After the BULK REO Tapes Real Estate Investing – its more than just finding cheap properties

August 15, 2009

Successful Real Estate Investing in New Markets…after you’ve purchased BULK REO tapes

Day 1:  Start to research the area
-research Trulia, Zillow, and other google searches
-locate areas where median income is above 40K a year
-locate “bedroom” communities around the outskirts of the city where people want to live
-Locate the better areas and interview a realtor about what areas are “hot” still
-Interview a local property manager about these areas, and ask about problems they’re seeing in the rental income property market.
-Call a local RE Max Agent for some ideas on selling houses in a slow/difficult market.

Day 2: Locate a good team for your local experts
-Go on to Craigslist under resume’s, and Jobs wanted.
-Find a couple individuals who indicate P/T work and add to interview list -Go on to Real Estate Investment group web pages and search for birddogs. -Post “bird dog” and a P/T help wanted ad for real estate assistant -Buy signs from Bandit Signs . com

Day 3: begin interviewing team members
-always get three or four people per group
-Attorney, agent, loan officer, non-profit group for home buyers/community development teams
-Call your local B of A loan officer introduce yourself and offer to send people to them who qualify for loans ask for referrals for pre-qualified buyers looking for nice homes.
-Call hard money lenders for investor meetings, and people I should talk to to find good homes.

Day 4-7: Finish up on anything that didn’t get completed in Days 1-3

-get a voice mail box in the area you want to invest
-record a message explaining that “you sell homes” will consider owner financing.

Week 2: Find out what the market wants
-Nothing sells if you have something that nobody wants
-Begin to identify hospitals, schools, universities, areas where traffic and job market is pretty good.
-put signs out in high traffic areas, but place them where people have to stop often (stop signs are good) -put out lots of signs in good areas, around schools. something like Gross Point Woods – Owner will finance

Week 3: Begin Interviewing for buyers
-Find out what they’re paying now
-Find out what areas they feel are safest
-Find out what they’d like to put down and pay per month
-Ask if you found “the perfect house” if they could afford a little more for that “ideal situation” -Take good notes and ask good questions

Week 4: start to look for homes on the MLS and through wholesalers like us -Search Craigslist for “fixer upper”, “handyman special” and must sell. -Download our spreadsheet for analyzing deals
-Ask what repairs are needed.
-Analyze deals
-Make an offer to purchase

Week 5: close with cash or private investor funds
-Begin demo on the house
-begin repairing
-Always do curb appeal work first and put a sign in the yard and near the entrances to both sides of the street

Week 6: line up inspections as work is done
-get electrical and plumbing done first as these usually take the longest. -do necessary repairs
-begin to call back the potential buyers
-Call back agents, bankers, and plan open house

Week 7: Wrap it up and get people in it
-Make sure that you plan one or two days where you have open house -Make sure the house smells good, looks great and is clean
-the open house should be open only for an hour or two.
-have a sign in list so buyers see there is interest
-Put a non-binding bid sheet in for people to make an offer.
-Call back all offers and see if they’d pay a little more or let the other guy win it.
-Offer bonuses for closing early: closing costs, one year warranty, upgrade bathroom or Kitchen faucets/fixtures

Week 8: Accept an offer and close

With a few variations, this is exactly how we did our last two houses in NE Detroit, MI. Even though the market is tough, we still managed to find over 45 interested buyers for our homes. We managed to find 4 cash buyers for other fixer uppers that we can now wholesale for a couple thousand dollars and lots of people who would love to do Rent-2-Own while they fix their credit.

For info on this and more Investment Properties or foreclosure deals, visit http://sillypricesSweetDeals.com/1.html to join our early notification investor list and free real estate investing information


Bulk REO’s

August 14, 2009

Bulk REO‘s make money for me.  We just got more than 2M of product for our buyers in MA, CA and FL.

What a great week this is turning out to be.

If you are interested in learning more about bulk REO’s or Investment Property click the links we we’ll get you information right away.

All my best…

Until Next time… JG


Buying Bulk REO’s Pt. III of III

May 27, 2009

Compiling a list: Once you have money and it is legit, the bank can’t present you with some random list and legally expect you to buy it.  The bank wants to see where you intend to buy, what you intend to buy at what price you intend to buy and what level of rehab will be needed for you. Some buyers only want perfect homes only needing carpet and paint.  Other buyers only want heavy rehab homes because of deeper discounts.

Enter in to the Letter of Intent: The bank can’t put a Tape together without knowing what you want to buy.  The letter of intent outlines all the demands you have for the property you want to buy. They can usually tell you if they have the inventory, at the locations you need and in the condition you request. The Proof of Funds and LOI are your “credentials” that tell the bank you’re serious about buying. Once the bank sees your LOI and POF, they have something to work off of.

Now the work begins at the bank.

The banks have a tough job of making this thing work. Imagine you had 1000’s of foreclosed homes in  your inventory. Some of those homes were listed on the MLS, some are going into an auction tomorrow, some of them have been pulled into court because the original owner thinks the foreclosure process was wrong. How do you track all your foreclosed property? How do you keep track of which homes are available and which ones are being closed on tomorrow. This is no small task I assure you.

Now, a buyer comes in and says, ” I want to make a bulk purchase of 100 homes in Southern California at 10% of market value”. Do you laugh at his face? Do you have security haul him off to the loony bin?

This is where managing expectations is important. The housing market is beginning to settle down especially in SoCal, TX and other areas of the country. If YOU were the bank would you risk losing even more of your shirt by selling to the bulk buyer at 10% or would you perhaps wait to see what happens with your properties on the MLS at 65%. The Banks need to clear inventory, but not THAT bad. If you make some blind offer without knowing the discounts that are reasonable you’re likely to get laughed at (not really) but you get the point. Here’s what we’re seeing for bulk discounts across the country: CA SoCal / NorCal – 65% pretty solidly; Midwest -18-25% frequently; Detroit and MI: 5-7% all day long. FL and TX I’m not sure on but I’ve seen some TX at 25-32% but not one I’ve closed.  Las Vegas is somewhere around 40-55% depending on location.

For the right buyer, Bulk REO’s can be a steal; however, if you don’t have the right teams in place for moving the property or repairing them you may have a bunch of junk houses when you’re done.

In some cities, ordinances are being passed where the city (or you) will need to board up the houses that are vacant. In Detroit, the city is doing this and then slapping a huge lien on the property immediately afterwards which adds to your cost of ownership.

If you’re reading this third blog you’re probably ready for a quick chat. Shoot me an email (no I’ll not give it out on a blog) by going to http://SillyPricesSweetDeals.com and click on contact.

Thanks again for reading and feel free to leave a comment.

SillyPricesSweetDeals.com/1.html


Buying Bulk REO’s Pt. II of III

April 30, 2009

The realities of buying Bulk REO’s: Think about your first home. Can you picture it? Great, now rewind to the 30-45 days prior to you closing on that deal. Remember all the paperwork, appraisals, inspections, title work, and loan crap you had to deal with? How about the number people that were involved? Let me refresh your memory: Bank officer, Mortgage broker, title officer, escrow officer and or assistant, the termite inspection guy, the lawyer if there were legal issues, the appraiser, the appraisers secretary because you couldn’t reach him for your apointment…I digress…

There are bunch of people involved just to close a single home—buying bulk REO’s is far more complex

Why do people thing it will be a quick transaction when buying 10+ homes, or 100 homes on a bulk tape…a little dose of reality would be nice!

Lets review buying Bulk REO’s and selling REO’s and intermediaries.

Buyers: buyers of bulk REO’s tent to be real estate investors or developers. Rarely will just anyone want to shell out a 10 Million dollars blindly on a package of homes scattered across the states.  They’d prefer to buy in areas that they know and can do their DD on.  The other type of buyer is one where they’re going to purchase in bulk  and gamble that there will be another fool in line to buy it once they add some crazy fee.

Daisy Chains and Broker Sellers: I check title on a couple random properties when I get a tape. 90% of the time they still belong to a bank which means someone fell out of escrow and then that list was distributed via the internet to 900 other people who don’t know what they’re doing.

Buying direct from the bank: How many people have actually bought a single REO? Was it an easy process? Did you have a few hoops to jump through? Can you imagine the level of complexity when buying dozens of these homes? Some may be sent out to an auction house, some may be listed on the MLS and some may still be in the banks pockets and havn’t been released to the public yet.

Buying a tape: It’s not just a matter of having the bank send you a list. When the bank compiles a list of homes it has several important things to do first.   Job numero Uno is to verify that YOU are going to BUY the homes when the bank gets a list together. To do this you must first PROVE you have the money. No loans, No credit cards, no weprovidethecash.com things can be involved. CASH, HARD CASH and nothing but CASH, CASH, LIQUID CASH.  Goodbye! If you didn’t pass step number one, you won’t get in. The banks were nearly destroyed by ultra-leveraged borrowing schemes in 2003-2007. They don’t want to repeat this mess. Buying in cash tells the bank that you have the ability to hold on to that property and you won’t go into foreclosure. Once you prove you have the cash, the bank has to be able to legally offer you product.

Be sure to read Part III coming soon…


Buying Bulk REO’s Part I of III

April 30, 2009

This is a Three part Blog about buying REO’s in Bulk and individual homes. Brought to you by    Silly Prices Sweet Deals.com

We’ll cover these topics:

1. The realities of Buying Bulk REO’s, and Buying Bulk REO property or bank owned homes.

2. The reasons its not as easy as it may sound.

In this blog we’ll discuss the difficulties of buying bulk property from banks.

First Encounters with the REO: My first encounter with bulk REO’s was when a client asked our firm about buying bulk REO’s. At the time I was a Financial Adviser and knew very little about what he was looking for. I asked around with some of my old Real Estate contacts and stumbled into a bunch of people who could help me find “a Tape”. Well,  I’m glad I’ve started that process because its turned out to be quite a fun and rewarding adventure but along the way there were  huge hurdles I needed to get through and so much crap to put up with to get real answers…

Too Many Chiefs: One of the biggest issues most bulk buyers run into is the daisy-chain or broker-chain. This is a complex network of people who say they know a broker who is directe with the sellers mandate or rep. There have been times when I ask, “Are you the seller on this package”? The response i get is, “No, but my associate knows the broker who is direct with the corporation who is in charge of the sellers mandate”. What?? You’ll gain more respect from me by saying you’re with the Mob, and Vinnie was the guy with the thing at the place when the deed was done…fugettabout it…

Honesty: This is the first thing that lets me know if I’m on the trail of a real seller or some clown who doesn’t know what they’re doing. If I ask if someone if they’re the seller or buyer and they say no, then I may be headed in the right direction. What I need to have a successful transaction is one buyer who will write a check and one seller who has the deeds. If I have to deal with Tom who knows John, who then must speak with his boss Melissa who heard about Timothy….. I hate to break it to people but half the times when you say you’ve got a tape, you’ve got a tape that fell out of escrow at the bank, was sent out to a few securities reps, who then passed them on to a few real estate professionals, or developers…it snowballs from there.

Just last week I was talking with a seller who sent me a tape…and something just didn’t seem right. I pulled up my old tapes, which by the way I keep on file for smoking out the daisy chain groups, and this particular tape I received 3 weeks earlier from someone else at a SUBSTANTIALLY HIGHER PRICE! Basically the original “source” who sent the tapes marked a $700,000 tape to over $932,000. REALLY? $230,000 profit for forwarding a list to someone? Riduculous!

The seller and I had a good laugh.

The best way to make sure intermediaries and broker chain stay tame is to have the buyer put the funds into escrow to be verified by an escrow officer and then that escrow officer affirms the buyer to the bank. Done! If the buyer is real, then the bank moves forward. Do you think Countrywide or Chase need to PROVE to YOU that they have property for sale? Not a chance. Often times this, “We need to verify product” is merely a ploy to release a tape so that person can market it to the world… bad news all the way around.

In the next blog, we’ll discuss how things really work at the banking industry when you want to buy in bulk.

Keep an eye out for part II and II of Buying Bulk REO’s and bank owned property.

Visit us on the web at SillyPriceSweetDeals.com

© Jason Gray 2009.  All rights reserved


April 22, 2009

Dallas Texas Fixer upper.

PROPERTY DETAIL

8715 Mosswood Drive Dallas TX 75227

3/2 1656 SqFt built in 1960

Brick Exterior in a stable neighborhood

Very Few Foreclosures in Area


Purchase Price: $19,500 plus closing costs


Exit Plan: Rent or Lease option to a buyer


Value Per Comps: 80,000 on low end once rehabbed.

See full Comp Detail below


Rental Comps: (Estimated Conservatively)

$900-1000 a month for rent

$1000-1200 for Lease to Own



PROPERTY DETAIL

3/2 1656 SqFt built in 1960

Brick Exterior in a stable neighborhood


MAP

AERIAL VIEW



PICTURES (Street View is Clean)




COMPS-

Average 94,077 ARV based on low sales and high sales in last three months

For this and other properties visit us HERE

SillyPricesSweetDeals.com




Success with Out of State Rentals/Rehabs

April 10, 2009

Here is  a quick outline for my Series titled: Virtual Investing-how to be a success at out of area real estate property.

  1. Know your Neighborhood
  2. Know your Team-It’s all about Management
  3. Know your house-how to tell if its a good rehab or fixer upper.
  4. Know your competition-What are the other homes in the area doing (rent, maintenance, repairs, crime).
  5. Know your tenant-proper use of background checks can virtually eliminate your tenant issues.
  6. Know your potential weaknesses-what are you most uncomfortable with and how to turn it into a strength.
  7. Follow your gut-don’t break your own rules-you’ll live to regret it.
  8. Use your team to Grow-you can’t be everywhere use your team to be come more successful and more potent as time goes on

SillyPricesSweetDeals.com

Next Month we’ll be discussing how to successfully invest in Bank Owned Homes that aren’t in your state.

All my best, JG


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