the money myself. I may, however, get the money for the purchase and rehab with a "No Doc" HML ~ if ~ the HML will allow me to use a Class C contractor. A Class C can only do a job up to $7500 (at a time). An entire job can be split (again if the HML allows) to accommodate the entire rehab. This particular HML that I have in mind loans cash based on the ARV and NONE of my credit.

Day 103

2004-06-26T17:27:00.000-05:00

Day 103:

I received one reply from one investor in my group. Well, that's not entirely true. I got one reply that was a very good lead. The other investor simply had alot of comments to make about my original email message.

I put out the following email message:

"Well, I am rested up - back from vacation - in need of a doctor for
the sunburn but that's the way things go. I am in need of locating a wholesale deal for my next project. I'd like to secure a rehab candidate house within the next two weeks. My
guys are ready to work. Here is what I am looking for:

- 3 bedroom / 2 bath (preferably)
- No major fire damage
- No major rebuilds (complete junkers that should be torn down)
- City of Richmond (certain areas only)/Chesterfield/or Henrico
- My Top Offer will be no more than ARV x 70% minus Rehab Costs
- List repairs you determine are required as a guide
- Assignments will be considered

My intent is to buy wholesale, rehab it, then retail it. It must have at least a $25k-$35k profit margin for me to consider buying it. Wholesalers / Birddogs contact me - please!"

One investor's reply was simple. He said:

"Wouldnt we all like one like that! Pickings seem rather slim and margins rather tight here lately. If your phone starts ringing off the hook with more deals than you can do, give me a call, I'll gladly pay a reasonable finders fee. Exact same criteria as yours."

Hmmm... Okay...

Another investor replied with a good lead though:

"Based on your message, you are looking for an investment opportunity.
I have a potential opportunity and would like to give you the details
before I send it to a broader audience. I have provided high level
details below and if you are interested, let me know. I would be happy to
spend some time talking about this or other opportunities in more
detail.

In case you are wondering why I would not do this property myself,
there are two reasons. First, I have several other properties that I own
and am working on. Second, in the long run, I would prefer to get more
involved with deals as a hard money lender … which may also include
finding some of the properties that I would finance.

My information if preliminary. I am still trying to validate some of
the numbers, so please keep that in mind. I should have a signed
contract in the next couple of days and am flexible in how I structure a
deal.

This is a substantial rehab. Based on what I know now, the ARV is about $150,000. The property has a number of attractive features including a double lot. I estimate the rehab costs to be about $50,000 to $55,000.

Option 1:

Cash Sale at a price of $39,900

Option 2:

I will consider financing the purchase price of property ($39,900).
We can discuss the terms … I would anticipate that I would ask for a
profit share amount of 7% to 10% of the face amount of the financing
amount.

Option 3:

I will finance the purchase price of property ($39,900) plus 50% of the
rehab cost. Again, we can discuss the terms.

For now, options 2 or 3 would require that I retain title to the
property and that a partnership agreement be agreed upon and executed."

This is really good news. Here's why - the investor is letting me know that he is willing to become an HML for me. We have agreed to speak more on this house on Monday.

Day 102: Ahhh... Back from Vacation

2004-06-20T11:02:00.000-05:00

Day 102:

Well we have returned from vacation at the beach and fully rested. Today I sent out an email message to my fellow investors in the creative real estate investors association which I am a member. The message stated that I am in search of a wholesale deal to purchase as a rehab project. Hopefully, I will get a call soon with a lead. I'd rather have bird dogs out there looking for me versus using my own time to search for a deal.

I have not tried the audio blog yet - still wondering if it would be useful at all. I searched the web and found that most people are using it while they are traveling on the road. So maybe the audio stuff is useless to me. Who knows?

I made a promise to myself to go put up the rest of my signs this week. So for a couple of days after work I will take out about 10 or so and post them until the supply is gone.

2004-06-11T19:21:00.000-05:00

Day 101:

Good Lord! It's been two months since I have posted this thing. There is a reason why, too. It's called "falling into the comfort zone". I got one deal done and now I am Mr. Lazy. And it's sad - no - a better word is "pathetic". What makes it worse is I learned today that many of my associates (investors in the Association that I started) are making money hand over fist. I feel like the kid who was left out of all the fun. But WHO do I have to blame? ME - I know. I am my own worst enemy. I become busy with other things, put off things I need to do, and make excuses. In reality, I procrastinate. Two words - it sucks.

I spoke with an investor friend today. He was the one who told me about a few other investors and the accomplishments they have made. I must admit - I was jealous. To hear about a $100k profit made at closing of a short sale by one individual sent me through the roof. I am very happy for my associate! But it made me realize that it's pretty sad that one of the Cofounders of the creative real estate investors association (me) isn't out there doing something in real estate investing. Hell, the other Cofounder is already working on his second rehab!

I read somewhere that a real estate investor will most likely fail in this business if he or she fails to run a strong marketing campaign. I believe that 100%. I have 60 signs STILL in my house waiting to be posted around town. I can't afford to run consecutive newspaper ads right now. But the signs will do. They most certainly will bring in another deal. Then I might be able to run ads later. Enough talk and rambling.

Over a month ago, my job description was changed by the company. Beforehand I worked evenings with rotating days off (6 on - 2 off). Now that my job has changed, I work weekdays (7a to 3p) with weekends and holidays off. I worried that I would get deeply involved with the j-o-b due to the change and I did. The responsibilities caused me to take work home. So, in the evenings, I put in another two or three hours of work each night. Real estate investing quickly took a backseat.

I am currently on vacation. Tomorrow the wife and I leave for Myrtle Beach. We have not had time off from work in several months - almost a year actually. This will be a week to get our heads cleared. I will become re-focused (hopefully) and then I can get back into investing.

Last week I made contact with a hard money lender who does "no doc" rehab loans. He said he will do 100% Investor Financing including the rehab costs. He said he can close in 5-10 Days, no money needed from me, no credit check on me or my wife, and no mortgage payments for up to 6 months. Furthermore, they make no limits on multiple properties, no down payment, no deposit, and no closing costs. He told me that he guaranteed financing w/ LTV 75-80%, a fast approval, and fast pay outs on profits. Seasoning issues are a thing of the past because he will finance my owner-occupant buyer. I truly believe that we are now going to go into the rehab realm afterall, especially if this program is true. We plan to talk more once we come back from vacation.

I will be adding something new to my blog - audio blogging. Yep, from time to time I will add an audio post to my blog. I thought since it's free, I'd try it out and all of you readers can tell me what you think. Maybe it will turn out to be like David Finkel's radio show (I doubt I can get to that calibre).

More to come soon...

2004-03-18T09:26:00.000-05:00

Day 100:

I just thought I would pass this information along to other investors that read my blog. If you are a new investor and you have learned that foreclosures bring pretty pennies on paydays, you might want to consider looking into this a little closer... If I myself can get the time off from work, I am definitely going to this training seminar! I learned that Michelle Odessey is hosting a 3-day Ultimate Foreclosure System Training Seminar that will take place in Atlanta, GA on April 23-25. This event is a unique benefit for investors because it is laser-focused and has comprehensive coverage of all aspects of negotiating for and buying financially distressed properties including:

* pre-foreclosure homes
* homeowners in bankruptcy
* auctions at the steps
* and bank-owned properties

Investors will be spending 3 days to learn from the nation's top experts on how to do this with the Ultimate Foreclosure System.

Here's what each teacher will be teaching on those 3 days...

* Profiting from Properties in Bankruptcy
- taught by Greg Dorriety
* Pre-Foreclosures And Short Sales
- taught by Dwan Bent-Twyford
* Profits with Bank-Owned Properties
- taught by Paulie Sabol & Donna Fox
* Powerful & Effective Real Estate Marketing
- taught by Richard Roop
* Asset Protection, Entity Structuring, and Tax Savings
- taught by J.J. Childers
* Structuring & Negotiating Deals
- taught by Barney Zick
* Making Millions in Foreclosure Multi-Units
- taught by John Dessauer
* The Power of NLP in Closing More Pre-Foreclosure Deals
- taught by Bill Twyford
* Organized Foreclosure Rehab
- taught by Heather Seitz & Stacy Holder

And here is what you will receive:

- 3 Days of Intensive Real Estate Foreclosure Training by the Top Real Estate Foreclosure Experts in the world today.
- You can bring your spouse, significant other, or any other family member for FREE!
- 3 Full Days with the most brilliant Real Estate Foreclosure minds in the world
- A 100+ page Manual - with Speaker Lecture Notes
- FREE ENTRY INTO OUR SEMINAR PARTNER PROGRAM You can make the cost of the seminar back with just paying referrals.
- Saturday Night Dinner Extravaganza

If you order before March 22, you will also get...
- The full audio recordings of the entire Ultimate Foreclosure System on CD. Every minute of every session will be on CD so you can listen to it again.
- Audio CDs of your coaching sessions during the 8 weeks following the event.
- Bankruptcy Premier CD set, OREO Profits with Bank-owned properties, and Foreclosure Fortunes CD set - an additional 11 Hours of Top Real Estate Training Information.
- An additional 11 hours of training on audio CD featuring Greg, Donna and Paulie, and Dwan.

If you want to register, you MUST use the following link below:
http://www.1shoppingcart.com/app/aftrack.asp?afid=132689

When I spoke with Michelle's associate on the phone, she advised me that this seminar will fill up quickly so you should act as soon as possible if you want to go! This training is very affordable! Best of luck to you... I hope you find this information helpful!

2004-03-08T04:45:00.000-05:00

Day 99:

Wow... I haven't been in here for over a month!

Well, big news folks. The rental property that I own has been SOLD. Finally, it's off my back. Yep, I sold it to three fellow investors on the 4th of March for $25,000 cash. I quit claim deeded the property over to them. I saved myself some closing costs and passed the liens on to the buyers.

It's funny... I never got a call back from the out-of-state buyer's appraiser. I never heard from my buyer either. I suppose his financing fell through ultimately. I decided to save my relationship with my money partner who assisted in this deal. Drastic measures produced results. I slashed the price, sent out an email to over 300 investors in my group and got calls of interest in 45 minutes!

By 10am the next morning, the house was sold. Now that's fast!

2004-01-26T00:20:00.000-05:00

Day 98:

I'd like to know your opinion of Robert Kiyosaki and his book series. The reason I ask is that I received an email today from a reader of this blog who stated that Kiyosaki's book Rich Dad, Poor Dad is (and I quote) "just a poor, almost plagiaristic, retelling of the far superior book “The Richest Man In Babylon”." (end quote).

The reader then advised me to view John T. Reed's thoughts on Kiyosaki which are displayed, in a lengthy manner, on his website. I've crossed paths with John Reed's website before (see Day 3 of this blog). Personally, in MY opinion, Mr. Reed uses his website to discredit many authors in order to sell his product. He recommends very FEW authors on his site.

He mentions that he does not understand Kiyosaki's point in Rich Dad, Poor Dad. I feel Kiyosaki explains it well in the very beginning. He lived in a dilemma. He knew that what his Poor Dad said was true and what his Rich Dad said was true. The point he tries to make in the book is that you must decide for yourself where you want to be. I think what he says is logical.

I am currently an employee. I hate it. I loathe it. Why? Because I am not seeing my FULL potential. I am limited to making my salary. I want control. I want to see my max. Kiyosaki explains the mindset of the rich person. And I think his line of reasoning is reasonable when he says that your assets should pay for your liabilities (and expenses ideally). That is making money work for you. Why would you want it any other way?

Now MAYBE Kiyosaki's Rich Dad is fictional - maybe his deals are fictional. I have no idea what to believe. John Reed says alot of what Kiyosaki claims is untrue or has yet to be proven. John Reed says there are many contradictions in Kiyosaki's book. What do you think?

If you've read Kiyosaki's book, send me email of your opinion.

2004-01-24T02:20:00.000-05:00

Day 97:

Today I finished reading Robert Kiyosaki's Rich Dad, Poor Dad. I never realized that my thoughts were so 'on target' with the teachings of Kiyosaki. Take a look at Day 2 in my blog... "Allow me to say this, right here and right now... I have always wanted to be successful in life. I want my own business, be my own boss, and financially be well off." That is what I wrote on Day 2.

I've got the right idea anyway. Here lately, all I've thought about is leaving my full-time job. So I ask myself - "Why do I want to leave?" It's because I know that making more money is not the answer. There's a guy at work that always works overtime. Anytime the sign-up sheet comes up, he signs away to work it. We joke with him by telling him that he lives at work. It really does seem like he does live there. He responds by saying, "It's another brick in his house."

Interesting perspective... he works more hours to make more money. But he pays more taxes, deductions, and spends less time with his family. The money, he says, goes to pay for his house - a liability. He is definitely trapped within the 'rat race'.

I want to get out of the rat race and this topic became a debate in our household recently. I came up with the idea that I would leave the department within a few weeks and invest in RE fulltime. I have grown tired of all the BS at work. It's absolutely crazy. No one is on the same page. Each supervisor wants to do things differently. Perception of policy is skewed. All common sense is thrown out the window. You kinda have to look at it and say to yourself, "This is ridiculous."

Anyway, my wife disagreed with me about leaving so soon. She said to leave without a plan will set us up for failure. After much discussion, I saw that she was right. Our liabilities are not that high. Our monthly expenses are not that large. She would like to see the car paid off, the credit cards paid off - all the mess paid off excluding monthly expenses. To define it better, monthly expenses are - the house payment, the insurance, the water bill, electric bill, phone bill, food, cable bill, so on and so forth - the "normal" expenses we pay each and every month just to "live".

We are working on this master plan and I will reveal it soon after I think it out a little more. Nevertheless, I really think we are on track here. I already know the idea is to possess assets which will pay for my expenses. Living off wages is NOT the way to get rich. Kiyosaki's book has got to be the best book I've ever read because it has shown me why I have been thinking in the wrong manner all this time AND it has shown me what I should be thinking to become successful and rich.

2004-01-22T00:45:00.000-05:00

Day 96:

Over the past few years, I've searched for the mindset that I should have in order to run my own profitable business. The bottom line is that I hate working for someone else. Entrepreneurs work for themselves so I must be on track. But something has been missing.

I've been brought up to do well in school, learn all I can, and ultimately work hard for my money. My mother, who stayed at home to raise my sisters and I, always said that my Dad works hard to put food on the table and a roof over our heads. And that is the mentality which was embedded inside me.

Beginning at age 19, when I married for the first time, I believed in that philosophy. I would say that about four years ago, that began to change. The problem was, I had no idea what my philosophy or view should be.

Today, I began to read Robert Kiyosaki's Rich Dad, Poor Dad. I strongly feel that this is what I've been looking for all this time. I have only read the first two chapters and already my mind is opened to another point of view. If you have already read this book, you know exactly what I mean.

Well, off to read some more!

2004-01-18T14:22:00.000-05:00

Day 95:

~ "Round and round it goes..." ~ "Where it stops - Nobody knows..." ~

You've probably heard it said, "The real estate game is a numbers game." In reality, it's also a game that involves time. How soon can you get the deal DONE?

The frustration mounts as excuses are made by inept mortgage brokers. Yes, that's right... the deal at hand involves a shell game.

Mortgage Broker: "Well this lender isn't working out."

Seller: Oh, okay, WHY NOT?!?

Mortgage Broker: "Well, I dunno but they won't get back with me. But we got another lender to fund (my buyer) at 95%."

Seller: Well, that's good news. May I get a closing date with a couple of tissues please?

So why, you may ask, am I allowing myself to get run over like this? It's quite simple - I don't have a back up plan. I want this house sold but I have NO idea how to get it done sooner. As a matter of fact, I talked with my wife about it - at great lengths yesterday - and I think we have come to the decision of making an ultimatum. Then they can call our bluff if they want.

I called my buyer's mortgage broker this afternoon and left a message telling her that if I do not get a firm closing date by Thursday, the deal is off.

That may get things rolling the way I want them to roll. I hate to do this, however, this should have closed by now. I have alot of respect for my buyer - he is a heck of a guy. He is just getting into real estate investing part time and he has a good head on his shoulders and seems to have an idea of where he wants to go with his business. That's why I hate to do this to him but I know of no other way.

IF we were to back out of this deal, I could probably go and get a refi on the house now and get my cash out that I need. I've owned the home for over 6 months and seasoning will NO longer be an issue. I would only need to find a lender who will lend under $50k. And I believe I can do that - I've made contact with a few lenders that will.

On to another topic...

Recently I interviewed an investor who does short sales. For those of you who have no idea what a short sale is - a short sale is conducted when an owner of a home is at least two months behind on their mortgage. The homeowner is facing a possible foreclosure. The owner solicits the help of an investor to solve their problem. The investor will, with authorization of the homeowner, work with the bank(s) to get a discount on the mortgage(s) owed and purchase the property outright. There are any number of exit strategies for the investor for this technique but more than likely they would sell it for less than fair market value and get their profit out.

Now, what does this do? Well, a number of things:

1) The homeowner avoids the inevitable - foreclosure.

2) The banks avoid costs of obtaining, holding, and selling an REO.

3) The investor creates equity and makes a profit.

So let's look at some real numbers... The investor that I interviewed had a deal where the mortgage left was $50,000. They got the bank to accept an $11,500 payoff for that note. Right there, they created $38,500 instant equity - equity they pocketed!

Short sales are very detailed - they aren't hard to do - but they take time; time that you really do not have. You see, short sales involve a short time frame. The banks are barrelling down the road and their destination is the foreclosure auction. They want their money. Usually, the home will be gone within 20 to 30 days that the homeowner contacts the investor because that's usually the time when the bank will take it. So the investor must work fast and possibly work long hours to get the deal done. There are alot of details involved in a short sale and I will not go over them here. However, I have given you an idea of how they work.

The investor that I interviewed stated that they will NOT get involved in the deal UNLESS there is at least a $25,000 profit in it.

You can look at the short time frame that you would be facing - if you are the investor - in one of two different ways. You could "freak out" and think "Well, I'm under the gun here - can I do it?" OR you could look at in this manner and think "Well, let's get this done - the pay day is definitely not far away!"

Think about it - $25,000 in less than a month! That is almost as much as most people make in ONE YEAR!

This is another technique that I most DEFINITELY will begin to use without a doubt. I strongly suggest that, if you are interested in short sales, buy a course that covers the topic in detail. I personally would not buy any thin material on this particular subject.

2004-01-13T02:18:00.000-05:00

Day 94:

I was asked to not publish an email that I got today (and I won't - verbatim anyway) but the author raised a valid complaint. They stated that they were a bit upset about the fact that I am a law enforcement officer (commonly known as a LEO) and I am breaking the law by posting bandit signs in my city. They said it looks bad for a cop to be hypocritical and act like the act is justifiable since I benefit. In addition, they were upset because they said I was telling people to post bandit signs thus breaking the law.

Allow me to respond... You are absolutely correct with one point. As a LEO, I should not break the law - ever - since I am held to higher standards. The bottom line here is that I need to start my business - somehow. And I chose this route. Was it a good choice? That's debatable. Have I received a call from the police about my signs - yes - because I placed them a couple of blocks apart. BIG mistake. Plus the things were originally 2.5 feet wide and 2 feet tall - like mini billboards. Since then, I place them about a mile apart from one another AND they have been cut down to 1.5 feet tall and 2 feet wide.

Being held to higher standards is damn near impossible for us cops. It's a fact - we are all human. Some cops speed. Many cops have bad credit (cops are expected to have PREFECT credit you know). Alot of cops I know consume too much alcohol while partying at a club and then go outside - called Drunk in Public - a misdemeanor. Worse yet - some of the idiots DRIVE themselves home - called DUI. Some cops cheat on their wives. Some cops are bought by drug dealers to act as "protection". Some cops VIOLATE your constitutional rights.

I am innocent of most ALL of these things. Yes, I am guilty of posting signs and yes, I am guilty of speeding 5 to 10 mph over the limit from time to time. All the other items I mentioned are horrible and I've NEVER been guilty of. I firmly believe that any cop involved in such activity should be found guilty of "malfeasance of office". Additionally, since such horrific activity makes us "7-11 Coffee and Donut loving" good cops look bad, that officer should face criminal charges.

Allow me to state that I do not want ANYONE to think that it's okay to post signs in a locality which has laws against it. I will say, as I stated before, that the signs do work. And it's a chance I take - just like it's a chance you take when you spit in public or walk across the street where there is no crosswalk. You could get a fine. The Democrats and Republicans that post signs come election time - ILLEGAL. The Realtors selling your home - ILLEGAL. Lose weight in 8 days signs - ILLEGAL. Work from Home signs - ILLEGAL. Yard Sale Today - ILLEGAL. Lost Dog signs - ILLEGAL. Get my point? ALL of these signs are ILLEGAL in any number - 1 or 100.

Lastly, I did state somewhere in here that I will STOP posting signs once my supply is gone - there's about 100 signs left. Then I will use other forms of "acceptable" and "legal" advertising. I respect your opinion as I would hope you would respect mine... In the grand scheme of things - I don't think posting my signs will ruin anyone's life, just like I would not mind if YOU posted a few signs when your home is for sale.

NOW...

On to other news...

I called my buyer's mortgage broker today - "I need a date." The reply? "I don't know what is going on." So I am thinking, "What the heck do you mean you don't know what is going on? YOU are the mortgage broker!"

So my next statement is, "I know you are doing everything that you can, however, this was suppose to be closed December 3rd. I know formalities and docs needed to be done but I am thinking of pulling out now." The mortgage broker then said that I should wait - the docs are all in - so it's "just a matter of time."

Honestly, I can not afford to cancel this whole thing. I need to get paid so I can pay off MY debts. Of course, if I did pull out, I probably could sell it for more now. It's a dilemma really since I feel some sort of loyalty to the buyer - yet I feel the buyer's broker should feel more responsible to the seller as well.

What to do? The investor who originally loaned me money for this deal is really lighting a fire under my ass now and currently I am starting to PAY her back with interest. I feel obligated to do so. As a matter of fact, the payment exceeds the income from the property and this is EXACTLY what I wanted to avoid - negative cashflow!

So the buyer's mortgage broker ends the call this afternoon with, "I'll call you back within the hour..." Yeah right! It's 2:15 the next morning and no calls thus far... What a day! Where the hell are my cigarettes?

2004-01-08T23:58:00.000-05:00

Day 93:

Well, once you read this you'll think - "That was quick..." Yes, it's true, I am smoking again. The evil demons in those damn things are hard to beat. The whole break lasted 5 days. I will try again soon - I do notice a BIG difference when I am not smoking. I just need to get the monkey off my back!

This morning at 8am, I had a meeting here in my home office with a friend of mine. I've known him since 1988. He is interested in getting into real estate investing. A couple of weeks ago, I spoke with him about wholesaling and gave him a few articles that I had printed out for him to read. Now he's hooked.

Today, we talked about how we will work with one another on deals. I explained that what I have invisioned is a home-based business where I have other people assisting me. They will work out of their homes and sometimes out of mine. Carl, the gentleman I mentioned in the above paragraph, is a man with the gift of gab. His current job is in customer service - with that experience, he will do well in this position that I have created for him. He will be responsible for handling any wholesale deal we work and possibly our lease purchases. Of course we will arrange for him to operate under his own LLC, but his LLC will work with my LLC under a Joint Venture Agreement for each property we work. That way all the bases will be covered.

In addition, I am talking with another friend who has excellent credit and access to a sizeable amount of funds. She was involved in my last deal and is interested in working others possibly. What I proposed was to have her work with me on deals that require some sort of immediate funding and split profits from the sales. She is interested and we are discussing future works. In addition to her funding ability, she is great with numbers. I may take her onboard to handle the books for the company.

I've explained to both of these individuals that what I would like to create is an in-house solution center. I hate to make comparisons but do you know about those "Buy Here - Pay Here" car dealerships? They have their own people in-house that buy, sell, and finance deals. That is something similar to what I'd like to create. In other words, I want to take a deal and present it to the funder immediately for consideration - get the deal tied up - and proceed into an exit strategy immediately. The flow will work better than if I have to wait for something to happen and be at the mercy of lenders and their time frames.

I am still waiting for a closing date - yes - unbelievable. But here is a situation where my buyer and I must wait "at the mercy of the lender and their time frame". According to the buyer's mortgage broker - whom I have kept in contact with religiously - the lender has completed the underwriting. Now we are waiting for something that they call an Appraisal Review. This is something that I have NEVER heard of before but supposedly the lender PAYS someone to VERIFY the appraisal. Isn't this putting the horse before the cart? Why wouldn't they do this BEFORE approving and doing the underwriting?

2004-01-02T09:25:00.000-05:00

Day 92:

New Year's Resolutions - they can be harsh. Well, after smoking for 14 years, I am quitting. Yep, the wife and I both are quitting. Why? Well, the obvious reasons - health, money, you know... but that's not all. We want to conceive in June of this year. Quitting smoking would be best done beforehand. But allow me to say that this is tough - very tough to do. With all the stresses in my life, smoking was the one thing that I could use as a crutch to 'chill-out'. Now it's gone. Even as I sit here typing this entry, I look over and my marble ashtray and Marlboro Menthol Lights are missing. The coffee is still there - thank God. But the smokes are gone. And if you smoke, and you plan to quit, I can tell you it's not easy. I want a cig so bad right now. But it's different... I can inhale very deeply now and it doesn't hurt. What a difference 36 hours has been. This may not be too bad for me afterall. I am getting a little help - Nicoderm CQ. With it, I think I can get the monkey off my back. Well, got to make some phone calls to start off the morning.... then it's back to studying Charlie and Randy France's 'ABC's of Subject-Tos'.

2003-12-31T15:28:00.000-05:00

Day 91:

Being concerned with this closing, I contacted a local mortgage broker friend of mine. He explained to me that, unless I see proof, I will remain in the dark about the status of my buyer's loan application. He went on to tell me that there are many different programs out there for borrowers.

For instance, there is what they call a 90/95 CLTV, meaning the borrower can get 90% financing and must come up with the other 10% or a combination of 5% down with a 5% second mortgage held by the seller. Then there is the 90/100 CLTV, meaning the borrower can get 90% financing and the seller can hold a 10% second mortgage.

In order to be kept abreast of the status of my buyer's loan, he advised me to - in the future - get the buyer to fax me a Pre-Approval Stipulation Page or Conditional Approval from the lender. That will show me the nature of the program from which his loan is made.

Well, at 3pm, I got a call from my buyer's mortgage broker. She advised me that my buyer was approved for 90% and my buyer will bring the other 10% to the table. It's in underwriting now. We should have a closing date created by Friday.

I don't blame my buyer for any of the fumbles in this deal. I really don't. He is just as new to this as I am. But both of us are the wiser...

2003-12-30T02:16:00.000-05:00

Day 90:

Well Christmas is over... New Years is right on top of us. Has this closing happened yet? NO! I can say with enthusiasm that I CAN'T STAND MORTGAGE BROKERS!

Now that I've vented... allow me to progress... This deal was to close December 3rd. Then we shot for a date (any date) before Christmas... it would have been nice to have some CASH for Christmas but we managed. It was nevertheless enjoyable and the kids still had a decent holiday.

Let me explain what I've been going thru the past few weeks. First, do not send me hate mail about my statement above. If it offends you, quit reading my blog. The fact of the matter is that I can't stand what SOME mortgage brokers try to pull. For instance... you are selling an investment property... tenants are in it. An official appraisal states that fact. The mortgage broker for YOUR buyer tries to get a 100% owner occupied loan for their purchase. HELLO!?! McFly?!?

Mr. Mortgage Broker? You can't do that! STOP Wasting my time and my buyer's time! No lender will go for that! Let's get a closing date already! And after some minor paperwork loss and re-forwarding, my buyer's broker gets an okay from the lender... at 90%. Since they now have the Rent Schedule AND the Chain of Title in hand, we should get a closing date soon. I can not wait... I want this deal DONE.

My feelings are not like when you were a child waiting for Santa to arrive... it's more like a paranoid crazy person having an anxiety attack. This is like a neverending nightmare. The reason I am going through this feeling this way is because I've never done it before. Once it's done, I will have an insight like none other. The next time will be easier.

My attorney has been VERY helpful. He has kept me sane! At least I feel like I have a team mate who is supportive.

If you haven't see my FILES site lately, I've updated it today. Click on 'Legal Documents' in the right hand column of this page under the 'What we are using' heading.

2003-12-02T13:51:00.000-05:00

Day 89:

Well, I took some time to reflect on some things. Obviously, I have not posted anything new for a while. Now I am back here again with my ramblings.

And now for the good news... I failed to post this earlier but... back on November 8th, the former owner of the rental house that I have called and said they wanted to get our promissory note settled as soon as possible. He told me that he was moving out of state. He asked me to pay him $10,000 and he would forgive the remaining $9,000. I asked him, "How soon do you need this money?" He said, "Today". I explained to him that I could not possibly get $10,000 today, however, I knew I could get $8,000 by tomorrow. He agreed to accept $8,000.

Next I called someone I knew I could borrow $8,000 from - real quick. I made arrangements for that loan and got the cash. The next day, I called him, met up with him and got him to sign the release form. I gave him the cash and we went our seperate ways.

So what does all of this mean? Well, quite simply, the entire deal began at $25,000 for a 2 bedroom/1bath rental home. I talked him down to $20,000. I gave him a quit claim deed to sign and $1000 cash with a $19,000 promissory note. That note just got discounted and he accepted $8,000 as repayment. Bottom line? I bought the house for $9,000!

Hopefully, this week the closing for that house (where my buyer in Cali is purchasing it) will occur. They are purchasing it for $30,000. In all, before all costs, I will have made about $21,000. Of course there are costs involved...

The lady investor that I had help me in the beginning (and I wish I had done things differently with her now) will be repaid in full. She will be cashed out and no longer involved with any furture deal. Her return? $19,000

So, in essence, I will only "see" a few thousand out of the deal. Nevertheless, it was a fun, wild ride!

2003-11-18T01:45:00.000-05:00

Day 88:

Here we are just a couple of days before the Foreclosure auction. I got an email from my partner in Cali as well as Bank of America. This deal is dead and it is officially over for us now. We can't possibly do anything with the house. BofA will NOT do a short sale. They are firm on that. Plus BofA got an appraisal done last week on the house and it only hit $76k. That proves I was REALLY wrong about this house from the very beginning. But what an eyeopener! It has served as a valuable lesson to me though, in more ways than one. I thank God I did not get into this thing too deep. My guardian angel MUST be watching over me!

This proves that speculation about a home's value is just that - a speculation. You try to do an educated guess but without an appraisal done, you're still only guessing.

2003-11-14T01:29:00.000-05:00

Day 87:

In regards to the elderly lady's house, I am glad I contacted the bank and faxed them the Authorization to Release Loan Information form. I learned the house was definitely in foreclosure. It went into the paper on the 12th. The auction is for the 21st. She owes a total of $67k for both loans. We think it would comp out at $89k but it needs paint, nothing else. The ad in the paper said $53k but I have no idea if we could buy it then for that price or not. I've never been to a foreclosure auction.

My partner and I are trying to figure out a way to do this deal. There is profit in there to be made BUT we need to create the equity somehow. If the bank won't play ball by doing a short sale, we will have to pass until the auction and see then if we can bid right. I would not want to go above $60k on it, period.

The sad thing is I know this house inside and out now. Everything works there fine - including the furnace. It just needs paint and I've already done most of that. The appraisal is what scares me. If the entire interior was repainted, I'd feel better about it. I am sure we could get appraisal price - which would be around $89k easy. So do we risk it or not? Obviously we can not help the old lady out with a lease purchase. Maybe an outright purchase but not at $67k. The bank will have to play with us to do that - and they may not accept only $49k for it (in essence forgiving the second mortgage of $17k).

I need to talk with my partner again. Time is running out, yet, it is of the essence.

Regarding other deals... My partner is the person buying my rental on Melton Avenue. I had a home inspection done today. The result - it passed stating it needs cosmetics, which we knew already. The problem came when the termite guy came to do that inspection. There is evidence of previous infestation of termites in the floor joists. The house is not riddled with "tunnels" but a few are visible. He said that there is no damage but treatment is strongly suggested - which will be needed for the sale to go through. That rings up to $620. This is a small hurdle to go over, really. The treatment will stop the issue and allow the sale to go through fine. This house is pretty solid. The floor beams are 6x6 - a massive size they used back in the day. I am confident that it will last another 100 years.

I will post more soon.

2003-11-06T23:52:00.000-05:00

Day 86:

I want to make one point and one point only here. If you are a newbie and have never done a lease purchase before, take heed and listen carefully. Some of you may know that recently I took a property with the lease purchase technique. This particular deal involved an elderly lady who simply could not A) keep the house up any longer, and B) keep up with the payments.

When I first started talking with this owner, the property did not seem so distressed - rather the deal didn't. I was led to believe that she was completely caught up on her first mortgage and only two months behind on the second mortgage. I figured, "What the hell" and signed it up. The profit spread was good. The cashflow was not so good but 'do-able' - at least it wasn't negative. I got all the paperwork done including the Authorization to Release Loan Information.

Last Saturday she moved out and I got the keys. The wife and I went to work on Sunday, Monday, Tuesday and Wednesday - sweeping, mopping, cleaning the fridge, countertops, stove, sinks, toilet, tub, etc, etc, etc. I put $10 on the house to sign it up. I spent $60 in cleaning supplies. Advertising and marketing was about $80. Then I realized that one wall needed painting in one bedroom so I completed that, plus minor touch ups throughout the house - all to make it show well. The backyard was a foot tall with grass so I cut it. Oh by the way, during that process of cutting - which took three hours just for the backyard - one of the rear wheels broke off the damn thing so I was cutting with a three wheeler push mower. That was real interesting - burned some calories that day. You should have seen the looks I got from the neighbor - it was a Kodak moment. But I pushed on (no pun intended) because I knew I was getting big cash soon.

As I mentioned in a previous post, we had a couple who REALLY wanted the house and were willing to put down $4000 cash and signed an application. They backed out a few hours later. That was a blessing in disguise and I will tell you why shortly.

On Wednesday, after I did some more touch up painting, I went home to get ready for work at about 2pm. Then I get the phone call that would change everything. The elderly lady tells me that she just got a certified letter which states that the bank is starting the foreclosure proceeding. They obtained a Relief of Stay from her dismissed bankruptcy case and were going to take the house. Of course I could not understand why this was happenning since it was "current" on the first and only "two months behind" on the second. I explain to her that I will get with the bank and find out what is going on as soon as possible but that I had to go to work.

I took today off from work to figure this mess out. Starting at 10am, the elderly lady and I met with her attorney who previously handled her bankruptcy. The man said he could do nothing for her quite simply because she did not follow the "plan" before and he would not file for her again. I only went to obtain contact info, so I listened. He did advise her that she could file bankruptcy again - thus ceasing the process of the foreclosure - but he was not going to handle it for her; she would have to get someone else to do it. I thought this was strange because I thought one could not refile for 6 mos after a dismissal. Anyway...

So I go back home and spend the next 5 hours faxing the Authorization form here and there to obtain the info from the bank. Bottom line I learned was this: the house goes in the paper on November 12th and to the chopping block on the 21st. She owes about $4,000 (over 7 mos past due) on the first mortgage and $2000 (over 440 days past due) on the second mortgage. They would NOT discuss a short sale since it recently came out of bankruptcy via dismissal. This, I realized, is the end. And what a shame too, the profit spread is potentially over $20k.

You can't possibly imagine the feelings I felt at that very moment. All I could think of was all that time, money, work, and sweat that I put into the house - FOR NOTHING. Of course I am upset for her that she is losing the house, but let's look at the reality of it here... she got herself into this, not me. I tried to help.

Just think for a moment... What if I signed up that tenant buyer with $4k in cash? I would have to explain to them that the deal fell through. What a mess that would have been!

So tomorrow I go to take the signs down. I need to get it off my website too. There is no way I can expect someone to come up with over $6000 to reinstate this loan, including fees. I'd rather walk now - I'm bruised big time. What a learning experience!

The moral of this story...

NEVER EVER BELEIVE A SELLER OWNER! NEVER!

GO GET THE NUMBERS FROM THE BANK YOURSELF BEFORE YOU DO ANYTHING ELSE!

Sure, sign it up if they are willing, but before you even put a sign out front, call the bank(s) and find out what the WHOLE story is all about! Trust me - you'll thank me later...

NEXT!!

2003-10-29T23:07:00.000-05:00

Day 85:

Well, as of today, I have signed a contract to sell the rental property. All the details regarding the contingencies were panned out between the buyer and I. We are shooting for a closing date of December 3rd. The closing of this deal is quite exciting for me, and my wife. It means much needed cash coming soon, though not as much as we would have liked, but some cash will still serve a purpose. As my Dad told me over the phone, "Hey, it's your first deal and it made you some money. You should be happy with that." And we are - very much so. But I am excited moreso about this transaction because it has opened up a new avenue or opportunity for us.

The investor that has contracted to purchase the house desires to work with me in future deals. In addition, since he lives outside Virginia, he is contracting me to manage the same property he is purchasing. I feel comfortable with this arrangement since he and I have talked at great lengths over the phone PLUS he and I seem to be very much on the same wavelength regarding investing. Seeing eye-to-eye will allow for a mutual respect between us in our working relationship.

It's about time I posted such an entry as this, wouldn't you say? Well, that is not all that is on the burner. Remember the lease purchase deal that I've been working on - with the elderly lady who was in bankruptcy? We signed a brand new lease purchase contract the other day and I got it signed up with a purchase price of payoff (whatever it is at the time I exercise my option to buy). So I went out and placed my 'Rent-to-Own' sign out in front of her house, plus I posted several directional 'For Sale' signs throughout the neighborhood that lead buyers to the home. As a result, within two hours of posting the signs, one possible buyer called and told me he had $3000 to put down on the house. Only a few short hours after that, I received two more callers who left messages on the answering service. And I have not even posted one newspaper ad on the place yet!

Let me back up a bit here. I wanted to bring this up the other day but forgot... I took my wife along with me the other day when we got the house signed up on the lease purchase. She pointed something out to me that I myself had not noticed. She said, "You were acting too much like a police officer." I was shocked but pleased that she said so. What occurred was the elderly lady was explaining something at one point that she had just stated twice before. I interrupted her and was quite abrupt at that moment - like a cop wanting to 'get to the point of the matter' at hand. I had not noticed this but the wife did. She called me on it and I am glad. She said I need to "change hats" in this business. I need to be saavy like a cop, but I need to be more customer oriented and attentive. You see, us cops deal with alot of trash on the street. Unfortunately, the job eats away at your nerves and fuse. Sometimes, you get tired of hearing the same thing repeated over and over again... like "I ain't done nothing wrong" or "those aren't mine". I realize that I need to be a little bit more customer service-like in this business. Fourteen years is going to make it hard to break the habit though.

Well, I will post any new events soon. I am kicking around the idea of creating a Real Estate Investor Resource website where every little thing I've found useful in my venture will go in there. I am not sure how I want to go about putting it together but we'll see.

2003-10-21T23:34:00.000-05:00

Day 84:

I have an offer on the house that I am selling. A young lady called yesterday and asked if the property was still for sale. She offered $27k. I told her that I could not sell it for less than $29k and she said she would contact her partner about it. A few minutes later, a gentleman called stating that his partner had just talked to me about the house. We agreed to $29k as a purchase price. He said he would send me a fax tomorrow (Wednesday) consisting of a purchase contract for the house. I'll look it over and if it looks okay I'll sign it and fax it back. Then my attorney can handle the closing.

I talked at great lengths with the out-of-state investor on the phone. There appears to be strong possibilities for future joint venture transactions between us. Networking between investors is a great way to make money. Finding deals, putting them together, getting them funded, and splitting the profits creates a win-win situation for everyone involved! This is pretty exciting!!!!

I spoke with the former owner of the house today to tell him that I got a buyer. He was pleased - needless to say - and looks forward to closing. I will be happy once this note is GONE.

So I'll only see about $8k profit from this deal. Yet, that is not too bad for a first-timer!

On other fronts, I talked with the elderly lady today regarding the lease purchase deal and she is moving out this week. If I am correct, around $391.44 is still owed on the second mortgage and that totals 3 months that it is behind. The first mortgage is now current. And remember, the bankruptcy is dismissed. Also, I did learn that she can not go file bankruptcy again for another 6 months (thanks Mr. Carbonare for the heads up on that).

I asked her to sign a "Release of Information" form so I can call the bank directly and learn the whole story myself since she can't keep things straight. If all pans out, I will place a Rent-to-Own sign out in front of the house soon!

Here are the final numbers -

A. With the Seller:

Purchase Price - $60,617.42
Term - 36 months
Payment - $772.42 a month (includes taxes, principle, interest, insurance)
Rent Credits - $0 a month

B. With the Tenant Buyer:

Purchase Price - $84,950.00
Term - 12 months
Payment - $825.00 a month
Rent Credits - $412.50 a month

So what am I facing here? Well, cashflow is not that good. It's only $52.58 a month. But, the backend is nice (roughly $14000). I know what you are thinking... the cashflow sucks and we do not invest for "what can be" on the backend. I am looking at the option money. Cash is what I need now. If I can get $4200 or better in option money, I'll be a happy camper. Besides I want to lock this up as a first lease purchase. Better deals WILL come around but this will be the first LP done for me!

Of course, I might be able to sweeten the pot of option money. If I wave the arrangement that I have with the seller in front of the faces of prospective tenant buyers and tell them to max out their option money, I'll ASSIGN my agreement with the seller to them for the price and rent that I got. Then I take the cash and I am out. Someone with lots-sa-cash may pop up and take the deal that way.

Who knows? We shall see...

2003-10-17T23:49:00.000-05:00

Day 83:

I got a taste of landlording today. Yes, I figured since I was to meet with a couple of the potential buyers of that rental, I might as well fix a couple of things there. The tenants told me last week the kitchen sink drain was leaking and they had a big pan to catch it. In addition, the shower handle came off and they were turning it on and off with a pair of pliers. I knew a few of the receptacles had no covers so I wanted to fix those too.

Off I went to Home Depot. I spent roughly $50. While I was waiting for my buyers to appear I worked. First, the receptacle covers were installed. Next the shower handle was replaced. Last I worked on the kitchen sink. Luckily, I have the know-how (thanks Dad). The strainer was old and rusted, thus leaking. It didn't help that someone used plumbers putty ALL OVER the flange to stop - correction - slow the leak.

Anyway, only one buyer showed. The other called to reschedule for next Monday. She is from Northern Virginia and she seemed interested. She and I talked and she said she planned to talk it over with her husband and make an offer on Monday. I have received calls from others interested in the property and will contact them this weekend to schedule a showing.

I want to wrap this deal up by Wednesday of next week. That's the plan. Whoever gives me the most reasonable offer will get the house. And it's not a bad deal, even if I sell it for 30k. I expect to see about 9k profit from it (after costs). And whoever gets the house will have a sweet deal too. I will be happy since it will be a win/win for everyone involved.

Fast Forward - the wife and I went to dinner with her sister and her husband tonight. We talked about the business briefly and how I'd like to do this full time. My brother in-law had begun his own business in construction after breaking away from his boss about a year ago. Now he heads a crew that handles the work. So far he has been successful - because he has been living within his means. We talked of me leaving my full time job and how scary it will be. When I actually do it is not known but hopefully soon. The wife and I need to discuss the mechanics of it first (how will bills get paid when I go solo). It's truly a dream right now - one that hopefully will become a reality soon.

2003-10-15T02:48:00.000-05:00

Day 82:

Thanks to everyone who sent email that was VERY positive. I appreciate it very much. I swear to God I am going to write a book about all of this once I become successful with this business - > definition - successful: no j-o-b, bills paid off, money made each month above $5k.

The Sunday ad ran to sell the income property. I got two calls. Both are seeing it Friday. Let's hope it sells. I'll be happy to see $30k from it.

The lease purchase deal is still going on with the other house. Just a little update... The elderly lady called me and said she paid up the 1st mortgage and now it is current. The 2nd mortgage (same bank) is still in default by three months (total she said $1750). Supposedly this includes late fees, etc, etc. Her bankruptcy case has been dismissed as of last week. Which frees up the house completely.

She is trying to figure out what to do with this part now - which is critical. Supposedly she is going to tell me exactly what is owed on the loans tomorrow. I am making her work to get this to pan out instead of the other way around. She REALLY wants to work for me to get this deal to go.

I'll let you all know more soon.

2003-10-10T23:09:00.000-05:00

Day 81:

Every once in a while I get an email from some one "out there" in the world wide web that is encouraging. Just today, a gentleman wrote, "I know you have goals. You will never reach them unless you think positively and creativitely." Another wrote, "you have done well." I am thankful for the positive comments.

What I'd like to talk about here is that tonight I got and email from a gentleman that probably does not understand what MY situation is really about.

He wrote, "I just wanted to drop you a note to say I have enjoyed reading your blog and to maybe give you a different approach. I have been reading your blog and seeing all the time you have been putting in to this with very little reward. I am new to RE investing also. I have been doing this for only 3 years. I have not went crazy with this stuff, but I have bought 5 homes successfully. When I got into this, I had some successful people tell me to get a line of credit established (home equity on my house, and unsecured line) first...so I did. All this stuff you are doing scares me... subject to, lease purch, quit claim stuff. I am just flat out buying properties with my line of credit, fixing them up, selling them or turning them into rentals. I am looking for properties that I can purchase 20+% below market value. I have to be careful and look, but they are there. I look for homes that have previous sales that are 20+% above what I am going to pay for the house. I then know that its worth at least that past purchase price. I then decide what it will take to bring it up to "sell ability". I am looking for homes that I can spend $1 to earn me $3 for what I did to house. I have not had a seasoning problem ever because I buy it on line of credit....fix it up....have it appraised...then go to bank with a house that's free and clear of debt( I bought house with credit, but the house didn't stand for collateral, so house is really free and clear). The bank gladly loans me money...80% of appraisal..which is great because I bought it 20+% under value..thus the bank is really giving me 100% financing. I have sold 2 homes and kept 3. My best sell was purchased at 23,600...spent 10,000 on improvements...then sold for 67,900. I do have good credit so this works for me in (state omitted). I will leave you with this info....hope I didn't bore you to death, but just wanted to give you a little different approach. It just seemed you were working yourself to death chasing something that ends up falling through. I know people are successful doing the things your trying, but it just hard to beat the old fashion way."

Now, that being said, if someone has read my entire blog from beginning until now, they know that:

A) My credit sucks.
B) I do not have access, nor will be given access, to a line of credit from any conventional lender.
C) I am investing in real estate creatively (ie- hopefully with none or very little of my money).

Sure it would be WONDERFUL to just go out, borrow money from a bank on a whim, buy house, fix it up, and resell it for a profit and payoff the loan. I suppose I would not have all the trouble that I've got right now if I could!

The reality is... I can't! When I do get large enough coconuts to do a full blown rehab or even a light one, I'll seek a hard money lender who lends purely on the value of the property after repairs. They are out there and they DO NOT come cheap. But they will be a resource then.

For now, I will do anything and everything that I can do to bring cash in the door. I had a goal to leave my full time job by December of this year. Well guess what - that ain't gonna happen. And, yes, I am upset with myself because that will not come true. But I've LEARNED many things this year. And those experiences have been an ASSET to me.

Please don't get me wrong. I think it's great that the gentleman that wrote me the above-mentioned email can get a loan and buy a house to turn for profit. Happy investing to him. But that avenue is paved with gold and it is not available to everyone - everyone like me TRYING to get a foot in the door of investing with poor credit and no cash.

Allow me to jump up atop my soap box for a moment...

You folks out there probably can agree with this statement: I am so tired of "gurus" who claim that REI is easy, and hassle free, and can be done with no money. The reason that they make these claims is because they are trying to SELL you something - probably for some super-colossal amount of money that you KNOW you can't afford to spend right now but you just GOTTA have that course.

In reality, real estate investing - at least for someone going in brand new on the ground floor - is hard. It's full of hassles and obstructions. If you lack information and how-to, you will be lost. If you are cash poor or have bad credit, it's a nightmare. How can I proclaim this? BECAUSE I AM LIVING IT!

Now I am not trying to scare anyone away. REI is probably the biggest challenge I've EVER faced in my life - next to the grueling police academy that I went through. REI tests your knowledge. It tests your emotions. It tests your emotional strength. There are times when you will say, "Screw this crap." But I refuse to let "it" beat me. Sure I need some money to work with in REI. I need to advertise - that's money. I need to put down option consideration fees - that's money. Plus I have added costs: Internet for use in the business - $49 a month. Another phone line in the house - $30 a month. Office supplies - money. REI does require at least a little bit of money to start out.

Nevertheless, I am pushing forward and I won't be shut down. Damn it all - I have goals and sometime... somehow... I will meet them...

2003-10-08T13:08:00.000-05:00

Day 80:

The rental property that I took via Quit Claim and have been TRYING to sell to other investors has been a PAIN IN MY A$$. I wish I'd NEVER taken it via Quit Claim now. The problem is layered. First, I can't find anyone who will lend me money on the house because the loan is too small (below $50k). Additionally, the seasoning issues keep arising (I have not owned it long enough). So I am trying to sell it for at least $30k. It appraised for $45k and NO ONE will touch it. Why? Because the tenants are in there until April 2004 and they are only paying $335 a month (way below fair market rent of $625 a month).

That being said, I am placing it in the newspaper this upcoming Sunday. The ad reads "INVESTORS - 2/1 Rental Property, 1424 Melton Avenue, appraised $45k, make offer - (804) 269-7994". I pray to GOD that someone will take it above what I owe the previous owner (which is $19k). If I make some money off of it at the sale then I will be happy. Of course I have taken three months of rent in from the current tenants (totaling $1005).

Right now I am VENTING because I am SO frustrated I can not see straight. I took a house on southside on a lease purchase that was suppose to start October 1st. Problem is, the lady owner had not moved out yet. So we backed everything up to December 1st. The owner notified me yesterday that the house is two months behind in payments now. GOOD GRIEF! Can ANYTHING else go wrong?!?!? She is moving out on October 17th!

So, naturally, I tell her that this lease purchase transaction CAN NOT go forward unless she makes up those payments and she says she can not do it. Additionally, I found out that the house was/is involved in a Chapter 13 Bankruptcy. WONDERFUL - more good news.

So how can I handle this deal? Well, I might be able to take it Subject-to the existing loan. Her name will stay on the loan and she can deed it over to me while I make the payments. I make the payments using a tenant buyer. This transaction is complex in the sense that I need to create a trust, get the house deeded over in the trust, have a trustee, get another insurance policy, etc. etc. Do I want to do this? I don't know yet. The downpayment from my tenant buyer would cover the back payments. But I am new to this 'Subject-to' type of transaction. I am VERY unsure of myself.

2003-08-24T11:08:00.000-05:00

Day 79:

Well, the house is up for sale as of Wednesday. I've sent an email to all of the investors that I know regarding the sale. I have even put up a $500 bounty to anyone who brings me an all-cash buyer who actually closes. One fellow investor has found me a possible buyer from Williamsburg. We have agreed that he will place the house under contract with me and he will then assign the contract to the all-cash buyer. Hey, he makes money from me ($500 for the bounty) and the buyer ($2500 for the assignment). A creative move! Now that is ONLY if the all-cash buyer buys. There will be stipulations on the contract between he and I - such as closing in 10 to 15 days (all cash deals should never take longer - there's no financing to obtain), plus the closing costs are being split 50/50, and the closing will be handled by my attorney. The house is up for sale for $35,000 - firm, so I've made it so wholesalers can have some room to get their buyers involved.

If I can get this done, I think things will be much better. I'll get the $19,000 note out of the way plus cash. The buyer is to see the house on Monday. I will update this blog soon with additional info.

2003-08-18T23:33:00.000-05:00

Day 78:

Okay, let's get to the meat of things first and foremost. I learned some valuable lessons today and here they are:

If you have been following my blog, you would know that I took possession of a property using a Quit Claim Deed with $1000 in consideration. My attorney filed the deed and now I am on title (for only $1000). I took out a Promissory Note with the former owner for $19,000. These two transactions are two separate and distinct actions. One does not rely on the other. I got an appraisal which showed the house is worth $45,000 as-is. My mortgage broker called today and explained to me what the problems are as they face me today:

1) TITLE SEASONING: I have only been on title for about a month and a half now. Most all lenders want to see applicants on title for at least 6 months before they request a refinance.

2) LOAN VALUE: The bottom line here is that it costs the same for a lender to do a $300,000 loan versus a $45,000 loan. My loan amount is too small for ANY lender to bite.

When she found one who would take the low loan amount, she learned they required that I be on title for 6 months or more. And when she found a lender who cared less about how long I was on title, the loan amount ($45k) was too small!

SO WHAT IN THE WORLD DO YOU DO IN A SITUATION LIKE THIS?

Well, let's look at the situation as a whole. Had I gotten the house under contract for purchase, NO title seasoning issues would have arisen. Only the loan amount would be an issue. But I did not do that. I got the deed and tried to refi. So where do I go from here?

A few options:

1) Get a personal loan and put the house up as collateral.

2) Sell the house!

I may try option #1 first. If that does not pan out with a high loan amount, then I will try option #2. If I get a loan, I will face a couple of negative things. First, I probably will not get at least a $35k loan on the house (which I want). Second, the interest rate will probably be very high. Last, my cashflow may go negative each month. However, if I sell the house to an ALL CASH buyer, I can probably get $35k for a $45k house and walk. No seasoning issues, no loan value issues, no negative cashflows, just cash-o-la in hand. Hmmmm.....

2003-08-13T11:00:00.000-05:00

Day 77:

Well, I have called the mortgage broker and left a message (again), this time telling him it's over - I've had it. I had to advise him that I needed an official release of the appraisal from the lender he was dealing with so that I could get it to another broker. I further advised that this entire transaction has lagged terrribly and I needed results, not excuses. It's ridiculous to have to deal with a company that is NEVER there during the day - you only get voice mail; they NEVER return your calls in a timely fashion - it's usually four or more days later; and when they do call back it's "I'm sorry, I just got back in town." Geez! How can you run a business if you are ALWAYS on vacation! He's fired! And I'm pissed!

So here I am, over two weeks after this promissory note was to be paid off (which it isn't yet). I need money and I need it NOW! The lady I called (who will now be my new mortgage broker) is now working on the issues surrounding the deal. Let me refresh your memory here: This is the deal that I mentioned in Day 64 (refer the that entry for more info). The new broker says there obviously is a couple of issues to work with - 1 is title seasoning (I have not owned it long) and 2 is the appraisal (for whatever reason it's kicking back a red flag with lenders). She is trying to overcome these issues as we speak before passing the loan pack to a lender.

Now the nice thing is this: Any lender who looks at the deal will see that I am on title for the property for $1000. There are NO liens on the house from the former owner because it was a 'Quit Claim'. Furthermore, the promissory note states that NO assets of mine, including the house, is used as collateral for the note. He can't take the house back. Period. Lenders will not see the note either - it is not a part of the deal - it's only in the background. Why? Because it is a personal note between the former owner and myself. It is NOT a part of the deal.

Is this brutal? Is it unlawful? Is it immoral? NO. I see it as 'smart business'. I want to protect myself in case things get screwed up (which it did). The lender will see a low price paid for the house and the former owner can only sue me for the note. He can not foreclose on the house. Sure, a judge can order the sale of an asset to repay the note, however, I hope to get this settled before the former owner TRIES to sue me.

Now I know what you are thinking... this is really a mess and SHOULD have been more organized. Well, keep in mind... I am a new investor and this is new to me. I have full intentions to pay the man his money. I am TRULY upset that this has taken such a horrible turn. But I am praying to God it straightens out and does so very soon. I never wanted to start a business where things would get screwed up - especially when people are waiting for their money. Hopefully, the new mortgage broker can resolve the issues quickly and we can get a closing date for the refi and I can pay the note.

2003-08-08T09:48:00.000-05:00

Day 76:

I have not had any time to get the property loaded up on my website but hope to get it done this weekend. I have had more troubles with the mortgage broker to get this refi done this week. He called (finally) and stated that the lender rejected the loan package as a whole because they rejected the appraisal - something about the comp being lower in value than the subject property. Anyway, I have had it! The former owner wants his money. Now he tells me he will "try another lender tommorrow". Whatever!

I have called another mortgage broker and left her a message to contact me. She seems like a go-getter so I want to give her a try and see how she performs. This other guy is not cutting it anymore. I know it is important to stay on top of things and keep track of EVERY step of the process but this part seems hard to keep a hold of! I hope the other broker can perform - and perform quickly.

2003-08-03T00:42:00.000-05:00

Day 75:

BEFORE I GET INTO ANYTHING ELSE, I must annouce that today is the First Year Anniversary of this Blog! To celebrate, I sewed up our second deal! Here is how I got it:

I would not have thought that a phone call a few weeks ago would lead up to this. Here is how I found the deal with the elderly lady I first mentioned on Day 69 (June 25th, 2003):

She first called June 25th and told me that she saw one of my bandit signs and was in trouble. She was facing foreclosure. The problem was, she did not want to let the house go. As I recall, she wanted to see if I would buy it and then rent it to her or something, but that idea just gives me the willies. We ended our conversation after she advised me that she would call back later, once she could "figure something out." Remember folks - deal only with motivated sellers and never chase deals.

On July 22nd she calls back stating that she caught up on her payments - the house is no longer in foreclosure. However, once she gets ready to sell, she said she would call me.

On July 26th a man calls me, says he is the elderly woman's son. He tells me he would like all of us to meet to discuss some possibilities with the house. Of course, I did not just jump up and roll to see the house without asking some questions. Here is what I learned. She had gotten caught up on her mortgage around July 22nd. So now everything was current. There are two existing mortgages. One has a balance of $14k and the other has a balance of $46k. So we are looking at a total of $60k left.

He has talked her into selling so she can go to assisted living arrangements. She can no longer manage her own home. I had already done my homework and learned it was only worth $65k as a present value. But he wanted to meet. So I obliged. We met July 27th around noon and we talked. Her mortgage, insurance, and taxes come up to $750 per month. The house is pretty nice - a 3 bedroom, 1 bath, nice kitchen, utility room (washer/dryer hookups), gravel drive, fenced back yard, metal shed, and the house is brick with hardwood floors. The home needs some cleaning. The carpet probably should be pulled since she has a couple of cats (and they have torn them up some).

Please note that, as you know, I've been in a buying mode lately and wasn't "open minded" to alternatives with this particular house. I've been working on getting our first rehab deal together and getting our first closing done on a refi. So my mind was pretty much closed to other possibilities and avenues - this can be a BIG mistake to investors.

In light of this fact, I told them that there was not a possibility for me to buy it - even for her payoff balance. I could not resell it outright for profit. Then we talked more. He brought up the topic of rent and asked me what I thought it could go for in rent. I told him about $900. He suggested that I handle everything for them and keep the difference. He said he wanted me to be their "property manager". I told him that I would consider pondering some alternative avenues (again, the thought of a lease purchase did not enter my mind at this point - DUH). Also make a note that, by law in most states, in order to be a straight-out property manager you MUST be the owner or a licensed real estate agent working as a property manager.

We agreed to talk more the next day and I left. As I drove away it hit me like a brick wall at 80mph. What the hell am I doing? This is our first lease purchase deal!

Remember - terms convert into value. I figured we could agree to buy the home for $65k with a lease purchase. I would only pay her mortgage, insurance, and taxes (through escrow to insure it's paid). That is only around $750 per month. I then could lease purchase the house to a tenant buyer for $75k, 1 year lease, $900 per month. I'd, of course, get whatever I could for an option fee. Back end profit would be $10k (minus option fee) plus $1800 cashflow for the term of the lease.

I called the owner back that night from work. I told him that I would be interested in a similar arrangement, close to what he suggested. I told him that I'd even help him out by paying for the advertising, giving the showing(s), internet exposure - the works. He was impressed. I said I could pay the closing costs as well for him. He said, "Done deal. When do you want to meet?"

On July 29th, the lady signed - with the guidance of her son, as did I. But don't Hi-5 it yet... While she was signing, her son asked for a business card. I went for my wallet and the wallet was missing. I had either left it at the Fast Mart counter or at home. So I ran to the car, got another card, and returned to the house. Then her son says, "Before we give this signed copy back to you, I want to see some ID." I couldn't help but say, "What? I've never been asked that before." And I told him that I had lost my wallet. So I thought - maybe the car registration will do - but I was driving the wife's car (my name is not on the registration). So I said, "Well, I don't have my ID nor can I prove otherwise." He then told me that he would give the signed copy back to me once I showed ID. So before I left, I told him, "Well, you already know I am a police officer full-time / investor part-time. I assure you, I am who I say I am." He said, "Well, that's all well and good but I'd like to see it." As I was going to the car, he followed. He says, "Look, I don't want to seem like an (censored) or nothing but this is my mom's house and I want everything on the up and up." I then told him that it was fine. We agreed to meet Saturday morning to finalize things.

On August 2nd at 10am, FINALLY! I am proud to announce that we had tied up our FIRST Lease Purchase.

Here is what I got out of the deal with the sellers using Michael Carbonare's Lease Option Contract form:

- Lease Purchase Agreement -
Sales Price: $65,000
Term: 36 mos (starting October 1, 2003)
Payment: $762.42/mo (mortgage, taxes, & insurance)
MY Responsibility of Maintenance & Repairs: Only up to $250 per incident
Option Consideration Fee: $10
Rent Credits: 0
Closing Costs: Paid by Buyer (Me)
Right to Cancel: Within next 30 Days
Right to Extend: Additional 12 months by paying Seller another $10.00

- The Property -
VERY Quiet Neighborhood
3 Bedroom / 1 Bath (Ceramic Tile Floor)
ALL BRICK 1 story ranch
1165 Square Feet
Fenced Back Yard / Gravel Drive
Shed in Back Yard
Hardwood Floors
Washer / Dryer (they wanted to keep BUT negotiated by me to go with the house)
Fridge / Dishwasher (they wanted to keep BUT negotiated by me to go with the house)
15000 BTU Window AC Unit (they wanted to keep BUT negotiated by me to go with the house)
Within walking distance to a very Large Creek - Great Fishing!

- Planned Exit Strategy -
Get Tenant Buyer to Pay $900 per month (Zero Credits)
$75,000 purchase price (future value in 1 year)
1 year Term
Whatever in Option Consideration Fee (at least $3k is targeted, or 4%)

- Total Profits in Deal -
CashFlow: 12 mos x $137.58 = $1650.96
Price Spread: $10,000
SubTotal: $11,650.96 - $3000 (option consideration fee) = $8650.96 in Profits!

I plan to have the property listed on my site (www.capital-renovations.com) sometime next week. Finally, Deal Number Two is DONE! Man I feel great! Now it's time to search for my tenant buyer!

It is a MATTER of PERSISTENCE folks! NEVER GIVE UP!
IF I CAN DO THIS, SO CAN YOU!
Don't Hesitate - Begin today!

So here we go - right into year number two of Investing in Real Estate!

2003-08-02T02:44:00.000-05:00

Day 74:

Okay, so 3 to 5 business days have gone by. No closing date yet. I am upset and so is the original seller. But he has calmed down quite a bit. He knows this will eventually go through but things are taking a little longer - too long if you ask me. Hopefully next week will produce the 'pay day'.

I am going to meet the elderly lady tomorrow morning (actually today at 10am - it's 3:42 am now). I will have our first lease purchase deal setup and then will go seek the tenant buyer for it. It's not a big money maker, but it will produce some cash soon (option consideration fee). Also, the house I mentioned that I want to do as a rehab - I hope to get it completely under contract this weekend (finally). I'll update ASAP.

2003-07-25T10:51:00.000-05:00

Day 73:

Okay, I am proud to announce that the appraisal made it to my mortgage broker! Now I am happy! Now it goes to underwriting and should be ready to close in 3 to 5 business days. There's still an issue with the outstanding liens on the property, but we hope to satisfy them at closing without a hitch.

2003-07-24T11:59:00.000-05:00

Day 72:

Well, things aren't getting any better. The mortgage broker sends me an email saying he never received the appraisal as of yesterday. I contacted the appraiser and he tells me that the mortgage broker gave him a hotmail address to send it to and the file never made it through. So he sent the appraisal to me directly. I have never seen one of these things before! It gives great insight as to what details go into doing one of these! Anyway, I faxed it to the mortgage broker (all 15 pages). Plus I sent it to every email addy I had for the broker - so someone better had gotten it! We STILL do not have a closing date and the promissory note that I had with the previous owner was due on the 21st! The owner's upset - I'm upset! The wife is wondering what is going on. Talk about stress! But this stuff is for real. And it's exciting. I wish I had gotten into it sooner! Nonetheless, better late than never!

My attorney called me yesterday about the house that is owned by the separated husband and wife which is in foreclosure. He told me that according to the title search, the foreclosure is VERY close. The note holders are about to take it! So I called EVERYONE involved - the husband, the wife, the trustee attorney handling the foreclosure, even the note holder. I left messages for everyone. I truly think they WANT it to go to foreclosure. I may never realize this deal at all.

2003-07-22T12:17:00.000-05:00

Day 71:

Well, I have not added anything here for a while, partially because the wife and I went on vacation to Myrtle Beach and Nags Head. Lord knows we did not want to leave! Now that we are back, I had to get caught up on the real estate association's administrative details regarding memberships and such. In addition, Comcast took AT&T Broadband over so I had to go change a bunch of links on all the sites to point them to new server addresses. Anyway, on to the business at hand...

The man that owed $6500 in taxes on his junker home never called me back after messages were left. I guess he isn't interested - no prob - next! My partner who is dealing with the short sale deal has been out of the country on vacation so nothing new has become of that deal. He will pretty much handle this one in the beginning stages.

About the house that the owners wish to sell for $65k, they agreed to sign a contract to sell. I hope to get it back (signed) from them tomorrow. This house will be featured on our rehabilitation website (http://rehabber.netfirms.com) in the future. Here are the details about this home:

It's a 3 Bedroom, 1 and a half bath house. It's a two story with vinyl siding and a nice yard. The home is in a $100k neighborhood. It needs alot of cosmetic work inside (drywall work, paint, carpet, tile, etc). I figure we can rehab it for about $9000 or so. Our plans are to get a rehab loan thru my mortgage broker to purchase and rehab it. Once the work is complete, I will sell it using Owner Financing but with a twist. I will create a note with the homebuyer and then sell the note to get cashed out. It's a wonderful plan, one where the costs are comparable to or better than using a realtor to get a conventional buyer. In addition, seasoning issues with lenders will not be such a problem plus no FHA requirements must be met for a loan! Flipping a home could not be easier! So that is our plan for this house. Hopefully we can get financing rather quickly to start this project.

Okay, on to the next one that we are working on... About the owner with the really nice cape - the bottom line is that since the owners (husband and wife) both own the property, BOTH must sign a contract with me to sell. I am working with the wife and she is coming around to sell. She has talked with her attorney who is assisting to get the deal sealed. We will keep you posted.

About the elderly woman who owns a house that is in foreclosure - she caught up on the payments and plans to wait to sell. That's good for her! Anyone that can fend off foreclosure has done well. Maybe she will call later to sell?

Finally, our refi is still in progress on our home in Church Hill. The appraisal came back last week showing $45k! We were so happy (especially since we only paid $20k for the house)! Now it goes to underwriting and then we can schedule a closing date. The former owner (who I have a promissory note with) called yesterday wanting his money. We were suppose to settle, according to the note, yesterday. I had to tell him that my financing had not come through yet. He was not happy but settled with a later date. I personally am becoming frustrated with the whole process, however, I know what I need to do next time to streamline the process. The problem is that when we went on vacation, not alot was done to stay on top of things. The appraisal did not get ordered until last week (by me). It was done the day after ordering. Bottom line is - you HAVE to stay on things to get them done. Calling the mortgage broker EVERYDAY if neccessary to get the appraisal ordered may be required. Leaving messages of importance is needed as well - trust me. I realize and respect the fact that my broker is busy. Everyone is refinancing right now before the rates go back up (which is soon). However, I have a business to run and after all - it's only business. Treat it as such. I should have - by calling while on vacation. But we wanted to enjoy it - and we DEFINITELY did, but now I am playing catchup!

So check back again this week - I will have another update soon!

2003-06-29T01:39:00.000-05:00

Day 70:

Hey folks. I will update you with new stuff going on as soon as I can. For now, I thought I'd add a little interaction capability to my web log - a chatterbox. All the way down at the very bottom of this page you can post your comments on this web log. Feel free to write what you want. You can get there quickly by clicking on the link on the right marked "Got a Comment to make about my Blog? Post it here!". Take care!

This ends Day 70.

2003-06-25T11:31:00.000-05:00

Day 69:

Well, the city's finest called me and left a message the other day. My bandit signs once again have gotten me into trouble. I've been advised by the police to remove them immediately or be fined $100 per sign per day until removal. What a hefty cost! Regardless of this situation, let's go over what I have in the funnel right now:

House #1: In regards to the man who has the junker house and only owes $6500 in taxes on the house - he has yet to call back to say if he will agree to sell for the tax amounts owed. No problem. Let's work on something more profitable.

House #2: I have partnered with someone who has experience with short sales. He is working with the bank to get one done with the house where the lady is facing foreclosure (she has had big medical expenses that have driven her to bankruptcy and foreclosure). Nothing is solid yet. This house is in the same neighborhood (across the street from) as House #3 below.

House #3: A man who is divorced is selling his home. His wife is still on title. The home is in a 95k to 105k block. They want to sell as-is for 65k because it needs work and he needs to move out of state soon. I plan to flip it for 75k if I can get it under contract. He said he'd talk with the ex-wife to arrange a meeting tiem and date to get one signed (hopefully by this Saturday).

House #4: About the man who has the really nice cape in foreclosure: I spoke with my attorney. I am facing a situation where the wife will NOT sign a contract for purchase with me and her exhusband. She wants to see it go through foreclosure to spite him. However, she signed an agreement with him back in March 2003 stating she has given up all interests in the house to him. It further describes how they are dividing their materialistic property. Basically, my attorney and I are going to use it as a legal doc to gain clear title. If it will fly, I will place it under contract for what is owed (mid 30's). The house sits in a 75k block. I will hold this one as a rental property if I can have the chance to buy it.

House #5: How ironic? A police officer called me and said that his elder mother is facing foreclosure. She is three payments behind on her home. I finally contacted her and she is getting the payoff amount from the bank today. It is yet to be seen if this turns out to be a real deal or not. She may owe more than it's worth since she refi'd last year and took cash out.

So that's where we stand at the moment.

Regarding our refi on our rental property, it's still in the works. I am waiting for the title report to come back and an appraisal is coming up soon.

Let me take a moment to mention one other thing. I have been reading Steve Cook's courses. I strongly recommend anyone to read them. They are very insightful and informative. I have probably reinforced my education and cut my learning curve down a whole lot more by buying these courses from him. You can find more information by visiting his site at www.flippinghomes.com.

2003-06-19T00:34:00.000-05:00

Day 68:

Yesterday I met with the man with a junker. He owes $6500 in taxes and this thing needs MAJOR help. I am only going to offer what he owes in taxes even though the comps are around 81k. We will see if he goes for it.

The other gentleman with the house that I want to buy as a rental, did not quite tell me the whole story. I learned more today. Anyway, I saw it too yesterday and - oh my - I want it terribly. It's all brick in very good shape - NO dirt on the floor at all (it's immaculate). I talked him down from 40k to 37k (comps are around 65k to 75k). Problem is... it's facing foreclosure. I do not know what numbers are truly involved here just yet. His estranged wife claims there are four liens on the property too. Boy, I need a search!!!!!! I spoke with the attorney handling the foreclosure for the individual who sold it to my owner with owner financing. The attorney advised me to get a release of loan info form signed by my owner and he would gladly talk with me to avoid the foreclosure process (in his words, "My client would VERY MUCH so want to avoid the foreclosure costs").

Time to get to work! Man I love this stuff!

So I am going to the owner tomorrow to get the form signed, fax it to the lender's attorney and get my attorney to do a title search to determine any liens. Then I can put an offer in to the owner/occupant. If he accepts (which I think he will - he just wants out of the debt), then I will get my mortgage broker to get to work to find me more money and buy this house!

Once again, we will try to refi this one and get cash out. Once I get title, we will rent it out (as-is since it's in great condition) for about $600 a month. That should bring us a nice cash flow!

I am still working on a short sale with a partner for a house that is in the southside of our city. My partner is going to try to talk with the bank to work it for us. In addition, I met with a man who has a house in rough but workable shape. The comps are about 95k. He wants 66k but I offered 60k. It needs about 8k to 12k in repairs. I left without a contract signed - I don't want to be a motivated buyer again. I may reconsider but I want to wait him out first - he needs to move to Tennessee by August. I left my card should he decide to accept my offer.

NEXT!

2003-06-17T01:18:00.000-05:00

Day 67:

A few sellers called yesterday. I go to see two of them today (one at 10am, the other at 11am). One is a rehab candidate and the other is a light rehab that I may want to buy to add to our portfolio as a rental. It depends, since I need to see them. Anyway, I will post the results later today.

2003-06-15T10:45:00.000-05:00

Day 66:

I am feeling pretty good today. My story about the rental home that my wife and I purchased is featured on CREOnline now at http://www.creonline.com/success-stories/ss-238.html. I am pretty jazzed about it.

I am now reading Steve Cook's courses on Wholesaling and Rehabbing - very interesting stuff. Steve shows he is very serious about ethics and morals in the business. Integrity is of the utmost importance. That is good - real good. I was impressed! I've only begun the first course and already I highly recommend it to everyone. His down-to-earth points of views are just what I need to keep my feet planted firmly on the ground.

Regarding the deals that I am involved in right now: The refi is still in progress, we should know more next week. Regarding the short sale involving the lady with a bankruptcy, we need to get more info from her. A fellow associate of mine will call the attorney handling her case to see about doing a short sale with the house. He and I are going to partner up on the deal (since he has done these before). In regards to the man with the house across the street from the bankruptcy lady, the same associate I mentioned will help me get this deal done. It is my plan though to get the house under contract for a price that is lower than the 66k. My associate will help create the note with a buyer and sell the note to any one of the investors he knows. We have not discussed the percentages yet, but regardless we should get anywhere from 10k to 20k out of the deal - I hope. I think we can do this in 45 days too! What a nice payday that will be!

This ends Day 66.

2003-06-12T01:02:00.000-05:00

Day 65:

Well I am trying hard to continually update the blog. I forget to add stuff and that's not doing anyone any good.

Last night, Steve Cook of www.flippinghomes.com spoke with our investors group for 4 and 1/2 hours about wholesales and rehabs. It was absolutely incredible how successful he has been. I have a much better focus now as a result.

I got info from my mortgage broker today. He's found one lender who will hit 80% of the appraisal once it's done (LTV). That's good - only I hope the appraisal goes well. If it weren't illegal, I'd slide the guy a few bucks to hook me up! FOR THE RECORD - I was only kidding.

Anyway, that's good news. Next I am working on another avenue of REI. I just love this stuff. The creativity is in abundance! This avenue is called a short sale. I have posted the following on two discussion boards requesting help:

"I have a seller who is involved in a Ch 13 Bk. The order was discharged with an agreement to pay 9k in back owed payments. The order was divided in payments starting June 02. She failed to pay any of it. She's paid the mortgage payment regularly but not the back owed portion that was ordered in the 13. She owes 79k total. Chase has started proceedings (they are 1st - no 2nd). The house is in a 96k block. The roof has damage and thus the ceiling in the upper bedroom has damage. Repairs can run 5k to 10k. I want to do a short sale on it and resell it as a fixer below FMV with some built in equity for the buyer. Is this possible? Is there room here? And how do I accomplish it if I can obtain all cash from my money partner? Quit Claim anyone? I've no 2nd to go after."

Once I get an idea on how to handle this, I will post it. Hopefully it will be a real "deal" and not some skinny I am chasing.

Another deal I hope to work on Friday is more than likely a deal. A man owns a house, right across the street from the one I mentioned in the quotations above. Can ya believe it? He owes $51k on it, is asking $66k! It's in a $96k block! This one I would like to pursue. I am trying to work another avenue on this one if it can be done at all:

1) Get it under contract for as low as possible (closer to the 51k - below the asking).
2) Immediately offer it FSBO with Owner Financing.
3) Create a note for the sale.
4) Sell the note to a Note Buyer that I personally know.

Of course, a few things need to happen here:

a) the buyer must pass a credit check
b) the buyer must have a down payment (specified by the Note Buyer in order for this to work)
c) the closing must occur through my attorney with full title search

I will keep you abreast!

2003-06-04T13:36:00.000-05:00

Day 64 (Update):

I got the deed to the property and paid him the remaining $900 after he signed the Quit-Claim Deed before a Notary. Now we own a rental property free and clear that will bring in $335 a month. Of course I have a promissory note to pay the former owner back a total of $19,000. But before doing so, I will have a title search done. The note is contingent upon the title being clean. The note, not due until July 21, does not include any assests of mine (including the house) secured as collateral for the note. Furthermore, I have a plan for this property. I plan to hold on to it for investment purposes. Now that we own it, I plan to get an equity loan on the property - a refi. I am working with my mortage broker on that now - the paperwork is in today. An appraisal will be done and we will get as much cash out of it as we can. Then we will pay all of our bills off and pay off the promissory note with the original owner. How's that for creative real estate investing?

We are pleased with this transaction. We furthermore want to thank God for the blessing that we have received. We do not fear the unknown regarding the refi, for we know He will see us through. Hey... He has gotten us this far!

2003-06-04T09:24:00.000-05:00

Day 64:

If you look closely, the previous entry date is showing June 2003! I have been absent from this blog for a couple of reasons: (a) my full time job has been very trying in that I've been overloaded with work, (b) my investing in real estate has had dips and even dives straight down because I lost focus.

Regarding the two very first properties that I had gotten under contract, I lost them both. Funny thing is Steve Cook himself, of flippinghomes.com, advised me they would most likely not pan out. Both were wholesale deals. Each of them went past the closing date because I did not have an "all cash" buyer. I tried dealing with one buyer who needed financing and that did not pan out. Rule #1 when dealing with Wholesales - Deal only with ALL CASH Buyers!

Even after extensive back-and-forth talks and negotiations, the house deal, mentioned below, that could have been our first rehab project fell through. I never even got it under contract because, quite frankly, I insulted the seller. Of course I did not mean to intentionally but I aggressively made an offer that was so low you could see earthworms diggin through it! Okay - minor set back. Let's keep pluggin on!

So I tried my bat at lease purchasing after the seminar on the topic. I was jazzed just calling folks, trying to work deals and such. Then it hit me after a month - "this is not working out for me." I got nothing under contract for a lease purchase. Then I told the wife that we need people calling us, not us calling the people. She agreed. This was two weeks ago. So the next morning, at about 3am, I took fifteen of my "We Buy Houses" signs and posted them at various locations around the city. It literally took me until 6am to finish. Mind you, most of the signs that I had put out back in January had been torn down. That Friday morning, I got a call from a man in trouble.

He said, "Are you the guy who buys houses?". I said, "Yes I am, what can I help you with?" He said, "Man I am in a bind. They got my back against the wall."

He went on to tell me about a house that he owns. It's a 2 bedroom / 1 bath house that is a rental in the east end of Richmond. Normally, I'd stay away from these things.... but, I listened to him. He said that his grandfather owned it and gift deeded it to him before he died. Since then, he has rented it out to a couple. They've paid him regularly on time. He went on to say that the kitchen and bath had been remodeled. As we spoke, I pulled the tax record online for the property. The city assessed it this year for $33,600. So I asked him, "How much?" He said, "$25,000". I advised him that I needed to "do my homework" and that I'd call him back.

So I called a fellow member of RCIA, the investors group that we have here in Richmond. She is well educated on rentals in the city. She advised me that the house might appraise for $40k to $50k and said that I should try to buy it with the hopes of getting cash at close. She said it really depends on the area and condition of the house. She encouraged me to go look at it.

My wife and I drove over there the next day. I was almost picture-perfect, kind of like a "Leave it to Beaver" style street. Kids were out playing on the sidewalk; there was a nice city park down the street; parents were out front of their homes talking - It was nice. The house looked like it was in pretty good condition, less normal wear and tear. So I took a picture of it. Not knowing where I would go on this deal, I thought it might be well worth pursuing after all.

The next day I called the young lady from our group. I had sent her the picture of the house via email. She told me that I needed to get the house under contract as soon as possible - that I could not pass up this deal, and if I did, she was going to take it! I thought to myself, "Gosh there must be something to this house!" And I suppose there is with all that potential equity involved. But I needed to dig deeper first, so I pulled the comps. The comps were selling between $44k and $49k. After learning this, I decided to get it under contract.

I called the owner of the house and only got a fast busy signal. This concerned me. Having experience with cell phones, I knew that meant bad news. His cell account must have been suspended for lack of payment. Now I have to track him down. I looked at the tax records and noticed that the assessment was sent to an address on Northside. The wife and I went there to find him. The address was an apartment building and the resident told me that she had just moved in last week. The man I was looking for had moved out.

Arghh!! This is not good! Okay... think... think... now what?! His tenants! Yes!

I back tracked the subject house address and found a phone number for the tenants that he had there. I called and explained that it was of the utmost importance that the owner call me back. My message was left that Saturday.

A couple of days went by, and my wife and I prayed that this man would call us. And he did. We discussed his situation and negotiated for a final price of $24 thousand dollars. We later met at a gas station in town and I gave him $10 earnest money deposit and he signed a contract to sell me the house for $24k to close in 45 days. We both left feeling good.

Then, a couple of days later, he calls me back. He says, "Troy this contract is not going to do me any good." I asked, "Why? What can I help you with?" He said, "My wife and I are now out on the street. We got kicked out of our apartment. I need a roof over our heads. I need a thousand from you on the house." I then advised him that I could not pull that out of thin air at the moment, to give me a couple of days or so. He agreed.

Two days later, he calls me again. I advised him that I could not get the money to him because I had my cash tied up in other deals at the moment. He then dropped the bomb on me and said, "I don't care about that house now. If I have to, I will pull out of this contract and sell the house to the first person I can for $10,000 cash." He further said, "I am not living like this in my car no longer." Talk about a MOTIVATED seller. It doesn't get any better than this. Knowing I might lose out on this deal altogether, I said to him, "Give me an hour to find the money."

I called a close friend and advised her of my dilemma. She told me that she could get the cash to me that afternoon. I called him back and said that I had borrowed the money. I then told him that I could get the cash to him that afternoon, however, I wanted to renegotiate the price of the house. I got him to drop down from $24k to $20k. We agreed to meet later in the afternoon.

After that conversation, I then called my attorney and discussed the matter with him. He advised me to secure my position in the deal fully. He told me to get him to sign a Quit-Claim Deed for the $1000 cash and a promissory note for the remaining amount of $19k. I called the owner back and told him what my attorney advised. He said, "Look, I don't care. That's fine with me. Let's get this done."

By now it was 5pm, and I could not find a Notary Public to seal the Quit-Claim. I called the owner and told him that I knew he could not get the deed nor could I get it notarized that day. He told me, "I need cash today." I said, "Alright, I'll give you some cash for tonight so you both can have a roof over your heads and you will sign a receipt for it. Then you get the remaining cash tomorrow once I get the deed." He says, "Okay, you give me $500 today and $500 tomorrow when I give you the deed." I replied, "No sir, I give you $100 tonight and $900 tomorrow once I get the deed." He agrees. We meet at the same gas station mentioned earlier. I gave him $100 cash and he signed a receipt. We agreed to meet the next day to complete the transaction after he got the deed from the courthouse.

As of this writing, today is the day we meet. He just called me and said that he had the deed. Now I go to meet the man to get this done. I will further update shortly. Take care!

2003-04-02T22:02:00.000-05:00

Day 63:

Well, I swear you'd think I'd forgotten and abandoned this blog - I almost did. Here is the scoop on the deals that I have in the works. First, I have a strong buyer for one of my properties. I will probably see $2000 from it. The contract closing date is coming up on April 12th and I told the buyer I'd discount it if he could move quickly - which he has. I will need an extension on the contract since he won't be able to close until the 26th. I've talked to the owners and they agreed to it.

On my next property, I hope to make $5000 from it. I've got plenty of time on this one. I have a buyer who wants it but has yet to produce a definite answer. That one is to close by May 27th.

The above mentioned deals can be seen on the web on rehabber.netfirms.com.

The next property that we are working on (hopefully) will be our first rehab deal. There's plenty of room in it IF the owner will accept our offer. There is some fire damage but it's not extensive. We hope to see a good profit from this one. It's in a clean neighborhood with working class folks and should produce a decent resale. We have a money partner lined up for the deal. We have agreed on a 60/40 split on the profits - which isn't bad at all.

Our real estate investors club met this past weekend. A lease purchase expert named Michael Carbonare (from Florida) spoke at our meeting. As a result, my wife now wants to handle lease purchase deals for our company. We start this weekend. She is pretty psyched to handle this side of the business (as I am). Now we are truly a team.

You can visit our club's site at www.rciaonline.com and our company website at www.capital-renovations.com.

This ends Day 63.

2003-03-08T00:29:00.000-05:00

Day 62:

It's almost been a month since I posted anything on here. I have been soooo busy. Here's why: The first house we got under contract has been put up for sale. We have it for sale for $27k. Several buyers have called but no bite yet. I am running another ad soon to try to sell quickly. Supposedly one lady from Maryland is coming this weekend to see it and maybe buy it.

But the biggest thing that has come up is a possible rehab deal. Since I last posted here, I found a rather large duplex with a somewhat absentee owner. I tracked down the owner and mailed back and forth offers and finally got it under contract. Then I went and got a money partner. We discussed the numbers and joint venture agreement and are awaiting an appraisal for the property. I've scheduled subcontractors to come next Tuesday to bid on trade work. I have a primary contractor (my brother in-law) who will head the project. If we buy the property outright using my contract, we will do the rehab and resell it. Progress can be viewed with photos on this page: http://rehabber.netfirms.com. Feel free to check it out. If we do not go through with the rehab, I will assign the contract and seek another property.

This ends Day 62.

2003-02-13T04:28:00.000-05:00

Day 61:

A MILESTONE IS MET!

We got our first house under contract today! It's a 1600 square foot, 3 bedroom, 1 bath house built in 1900. It's definitely a rehab candidate! Pictures of it can be found at our company web site located at http://rossinvestments.home.attbi.com - click on "Houses For Sale" at the top.

The negotiation process was interesting but I truly think we did well. The owners were asking $30k for the house. I offered $10k initially. They called back saying they got a different offer of $20k for the property. I should have asked to see the written offer from the third party, but I didn't (lesson one). I went ahead and told the owners I would counter offer at $22k but no more. I made it clear I would not go any higher. They accepted and we signed the contract today. I want to flip it for $27k. I think $5k profit out of this is fair.

There is one issue with back taxes. They owe a little over $1,100 in back taxes. I think we can get a check cut during closing to go to the city for the taxes. I'm not sure yet. This needs to be cleared up. What I'd like to do is have it taken out of the balance of what is owed to the owners.

I wrote the contract up myself (using a major portion of a solid buyers contract and adding contengencies). The contract is for 60 days. I put $10 down as earnest money. I need to flip this thing fast on assignment (it was signed 'and/or assigns'). I still do not know how this part works - the assignment part. I'll find out soon after I talk with some other investors.

On other news - PEI refunded the rest of our money. We are pleased with our progress thus far. We will keep you abreast.

This ends Day 61.

2003-02-09T23:52:00.000-05:00

Day 60:

I am getting ready to leave to go look at another junker this morning plus meet with my money partner to look at two houses that I plan to put under contract - he wants to see which (if any) he'd like have us rehab.

But I wanted to address the Carleton Sheets post that I made on CRE from a few weeks ago or so. Allow me to explain what happened... About three weeks ago, a man called me and said he was with Carleton Sheets and the Professional Education Institute (PEI). He said that Mr. Sheets has some new and exciting products and bootcamps coming up and, since I was a "valued customer", they wanted to send me free information about them. I of course agreed to getting this information and he "verified" my home address and such. Well about a week later we got a letter in the mail from PEI. It thanked us for our order but they had a problem charging our credit card (actually a supercheck visa card). The 'bill' was for $308.62. I was floored so I called PEI. They said the charge did go through but they would refund the money if we refused the product once UPS delivered it. So once UPS arrived and I refused the package, I called PEI and they put in a charge back of $308.62. I asked "Victoria", the customer service rep, what PEI would do to reimburse me if I got charged insufficient fund fees for our bills going through before the charge back was posted. She advised me that they would cover the insufficient fund fees if that were to occur.

Two days later the charge back was not posted, but $175.11 in NSF fees by the bank were there! I was so mad! Our bills tried to go thru but, because the money was gone, we got a $25 fee for each returned. To top it all off - we never realized it was on my wife's account until a day later!

Then the charge back from PEI comes in - some relief, until... I tried to get our NSF money from PEI. They demanded that I fax all the info - bank statements of overdraft fees and a letter from our bank saying they would NOT recind the fees (duh). So we faxed it to them. They called back and said it was not legible so we resent it with a better printout from the bank. Another week goes by and we hear nothing from PEI. So I called. They give me the run-around saying that they can not connect me to other service representatives or supervisors or their phone extensions. So hardball was required.

I called the Burr Ridge, Ill. Police Department (where PEI is located) and filed a complaint regarding unlawful use of my wife's credit card by PEI. The detective and I talked a while (being that I too am a law enforcement officer). He told me that Burr Ridge is a small town of about 11,000 people - none of which actually work for PEI (go figure). He also stated that here in the last month or so many complaints have been filed with them regarding PEI and their "activities". Anyway, the detective handling the case kindly called PEI and then visited them to convince them that they needed to correct the situation or else I'd file charges criminally. "Jeanette" from Human Resources Department of PEI called me directly yesterday and assured me that the credit for the insufficient fund fees were being charged back to our credit card. She said if it does not show up in our bank by Monday afternoon to call her directly so they could clear the situation up. I thanked her for her time then suggested they find out who the representative was that did "the deed" originally. She said they were in the process of "handling that situation". I then advised her to remove my information and my wife's information from their database - that I wanted nothing more to do with PEI. I clearly stated that I wanted all credit card information to be destroyed. She stated it would be done.

I will advise if they came through with their promise of the charge back to our bank account. I will keep certain direct line phone numbers on file in case others, like myself, have a problem with PEI as well. If necessary, you can email me and I can provide the phone numbers.

This ends Day 60.

2003-02-08T14:00:00.000-05:00

Day 59:

This morning at 10am I met with a potential money partner. We briefly got to know one another over coffee and discussed each of our own outlooks and goals in real estate investing. We discussed partnering up with one another on a few deals. Nothing has been solidified just yet, however, he did agree to a 60/40 split in profits each deal. We plan to look at each property tomorrow that was discussed in Day 58. He is interested in each deal.

At least things are starting to come around. I feel much more confident having found a money partner. Both he and I have agreed that each can still do other things in dealing with real estate, such that I can, on my own, wholesale houses to get some cash coming in. He can still invest in other areas and types of deals. I will keep you posted on the progress.

This ends Day 59.

2003-02-08T02:59:00.000-05:00

Day 58:

I think I lost it in Day 57. However, after talking with my wife and after receiving emails of moral support, I've decided to push forward. I want to thank those of you who did send me a message to continue on. Those messages are much appreciated.

A bit of hope managed to creep into our lives. I made contact with a potential money partner. Yes, I thought I had made contact with one before (the man who does rehabs mentioned a few entries ago), but he seemed like he only wanted to pay me a finder's fee of some sort and that's all.

This new potential money partner doesn't want to be a part of the rehab, meaning he does not want to do any of the actual work. He is interested in pursuing other real estate investments while someone else does the dirty work. Ah, sounds like the type of person I want to work with. He is willing to front the money to make the initial purchase of the property and cover the rehab costs. I am meeting with him tomorrow morning to discuss a potential business relationship. Hopefully, we can discuss the percentage split of profits as well. I am hoping to work a 60/40 split with him which I think is very reasonable.

I received a call from one young lady today who I've been going back and forth over the price of her house, actually her deceased family's house. They were asking $30k. I offered $10k. They then had a different offer of $20k. I countered with $22k and they accepted. They were out of town today so I could not get a contract signed. They will be back on Monday so hopefully I can get it signed then. This property has a potential of producing a $95k profit once finished and resold.

On a different property - this one being the rental I mentioned in Day 57 - I learned alot more about it. The city zoning office advised me that legally the building is zoned as a duplex. The assessor's office has it listed as a triplex. In reality, the last use for the building was a fourplex. It would cost me $1500 to file for a special use permit that may not be approved by the city. As a matter of fact, the zoning officer advised me not to bother because the city wants the area that this building is located in to stay duplex typed or revert totally back to single family. I also learned that the house is not listed by the realtor that showed me the property. As a matter of fact, the contract with that realtor expired - it's no longer on the MLS. So I called the owner directly and said, "I know it's not listed - why not save yourself 6% and let's work out something between ourselves." He agreed. He told me he was going to ask $35k for the property and told me to make an offer. This I still need to think about but I can't take long. Honestly, using Legrand's formula, I do not want to pay more than $30k for it. This property, once complete, would produce $90k profit once we resold it.

I've put together some info for this potential money partner to look over regarding these two deals. I've done so with the hopes that he will advise me to jump on one of these. Heck, I'd like to work both but if I can only rehab one, I'll just get the other under contract and flip it to a rehab investor for $5k. I've NEVER made $5k in a month - it would be nice!

This ends Day 58.

2003-02-06T02:07:00.000-05:00

Day 57:

Things are a bit busy. I have not posted to my blog in quite a while simply because I have been so busy. I am trying hard to locate deals in the area. I've looked at several houses and haven't put nay one contract on one. I got into looking at one triplex this week which may be a good deal - I have NO idea really. I am quite confused when it comes to determining FMV for a rental property. The onwer is sick - wants to let it go - and it needs a MAJOR overhaul. Aside from that, the contractor that came out told me it would need about 100k to "do it right". Plus I NEED MONEY! Where are all those people who want to invest as money partners? My gosh - I've heard sooooo much about them but can't locate ONE to talk to!

To TOP IT ALL OFF - the city police called me today. They said I was in violation of Va Code 33.1-373. It states:

§ 33.1-373. Advertising on rocks, poles, etc., within limits of highway; civil penalty.

Any person who in any manner (i) paints, prints, places, puts or affixes any advertisement upon or to any rock, stone, tree, fence, stump, pole, mile-board, milestone, danger-sign, guide-sign, guidepost, highway sign, historical marker, building or other object lawfully within the limits of any highway or (ii) erects, paints, prints, places, puts, or affixes any advertisement within the limits of any highway shall be assessed a civil penalty of $100. Each occurrence shall be subject to a separate penalty. All civil penalties collected under this section shall be paid into the Highway Maintenance and Operating Fund. Advertisements placed within the limits of the highway are hereby declared a public and private nuisance and may be forthwith removed, obliterated, or abated by the Commonwealth Transportation Commissioner or his representatives without notice. The Commonwealth Transportation Commissioner may collect the cost of such removal, obliteration, or abatement from the person erecting, painting, printing, placing, putting, affixing or using such advertisement. When no one is observed erecting, painting, printing, placing, putting, or affixing such sign or advertisement, the person, firm or corporation being advertised shall be presumed to have placed the sign or advertisement and shall be punished accordingly. Such presumption, however, shall be rebuttable by competent evidence. In addition, the Commissioner or his representative may seek to enjoin any recurring violator of this section.

The provisions of this section shall not apply to signs or other outdoor advertising regulated under Chapter 7 (§ 33.1-351 et seq.) of this title.

(Code 1950, § 33-319; 1970, c. 322; 1993, c. 538; 1994, c. 696.)

SO NOW I HAVE TO TAKE DOWN ALL MY 'WE BUY HOUSES' SIGNS! This just absolutely SUCKS. I am so frustrated right now I can't see straight. Along with this crap, I am dealing with Carleton Sheets and his company PEI because some dumb a$$ there illegally charged product on my wife's credit card. And they don't want to reimburse us for it!

AS if I don't have enough on me to make me want to shove all this REI stuff out the window!

Anyone got a pillow I can cry in for a while? ; )

This ends Day 57.

2003-01-24T08:46:00.000-05:00

Day 56:

I looked at this diary of mine and thought for a second - gosh this thing looks like it's lost a couple of days of entries here recently. Then I realized that the past few days have been so busy, I had not made any entries at all. I suppose that is good - because that means that I am doing, not just saying I'll do.

Two days ago I met with one man who has a house available on assignment. It's in not too bad condition but I honestly feel the assignment price is too high. I have a contractor coming in on Sunday to meet me at the house for an estimate. I also need to get a CMA from my realtor as well. Once I have these things, I'll take it to my money partner. I hope the numbers work because the house is in an up-and-coming neighborhood. The homes nearby are in great shape - it's not in a war zone.

Yesterday my wife and I met with an owner who called on one of our WBH signs. The home they have was inherited by them from their father. It's been vacant for 5 years (and looks it). It needs alot of work and they simply dont want to fool with it any longer. They are asking $30k for it but I believe once negotiations start I can get it much lower. We could not get in the house yesterday because the city boarded it up with plywood and wood screws (millions of them like fort knox). So on Sunday, we are meeting again to go inside. I learned a lesson to bring not only a hammer, but my cordless drill with a phillips bit attached as well.

Last night another man called on our signs saying his mom wants to sell her parents old house. It too needs alot of work he said. She wants to sell it because she does not want it - it holds too many bad memories, according to her son who I was speaking with on the phone. I have not gone to look at it simply because he said he did not know what she wanted for the house yet. I plan to call him back this evening for more information.

One way or another, I am determined to put a contract on a house soon and get my money partner to fund the rehab. I don't want to jump on a house just to do it - the numbers have got to work first. But I have a strong feeling that my first deal is coming soon.

Another thing that is rolling is our creative investors association. We now have 38 members! Our first meeting is tomorrow morning and should be exciting. Myself and the other co-founder of the club met yesterday to hammer out the remaining plans for the meeting. What amazes me is the fact that we have not only a bunch of 'newbies' who are members but we have 'veterans' on board as well. Some have 20+ years of experience! What a vast wealth of knowledge and experience we have to access. It should truly be interesting.

With all of this being said, I have a meeting in less than an hour. I will post an update soon - hopefully with a goal finally met!

This ends Day 56.

2003-01-20T02:05:00.000-05:00

Day 55:

I met with the potential money partner on Day 54. I was impressed at the current project he is working on. We met at this location to talk. The house he is working on now is a little over 7000 square feet. After he sells it for about 1.6 million he will make oh, about $300k off of it. I was just floored.

He is cautious to take small steps with me it seems. He is not going to touch any of his 1.5 million credit line to do deals with me. He basically advised me to look for deals, bring them to him, and we would discuss the numbers - which is fair. I told him that I do not want to just "assign" deals on finders-fees to him. I want part of the profit. We left it as mutual potential partners. The next step is mine.

Now I am trying desperately to find a deal. I've looked at four houses and talked with three owners. No one wants to deal - they are asking too much. Example - a shell for $50k - no way. Maybe $23k but not $50k. It isn't going to happen. What this reverts to is finding a TRULY motivated seller. With that being said, an investor friend from Fredricksburg is coming down to meet me on Tuesday. She is kinda-sorta mentoring me. We are going to track down an owner or two, see if they will sell, and place the house(s) under contract.

Calls are coming in. But it's a bunch of tire-kickers, unmotivated sellers, or wholesalers who are asking too much. I am hoping that this visiting investor is going to light a fire under my butt and get me going in the right direction. Most of all, I hope Tuesday is successful - one way or another.

This ends Day 55.

2003-01-14T09:54:00.000-05:00

Day 54:

I'd like to address an issue that may be troublesome to a few folks. As you read this page, are you able to see a set on web links to the right, just below the word 'archives'? If not, PLEASE send me an email message. I have a frequent reader who can not see them and I need to find out if the problem is with the blogger code or my updates.

Aside from that, we are STILL putting up signs. In the process, we discovered that some mean gremlin took 3 down in one area. Oh well, they can be replaced. Today I am meeting with someone who wants to partner up with me. He has his own home restoration business. He said he can front the money to buy the houses and pay for the rehabs. And then we can split the profits. I hope we can come up with a percentage today. He normally does high end houses (500k+) and this will probably be his first low-end with me. In addition, I never got a chance to see the houses that the wholesaler has for sale. So he and I are meeting later on this afternoon. I will post further info later tonight.

This ends Day 54.

2003-01-11T03:00:00.000-05:00

Day 53:

We got 19 WBH signs up in three neighborhoods the day before yesterday. My startup partner and I set out at about 11am and hit neighborhood number one. It is a small neighborhood, only a 4 block by 4 block area with some rehabs already complete. Thus the comps in the area are UP. That's a good thing. It basically has two major entrances/exits so we only put up two signs, one at each end. Then we went to the next neighborhood. This one is much larger and older. We put up seven signs, again along major arteries around the neighborhood. Lastly we went to a much larger neighborhood and put up ten signs. Now everything went well until this point. We stopped along a major road that splits the neighborhood in half. I had tried not to post any signs in front of or near someone's home. But in a hurry I began to post one sign in front of someone's house. They came out and yelled, "Don't you put that sign on that pole!". I could not hear what he said and asked him to repeat it, which he did in a more angered tone and then added, "Go put up the street somewhere!". Needless to say, I had to rip it down. I now know it takes a hammer to do so. You can't rip it off by hand. The plastic capped roofing nails I used held well. So we moved it - further up the street after a good laugh. That old man was pissed. Alas, we had to go home to get ready to go to our normal jobs.

Well, no calls came in the next day - like I expected any. But on the day after, a guy called saying he wanted me to call him - he saw the bandit sign. So I called. Like I figured - a tire kicker. He asked what kind of houses I bought - of course I said any type. He told me he had a duplex with a laundry mat business attached for sale for 125k. I told him I was not interested in retail prices. Thus the conversation ended.

We have not been able to put up anymore signs the past two days but on Monday we plan to finish posting the other 81 throughout the city. In case you did not know, our city is split in half by the river. We are posting 54 on the northside and 46 on the southside. Therefore the city will be blanketed. We are careful not to post sign after sign on pole after pole. That makes no sense and will piss alot of people off. I just want it subtle enough to appear and catch their eye after driving by it several times in a week to go home or to work.

The issue of illegal posting of signs was discussed. I have learned that the city really does not like it but can't and won't do anything about it. They don't have the resources or the time - both the zoning officer and the code enforcement officer told me that. Don't ask me how I got them to tell me themselves this information but they did. I implemented a little imagination as a "concerned citizen of the city" and inquired about the sign posting activity. Figure it out for yourself. They did advise me that if I wanted to rip any such signs down I could - which would "assist" the city very much.

Meanwhile, today, I got a call from a fellow member of our creative real estate association. Before I get into this, I need to say that creating this club is turning out to be a great asset! Go to our web site (RCIA) and see how much we have GROWN. Anyway, this fellow member said he had heard I wanted to do some rehabs. He has some to assign. The three are being researched now. I plan to go look at one with two contractors Monday morning. If they look like a deal I will call my money partner to see if they want to go in on it. So we are still looking. But hey, the possibilities are coming to me! I feel like the work is a little easier now.

This ends Day 53.

2003-01-05T21:23:00.000-05:00

Day 52:

I finally was able to go buy the materials to make my bandit signs. And I printed them myself today. Allow me to say one thing - DO NOT ATTEMPT IT. First, you do not save any large amount of money by doing it yourself - maybe $25. Secondly, the amount of work I put towards making the sign template and all the hassles (31 degree weather, some snow, bird droppings on finished signs, etc) was not worth saving the money. GO GET THEM PRE-PRINTED. That being said, the signs came out pretty well. You will find a link on the right that shows you what I did to make them.

My silent partner is coming over tomorrow to get me and help me put up the signs. She will be driving me around in town to certain locations where I will post 100 signs. I think if I post them in key areas then we will surely get some calls.

On to the next topic... RCIA is growing pretty quickly. We've established out meeting date, place, and time. I think that our newly made association will benefit each of us greatly since we will be networking with one another.

This ends Day 52.

2003-01-02T01:52:00.000-05:00

Day 51:

Happy New Year! Well the old year did not end like I wanted (with at least a deal under my belt). But the new year will be more memorable once the first is done. The gentleman who had two junkers for sale sold them just before the 31st. So those properties are gone. I am looking at three others and I hope I can grab one before they are all gone. I am researching the values tonight.

Myself and another investor here in Richmond have started our own investors club. There is a foreclosure club here and an apartment owners club here but no creative investors club so we started one. So far we have about 12 people who have joined. The web address for our club is:

http://wave.prohosting.com/rcia

Feel free to check it out.

This ends Day 51.

2002-12-24T12:29:00.000-05:00

Day 50:

Merry Christmas and Happy Holidays!

Carleton Sheets tells you in his course that you can expect to BUY your first NO MONEY DOWN property within 50 days. Well it has not happenned for us just yet. However, we DO have a possible deal - actually two - in the works...

Yesterday I received a call from a man who is a don't wanter. Basically he owns two junkers in a neighborhood that is currently being rehabbed by several investors. He has two 4/2s selling each for around $20k. I got the specifics on them both. He owes about $20 on each (liens). I spoke with my source for MLS recent sales in that area and found out the houses are selling in the 90k to 100k range. Both houses will probably need conservatively $30k - $35k to rehab. So let's break this down.

The 60/65 Rule

After Repair Value is $90k (let's be conservative)
60% of 90k is $54k | 65% of 90k is 58.5k
54k minus Repairs (30k) is 24k | 58.5k minus Repairs (30k) is 28.5k
24k minus My Assignment (5k) is 19k | 28.5k minus My Assignment is 23.5k

I can get a DEAL if they sell for 19k to 23.5k on each house.

I told the owner I'd call after Christmas. For some ungodly reason he had listed with an agent to sell these 'basket cases'. I already have a potential rehab investor that will buy if the numbers are right.

I will post how this goes. You folks have a GREAT holiday!

Merry Christmas!

2002-12-20T11:28:00.000-05:00

Day 49:

Good ol Jim in Florida comes through once again... What can I say? For those who are just starting out investing in real estate need to watch their money, especially if you have not MADE any yet.

I was just about to call the guy in Houston to order my bandit signs when I decided to check my email and any new posts on our discussion forum. Jim from REmentors made a post in the discussion forum. It reads:

Name: Jim FL
Subject: Make them, here is a link
Email: Jim@REmentors.com
Website: www.REmentors.com

Troy,

I just happened on here while suffering some insomnia this morning. I have been dealing with a large number of vacancies, a few pending evictions and slow seller calls, so cash is somewhat tight these days. When that happens on occassion, I ALWAYS look for ways to cut costs.

I figured I'd try to solve two problems with one effort, and make my own signs. I found a website online where I could purchase blank corrugated plastic sheet sign blanks, in yellow or white, for well under $1.00/blank.

I then invested in three sheets of poster board at the dollar store, along with some spray paint, in red, all for less than $10. By the way, I bought 100 blanks, for less than $80 shipping included. I made a template out of the poster board with my message by cutting out stencils.

I laid the template over the corrugated plastic and spray the paint on to create my signs. These did not turn out as well as I liked, and the cheap paint began to run out. I then had on hand some of those LARGE BLACK permanent markers on hand, and created the rest of my signs with those, drawing them by hand.

They look fine, especially since the text/font used on most of the "Homevestors" billboards around here is designed to look hand written. They help us little guys get recognized as a real solution.

Anyway, not to go off on a rant. But, after this weekend, when I combine my new 100 home made signs with the remainder of my professionally printed signs out, we will have well over 150 signs out. The calls are already coming in from the trickling of signs we have sprinkled out from older sign stock.

If you want to get these blanks for a good price, check here:
http://www.signsupplystore.com/signblanks.asp

They got me my sign blanks in 3 days, super service and good product. Be sure to get YELLOW instead of white, it shows better all the time, including night time.

You may even want to ask for them to cut the sign blanks so the sign flutes are vertical. This will make it easier to place the signs if you are going to use those metal "H" stands. And if you are not, get them horizontal. This helps signs withstand winter winds. Then use wooden contractor stakes, screwing the signs to them with drywall screws with washers on them, or nail them with roofing nails with the large round plastic washers. (I prefer the nails, quicker.) Nail the signs to the stakes ahead of time, and then pound the stakes in fast with a small slegde hammer or attach them to phone poles with those same nails, not ling the nails up inline on center.
Stagger them, so the sign lasts longer in the wind, and is harder to remove.

Good luck with your sign campaign, and wish me luck with mine. I'm shooting for two deals before Christmas, and ten deals by the end of January. Remember, the second week of January is the prime time to market for sellers. Begin to get your message out there at the beginning of the month, and then SLAM the area the second and third week. This is when the holiday credit card bills all come due, and people will start to feel pain financially. Pick these houses up, and be ready for PRIME lease option season for buyers. TAX REFUNDS make GREAT option money payments, and everyone gets something back if you have houses in the median home price range.

Just a little extra tip for you.

Have a Happy Holidays!
Jim FL
________________________________________________________________

Now after I read Jim's post I went to the SSK Sign Supply web site. I placed an order for two boxes of 50 Yellow Corrugated Sign Blanks. The price was $65.00 for 100 blanks. The web site quoted me $14.51 for shipping UPS Ground. So the total price was $79.51 charged to my card. I requested that the signs be cut so the flutes run horizontally. Right after I placed the order online, SSK called my home office. The man told me that they only have signs where the flutes run vertically. I told him to go ahead with the order. He then told me that the UPS shipping charges were 'a little off'. So I asked him what the correct charge would be and he told me $21.92. So their shopping cart software they have online is incorrectly charging folks too low. If you order online, expect a call from them. Anyway, I ordered the product regardless from SSK. The correct total was $86.92 (including S&H). The man told me I'd have the signs at my door by Christmas Eve. Not bad turn around time!

The Houston sign company, XYZ, would have printed them with a generic message for me but it would cost well over $175 for 100 of them. Now I can make my signs myself - my wife can join me in this effort (are you reading this honey?) - and we can get some calls in here! I plan to create some sort of way to "print" my message on the signs. I have not thought of how to do that yet (be it spray paint and stencils or grafitti markers). But I have some time to be creative and come up with a way. After all, isn't that what this business is all about? Being creative?

This ends Day 49.

2002-12-19T21:35:00.000-05:00

Day 48:

Well my regular J-O-B paid me yesterday so I am ordering 100 bandit signs from XYZ Signs in Houston, Texas sometime tomorrow. Also, the flyers go to the presses tomorrow at the local print shop.

Today I had the opportunity to interview a man who lives in Dayton, Ohio. He is a wholesale investor there. We've spoken by phone and emailed one another over the past month or so and he has given me so much insight into the game. I found that I had several more questions to ask him about wholesale deals recently. So I decided to call him. I wanted to be respectful of his time, of course, so I figured if I recorded the conversation it would reduce the amount of time on the phone with him. In turn, I obtained permission from him to put the audio on the web to share with you.

This conversation is very candid and informal. It is about 32 minutes long. We talk specifically about the game that he is in which is strictly wholesales. This realm of investing will definitely be my initial target at first so I wanted much detail from him. The audio file itself is an MP3 file so you will need Windows Media Player or some other player program to listen. The file is also 7.6 megabytes in size so download time may be rather long for dialup users. Broadband users should have little download time. In consideration for dialup users, I made the file as small as possible using a mono channel and low bitrate and yet the sound is still good.

You may listen to this conversation via the link in the right column or by clicking below:
http://new2rei.home.comcast.net/interview.mp3
It may be more feasible for you to right-click on the link and Save the file onto your computer and then play the file.

Enjoy!

This ends Day 48.

2002-12-16T12:40:00.000-05:00

Day 47:

The owner was located! This is how it was done: In the city where I live, they have a GIS website (Geographic Information System). This site provides a large amount of information regarding real estate within the city. I was able to find out the owner's name for the target property. The problem was the owner was listed as living AT the target property. Well, I knew that could not be true since it was condemned and abandoned! So I got the site to make a list of owner's names within the entire neighborhood where the target property was located. It listed 706 homes. What I was looking for was the owner's name within the list to repeat. And I found it at an address three blocks away from the target property! The secondary property listed the same owner as living there. So the next day I visited the neighborhood and found the house. It appeared empty but livable - as a matter of fact there was a Realtor's FOR RENT sign out front. It turns out that the owner of the target property was the listing agent on the sign! What luck!

I have not called the man yet. But I might. I've researched this neighborhood for about a week. I obtained enough owner information about several junkers throughout to make a list of about 40 targets. Now it's time to put the postcards to work. I've sent them all out to the each of the owners as of Saturday - including the listing agent. It will be interesting if someone calls. With the holidays right on top of us, I realistically do not expect to hear from anyone until January.

This ends Day 47.

2002-12-13T10:49:00.000-05:00

Day 46:

Even though it's Friday the 13th, I am on a QUEST. A quest to find the owner of this abandoned house l've been rambling about for the past few days. I posted the question about how I can find these people on CRE and many people responded. You can view the posts at http://www.creonline.com/wwwboard/messages/40479.html if you'd like.

Check out our Newbie's File Portfolio page at http://rossrei.50megs.com as we have updated it today with a new twist on flyer ads. The new file is number 38. I came up with this idea for a flyer recently out of concern. I was thinking to myself about what happens to my flyers once I put them on someone's door. It's originally a small 4.5" by 4.5" flyer advertisement. Surely, people will see it but most will simply throw them away - and I don't want that to happen. I want them to "linger around" as much as possible. So I had to think about how I could get people to hold onto them for more than 10 seconds. They would need a reason to keep them. I've come up with quite a few marketing ideas for new flyers but stuck with one particular one for now. I call it the "Safety Tips for the Holidays" flyer. Basically it lists at the top of the flyer a few home and shopping tips related to the holidays at hand. I added a few graphics along with the worded tips to dress it up. Then, at the end of the list of tips, the flyer states, "These Holiday Safety Tips have been sponsored by" and then I placed my 'We Buy Houses' ad below it. The flyer even suggests, at the top, to post the tips on their fridge. Maybe they will hold onto the flyer - at least through the holidays. It's just an idea, one that I don't know if it will work or not, but worth a try. They are bigger than the original, but they may be worth the added cost to print.

This ends Day 46.

2002-12-11T10:49:00.000-05:00

Day 45:

MAJOR CATASTROPHE AVOIDED!

"Jim_Fl" probably just saved my hind parts from causing a serious catastrophe as a newbie. You see, us 'newbies', still wet-behind-the-ears, can get into trouble and not even see the big gigantic neon WARNING signs flashing in front of us. Rookies! Well, I guess we will learn!

Allow me to put a plug in here for Jim - hell I owe him something for his help! Jim is an experienced investor. He mentors folks and assists them with handling REI deals. His website is located at www.REmentors.com so feel free to visit and learn more about how he can help you.

Jim, posted to our Discussion Forum in regards to my Day 44 blog entry. This is what he stated in whole:
____________________________________________________________
Name: Jim FL
Subject: Your most recent blog entry
Email: Jim@REmentors.com
Website: www.REmentors.com

Troy,

Good to see you are now recertified to protect and serve. I remember doing those types of classes, and even teaching a couple, when I was in uniform.

Anyway, I wanted to comment on your most recent posted entry on your main blog page. I like the idea of thinking creatively and trying to make some sort of money out of helping this seller. Being a consultant is a good idea, but must be done carefully.

Here are some issues to think about:.

1. If you simply teach them how to set up a lease option, you are a consultant. However, if you prepare paperwork, or give them out and out legal advice, you are practicing law without a license. Be careful here, something backfires, they might come after you. Some sort of signed agreement with a release of liability outlining your role as a consultant would be wise.

2. You might not get paid. They might learn from you, and blow you off. Getting them to pay you by force, as in court, might also bring you troubles of acting as a broker, if the wrong judge got the case.

3. The sellers might turn unreasonable and reject ideas from you, and not sell the house your way, stiffing you for your fee.

Lastly, when you said:
"Now, of course I could take this simple concept a step further - and I may offer it to them but I doubt it. I could turn the 'consultation' into an 'assistance program'. For a few more hundred dollars, I could offer to complete part of the transaction for them - up to getting the tenant buyer in the house - not to closing. In other words, I could offer to put up a 'Rent-to-Own' sign in front of their house (with MY number on it), advertise their house on my business web site, place an ad in the local newspaper for a week (including Sunday), prescreen and prequalify the callers, setup the 'showing date' with all the candidate tenant buyers at one time, process the applications, and seal a deal to get the tenant buyer in the house. Whew! That's a run-on sentence if I ever saw one! But, seriously, how much is ALL THAT worth? $200? $300? $500?"

This is worth more than a few hundred bucks, it is worth 4-7% commission. Why? Because you would be acting as a broker, and that is what they get paid. The bad thing is this, you cannot do this without a license. So do not do this idea.

If you want that much control, simply sign an agreement with them to lease option the home for x price, and x per month, beginning when/if you find a suitable sub-tenant/buyer. In the event this agreement is assigned, payments will begin immediately upon such assignment.

Set the price a little higher than their payoff amount, to help them offset closing costs. Advertise the house, and when a suitable T/B'er comes around with enough cash, assign the deal to them, or sign up the T/B'er and assign your deal with the T/B'er to the seller. Releasing your original agreement with the seller at the same time.

Plenty of ways to skin this cat, and possibly make some money with little risk. Just don't act as a broker, get paid for your time, and do not committ to making any payments or being tied to the deal. You very well could make at least a couple of thousand ($2,000) for the effort, after expenses for marketing the house.

Good luck to you. I just wanted to offer my two cents.

I am busy as all get out these days dealing with my own stack of deals, and daily business issues, coupled with the downsizing of my staff, so bare with me as I don't come here as often as I'd like. But, with that long sentence said, I will try to come here and help if you want me to, once in a while.

And for anyone else here, Troy and others, feel free to e-mail me with questions, as long as you don't need an answer faster than 24 hours.

Take care and good investing to you,
Jim FL

P.S. Happy Holidays to you!
____________________________________________________________

Jim, thanks SO much for the advice. As a law enforcement officer, I should have realized these facts already but I didn't. Nevertheless, I do not need to get caught up in the legal entanglements of being TAKEN to court over such issues as practicing law w/o a license or brokering w/o a license.

Let it be known - I have NOT done the consultation as of yet. We tenatively set the date for this upcoming Saturday but that may change. I am still trying to finish the consultation 'packet'. Allow me to address a couple of things that you said in your post. You listed in number one above, "Some sort of signed agreement with a release of liability outlining your role as a consultant would be wise." I did try to use the grey matter for what it's worth - I placed a disclaimer in an agreement along with a release of liability in the consultation 'packet'. In regards to payment for services, I had planned on obtaining cash or certified check BEFORE any consultation was given. This would eliminate number three: "The sellers might turn unreasonable and reject ideas from you, and not sell the house your way, stiffing you for your fee." I can't afford to spend hours putting this together, two or three hours talking and explaining all of this to them, just to hear them say, "thanks anyway, but no thanks" and then show me the front door empty handed. No way! I explained to them 'the basics' but not the nuts and bolts. That got their appetite. Hopefully, they will order the entree.

When I suggested the 'assistance program' in my blog, I did so with the thought that, even after I explained all of this to them, they may very well think and say to me, "This is all so complicated. We don't want to do this - how about YOU handle it all for us?" And Jim, you were absolutely right when you said, "This is worth more than a few hundred bucks, it is worth 4-7% commission. Why? Because you would be acting as a broker, and that is what they get paid. The bad thing is this, you cannot do this without a license. So do not do this idea."

Your suggestion to sign them up and then assign the contract to a tenant buyer is an excellent idea in case they don't want to do it all themselves. I was trying to figure out how to work a LO purchase on it originally but realized it was just way too thin for the long haul. This way, as you suggest, I can get in and hop out quickly - without any legal entanglements - as long as I get a release of liability from the owner/seller upon assignment.

I suppose it's somewhat true - that this doesn't take rocket science - as long as you use your noodle (and some knowledge). A professor in college once said something that I wrote down and have kept in mind all these years. He said, "Knowledge plus Experience equals Wisdom". Boy, was he right!

I believe I know what I can and can't do with this particular house for this particular couple now. If it's structured properly, I should be able to make some money with it. Jim in Florida - Your WISDOM that you shared (with all of us) is greatly appreciated! Thanks again!

This ends Day 45.

2002-12-08T10:50:00.000-05:00

Day 44:

This week my regular job required that I attend a bunch of classes for recertification. DCJS requires all officers to do so every year to keep abreast of laws, technologies, and general information. Needless to say, that kept me from making any entries in this blog. It did not, however, keep me from doing something in regards to REI.

If you look back in Days 41 and 42, I wrote about a couple who had a house they were trying to sell. With the numbers involved for their particular situation they found themselves upside-down. In other words, they owe more on the house than it could sell for at this time in the market (owe $129k - might sell for $120k at best). They can not afford to make up the difference and simply unload it to a buyer who might pay the $120k. They absolutely have to sell it for $129k or better. Anyway, I got a call back from them this week. They just closed on their new home and are moving into it next week. Now they REALLY want to move this house. After talking with them and closely reviewing their situation, I realized that I could not possibly flip this home nor handle a lease purchase transaction for them to sell the house. The numbers simply do not work.

Well I sat at my desk and thought and thought - God, these folks are really nice and seem like they really need some help. Now I know we investors are to never get emotionally involved. And I tried not to get emotionally involved. So I took those thoughts and used them to find yet another solution for them. The key was found when I asked them, "What are you going to do with the house if it does not sell?" Their answer, "Rent it out."

Now let me take a moment here to say something. I currently have needs myself. I need some cash (and who doesn't). But I need to buy about 100 bandit signs to get my business rolling. Plus I need to make more flyers to put on houses in a few of these neighborhoods here in Richmond and surrounding areas. I figured I would need about $500 to cover those costs at least. And I really would like to make a deal - any deal - happen to get that money. But I was faced with this couple's house that was a 'no deal'. How could I turn it around? How could I make something (cash) out of nothing (a no deal)?

Bingo! Then it hit me. I called the couple back and explained to them that I could not purchase their house. Then I explained why I couldn't - the deal was upside down and that there was no profit in it. The lady of the house seemed like she was 'let down' until I made my next statement. I told her that I could show them how they could sell the house on a lease purchase for more than what they owe on it AND make money on it upfront AS WELL AS cashflow during the term of the lease. In other words, I told her I could show her how I would have normally done it in a sandwich lease. Basically, I would be their 'solution consultant', for a fee of course. Now I got her attention. She asked what could be done exactly. Well, I did not give her exact numbers, but I am sure they could get $2k or $3k upfront in option consideration fees, maybe $100 a month over mortgage payments in rent, and about $6k or $7k on the back end. It's too close for me to try such a lease purchase, but not for them - the owners. They have nothing to lose in trying!

She likes the idea. She told me that she is going to talk to her husband about it. She also asked me to pre-schedule next Saturday morning to meet. Hopefully they will go with this idea and I can make $500. Now what I will do for them is sit an talk with them, basically teach them how to create a lease purchase plan. I am putting together a Powerpoint presentation that will layout the plan. Once I have that done, I will print it out (including the notes section for each slide). This will act as a guide, in hardcopy form, for them to read as we discuss the plan. I will include the forms necessary to solidify the deal with a tenant buyer. These forms will not have my wife's nor my name on them, but they will be almost exactly alike. I think it may take three hours to cover the material and any questions. That will basically be the consultation. They, of course, will be required to sign a disclaimer (release of liability) before the consultation. I do need protection from lawsuits (at least some protection). I will not make this consultation plan available on the web just yet, nor will I email it to anyone. I need to see if it works first. I will make it available at a later date.

Now, of course I could take this simple concept a step further - and I may offer it to them but I doubt it. I could turn the 'consultation' into an 'assistance program'. For a few more hundred dollars, I could offer to complete part of the transaction for them - up to getting the tenant buyer in the house - not to closing. In other words, I could offer to put up a 'Rent-to-Own' sign in front of their house (with MY number on it), advertise their house on my business web site, place an ad in the local newspaper for a week (including Sunday), prescreen and prequalify the callers, setup the 'showing date' with all the candidate tenant buyers at one time, process the applications, and seal a deal to get the tenant buyer in the house. Whew! That's a run-on sentence if I ever saw one! But, seriously, how much is ALL THAT worth? $200? $300? $500?

I am not sure. But then again - do I want to place myself that deep into the deal? The more involvement that I have in it, the more liable I am. So is it worth making an additional $500 now just to possibly be involved in legal issues between the owners and the tenant buyer down the road if something goes wrong later in the deal. It might be worth it to some... but not me. I'd rather not go that far into it.

On to the next topic... a friend of mine (well I never have actually met him face-to-face, but a friend still) lives in Dayton, Ohio. I think I've mentioned him before in the blog - maybe not - but anyway... He is an investor there who does nothing but wholesale flips. I was talking with him about this junker house, mentioned in Day 42 that might be a flip candidate. I told him that in the city records, the house was sold for $120k in 1999. I believe it was sold after it had been rehabbed once before - at least it looks like it was rehabbed a while ago. Now it's in bad shape again - real bad. The owner is still listed at the house address - but no one lives there - it's abandoned. He said it sounds like it's a no deal and he told me nonetheless "Do not chase owners. Make them come to you and you will find the deals." So this soaked in for a while and then I remembered Joe Kaiser of CRE posting something about that very ideal. Basically, if the owner is not motivated enough to contact you, how will you be sure they will be motivated to sell even if YOU find THEM? At most, I think I will place one of my 'We Buy Houses' flyers on the door of the house. Maybe they will come by to get mail or something and see it. The bandit signs I hope to post throughout the neighborhood will be nearby and they may see them as well. I am beginning to think that this should be done (getting deals) by waiting for people to call me for help - not the other way around. It's too much work - and there are too many people out there that are motivated and will call to waste time chasing those that might not be.

And that moves us to our next topic... I got a call from a Realtor yesterday just as I was heading out the door to go to my regular J.O.B. He said he spoke to me about a month or so ago about a house that was for sale. The owners were pretty firm on their price of $172k but now they are, as he said, "super motivated" to sell. Well I asked, "How super motivated are they?" He said they reduced the price dramatically and there's an offer on the table now for $159k. Well that's $13k sitting there, I thought. Knowing I had no comps for this place I asked him, "Are they going to take it?" He said he was not sure if the buyer would actually go through. So, to end things quickly, I told him that if that deal did not go through to call me back and I might be interested if they REALLY want to sell it quickly. And he got the drift... I wasn't a conventional buyer and I wasn't going to pay market price. So we ended the conversation and I left for work. It just so happens that I drove by the residence on the way to work. It's a nice house - the typical 'pretty house'. A much older couple were just going inside with groceries. As the older gentleman was putting the key in the lock to open it, I thought 'there's a lot of equity in there to work with'. I wonder why they are selling? I guess I'll have to wait for the Realtor to call back...

One last note, you may have noticed that I reformatted this site to allow for a wider section for the notes. I figured this may be of some help in reading it.

This ends Day 44.

2002-12-01T11:57:00.000-05:00

Day 43:

This past week went by rather quickly didn't it? I hope that everyone who visits this blog had a wonderful Thanksgiving as I did. And, yes, I am still full from Thursday's dinner. It kinda sucks that the Redskins lost to the Cowboys, but hey, like we say all the time - "there's always next time". If the tip and interception had not occurred, we would have won - period. Cowboy fans please do not bash me with emails! I don't want to hear it... You guys have a great team, really and truly you do. Too bad it's a requirement that a player has to have or earn at least one felony on their record before they can be on the team! Oh Good grief! I'm just joking... Geez... I have to poke fun a little. Gimme a break.

Alright... on to more serious matters. I don't know if you have been on CRE to read any of the posts but I placed one in regards to lease purchasing versus wholesales. I read on a previous post about how newbie investors can and have gotten burned badly on lease purchase deals. This makes me wonder if I really want to bother with them at all. I had a long talk with a gentleman from Dayton Ohio who is a wholesaler. He gave me some wonderful insight into that particular game. He's making good money with very little risk. I originally wanted to have a grab bag of solutions to offer sellers - but maybe I will feel more comfortable just doing wholesales in the beginning. He is giving me some tips and guidance. So I went out scouring an old neighborhood yesterday. It's being revitalized over in its northeast section and that revitalization is moving south and west. I found 12 houses that I'd like to target and see if the owner will sell. Two of the houses are linked below. All of them need rehab in some form or fashion.

Good Junker

Average Junker

The house at the top is in ok condition. Both have been condemned by the city. I am communicating now with the investor in Dayton to find out how I should approach the owners about selling. I have already gotten the property and owner information from the city's website on all 12 houses. Anyone here who has done flips on junkers like these - please email me!

2002-11-24T13:51:00.000-05:00

Day 42:

I read once in a post somewhere that it is VERY important when you are talking to a motivated seller over the phone to go and get the house tied up under contract THAT day. It also stated to NEVER hesitate. From now on, that is going to be my motto for today I have learned an important (and maybe costly) lesson...

I called the couple back today, mentioned in Day 41, to make an appointment with them to discuss a deal. Mr. Motivated Seller became Mr. Ichangedmy Mind in 24 hours. He advised me that they want to wait and see if the house will sell through 'Help-U-Sell'. They have a contract through 2/2003 with them.

It's possible that this particular house may not even be an true deal anyway. Their monthly mortgage payment is around $1200 a month which would result in zero or negative monthly cashflow. Fair market rent for their area is only $1000 a month. The next issue would be the price. They owe around $130k and comps are only $120k average. I am sure after talking with them that they could not possibly come down on the price. Conclusively, this may not be a deal at all.

I received an email message today that gave some interesting insight and tips that I definitely will check out. Since the author said it best, I decided to add a portion of the message to my blog. This is what he writes:
___________________________________________

From: "Tony"
To:
Subject: possible advice on your possible deal
Date: Sun, 24 Nov 2002 10:43:10 -0500

...I must also say that I love your site. You and I are EXACTLY in the same stage here. It's good to see someone else in my shoes, and I feel I can hopefully share some knowledge I've gained. Allow me to tell you how my county courthouse works. ( I've had a ball :-( trying to figure it out, and I still have a lot to learn) I tried asking about how I might obtain a "list" of pre-forclosures, and just like you, they told me it did not exist. They are right!!

HOWEVER, I can still find them. They call it the Prothonatory's (probably not spelled correctly) Office. That's where you can find out about any lein against a property. In that office (at least here) is where I can find ALL of the civil court files. All I have to do is go to the room that they file them in, and start with the most current case and work my way backwards. You will pull these files ( I usually grab 25 or so at a time) and go sit down and look through them 1 by 1. You will see all kinds of cases, ranging for abuse cases to insurance company suits. You WILL come across MANY foreclosure cases also :-). The file will tell you all you need to know (ie., who own the property, who the lender is, how much they are in default, their loan balance, etc.). The rest is up to you. Look the interesting properties up in the tax office to make sure nobody's just bought it, then go knock on the owner's door.

I know, you're probably thinking, "If it's that easy, why haven't you flipped a property yet." Sometimes I think the same thing too :-). But, I come from a relatively small town, and my selection is VERY small. I know that I will find a good deal soon though. And I hope this will benefit you too.

Another option that I would like to bring up (and I only mention this because you have not) is to discount the mortgage in a forclosure. To do this, I am told you will need to come across a case where the lender is small and local. If you find a property in forclosure where the owners have NO equity, you would get them to sign an Authorization to Release Information form (so the bank will give you the information as pertains to the owners financial situation with that bank) and then call the bank (or stop by, if local) and talk to the person in charge of their loan. Now, you and I both know that banks are not in the business of owning REO's. I sounds to me that you are good at making presentations. Doesn't it sound logical that the bank might like the idea if taking a reduced payoff for the loan in default? After all, they're demanding the loan in full from owners that cannot even afford their monthly payments. The bank's not getting any money there, why not from you? If the Owner's are in default $100,000 from "Joe" Bank, and the house will appraises for $95,000(or lower, if in need of work) write up an offer for $60,000 ( the owner won't care because they're upside down in the loan anyway and just want out). The bank will probably counter-offer at something around $80,000. Your say $65,000 then you both settle on $75,000. That still leaves you room the flip it for a great profit. Sell it under market for a quick $85,000 sale and that's $10,000 in your pocket. Again, I am told that this works best with small, local lenders.

That's what I'm currently working on, but I thought I'd tell you because I strongly think that we need to "make" our own deals happen.
___________________________________________

Thanks Tony! I think everyone here can benefit from your message. I plan to look into what he is speaking of this week myself.

This ends Day 42.

2002-11-23T13:50:00.000-05:00

Day 41:

I make this entry with mixed feelings. I am bothered by an email message that I received from one individual, while at the same time, I am elated about a strong lead that I got this morning. Allow me to go into detail...

I got an email message from someone who is unknown to me but visited this blog site. I do not know if one could consider them a "newbie" or "seasoned" investor but the message they sent to me was quite clear. They stated that I am "dragging my feet", that I am not "posting information about deals in the works", that I am a "wanna-be investor" who just "blah, blah, blahs" on his blog about what I plan to do and such with NO real sense of direction. It's so nice to know that this world is full of inspirationists!

Now I know what you may be thinking... "What an ass!" and I could not agree more. I am not sure if you've noticed it lately, but it seems many discussion forums are infiltrated with "bashers" or "haters". It may be the same ones who then visit my blog and make negative comments to me. Does it bother me? Sure - a little. Will I let it keep from from going at a rate of learning and discovery that I AM COMFORTABLE WITH? No, and sorry for me being rather blunt here but "screw 'em". If they don't like the speed at which I am moving along, they can stop visiting this blog. This blog was meant FOR newbies like myself. What I do to get into the game is for me (and my wife), not them.

I tried to reply to the offending email message, but it was a dead address, of course. So the fact that they are a COWARD and want to hide behind the web means what they had to say should not hold creedence. My point here is to say that YOU WILL BE ATTACKED by some. Don't let it get to you. And to the person who sent that message to me I say this: I will keep my chin up and smile when I cash that check from the first deal!

Now for a more positive note. I received a lead from a fellow investor. They advised me of a serious "don't wanter". I called the owners and they do not have enough equity to sell thru a realtor so they are trying the FSBO route. After explaining what I could do for them with a lease purchase, they became very eager to sit and talk with me. We are aiming for a meeting on Monday to construct a deal. I will post further details as soon as they occur.

The house is in a VERY nice neighborhood with excellent schools. They only want what they owe on the first and second mortgages. Being that time is of the essence and they are closing on their new home next Tuesday, they are very motivated to move the house. My only concern is the amount they owe and what my resell value could be seem too close. This may not turn out to be a potential deal. Like I said, more information is needed and will be obtained once I sit and speak with them. I am sure that I can find a tenant/buyer. They said they got 20-30 calls from those interested in renting it from them but they don't want to go that route.

This ends Day 41.

2002-11-22T13:45:00.000-05:00

Day 40:

This is to announce that I have reformatted ALL of the files on our portfolio page to Adobe Acrobat Reader. You will need the reader program to view each file. The reader is available at http://www.adobe.com and it is free. I hope this change addresses the problem with downloading the files. Let me know if you have any more problems.

Also I have added more files to the list. And if you view a document and can make any sugggestions for changes - LET ME KNOW! If I can make them better than they already are then that would be WONDERFUL!

Send me an email if you want to join our local REI club! More info is available in the Day 39 log.

This ends Day 40.

2002-11-20T01:32:00.000-05:00

Day 39:

I am sooo SHORT for time this week. I have court three days in a row so I will try to make this quick so I can get to bed and get some sleep.

I am still working on mass marketing our REI business (flyers) and hope to start on the bandit signs this weekend. I've been making alot of contacts lately and even got a lead on a flip or possible l/o. I am in the midst of hunting the owner down now.

Meanwhile, myself and another local investor spoke over the phone yesterday. He suggested something that I've wanted (and looked for) for a few months now - a local real estate investing club right here in Richmond, Virginia. There is a local apartment owners group but no REI group.

So this is what he and I propose:

If you live in the Metro-Richmond Virginia area (meaning City of Richmond, Henrico County, Hanover County, Chesterfield County) and you are a newbie or seasoned investor AND you'd like to join, then send me an email message with the following information:

1) Your Full Name
2) Mailing Address
3) Phone Number
4) Email Address
5) Type of Investing you are interested in (Rehab/Wholesale/Flip/Lease Purchase/etc)

He and I would like to make it a 'no-cost' group, meaning no membership-fees will be required. We think that this is an EXCELLENT way for all of us to share information, highs, lows, in/outs, and more importantly LEADS! We would like to setup a breakfast or lunch meeting once a month and a monthly email newsletter for all members. The directory listing of members would circulate around to all members (which would include the above mentioned list of info for each member).

Now let's talk about leads being generated within the group for a moment... "Jim", who for the sake of our example is a 'member' in our group, and he gets a call from someone who has a house for sale at a rock bottom price because it needs a lot of rehab. But Jim does not do rehabs - he does Lease Purchases. So he calls "Kim", another member in our group who does do rehabs. She makes the deal happen with a wonderful profit all because Jim called her with the lead. To make it a win-win for everybody, Kim gladly pays Jim a 'referral fee' of $1000.

How does that sound to you? It sounds good to me - plus we would be learning from one another! So all you local seasoned investors - and newbies, send in that email to join. We would like to compile a startup plan for the group over the Christmas holidays and we want to officially announce the group in January 2003! After the group is formed, I will post the group name and info on other REI sites so other Richmond investors can find us. Sound like a plan?

This ends Day 39.

2002-11-17T01:53:00.000-05:00

Day 38:

I am posting this just before going to bed on Saturday evening. Not much to say - I had my two kids (from previous marriage) today (and tonight) so we did not get to post flyers as planned. I have not seen them in a while so, to me it was more important to spend time with them rather than doing anything else. They have to go home tomorrow around noon so we plan to go post flyers in the afternoon...

I did get a possible lead from a fellow investor today. She told me about an old man who turns out is a tired landlord. She gave me his name and number for me to call him. I do not know if he is truly motivated but he does want to sell two or three homes he owns and currently rents. I will call him tomorrow afternoon and post the results here... This ends Day 38.

2002-11-15T11:56:00.000-05:00

Day 37:

It never fails! Someone has to be negative and dump on you about what you are doing in creative real estate investing. I made a post at a board the other day and a couple of the moderators - well really only one of them was rude, crude, made unneccessary comments that were disheartening and very unencouraging. If you want you can read about it in detail in our discussion forum (linked on the right). What I have learned is that regardless if someone tries to discourage you, or put you down, even if it's another investor, you CAN NOT let it get to you! The hell with them. It's amazing what money can do to a person to change them. They get high on their horse and forget about the place from where they came! We are going to try hard to NOT allow that to happen to us. I think if we keep in mind the old adage "what comes around goes around", we will be alright. Also if we keep in mind to always give instead of take, we will stay focused.

This ends Day 37.

2002-11-15T03:55:00.000-05:00

Day 36:

For those of you who may be interested, we have added our own discussion forum for newbies. Feel free to post anything related to REI. If you are a newbie, as Rachel and I are very much so newbies, utilize the forum to discuss what you are doing in real estate investing. I know CRE and the others have vast resources as far as getting help. Please continue to visit them! But visit ours as well. Maybe one newbie has learned something another can use or follow!

This ends Day 36.

2002-11-14T04:03:00.000-05:00

Day 35:

Thought I'd go ahead and pass on a short note real quick. We are making new flyers to post all around the area this weekend. Please note that we HAVE NOT received ONE call from our ad that was placed in last Sunday's paper - not one. What a bummer! I will be picking up materials from Home Depot and/or Lowe's to begin making our bandit signs this weekend.

Lots, and lots, and lots of you have been asking about what phone scripts and documents we will be using. In light of the DEMAND, we are now supplying! Look in the right-hand column and you may locate a link for those files under the header called 'Resources'. I stayed up until 4am to post them so... Download away folks and enjoy!

(yeah, yeah - you're welcome... oh no please stop... seriously...it wasn't a big deal - lol)

Please note I may update some of the files from time to time to make them more accurate. How is this for a DISCLAIMER - they may not be legal in YOUR state! Have your ATTORNEY check them out and feel free to customize them.

One last thing - IF YOU HAVE NOT DONE SO, please - please - please, click on the 'View My Guestmap' button (in the right column) and post your location in the nation! I'd LOVE to have everyone who comes here to show everyone else who is visiting! It ONLY takes a few seconds to do. Look at it as your display of appreciation for us making all the files (finally) available online! LOL!

Thank you.

This ends Day 35.

2002-11-13T00:28:00.000-05:00

Day 34:

Today I got up and picked up the Ron Legrand package I spoke of a couple of days ago from the flipper investor. It has several tapes for me to listen to plus lots of "The Mentor" newsletters and his 9 Special Reports book. It is not the course but nevertheless good information.

My wife and I spent the rest of the day at Office Max getting a few things. I am adding the flyer file to the right column tonight for you to see / use as an example. Bare with me for the next couple of days - I need to read a lot and listen to the tapes and then I will post a blog... This ends Day 34.

2002-11-12T02:01:00.000-05:00

Day 33:

Today I went to work and handed out business cards. I spoke to quite a few folks and even told each person that if they referred someone to us who was selling, and we CLOSE on the house, then I'd pay them $500 just for the referral. That way I have scouts, or bird dogs, out there looking for me. Lots of folks were interested once money was offered to them.

While talking with co-workers, I found one whose brother is a Realtor. He called his brother tonight and told him that I was getting into real estate investing and looking to network with a Realtor. He basically gave him the ideas behind my wanting to deal with him. The Realtor called my home office and left a message saying he wants to talk to me so we can work out something. So I guess it was a good thing to get the word out. Simply because I talked to a co-worker, who is a friend, I may be able to obtain expired MLS listings and network with him for possible deals!

We finished making our flyers. These flyers will go up at grocery stores, community boards, anywhere at work, and any place we can post them. I will add the file on the right in a day or so for those of you who'd like to see them.

In addition to our biz cards, flyers, news ads, and word-of-mouth we plan to make our own bandit signs. Yes, we will plan to do these. One investor who has been successful with obtaining calls from these told me how to make them. So that will be our next task this week or next. Mass marketing seems to be the other half of this business equation (the other half being the numbers game).

So, not only will we offer lease purchases as a solution to problems for sellers, but we will offer a flip. Depending on the situation, we will determine what route to take... This ends Day 33.

2002-11-11T01:03:00.000-05:00

Day 32:

Well, I got a call from the flipper investor whom I spoke with last night. She told me that she feels she has some info that will greatly help me out in learning how to flip. She is giving me a bunch of material by Ron Legrand for free! The ONLY stipulation is that once I am finished with it, she wants me to pass it on to someone else who is a go-getter and will benefit from it. I am so glad I called her last night.

Today I did not do much with REI. One of three of our computers began to fail in the office so I ended up taking two systems and making one good one. It's a little cumbersome now that we only have two systems up but that's okay - no files were lost. Besides, once the money does come in - we're getting new systems. The 266 PII is dead and now we only have the 233 PII and the 300 PII running - yes that's in Mhz and they ARE Pentium 2s - they allow me to work at least.

I am going to go through the Sunday ads now - looking for the 'don't wanters'. Our ad went in today - no calls (of course) but I did not expect any. We shall see what this week holds as far as new events go... This ends Day 32.

2002-11-10T04:38:00.000-05:00

Day 31:

It's Sunday at about 4:00am. I can not believe that I am still awake - much less moving at all. I really can not help it. I am PSYCHED. Tonight I had the opportunity to speak to two individuals over the phone. Their names shall remain anonymous as I type in this log but, nevertheless, credit is due to them.

I spoke to one very nice lady who is an investor interested in rehabbing. During our conversation the topic of lease option purchasing versus simple flipping came up. She voiced her opinion about the two, and what she said made quite alot of sense to me. Lease purchasing does involve quite a bit of risk. There are many many variables related to such a beast. In turn, many problems can arise. I do not plan on turning my back on doing lease options. I just think, after much discussion with my wife, that maybe if we have more than one 'goodie-in-the-bag' to offer to help a motivated seller, we should learn about more REI avenues. This rehabber made me realize that I should not turn away from learning other things involved with REI - always have alternatives to work with. In her honest opinion, she thinks flipping would be the "safest" thing to do first. She also mentioned that she owns a house in need of rehab and possibly for sale. I might be able to do something with it if I flip it to a rehab investor I know. I really need to do my due diligence on it first in order to know what numbers I am working with. If I could make $3k to $5k on it - I may try it.

After talking with the very nice rehab investor, I called on another investor. I got her number from a list of ads under Real Estate Wanted. She had an ad in there along with 7 or 8 other "We Buy Houses" ads. I spoke with her for over two hours. She lives close to me and spoke freely about what exactly it is that she does. She is a flipper. She is interested in pursuing Pre-Foreclosures but she flips FULL-TIME and has done so for over a year and a half. She spoke highly of Ron Legrand and Robert Allen - both of whom she personally knows. During our conversation, she explained to me that THE BEST thing that my wife and I could do right now is to flip properties. She stressed that it is true that one who wants long term wealth should buy and hold - or even hold using lease purchases. But the most important thing to do at the moment is to take care of the bills - to handle you business and personal needs now. She asked me what our immediate goal was. I told her that we want to build capital reserves - right now. That is the MOST important thing to us. She said that the easiest, most lucrative, with the least out-of-pocket expense, and has the least amount of risk involved way into the REI game is through flipping - tie up a house on a contract, market it like crazy, and double close or assign as fast as you can.

I feel like I kind of pushed the conversation into overtime (not to mention overkill) because we were on the phone so long. As a matter of fact, my cordless phone battery was dying. When I figured I had talked her ear off already, she offerred me a possible deal. She said she couldn't do anything with this deal herself right now - due to the fact that she is recovering from an injury and simply cannot move around for a couple of months. But she did say she wanted a finder's fee of $5000 once the deal was closed. She told me that she has already passed the info about the house to another investor who specializes in HUD homes but if he does not want to do the flip with the house, she wants to pass it on to me. She said it's too good of a profit to pass by.

The house she was speaking of is a two story, 4 bedroom, 2 bath - 3000 sq ft, with a jacuzzi, new appliances, new fireplace, it's got an attached 2 bedroom in-law suite (currently rented for $450 a month), and the property is large with a couple of out-buildings. The appraisal is approxiately $170,000. The owner is definitely a "don't wanter" and she wants out ASAP. She is going back to school and wants out of the loan now. She has voiced that she wants only for her mortgage to be paid off ($153k). Currently the owner has a 9% loan ($1300 a month).

I plan to call this flipper investor back on Monday. She said she will tell me if her other investor-friend plans to do the deal or not. If he doesn't, I think she would have no problem helping me get the deal done. She's got $5k in it for her if we do it. If I can get the place flipped at a price of only $170k, my wife and I can get about $12k out of it. That's not too shabby for a first deal.

I learned a lot this past evening. I know now that I really need to have a toolkit in this business. I will keep you posted on what happens. For now, it's bedtime... This ends Day 31.

2002-11-08T18:58:00.000-05:00

Day 30:

Well, things are moving faster now. Thursday I spent the day making all kinds of phone calls. First, I talked to so many people at the courthouse. I have no idea where the 'gurus' get their info from the courts to find pending divorces, bankruptcies, and foreclosures but I've been told by SEVERAL people at the courthouse that there is NO WAY to get a "list" of people involved in these things. I can only think that maybe the court system varies from state-to-state in the sense that some offer more info than others.

I called a title company to get a list from them regarding "Absentee Owners". The lady who spoke with me was the owner. She said that her office was too small to handle such a compilation. She advised me to contact a larger company but that they would probably charge me $100 per property that they find that has an out-of-state owner listed on it. Yet another roadblock is found.

Even though I was disgusted with the whole day, I still decided to call on some ads. I found one woman who bought a nice 3 bedroom 2 bath rancher back in July 2001 for $141,500 (it was assessed at $87,200). She has it available for rent. She told me that they were moving out-of-state by the end of next week. I explained to her that I was an investor and was interested in her house. I went on to explain how I could help her out and she told me a little bit about the house. It's a brick rancher, 1300 square feet, new kitchen, a shed out back with electricity, fenced-in backyard, gas radiator heat, and no AC. Her outstanding mortgage is around $113k and the payments are around $900 a month. After we talked for about 45 minutes, she told me she wanted to talk to her husband about it. She sounded very interested. She told me that she would call back and let me know either way if they wanted more information. Today is Friday, and I don't expect to hear from her before this coming Sunday. We shall see.

I spoke with my wife and we decided to go ahead and place an ad in the Sunday paper. It will read:

YOUR PROBLEMS SOLVED
We Buy Houses!
Relocating? Facing Divorce? Foreclosure? Bankruptcy?
No Problem Too Big! No Commissions! No Fees!
We CAN Help! Call ANYTIME xxx-xxxx

So that will hit the paper (along with all the other investors who have theirs in there) on Sunday. I am wondering how my $48 investment will do. After all it's in the WANTED - Real Estate section. I thought about placing it in the MONEY TO LEND section but I think I will wait to see how this will do.

My wife suggested we go ahead an make flyers to post at grocery stores all over town. I think we should too. I am at a stumbling block here and can't think of how to find more motivated sellers! Maybe I should get those bandit signs - but they are illegal to post in my area.

I have all these postcards available to send out with no list of folks to send them to! Anyone out there got any suggestions?

This ends Day 30.

2002-11-05T21:44:00.000-05:00

Day 29 (addition):

Well, where should I start. Today was very interesting. My wife and I went to the courthouse and found the Records Room. We learned that this is where we'd look at deeds - to do title searches. I asked one lady how I could find the owners of particular properties, properties in which I had addresses. She referred me to the Real Estate Assessor's Office.

So off we went, down the hall, into another building, past yet another Sheriff's Deputy and metal detector (a very secure building I might add) and into the Assessor's Office. A lady showed me how to look up properties on the computer. I asked if I could find the names and addresses of those who owned property in the county but lived outside the county - say, in an other state. I was amazed that she told me that there was no way to search it - that I'd need the house address! I asked if I could find a list of divorce, foreclosure, and bankruptcy filings and they told me there was no such lists. I need to research that a little more in another office because I really did not think this lady from this office truly knew the answer. Well, I researched a few properties with the addresses that I did have. I got the owner's information and wrote it down on a log sheet that I made.

Next we went to the Property Tax Office and found the Delinquent Tax log. This monster of a log had 271 double-sided printed pages of folks who are delinquent on their taxes on their homes! Another lady told me that I could BUY a copy for $50. I turned to my wife and told her how I wondered what we could do with it. We've got all these postcards and we MUST have somebody on this long list who is motivated to sell on a lease purchase. But how do we pick them? Some folks owe as little as 10 cents, others owe as high as $150,000! The average appears to be $1,500 to $6,500 tax owed in arrears. But how could we work with these owners to enter into a lease purchase? Is there any real way of doing it?

Well, without an answer - we did not buy the county's Tax Delinquent Properties List, an equivalent of "War and Peace". So my wife and I left. She ended up going to work at 3pm so I decided to "farm" our area. I found five FSBOs and thirteen FOR RENTs, for a total of 18 possibles. I called all of them. I ended up leaving messages for 11 of them this evening. I spoke with seven owners - some selling and some wanting to rent. All of them were not interested in selling at the end of a lease. Honestly, I did not expect to "hit the jackpot" tonight. I just wanted to 'get my feet wet'. One man with a rental, a real estate investor himself, stated to me "You're an investor and you sound like you know what's going on... how much do you think my house is worth?" Now without busting into complete laughter regarding his comment about me, I simply replied, "Well sir, I can't really say... I'd have to do the comps myself and then give you an answer. But enough about me... What do you think it's worth?"

Tonight was EXCELLENT training. I was not so scared simply because, with my 'normal' job, I talk to people all the time. So the setting was not uncomfortable. I just had a different topic to talk about. My phone scripts helped me out alot as well. Without those I would have been lost! I found where I need to make some adjustments on them but they are few.

Well... tomorrow is another day. I have to go to my 'normal' job for a few hours but, I will jump right back on this afterwards. I plan to go back to the County Courthouse again. I really must talk to more folks there to learn how I can get the info I need. If I can't make it tomorrow - then Thursday will be the day to return.

This ends Day 29 (addition).

2002-11-05T10:54:00.000-05:00

Day 29:

Well it's Tuesday. I had planned to go to the courthouse on Monday and do some searching of some records. But, as life would have it, the day got botched up. My 'normal' job required of me to handle some issues that are due to occur on Wednesday, therefore, I had no chance to leave the house. I ended up making phones calls to quite a few folks regarding the problems and once done it was already 4:30pm - so much for that day!

But today is a new day - I am up and getting ready to leave. Upon my return, I will make an addition to this day and explain all that I have learned. Hang tight - I'll be back in a few hours!

This ends Day 29 (for now).

2002-11-03T11:04:00.000-05:00

Day 28:

Okay, before I go to my 'normal' job, I had to post today's blog. Now I do not know how you fellow newbies do things but I tend to 'what if' stuff to death. I do something that I learned in a Speech 101 class called "clustering". It's when you write down a topic and draw a circle around it like a bubble. Then you branch off from it to another related item or point and circle it, while connecting the two with a straight line. Get the point?

Well I had the opportunity to cluster a few 'what ifs' the other day - trying to figure out how I would respond to a potential tenant buyer who would call one of my ads. This morning I got on CREOnline to cruise some posts. I came across one that is related to one situtation I was pondering...

Posted by Ron M on November 02, 2002 at 17:14:24:

O.K. I have a home I'm going to lease/option to a tenant/buyer for $84,900. I ran an ad in the paper that reads,

Rent to Own, Newer 4 bed, 2 ba home,
30% Rent Credit. Close to Schools,
$850/mo. 888-555-5555 24 hr rec. msg.

I then put a 60 second message directing the caller to leave their name, phone number, and the upfront payment they have to work with. Obviously the larger the upfront payment they have to work with, the more likely we are to choose them to buy this home. I stressed two times, to leave the amount of upfront payment they have to work with.

The ad ran today, and the first call came in from a guy named Gene, he left his number and then even though I requested the amount of up front payment he had two times in my message. He simply said, "we have quite a large down payment available if its' the property we want."

Should I take this guy seriously? After all, he didn't give me a number, did he? Also, how quickly should I try to get this guy to look at the property? My reading material says to try to show as many prospective buyers the property at the same time as possible, to create competition. I wasn't even planning on running the ad in the Saturday paper, because I know the Sunday paper gets more readership. Should I wait until Sunday to call him back, or should I just go ahead and get with him? Anyone with any lease/option experience like this, please feel free to respond.

Excitedly,
Ron M (WA)
___________________________________________

I responded to Ron with a reply-post.

Posted by TCR_Va on November 03, 2002 at 09:52:24:

In Reply to: My first response! Now What? posted by Ron M on November 02, 2002 at 17:14:24:

Call Gene back. Ask him how much money he has to work with as an upfront payment roughly. If he quotes, say "$8000", use Conti & Finkel's range technique and reply to him, "Oh, $8000 to $9000, okay." And then go into scheduling an appointment.

You've already got, or should have an idea of what you'd like to get as an upfront payment for the property anyway. If Gene bucks and says to you that he wants to know what you had in mind for an upfront payment, then go ahead and tell him but again use the range technique. If after you quote it and he tries to negotiate down, stop and explain to him that you feel he should at least see the property before negotiating anything. And then go into scheduling an appointment. If he balks at this point, he's not serious. Only ten minutes of your time is wasted. Go on to the next caller. But let's say he agrees to scheduling an appointment. Well, at the appointment, the level of competition will be recognized by Gene and any amounts that may have been stated over the phone are pretty much moot. He'll either up his ante or drop out.

The idea is that you won't be committing yourself to a certain amount over the phone while at the same time weeding out the prospects from the duds. Good Luck!
___________________________________________

How would you respond? Do you think my response is a good way of handling the situation or is there another way? I'd love to here your response... This ends Day 28.

2002-10-31T12:52:00.000-05:00

Day 27:

H A P P Y H A L L O W E E N !

Be Safe!

This ends Day 27.

2002-10-30T02:35:00.000-05:00

Day 26 addition:

Just a couple of things to put in here. First, our postcards arrived this afternoon - after we went to work. When we got home, needless to say, I was excited. And let me tell you, these things are INCREDIBLE. They turned out alot better than I thought they would - Vistaprint.com did an EXCELLENT job. I ordered 1000 of them and they sent me 2000! They are wonderful!

Secondly, Craig (SoMD) has posted a response to my message titled "What happened to the Realtor?" in CREOnline News Group.

The posted reply can be found at the following URL: http://www.creonline.com/wwwboard/messages/32966.html

If the reply pertains to an ongoing discussion, it is requested you go to the above URL to post any response.

The posted reply reads as follows:

Dated : October 29, 2002 at 10:56:04
Subject: Re: What happened to the Realtor?

When the seller first called me (off my ad), his contract with his agent was due to expire within the week. I told him to call me back once the contract was expired and I would work out something to buy his property. So the realtor was out of the picture. Actually, since the property was a rental before, the realtor really wouldn't be concerned that it was going back to a rental.

This ends Day 26 addition.

2002-10-29T12:42:00.000-05:00

Day 26:

I have received a couple of responses from my post on CREOnline regarding motivated sellers who owned their home free-and-clear, the amount of rent I pay the owner each month, and whether or not my tenant buyer should be required to have renter's insurance. This post is from Joe Kaiser.

The posted reply reads as follows:

Dated : October 28, 2002 at 06:39:20
Subject: Re: Lease Purchase Free & Clear Home

I'm trying to recall the last motivated seller I ran in to who had a free and clear house . . . and I can't. Motivation happens for all kinds of reasons, but a pending foreclosure is number one in my book. Motivation happens when you can't make the payments. Free and clear is rarely going to present the sort of opportunity you're looking for, I'd imagine.

If you're talking about what your lease payments to the owner should be, they should be as little as possible. A percentage of the fair market rent should be the end result, but I wouldn't be going in with a percentage in mind. I'd negotiate for the absolute minimum amount possible and see where that gets me.

The amount of their original mortgage payment will have absolutely no bearing on that figure.

Renter's insurance is not something I can legally require, but it's probably not a bad idea to recommend it. Pets are something you do have a say in. I refuse to accept any pets in a multi unit property and try to rent to people without pets in general. In a tough rental market though, I'll consider it with a hefty deposit, but will still restrict both the number and the size of the pet. Company policy is "no pets," but sometimes ya gotta do what ya gotta do.

- Joe
______________________________________________

Here's another post. This one is from Dave.

The posted reply reads as follows:

Dated : October 28, 2002 at 07:17:34
Subject: Re: Lease Purchase Free & Clear Home

Unlike Joe, I do happen across a motivated seller with a free and clear property every now and then. In a case like that, I usually propose some sort of owner financing, steeply discounted cash price or land contract instead of a lease option. As Joe said though, if you do a lease option on these, give as low a payment as possible.

I once lease optioned a free and clear property that had been inherited by the seller who called me. When I was trying to think of what to offer them a month, I thought to myself that I would just start off by insulting them! I figured that I would just offer a very low payment and negotiate up from there. This was a $96,000 house and I offered a payment of $200 a month! Amazingly, the seller
didn't flinch for a second and simply said, "OK". Since this seller had no outgoing payment, the payment I offered was all profit to them any way!

As far as renter's insurance, check with your attorney to see if you can legally require them to get it. However, I always recommend it to my tenant/buyers and explain to them why. Their possessions are not covered by my insurance, so it is in their best interest to insure their things.
______________________________________________
This ends Day 26.

2002-10-28T04:31:00.000-05:00

Day 25:

Most of you may not know this but my full-time job is in law enforcement. Furthermore, I work in the Richmond, Virginia metropolitan area. I am soooooo thankful that this DC Sniper situation is finally over - or at least concluding with a trial in court. I can now begin once again to concentrate on our real estate investing. Please do not email me asking me what I think should occur to the couple involved in the Maryland-DC-Va incident. I'd rather stay professional, ethical, and keep my opinions 'off record'. I will say that I am deeply sorrowed by what has occurred to the families that they have affected, but at the same time, I am simply happy that no one else will die by their hands. God will deal with them in his own time. 'Nuff said - on to other matters...

This upcoming week is going to be quite hecktic for me with the case load I am facing with my "normal" job. However, I am taking time off from work starting November 4th through November 10th. I plan to go to the courthouse on the 4th to begin name and address collection. Our postcards (the ones we will send to possible motivated sellers) have not come in yet from Vistaprint. I hope to see them at least by Tuesday this week.

I have a couple of REI loose ends to tie up and this week I hope to handle them. I've recently posted a few questions on CREOnline regarding lease purchasing. One post is listed at http://www.creonline.com/wwwboard/messages/32716.html. The other is listed at http://www.creonline.com/wwwboard/messages/32718.html. I am writing up my OWN tenant/buyer lease with my own clauses but it will also shadow the regular standardized lease used by apartments and landlords in Virginia (accepted by the Board of Realtors in Va).

After today, you may not find an update until the time around November 1st. But please check back regularly - anything can happen. My silent partner suggested calling the owner of the two bedroom house that she is familiar with. I may even do that this week - just to get my feet wet in talking with a seller - as a trial. We will keep you posted... This ends Day 25.

2002-10-19T00:53:00.000-05:00

Day 24:

I began looking over all of my "aged" classified ads to look at houses - maybe find a motivated seller or two who would state "motivated to sell" or "must move" - anything that would indicate they wanted to sell ASAP. But I came across the section where we investors place our "We Buy Houses" ads. Then the thought hit me, "Why not call them?" You may wonder why in the world would I ever want to call them. Well, as strange as it may sound to contact a competitor, it makes sense to NETWORK with them. What if I came across a motivated seller who just happens to have a basket case for a house? What could I do with it? Rent to Own the thing as-is? I doubt it very much. I most certainly can't do a major rehab - I might be able to do a 'handyman special' with a little help from my "contractors-by-marriage" (my wife's father and brothers). Sure I could take it and make it presentable using minimal cash - but not a rehab. So I called the ads - all of them. For those with an answering machine, I left a message. Of the ten or so ads I called, I spoke to one investor and got a message on my machine from another investor while at work.

I must, first and foremost, state that this conversation was the FIRST one that I have made related to real estate. I have not talked to any sellers or buyers yet, much less many investors (yes, Eva, I've been a real jerk by not calling you yet - I'm sorry - but I have placed a Post-It note on my computer to remind me to call you this weekend - and I promise I will).

The Conversation. I spoke with "Don". Don had a "We Buy Houses" ad in the paper. Don has been investing in real estate for less than two years. I basically told him that I was interested in networking with other area investors. I then put my "Prequalification of the Retail Investor" phone script to work. This script is basically written on one page. It contains a list of questions that I want to ask of the investor to qualify them for possible flip deals. Anyway, I told him that my wife and I just got started in real estate investing and I knew at some point I would end up coming by a rehab which I could not possibly handle. I then said that I was interested in finding another investor to flip or assign the contract to. He told me "Sure. If you find one I might be interested."

I know I will come across a rehab sometime. So what could I do with it? Tie it up on contract and flip it to another investor or simply assign the contract to them. Either way I can make some money off it - even if it's for 3-4k. The catch would be to do it safely, just incase the rehab investor doesn't want it.

So Don and I went on with the conversation. He said he does foreclosures mostly but he's done some rehabs and lease option purchases. ( Ah Ha! Now I really want to talk to Don! )

I turned the conversation around back to concentrate on rehabs for a moment. I asked him, "How many houses (he) did in a month on average?" He told me "One or two." When asked, "How much potential profit from a rehab did (he) usually look for?", he responded by saying "20 or 30k after expected renovations." ( This is kind of high I think but in the Richmond market it's acceptable. I can't expect too much profit on a rehab assignment or flip anyway. ) He said he has his own cash to buy, he can handle any size of rehab job, and he can close in one week. ( This guy is a good candidate for assignments. )

( Now I wanted to talk about my favorite topic - lease option purchasing. ) I wanted to warm up a bit with Don so I tried to find equal ground or something we could relate with one another. I asked him where he was located. He advised me he was in a county outside Richmond (just so happened to be the same county where my parents live). I told him where my parents live there in that county and he said he lives right down the road from them. We talked about how much that area had grown in the past few years and how cumbersome the traffic has gotten there. I then asked him about his experience with lease option purchases. He gave me good insight information. He told me that most people you talk to about lease options are apprehensible and don't like them. They worry about what's going to happen later on; if the house is getting torn up; etc. But those that are really open to lease option purchasing are truly motivated sellers. They just want to get rid of the payments as soon as possible. He told me to get to the courthouse and find those motivated sellers (divorces, bankruptcys, pending foreclosures, out-of-town owners, etc). He said they will do anything, especially if they don't have alot of equity to sell with a realtor (commissions).

The conversation then ended with informalities. It was a good conversation though. I got good information, learned a little more, plus I found a good candidate for rehabs or other homes I might find to assign or flip. I encourage other newbies to do the same as I did. I was nervous as hell but I took another step forward.

The message on my machine from the other investor was interesting. She said she was happy to hear from a fellow investor and would love to network with us. I really MUST call her tomorrow! And I will call the other investors on my list this weekend... This ends Day 24.

2002-10-18T01:50:00.000-05:00

Day 23:

I have setup our voice mailbox with a message similar to the one Peter Conti and David Finkel quote in their book. There is a link in the right column where you can find the actual message with full sound. It's listed under 'resources'. A new page will open, but don't pay much attention to it - it's a template. I am sorry about the few damn pop-ups that occur when you open the page. Anyway, what you are looking for is the voice mail message file linked on my 'portfolio files' page. It's a small-size 'mp3' file and should play on most any player on your computer.

Yes, it's MY voice on it so don't laugh... This ends Day 23.

2002-10-16T21:42:00.000-05:00

Day 22 addition:

After completing all the forms, I realized that to compile one entire file holding all of the forms would be gigantic. I've decided to not list a link for them on the right. I am sorry for this, however, it stands to reason that each newbie needs to compile forms for themselves that is specific to their own home state. I'd rather not allow someone to have access to one of my forms, use them, and then find themselves in a legal bind of some sort. I do not want to be liable for any form. Therefore they will not be made available to the public.

On to bigger and better things... I am proud to annouce that it is time for us to go hunting for our first motivated seller. Our ad will go into this Sunday's paper. Next Wednesday we will visit the courthouse to search for possible candidates of motivated sellers. Our official personal cards came in the mail today. Whoooo Hooooo! Our postcards are on order - they should arrive in 7 to 10 days. We will use them to target motivated sellers on the list we compile from the courthouse (bankruptcy, divorce, foreclosure, out-of-state owners).

We are ready... I think... whew! This is really hard to grasp. The first REAL step... Let's see how it goes... This ends Day 22 addition.

2002-10-16T11:29:00.000-05:00

Day 22:

The number of emails that I've received regarding the business plan has been overwhelming. So, in light of this, I decided to go ahead and make it available via the web instead of replying to each individual email message. If you look in the right-hand column of this page, I have reformatted the links section. The section has been renamed as 'resources'. I've added a link to the web site that we will use for business. Also, you will find links to our business plan, presentation, a copy of our personal card (front and back), a copy of our postcard (front and back), and hopefully I will upload all of our forms sometime today. The forms file will contain ALL of the forms we will be using for our business. These files are viewable by clicking on the links. A new window will open for you. You can save the files for future reference by right-clicking your mouse and selecting the 'Save As' tab. This will download the file onto your computer. I don't mind you using these files as templates for your own work. But please, author your own items. I've put alot of time into this and the work does belong to me. Again, I don't mind making these things available - please use my work as an example for reference all you want - but please author your own things. Hopefully I can finish the forms today and make them available as well... This ends Day 22.

2002-10-14T03:46:00.000-05:00

Day 21:

As luck would have it, you get something neat on your web site and somehow, some way, it gets screwed up. My GuestMap, located on the right, got botched up tonight. I think Bravenet was having issues. Anyway, it had to be completely recreated. So, if you visited here before and posted a pin marking your location on the map, it's gone and needs replacement. You can do so if you like. I think it would be neat to see all the "newbies" out there on the map. I've changed it to show only the United States as well. It probably would have been too cramped with the entire world on display anyway. So perhaps it's a blessing it got botched up.

Next on the agenda, I'd like to say to all of you CRE Onliners, please - please - please watch out for malicious posts on the board. I was at my regular job tonight, nosing around CRE and found a post on the main board. It was titled 'Feds to reduce rates this week' and I clicked on it. In the post was a web address. I cut-and-pasted it into another window. And then "BAM!" a pot load of popup windows infiltrated my screen - one right after another. Some included pictures of people involved in "alternative lifestyles" which definitely was not proper for the workplace! The computer at work is on a T1 connection (one of the fastest you can have by the way) so I had to literally pull the network plug from the wall to stop the attack. The computer almost locked-up on me for having too many applications open and sucking the life out of the memory on board. So please be careful of that - AND - be careful of ANY web address you see that commands your 8080 port to open. Any web address that looks like "http://www.someplace.com:8080/someword" can be a malicious (and possibly a hacker's) web site. The site computer will try to connect to your computer via your 8080 port. Usually the hacker's purpose for that is to run a script to load a trojan onto your computer for access. So beware!

Alright - enough of the technical mumbo jumbo stuff. Let's get back on topic. I am working hard to finish the forms. I have completed sections 1, 2, 3, and 4 (of 10 total). Like I said before I am using some of the Sheets forms but I am also using David Finkel's and Peter Conti's forms as well. I like the ads that Bill Bronchick uses and I may incorporate a few of them. For those of you who have Adobe Acrobat Reader 4.0 or better, I will put all of my forms in that format - together - in one Acrobat file for printing and viewing... This ends Day 21.

2002-10-13T00:37:00.000-05:00

Day 20:

I received an email today from someone who expressed a justifiable disapproval of my idea of running the blind ad explained on Day 19. Their opinion was that it could be seen as unethical and deceiving. I'm thinking maybe they are right. I remember reading a post on CREOnline related to running a blind ad to obtain buyers. I have spoken with other investors, via email and over the phone, and they simply told me that I should find a house first, tie it up, and then advertise it. They said that especially in the Richmond area, the tenant buyers will call. I suppose I should eliminate a possible guilt-trip that I'd end up placing on myself if I were to lie to those who would call on the blind ad.

Well, since my mind is clearer. I thought I'd write about all the forms I am compiling. It's a long list but it's not as bad as I thought it would be. The 3-ring binder that I am using is going to serve me well. I have combined Carleton Sheet's phone scripts with Peter Conti's scripts in a Word Doc file. I think it will be a powerful tool. I am sure someone out there will want them - and I don't mind sending them out. Once I get all of my forms put together, I'll put them together in a zip file. I think it may be best to upload one zip file up to my web server (which I will provide you the web address via email only). This way your email provider won't balk at a large file... This ends Day 20.

2002-10-11T04:11:00.000-05:00

Day 19:

My how the days go by! Ok, switching gears again - this time from first to second (thought I was in reverse for a while there). The next plan of action is organization. I've put together a 'forms binder'. This will hold master copies of EVERYTHING from Property Analysis to Lead Based Disclosures and everything in between.

We plan to place our classified ads in print - not this Sunday but next. There will two ads:

1) We Buy Houses
2) Rent-to-Own Nice 3 bedroom 1.5 bath, etc.

Ad #1 will work towards motivated sellers. Like I really believe that one will be worth the money I spend on it. I'm sorry but I don't look towards that one to work well. I strongly believe you have to turn over a bunch of rocks to find motivated sellers - go out and find distressed properties and work courthouse records to death, maybe call a bunch of ads.

Ad #2 will work towards tenant/buyers. This one I have a lot of faith in - I truly do. The phone will ring off the hook I am sure. My wife asked me, "Why the hell are we running an ad like that when we have no house to rent?" The answer is quite easy. What I will be running is a 'blind ad'. Now think about it first before you read on...

The caller will 'see' the ad but they won't 'see' the house. So what the heck is that suppose to mean? Well, my purpose for running the ad is to develop a database of possible tenant/buyers. I will explain to them that my partner and I had a house available for rent-to-own, however, we signed on a tenant late last night. So that house advertised is no longer available. Then I explain to the caller that my partner and I are real estate investors and we may be coming up with another nice house like the previous one soon. I'd then prequalify them over the phone with my 'Caller Form'. I'd write down their information and keep it on my desk. As soon as I get another house - I'll tell them I'll call them back. Is this a sketchy way of doing things? Is it false advertising? Maybe. Maybe not. My intentions are good - to find a house for them. Nothing was advertised for sale falsely so I think we are alright with running it.

So this next week will be spent handling organization. I've got some more forms I need to finish making. I have a few more books to finish reading. I have to get my attorney to review my Lease Option purchase agreements. I gotta price an umbrella policy too. And I have to place the ads. Are there EVER enough hours in the day to do all this stuff. Well, on my days off next week I am spending at least one day at the courthouse to obtain out-of-state owner names, recent bankruptcy names, recent divorce filings, etc. I will find at least one motivated seller - somewhere out there. I want to START INVESTING!

As of late last night, I ordered new business cards to replace the screwed up ones. This time I bet Vistaprint does not mess up and accidentally send me 2000 instead of just the 1000 I originally ordered (like with the bad cards). There's a postcard I got my eyes on at Vistaprint too that I want to use. I may order them this weekend. I'd use those for mailing to out-of-state owners, divorcees, persons facing bankruptcy, etc.

Now, of those of you who are out there reading, I have a request. Could you check out my Investors web site (link is on the right). I'd like some feed back - constructive (not destructive) criticism is welcomed. I want our Real Estate Investors web site to be primo! Keep in mind that this is the site that I will be sending Tenant/Buyers and Motivated Sellers to for online information. The web address will also be printed on our new business cards, postcards, letters, etc that goes out. Let me hear from you! Thanks... This ends Day 19.

2002-10-10T00:36:00.000-05:00

Day 18:

Just a quick note. Our REI website has been updated to reflect the proper wording and logo. Actually after my wife and I discussed the situation, she drew our new logo on a post-it note. She laughed and put it on my desk. I liked it and re-drew it on my computer. As a result, our new website logo was born.

Please note - on the right side of your screen you will see a few new things. I've added a Guest Map - if you've visited here, please post a 'pin' where you live on the map. I've also added an Add-a-Link section. If you know of ANY site that has helped you in the past, given you some guidance, or is related to REI, please add it thru that link. My goal is to make this blog a resourceful one. Also, I've added a link where you can place an ad to sell a property, lease option it, or offer to buy a property. It's listed on the right as well. Please contribute. Thanks... This ends Day 18.

2002-10-09T10:15:00.000-05:00

Day 17:

Alot of questions have arisen about legalities in business names, registering an LLC, and the like. I have recently found myself knotted up in red tape that I have created for myself. If you have received a copy of my plan and presentation, you will find that I had planned to go with a business license and developing an LLC. In the past few days, I've spoken at great lengths with the city government, a CPA, and an attorney.

Let's cover the original goals I had:

1) I wanted a business license
2) I wanted to do business as 'Ross Real Estate Investments'
3) I wanted an LLC registered to protect assets and liabilities

To do this I'd need a zoning approval. This required a signature from my landlord for the zoning approval - which he agreed to do. Then the city would notify my neighbors of a hearing to approve/disapprove the zoning request. If disapproved, no zoning approval would be granted - no business license can then be obtained.

But let's say it was approved. I'd get the license, register the LLC, and do business as 'Ross Real Estate Investments, LLC'. Great!

But wait a minute... what's the law say regarding real estate?

According to Virginia Code:

"§ 54.1-2100. Real estate broker defined."

"For the purposes of this chapter, "real estate broker" means any person or business entity, including, but not limited to, a partnership, association, corporation or limited liability company, who, for compensation or valuable consideration (i) sells or offers for sale, buys or offers to buy, or negotiates the purchase or sale or exchange of real estate, including units or interest in condominiums, cooperative interest as defined in § 55-426, or time-shares in a time-share program even though they may be deemed to be securities, or (ii) leases or offers to lease, or rents or offers for rent, any real estate or the improvements thereon for others."

Uh oh, now that I am a business - I need a REALTOR's license as a broker in Virginia. NOT GOOD! In order to obtain a REALTOR's license, I'd have to test. If I pass, I'd have to work FOR a broker for two years before going independent. THAT SUCKS!

Now for those of you who are REALTORs, please, take no offense. I simply do not need to be bound by the laws that you guys MUST adhere to as salespersons.

Now, if I conduct real estate transactions for myself for personal gain, am I subjected to the law mentioned above? No I am not.

According to Virginia Code:

"§ 54.1-2103. Exemptions from chapter."

"A. The provisions of this chapter shall not apply to:

1. Any person, partnership, association or corporation, or their regular employees, who as owner or lessor perform any of the acts enumerated in §§ 54.1-2100 and 54.1-2101 with reference to property owned or leased by them, where the acts are performed in the regular course of or incident to the management of the property and the investment therein."

I can act as 'principle', meaning 'owner' of property, and NOT be subjected to the real estate laws.

So what exactly does this mean? Well, I won't 'be' a business. I will handle everything as "principle". I'll need new business cards and a new logo for the web site and documents. My cards will then be 'personal cards' and not 'business cards'.

What's the advantages and disadvantages? I won't pay more money to startup (except new cards). I won't be subject to gross tax receipts in the city. I won't need a realtor's license. But I will be paying capital gains taxes unless I roll over into another investment with the profits, according to my CPA. I will be subject to suits more than if I had an LLC. The tradeoff is the licensing issue though. I think that if I am careful to disclose EVERYTHING and have my docs lined up properly by my attorney, then I'll more than likely be alright. As long as I perform on my contracts, then I won't be subject to lack of performance suits.

Will I go out there completely unprotected? No. Nobody should. I will talk with a few insurance agents and get some prices on a one-million dollar umbrella policy. This will be used for protection - just in case I do get sued for something. It can cover me if a tenant/buyer breaks a leg on a doorstep too. I'll post my findings soon... This ends Day 17.