All Forum Posts by: Kenneth Johnson

Hi Everyone,

So the thread started with a request to send feedback on Short Sale Riches the McLaughlin and Jurewicz program. Like I said I was a member but I never got involved with them I was more interested in their corresponding Investor Network but I never got any investors, more like a "How To" on finding private investors. I didn't need their Short Sale advice since I had already done a bunch of them.

Adam did anyone respond with any positive info in regards to Short Sales?

Ken

David,

Are you donig REOs strictly in your neck of the woods?
Are you the touchy feely type that needs to drive out at night to see your investments? Believe me here I am not belittling a personal need to make that happen. I am merely trying to gage your personal risk factor.

Would you be open enough to Buy & Flip REOs all over the US of A?

Here's another zinger the risk is the same next door or 3,000 miles away. But you say I won't have a Power Team in place in remote locations. First, I say, determine your market place where you plan to do business, not just one place but 5 to 10 places. Then have Power Teams in those five to ten places with alternate players recommended by the team. For example you have a painter in Houston, TX (greate area for REOs) on your Houston Power Team then out right ask the painter, "Hey suppose you are busy when one of these projects in Houston opens up for me, who would you recommend?"

Here's another thought you don't need much of a Power Team if you are not Rehabbing. Rehabbing takes time and ties up money.

You do NOT plan on living in this property as your "dream home" so don't become personally attached to it. Buy it, Rehab it and Flip it then wash and rinse and do it again. Or better yet, Buy it and Flip it "AS IS" and move on.

Do you have access to a nationwide web site that lists REOs? If not, subscribe to one.

ForeclosureRadar.com is a $50 a month subscription and it is only for CA counties. In Ca try www.HudExchange.com also. If you are nationalwide minded try RealtyTrac.com Foreclosure.com or 4closureAlert.com <-cheapest at $30. Ask around as to what your Investment Club and Cash Flow Club folks use as far as Web Sites go in locating REO, PreForeclosuer, FSBO, Tax Liens oppurtunities.

I like Steph's approach also which is great provided the buyer whose criteria you use does not tie up his/her money in some other deal while you are trying to close yours. In cases like that make sure you have a "Subject To" clause in your Purchase Agreement saying no harm no foul if I can't find funding within ten days. You might get your potential buyer to agree to set aside the funds sit back and enjoy the ride while you do all the work.

But think of this why would a potential buyer apparently that you know pay you for a property that he can be sure of in his mind he is paying maximum dollar for. Greed is a deal killer always leave something on the table for the next guy.

So apparently you aren't using your own money, but rather OPM. Wouldn't it be better if you approached your buyer(s) in this way. Hey I'm putting together a Real Estate Investment LLC that "Buys and Flips" REOs any contributing Investors will earn a Guaranteed 15% Interest per year. Pay more or less interest rate depending on your comfort level. Try to make sure it is a larger interest rate than they can earn in the Stock Market / Bonds / Mutual Funds. I am not talking about creating a REIT here just a business that offers returns to its investors. Talk to an LLC Lawyer in your state as a consultation to figure out what laws come into play.

Make a trip to your State Capital, Rep & Dem Reps, Federal Gov't and their Rep & Dem Reps on the internet or by phone of course to find out what grants might be available to you as a Vet, single black mother, young business man, retired old guy, whatever you might qualify for to pump up your business.

So think about how much money you need to play with to "Buy & Flip" REOs. Say you want to buy 15 to 20 REOs a month at $10K a door and you do not plan to tie up your money for more than 30 days. Your operating costs are Title Ins on a $10K property & Hazard Ins $45 a month on a $20K property. Notice I said Hazard Ins on a $20K property because that is the smallest selling price for you. So you are buying low at 10 to 30 cents on the dollar and selling low at 20 to 60 cents on the dollar, but you are doubling your investment with every sale. Now you don't need your investment buddy as a buyer so you can go national and post your properties on Postlets, Craigslist, eBay, RealNet.com and you can always use the MLS of the RE Agent that listed the property on the Web Site. Even more so you can go to those places and say post a hypothetical home and find potential buyers. I.E. Looking for potential motivated buyers seeking single family dwellings at incredible discounts blah, blah, blah.

So your operating costs amount to $400K for two months at $200K a month rolling every two months. Eventually as each $200K month doubles you'll have more than enough returns to pay for the $400K at 15% a year to your investors.

You can even start cheaper than $400K only buy 5 houses in your closest market with a starting investment of $50K then buy another 10 at $100K when you clear your inventory doubling your holdings every time you clear your inventory.

You are probably saying to yourself where the heck can this guy find properties under $10K. Well I deal with properties between $7 to $18K clear title definite rehab to buy and flip at double my purchase price. The folks I work with have been doing it for 21/2 years.

Ken

Steve,

Go to a Realtor friend, you should cultivate that relationship if you are going to be an investor. I have five close Realtor friends in CA and three in AZ.

Anyhow ask your REA friend if they will do a full Property Profile for you. If you don't have a REA friend go to a local RE Agency and tell them you will pay for a full Property Profile. This shouldn't cost more than $20. You'll soon have a friend. Tell them there will be moe to come. Ask them if you can become a member of RealNet.com, then you can do like 15 to 25 a month for free and you won't have to interupt their day. You can find the info on the MLS under Days On The Market (DOM), but each county has its own MLS in CA. Also the listing may have expired or the property may have been put up for ssale more than once.

Also as said earlier for $4 in my county the County Recorder will print a report on property ownership (i.e. Title Transfers, recorded Deeds, etc...) and they will also move aside the mist giving the name of the current owner (i.e. the bank) and contact info.

Go to a local Title Company and pay for a Title Abstract or Title Search. It will cost you some bucks $75 to $150 or more. Call first and ask about how much it will cost. Here also is somwone you should become freinds with Escrow Offricers and Title Company officers. I had a Title Company president save my clients $8K once because of an early recording and because we used to sit at the corner bar after work titling dragons.

Lastly but not leastly Foreclosure Web Sites like in CA ForeclosureRadar.com will list the property profile, DOM and do Foreclosure Comparables similar to a CMA done by a Realtor. ForeclosureRadar.com is a $50 a month subscription and it is only for CA counties. In Ca try www.HudExchange.com also If you are nationalwide minded try RealtyTrac.com Foreclosure.com or 4closureAlert.com <-cheapest at $30. Ask around as to what your Investment Club and Cash Flow Club folks use as far as Web Sites go in locating REO, PreForeclosuer, FSBO, Tax Liens oppurtunities.

Ken

Mr Jones,

I assume that's your name by your avatar.

Any way I agree with Rich you don't havve to pay for a mentor and as a matter of fact most successful folks don't need the money unlike the gurus of the internet who seem to only think about the money.

Try attending Chamber of Commerce meetings, go talk to a couple of Real Estate Agents or Brokers offer to buy lunch and tell them what your interests are, go to your local Investment Club meetings (join one somewherre around $20 a month) and / or Cash Flow Club meetings, ask around if folks know of investors, do a YP Search and talk to everyone one the list.

Lastly when you find one and you become friends ask if they would like to profit share in the first few deals they help you walk through. That way they contribute without feeling like you mikght be sucking the life out of them and the feel part of the deal so their interests are peeked.

Ken

Matt,

Great posting. I like reading your posts.

Nervousness like fear are wonderful motivators and they let you know that "You're alive?". Everyone has fear (you'll probably have more nervousness and fear in your first year of RE Investing especially if you use your own money than any other time of your life) but it is what you accomplish in spite of the fear that makes you feel alive.

Get your first deal on the books then try to make all your next few deals as cookie cutter events of the first.

BTW this is the second time I have heard of "The Secret" once outside of this forum and now here. I'll look into it. I am an avid reader.

And as for the afore mentioned books consider reading "How to Win Freinds and Influence People" too.

I saw a mention of a "No Money Down" contract, how about a no money down no bank involved deal just try doing a "seller carry back" note. The seller becomes the bank writes the note and then you can flip the property in your own time.
Just make sure you have the right to sell and that you make enought money after paying off the seller to make a decent profit.

Truely motivated sellers will do just about anything to be free of the debt or payments. Do you need to pay full asking price? Absolutely not, remember they are the motivated sellers. Just make the interest rate that you pay high enough even when you get steep discounts on the purchase price so that the seller can make the existing mortgage payment(s) and make a slight profit while you flip the property. Also ask that your first payment become due two months after signing. You have to get a deep enough discount to cover any mortgage payments to the seller you might make while you hold the property, plus Hazard Insurance and Title Insurance.

So instead of paying 100% of the asking price, get an appraisal, or talk to a Real Estate Agent and ask for a CMA then offer 70% or 80% of the CMA or appraisal. Remember you too are going to discount the property from its CMV to sell it quickly so also consider that.

Here is another method "assignment" find the motivated seller, get the steep discount and make the contract an assignable one. Now go hunting for someone to buy the contract from you.

Ken

Matt,

Thanks for asking that question on how to "Flipping Homes".

Michael & Jeff,

Thanks for the information on the reading material.

Matt,

You should join your local Real Estate Investment Club they are a great source on flipping SFR.
I have a list of Investment Clubs.

Ken