All Forum Posts by: John Harris

Mine should arrive in a couple days. I'll try to remember to post my thoughts.

I also carry notes and throw the post cards away as they come in. There are opportunities out there to make money in notes but I'll stick to things that aren't taught in seminars and books for now.

:wink:

I post this here because new investors make this mistake more than others.

I am a builder/developer in Texas. We have had a few investors invest in our neighborhoods at the advice of an unscrupulous realtor who also was to be the property manager. We were happy to sell the home (at full retail) and even referred customers, who could not buy, to the realtor as possible rental customers. After several of these deals we have stopped dealing with the realtor and have turned down several "investor" deals because we don't feel that they are getting a good value.

I'm no investing expert but in my opinion, any customer who I can't get financed (in this market) will not likely pay their rent anyway. Our mortgage brokers are very good and lenders are still very lenient. These investors now own several vacant homes which is bad for us and horrible for them.

None of these "investors" asked to talk to me (the seller) before the closing. I have no clue what they were being told, but they are all in trouble now. They insisted on using a different title company and I suspect mortgage fraud which the buyers were involved in.

Unless building costs go up like crazy or the market goes through the roof these guys will either sell at a loss, rent with negative cash flow, or suffer a foreclosure.

The moral of this story is: Be careful investing out of state. If homes are selling for 100 gazillion dollars in California and New York that doesn't mean that paying 75 gazillion in Texas or South Dakota is a good deal.

I hope this post saves someone some misery. Please do your own due diligence and don't let greed convince you to make a bad investment.

My company has a lot of success contacting preforeclosure owners and negotiating a deal prior to the auction. I have never done a short sale but I imagine that only works when the bank thinks that the auction price will be less than the loan balance.

Suppose you buy a house for $100,000 and sell it later for $110,000. Your return on investment is 10%. If you only put 10% ($10,000) down (we'll ignore losing costs and commissions here) then your cash on cash return is 100%. If you paid cash then CCR and ROI are equal.

That is what leverage is all about. Just remember, leverage increases risk.

I'd like to second the "be patient" and "do your homework" themes in contrast to the "just do it" posts. I'll only name one since I try to block out most of my biggest mistakes.

While working for a developer, I was able to purchase a residential lot for $30,000 below market value. I got greedy and decided that I could make more money if I built a new house on the lot to sell. After almost 8 months of learning that I knew nothing about the construction business and another year of being too stubborn to cut my losses I sold the house at breakeven.

If I had just sold the lot and taken profits I'd have made at least $30,000 and I'd have been able to focus on the job I was doing for the developer which would have meant at least another $30,000 in commissions.

Lessons learned: Do what you know, if you want to do something new, start on a small scale that will prevent you from losing your *** if you make mistakes, because you will make mistakes.

Just found the site today. I hope to be able to contribute.

I'm off to browse a little more. 8)