Thursday, November 11, 2010

Gratitude Challenge - Change Your View - Change Your Life....

I want to thank Drew Canole for sharing this video.  It's a wonderful reminder to have and share gratitude for the blessings in your life.

So, Thanks Drew!

Tuesday, August 31, 2010

How to Profit with Orlando Real Estate

Why I choose to invest in Orlando investment properties:

If you live in an area like I do (Denver), where property prices are high, but rents are fairly comparable to rents in other large metros, you’ve probably been wondering how you can get into this gold-mine you keep hearing about on the news… where property prices are so low. I wondered too. So I checked out a few areas around the country that had been much more depressed than my home area… areas like Nevada, Arizona, California and Florida. Because, after all, I want to buy in areas that were hot and will be hot again; but that have had significant price drops that I can use to my advantage.

Here’s what I found.


  1. Nevada’s major draw is legalized sin, basically – gambling and prostitution. It’s not really an area where I would be comfortable owning rental properties. After all, who is my renter going to be? An empty eyed gambling addict pulling at the handle of the slot machine hoping for the “big one?” Thanks, but no thanks.
  2. California’s prices are still crazy high compared to rents. Even the bad areas are still expensive. And the state itself is on the verge of bankruptcy. While it is an attractive area, I found too many fundamental problems for my risk tolerance.
  3. Arizona is a little too controversial right now with all the protests against their immigration law. And it was so overbuilt that there is an awful lot of inventory to clear out – a lot more inventory than there is population. I found that population there is dropping, which means that the rental markets there will be slower.
  4. In Florida, I found that it was overbuilt in certain areas, but that population is increasing, even amongst young 20somethings, who are a perfect group for renters. I found that although Florida has a high unemployment rate, companies are hiring there again. Disney is putting a brand new billion dollar project in place in Orlando.

So, I thought, now that I have it narrowed down to Orlando, how do I buy properties there safely? How do I know that these properties aren’t filled with mold, Chinese drywall, termites…. Or that the people selling them even own them? If I don’t have eyes on the ground, how do I protect myself from scam artists? Luckily, I know some people who happen to be investing in the Orlando area. I researched them and by the time I was done, I was so impressed that I decided to become a Director in the company.

Investors Alliance Asset Management Group, a division of HIS Real Estate Network, was formed specifically to take advantage of the phenomenal opportunities available in Orlando today, and to share these opportunities with other investors. We started with $5,000,000 to purchase properties directly from banks – and we purchase the properties in bulk. Our acquisition manager picks specific subdivisions that have fabulous amenities; subdivisions where you would like to live. While that is not often a criteria for rental properties, I like it that I can get affordable properties in very nice areas. After our acquisition manager purchases the properties, our construction crews get to work. They fix up each property to like-new condition. Once the properties are in excellent condition, we assign them to an expert property management company and they get the properties leased. Then, and only then, we offer select properties to our VIP buyers list.

Let me give you some real-life numbers so you can see for yourself what we are talking about:

One condo in a gated, resort-like community has 3 bedrooms and 2 bathrooms. It’s approximately 1260 square feet. In 2006, this condo sold for $432,000 – so yes, it has granite countertops, crown molding, etc. It’s a NICE place. It would cost $150,000 to rebuild and the current tax appraisal is $125,000. So, we bought the condo for about 10% of what it sold for in 2006, fixed it up, rented it out at $850 a month and sold it for $59,900. It’s cash-flowing for the investor from the day of closing. Now, we recommend that investors hold on to these properties for at least 3 to 5 years to take advantage of market recovery. And when a property is cash-flowing, how many properties can you afford to hold on to indefinitely? That’s right! As many as you can grab.

To find out more about our investments, check my website at www.christinamellott.com. On it, you will get immediate access to a free report about the Orlando Market. I would also like to invite you to an upcoming live 2 day training event and property bus tour! The first day, we will teach you how we manage our business and the second day, we will take you on a bus tour of our available properties, so you can meet us and see for yourself that we are the real deal.

I’d love to meet you in Orlando – come check us out.

Christy Mellott
Executive Director, Investors Alliance Asset Management Group

Saturday, August 14, 2010

Top 5 reasons to buy REOs

Today, I'd like to talk to you about the top 5 reasons to buy REOs, as opposed to foreclosures or properties directly from homeowners.  First, let me explain to you what an REO is.  REO means Real Estate Owned and it is real estate that is owned by banks.  It's generally been taken from the previous homeowner in foreclosure.


1.  REO properties are free and clear.  They have no other liens against them.  For instance all the taxes have been paid, any mechanics liens or 2nd or 3rd mortgages have been paid.  If you are working on a property that is in the foreclosure process, there could still be many other liens on it.  There certainly could be 2nd mortgages, mechanics liens, tax liens or any number of other problems that you will have to deal with as an investor.  Savvy investors know to always check the title BEFORE you buy a property.  The same could be said for properties owned by individuals -- unless you have a title company who can check title for you, you could be in a world of hurt when surprises, like other owners for example, come up.  When the property is already owned by the bank, there are no other owners -- it's just the bank.
2.  Banks are motivated sellers.  Banks are not allowed to own properties and the more they own, the more trouble they are in.  They need to get rid of these properties and get rid of them at reasonable prices.  Though if you are only buying one at a time, you might disagree with that as banks are also trying to recover as much of the property value as they can.  However, if you can buy several REOs from a bank, you can get them for much less.  Also, the bank has already spent a fortune on the foreclosure and they now have carrying costs for any property on their books.  The more properties they have, the more trouble they get in with regulators, and with their shareholders.  It's very good for banks to get rid of REO properties. 
3.  You don't have to go through a long process like you do if you are trying to get a bank to agree to a short sale.  You don't have to get all of a seller's personal information and constantly submit fresh paperwork to banks or work with seemingly unmotivated loss mitigation representatives.  While short sales can be very lucrative, and I believe in helping homeowners to avoid foreclosure so it is worth it to do short sales, if you can buy a property that a bank already owns, it's a simpler process.
4.  Properties are ready to be yours right away.  REOs are generally vacant.  Any tenant has been evicted or the homeowner has already moved out.  Unless you have a squatter, you don't have to deal with evicting a tenant or with angry homeowners destroying a house before you are able to buy it.  What you see is what you get -- you will already know if the house is destroyed when you make your offer.
5.  You get clean title with an REO property.  The bank is the owner as soon as the foreclosure process is completed.  There is no question about who owns the house and you won't magically have 5 other heirs show up on title making it impossible to purchase the property -- which is something that happened to a fellow investor and friend of mine.

I hope you learned something from this and look forward to speaking with you soon.

Christy Mellott
www.christinamellott.com <- go here to get a free report on investing in the Orlando Market (yes -- in fixed-up REOs) and 2 free tickets to a Real Deal Commercial Investing training and bus tour that normally sells for $997

Saturday, August 7, 2010

Spinning Wheels, Spinning Round

I was listing out the courses that I've purchased and mostly completed over the past 5 years.  I had an acquaintance ask me to teach him how to invest in short sales and to do short sales negotiating over a Facebook chat message.  And it made me think of all the time and money I've spent educating myself in these fields of real estate investing and marketing.  And it made me wonder why I haven't organized my business better.  I have more training under my belt than most other people I know.  45 courses and mentorships over the course of 5 years is 9 a year.  Plus I paid for access to Dwan and Bill Twyford as coaches and am currently in the MMM Challenge.

For a long while, I didn't have to do anything with this knowledge.  I was learning in order to keep my mind alive -- just following things that I was interested in.  I was going to start a business when my son went to preschool.  That 2.5 hours 3 times a week was going to be my time to start a business.  Then my father-in-law got very sick and eventually died.   Then I got pregnant with my daughter.  I had a lot of excuses, I mean reasons, for not starting a business. 

And I was always afraid that I didn't know enough (which you'll laugh at, after you read the list below).  That's a fear that I think a lot of people have -- and one that is preyed upon by many gurus.  I didn't actually call a seller until after my husband lost his job and got a new job that paid less than half as much.  That's when I started making money instead of just talking about it.
  1. Michael Masterson's Accelerated Program For Six Figure Copywriting
  2. Michael Masterson's The Masters Program For Six Figure Copywriting (haven't completed this)
  3. The Quick and Easy Microbusiness System (haven't completed this)
  4. Direct Marketing University (haven't completed this)
  5. Direct Marketing University, The Master's Edition (haven't completed this)
  6. Jeffrey Taylor's Landlording systems
  7. ETR Bootcamp in a Box
  8. Ultimate Buying and Selling Machine (Larry Goins)
  9. Apartment House Riches (Dave Lindahl)
  10. The Ultimate Travel Writer's Program
  11. Make a Flippin' Fortune (Ron Mead)
  12. 31 Days to Profits in Probate Real Estate (Ron Mead)
  13. Improve Your Credit Now (Ron Mead)
  14. Wholesaling Houses for a Living
  15. Corey Rudl's Accelerated Internet Wealth
  16. The Billionaire Way
  17. 6 Steps to Mastering Foreclosures (Alexis McGee)
  18. The Sedona Method
  19. Wholesaling for Quick Cash (Steve Cook)
  20. The Instant Entrepreneur 
  21. Advanced Short Sales (Dwan Bent-Twyford)
  22. Foreclosure Fortunes (Dwan Bent-Twyford)
  23. How to Turn $10 into $10,000 in 30 Days or Less (Dwan Bent-Twyford)
  24. Short Sales Secrets (Dwan Bent-Twyford)
  25. Shut up and Stick to the Script (Bill Twyford)
  26. Secrets of Closing the Deal (Bill Twyford)
  27. Foreclosure Investing Strategies 
  28. Real Estate Success Library (Bill Bronchick)
  29. Power Real Estate Negotiating (Bill Bronchick)
  30. Rehabbing for Fun and Profit (
  31. How to Sell a House Quick in a Down Market (Ray Cooper)
  32. Jim Banks Probate Profits Made Easy
  33. Larry Goins Mortgage Broker Training
  34. Vena Jones-Cox Advanced Marketing
  35. The Agent Magnet (Bob Massey)
  36. The Short Sale Success Blueprint (Josh Cantwell)
  37. Virtual Wholesaling (Cris Chico)
  38. Real Estate Voodoo (Cris Chico)
  39. Short Sales Riches (Nathan Jurewicz and Chris McLaughlin)
  40. Michael Jake's Platinum Mentoring Program
  41. Hedge Fund Lending (Richard Geller)
  42. Credit Repair system (Richard Geller)
  43. Shortcut to Money Secrets (Thomas Kish)
  44. Bulk REO Secrets (Susan Lassiter Lyons)
  45. Inspired Action Weekly (Matthew Ferry)
Right now, my business is mostly just me, though I have a couple of emerging partnerships for apartment investing and bulk REO deals.  I am also working with a fabulous local Realtor and a short sale negotiator.  I am also fortunate enough to know lots of excellent people.  Maybe I am just feeling stretched a little too much right now...  

I have a few steps I need to take in order to take my business from just me to a viable business that allows me to not just stay home with my children, but to spend time with them too.  This summer, they've spent largely in front of televisions and video games because I've spent so much time working.... and it's a summer that I can't get back with them.  Being a mommy with a business has been a challenging balancing act for me.

The first action I need to take is to write descriptions of the systems that a virtual assistant can take over for me.  Then I need to hire a virtual assistant so that I can simply manage the systems & so they get done without my constant involvement.

So, I'm off to do that now.

Have a wonderful day!

Christy
Millionaire In Training, MMMChallenge.com
www.christinamellott.com
www.housingheadaches.com

Monday, August 2, 2010

I wanted to share this post from an email I received today from Chris McLaughlin, an attorney in Florida who specializes in short sales. Since I am in Denver, it was particularly interesting that Altos Research considers the Denver market to be unstable. We are definitely seeing a slow down in the number of buyers in the market.

"Real estate data provider Altos Research is taking a very bearish outlook on the housing market. The California-based company says that ominous shadow inventory of distressed properties hanging over the industry will lock home prices into a downward trajectory for the remainder of this year, with property values
starting out 2011 even lower than they were in 2009. Market trends charted by Altos show that inventory levels are indeed moving higher and the influx of shadow inventory is beginning to show in the market. The company’s VP of data analytics, Scott Sambucci, described a noticeable shift in housing supply dynamics in a Webinar earlier this week, in what he called “a sign of market weakness.”

Since January, and particularly post-tax credit stimulus, Altos has tracked a rapid divergence in inventory numbers vs. listings sold and absorbed. This, Sambucci explained, means more inventory is coming onto the market, with less inventory leaving. As a result, he says, we’re going to see an extreme inventory overhang going into 2011. Add to that the fact that the pool of viable buyers out there is shrinking – thanks to tight credit, a declining homeownership rate, and more and more consumers being locked out of the market after a foreclosure – and you’ve got an equation that’s right in line with Altos’ bearish outlook. Following the rudimentary rules of supply and demand, more inventory with fewer takers equals lower prices. Altos Research provided its assessment of the most stable housing markets…and the markets that it considers to be on shaky ground. The San Francisco metro area topped the stable list, along with Las Vegas and Washington, D.C. Unstable metros included Minneapolis, Denver, Chicago, and Phoenix."

What do you think? How have your markets been behaving?

Leave me a note and share what you're seeing!

Christy Mellott
www.christinamellott.com
www.realdealcolorado.com

Tuesday, July 13, 2010

What Should You Expect During the Short Sale Process?

In today’s difficult real estate market, sometimes a short sale is the best option for a homeowner. You’ve already tried a loan modification and that didn’t work for you. Or you need to move but can’t afford to sell the house because you owe more than it’s worth. And your financial state is such that you can’t bring money to the table to sell the house… or you can’t do the necessary repairs and maintenance anymore, you need to sell your house for less than you owe on it and get the bank to accept that amount as payment in full.

Sometimes you won’t qualify for a short sale. For instance, if the house is worth less than the mortgage, the bank is unlikely to accept less than what you owe on it because you can sell the house and cover the mortgage. Or if you have a ton of money in your bank accounts, the mortgage holder is not going to look kindly on your application for a short sale. They will expect you to come up with the difference to sell it.

So, if you likely qualify for a short sale, here is what you can expect from the process:

1. It will take time. Short sales take longer than regular sales because we have to negotiate with the bank to get them to accept less than you owe on the house. Some banks work much more quickly than others. However, many are notorious for taking months to even assign a processor to the file.
2. You will have to prove your financial hardship to the bank. The bank basically requests all the documentation that they wanted when you got your loan – only this time, you are proving to them that you can’t afford it anymore.
3. Once the bank decides that your financial hardship qualifies you to participate in the short sale process, they will order a broker’s price opinion or an appraisal on your house. They want to be sure that the house is actually worth less than what you owe on it.
4. You might need to continue to give the bank updated documentation and they might send you other documents to sign during the process.
5. The bank will either accept the offer, reject the offer or make a counter offer on the sales contract. You need to have a sales contract on your house in order to start the short sales negotiation process. Because it can take so long, it’s often a good idea to work with an investor. People who don’t understand the process, like first time homebuyers will often back out because of the time.
6. If the offer is not accepted, you must negotiate with the bank and with the buyer (unless you are working with an investor who will take care of all this) to get their prices aligned.
7. When a short sale is accepted by the bank, your buyer must close within 30 days of the acceptance letter.
8. If you are in the foreclosure process, you must keep on top of the bank to ensure that your house does not get sold on the sheriff’s steps while you are trying to work out a short sale.

When you are working with a Realtor to get a short sale accepted, there is about a 5% acceptance rate. Realtors can’t start the short sale process until they have a contract on the house. Buyer brokers do not like to show houses that are in the process of a short sale because they know that they are likely to lose a buyer who is ready to go if that buyer has to wait for the short sale to be processed. And if they lose buyers, they can’t feed their own families. And Realtors don’t necessarily enjoy spending hours on the phone with banks negotiating a short sale when they could go sell the house down the street and make the same money for a lot less effort. Very few Realtors are actually trained to work short sales because, frankly, it’s just not as profitable to them as working normal house sales.

When you work with an investor who specializes in short sales, that investor will put your house under contract right away. They will work with you to get the paperwork package together for the bank. They, or someone on their team who specializes in short sale negotiations, will spend hours on the phone with banks checking up and following up on your file. They will also do their best to ensure that if you are in foreclosure your house does not get sold before the short sale is completed. When the short sale is accepted, the investor already has money lined up to purchase your house so it will not fall out of contract.

So, your short sale is much more likely to be completed if you are working with an investor who specializes in short sales, than if you are working with a Realtor who would rather just be able to list the house and find a buyer without having to deal with the headaches that come with short sales.

Christina Mellott
Millionaire In Training, MMMChallenge.com
www.housingheadaches.com

Thursday, July 8, 2010

Why Buy in Florida Now?

You've all heard the news... Florida market dropping like a stone .... unemployment is up, jobs are down. Real estate prices are falling, falling, falling. Loans are hard to get, the stock market is on its way down. What's a reasonably intelligent investor to do?

Well, I like to start at the top and take a page from Warren Buffet. After all, if you're going to model success, he's a pretty good guy to follow. And one thing that Mr. Buffet says is that you should get greedy when other people are fearful and be fearful when other people are greedy. Following this advice would have saved a lot of people who sunk money into the real estate market at its top. Guess where Warren Buffet is investing right now... That's it -- real estate!

Right now, we believe that the Orlando market has reached its bottom. Prices are showing upward pressure and investors are moving back in. That's why we've formed a fund and are purchasing properties directly from banks in Orlando.

Here's why we picked Orlando:
1. 55,000,000 tourists visit every year. It's one of the world's major attractions.
2. The city of Orlando is filled with beautiful parks, recreation facilities and has a world class international airport.
3. The Mayor and city council of Orlando are working hard to attract new businesses and are using federal funds to improve Orlando's infrastructure.
4. Disney is starting a new billion dollar development. They're pretty smart -- and we like to follow smart money.
5. Orlando businesses are hiring again.
6. Orlando is attracting a young population. Their influx of 20-somethings will provide an excellent base of renters for our properties.

There are 6 reasons that we are investing in Orlando. We provide a turn key solution for investors. The properties we purchase are in gorgeous communities. We fix them up, rent them out and sell them to our investors at below-market prices with excellent property management in place. If you'd like to learn more about investing with us, please contact me at 303-386-6732.

Christy Mellott
303-386-6732
mmmchallenge.com
www.realdealcolorado.com

Tuesday, June 22, 2010

Finding Buyers for your properties

It seems that I hear a lot of people these days who can get contracts on properties because sellers are desperate these days. However, they have problems finding good buyers with money to purchase the properties. Here are a few tips to find good buyers for your wholesale properties.

1. Go to your local housing authority and get a list of the section 8 landlords. Call the list. Yeah, I know -- calling people out of the blue is hard. But, you know what? If you are going to be a success in this creative niche of the real estate investing business where you aren't using a lot of your own cash to buy and hold properties, you're going to have to do some things that take you out of your box. Sometimes, you're going to have to cold call people. You're trading your previous comfort level for success. Get over it. Get on the phone and make the calls. Not only will you find some great cash buyers who want more rental properties, you'll find some landlords who HATE what they're doing and who will be willing to sell you their properties. GREAT situation -- finding buyers and sellers from the same list!

2. Get yourself to your local REIA meeting! Real Estate Investor association meetings and network. Talk to the president of the group. They will know who the players are and if you come across well, they will be thrilled to introduce you. Be friendly. Find out what is important to them and offer to help them with whatever it is. Follow up! I have met so many people at REIA meetings and hardly anyone actually bothers to follow up. That's great news for you. If you actually follow up, you won't just be one of the herd, you'll be unique and you'll be building yourself a good reputation.

3. Get a list from one of 3 places: Your title company, your MLS or RealQuest. Ask for a list that includes the following:
People who have purchased in your area
in the past 6-9 months.
Non-occupant owners
Loan balance = $0
Purchase price = whatever price range you want to sell it at
Get all the details that the list provider can give you
Realquest will be the most expensive of these options, but they include information that covers 97% of the properties in the U.S. If you can't get the information through your title company or your Realtor's MLS, they are a good option. And, isn't it true that it's worth paying a few dollars to get a list of solid cash buyers who are purchasing right now in your area?
Now, go buy a house!

Christy Mellott
Millionaire in Training, www.MMMChallenge.com
www.realdealcolorado.com

Monday, June 21, 2010

Do you Quit or Keep on Going?

There have been many times when I wanted to quit in life, but I just kept going -- in the final stretch to get my college degree and on my first completed wholesale deal are 2 big ones.
When I was going to college, I was also working full time while I went to college at night. I was also a leader of our Tony Robbins group in Denver and had a very active social life. Oddly enough, once I could see the end stretch, I lost the motivation to continue. I forced myself to go on & finish. It was very good for me. Just having a degree opened up job opportunities that would never have been available to me without one. And if I hadn't finished that, so close to the end, it would still be haunting me, 12 years later.
The other time that I was tempted to give up, but I knew I had to fight through was when I was doing my first wholesale deal in January. I had a motivated seller on the hook -- he had a property listed at $250,000 and after some negotiations, agreed to sell it to me for $130,000. I thought that finding a buyer would be easy! So, I called someone that I 'knew' could perform & spent over a week working with him -- and a week in wholesale time is a LOT of time! Well, for some reason, he couldn't come up with the money, so he told me to go and find another buyer. Luckily, it was just before one of the REIA meetings that I attend, so I pitched the deal there and got a ton of interest. Did I mention that I raised the price? I was going to sell it to the first buyer for $145,000 -- and when I had to go find a new buyer, I raised it to $150,000.
I showed the house and put it under contract within an hour. The somewhat new, but not totally inexperienced buyer seemed so eager & was working with a hard money lender who was thrilled to lend on the property. Well, the buyer decided that he didn't like some of the verbiage on the hard money lender's contract and backed out. 24 hours before closing. So, I scrambled and found another buyer who had the cash to close. I thought this buyer was experienced, because he lent money through the hard money lender, but it turns out that this was his first foray into buying a triplex. He freaked when he found out that the landlord pays for water and trash... and backed out 5 minutes before the deal was to close. At closing, I had to talk a very unhappy seller into extending the contract, which he did, for one week. It had started as a 3 week contract.
I put the property under contract again with another buyer, who is generally a great buyer, but the owner of the company was somewhere in Central America with spotty cell coverage and was very hard to get in touch with. They were supposed to fund through an IRA... guess what they didn't get in time? I had to ask the seller to extend again. He wouldn't do it.
So, I closed on the property myself using hard money for a week. Well, that buyer had several more problems getting their money and wouldn't pay the additional fees it was going to cost me to hold the loan longer. Therefore, I found another buyer with cash who FINALLY closed on the triplex. Because I was under the gun, I agreed to pay his closing costs as well. In order for the last buyer to close, the other buyer had to release their contract, so I had to return their non-refundable $3,000 deposit to them. On a property that should have been a slam-dunk $20,000 fee to me, I wound up making about $12,000 after all my costs.
It was hard to get that property closed, even though it had an ARV of $300,000 and fix up at the most would be $30,000, so with the price of the property and fix up costs, I was selling it at 60% of ARV, which is an unheard of value in the Denver area. Usually properties go at 75 to 80% -- sometimes more.
But, I persevered and made a nice check which I would not have done if I had not powered through all the obstacles. Wholesaling isn't that hard in most cases, so I had to deal with the worst first. I forgot to mention that the seller's Realtor kept scheduling closings, even though I didn't have the buyer's completely lined up? She definitely added an extra layer of complexity!
Now, time to go buy another house!
Christy Mellott
Millionaire in Training, MMMChallenge.com
www.realdealcolorado.com

Monday, March 8, 2010

Burn Exercise

This exercise is part of the MMM Challenge. We are in week 3 of the challenge. We wrote down some past limiting beliefs and some things around them like the people that we think contribute to them and why we haven't already achieved our goals, then burned the papers while we recited some of our affirmations.

video

Hope you enjoyed that and maybe you can do the same sort of thing to get past your limiting beliefs.

Danny Welsh and Rick Melero are excellent coaches. If you are interested in being a part of the MMM Challenge, go to www.mmmchallenge.com and apply for the next round. It's truly a wonderful opportunity... the only one I've seen where they actually offer to coach people for free.

Until next time...

Friday, February 12, 2010

MMM Challenge Real Estate Menternship Program

Well, I applied for this free program and I got the word this morning that I am one of the 24 Menternship Students. How exciting is that?

Saturday, January 30, 2010

Over and Out! Finally.

Now, you would have expected that the closing with the experienced investor buyers who had plenty of time to do all their due diligence and get their money together would have been a piece of cake. You, however, would have expected wrong.

On Thursday afternoon, a bit after 3:00, I hear from them that they didn't get the HUD 1 from the Title Company until 8:00 Thursday morning. Therefore, they claimed, their investor wasn't going to be able to get me any money until Tuesday. That was going to cost me an additional 2 points, plus a payment of $1,320 - so approximately $4,000. I told them that I'd extend the contract if they covered my cost. After all, I had already bent over backward to work within their time frame. Also, I had cleared out the unit that people had left full of junk, gotten the current tenants to agree to the new rent, gotten the current tenants to sign their old lease as we didn't have a signed copy & gotten them to agree to make up the security deposit that the old landlord had taken in lieu of rent.

Well, they didn't want to pay the additional $4,000, but wanted me to extend it for free. Now, I'd already paid 2 points to a private lender as well as $1,800 in closing costs, rather than calling a cash buyer to close on the 22nd, in order to be able to work with these guys. To put it in monetary terms, I'd already spent $4,400 of my profit. Now, they wanted me to eat $4,000 more? When I'd first talked to them, they told me they could close in 2 or 3 days. When I got the seller to extend the contract, they told me they could close in a week. When they went under contract, they told me they could close in 2 weeks. Suddenly, 25 hours before closing, they needed more time. I had some serious thinking to do.

What were my options?

1. Let them have an extension and eat $4,000.
2. Keep it myself, along with their non-refundable $3,000 deposit.
3. Call another buyer and sell it to him on Friday before I had to pay the extra points and payment to the lender.

So, I called the other buyer. He agreed to buy it as long as he could just wire $150,000 and I'd pay his closing costs. In order to do this, I had to get the first buyers to release the contract... which they agreed to do as long as I didn't keep their deposit. So, another $3,000 lesson. Get the money released from escrow as soon as it goes hard. And another one, make it clear up front that there will be a high cost for any extension of the contract. It needs to be built in up front.

I wound up closing with my cash buyer who unfortunately wanted his title policy held open. This cost me over $600 because I had already held open my policy, expecting to turn it over to an end buyer and not incur any additional costs on it. The total amount I made of the $20,000 that I expected after all the expenses was about $11,800. It was a very, very expensive learning experience and I felt pretty beat up last night. I know I made money and that's great, but I just didn't feel like celebrating because the cost was so high.

Well, I have 3 short sales lined up and am going to be on the hunt for more wholesale deals. I've learned a lot from this and am certain that my next deal will be so much smoother. My wonderful Realtor tells me that it would be really hard to top how difficult this one has been.

Until next time...

Saturday, January 23, 2010

Proud owner of a triplex... for a week anyway

I've been very, very busy this week. I had to close on the triplex myself because my buyers needed more time to close than the seller was willing to give me.

I found a transactional funder who financed the property for a week. It's costing me 3.25 points (which I thought was 2, but when I read the loan docs, it costs an additional 1.25 points when I pay off the loan). So, with the funder who got the loan approved in 2 days - kudos to her!!! - I was able to close on the triplex on Friday afternoon.

Also, my Realtor wrote a contract between me and my end buyer and I'm paying him extra for all the work that he did to help me. He's been a rock and I'm so happy to have him on my team.

Friday night, I put a "free stuff" ad in Craigslist and spent Saturday morning giving away all the stuff people had abandoned in one of the 2 bedroom units. They literally left a houseful of stuff, as well as 9 leaf sized trash bags of trash (so far). Tomorrow someone is driving up from Colorado Springs to get much of the rest of the stuff (woohoo!).

My buyers are going to close sometime on or before the 29th - hopefully before. And I must say that not going with these buyers in the first place cost me around $5,000. This was a very expensive lesson to learn, but believe me when I say that it is well-learned. And even though it cost me money, I have made quite a few good contacts from it, including 2 more cash buyers and 2 good funders.

I'll let you know what happens next week.

Until next time...

Monday, January 18, 2010

Lessons to Learn

So, now there's a gap between when my buyer can buy and when the seller needs to close. I have put down $2,000 of my own money and am looking for the best rate on transactional funding for a week.

I had a very frank conversation with Brad of IRR and he told me that I could have avoided all of these buyer problems if I'd had a tighter process. He's absolutely right... This really is all my fault. I've let the buyers roll all over me and have been far too accommodating when they've asked me to change things in the assignment contracts. I need to get tougher. No more working with anyone until they sign the contracts and put down some money, because if they haven't done that, they aren't really a buyer... and I need to add a clause that says if a buyer defaults after their inspection (like my first buyer did), they have to pay my whole fee. That would certainly make them think a lot harder about backing out when they have money approved. I'm thinking that I need to get IRR's assignment contract.

And, I have to tell you that Bill Twyford, who I coach with on Skype, really has my back. He actually contacted the most recent buyer and chewed him out for backing out at the last minute.

So, I'll let you know how it goes. Until next time...

Saturday, January 16, 2010

Challenging Week

Well, I thought I had the property sold to someone that I know and trust. However, he couldn't find money for some reason or another, so said I should shop the deal. That took about a week, but it was actually very helpful. We got an inspection and we got an estimate from a roofer on what the roof would cost.

Therefore, I pitched the deal at our local REIA meeting, to IRR. I was mobbed at the meeting. All 25 of my flyers got snatched up and 8 other people left me emails or cards. I showed the house to 4 people the next day and accepted the first guy who offered to give me a check. That's where the problems started.

While the buyer seemed to be very eager to buy the property, he had to work with hard money. The hard money lender was awesome. Their appraiser said the ARV (after repaired value) of the property was up to $300,000. A screaming deal when you look at the buyer's purchase price of $150,000 plus his estimate of $27,000 in repairs. Well, they approved the buyer, but the buyer didn't like the terms of the loan, so backed out. He told me at 10:17 Thursday morning. Closing was supposed to happen Friday at 3:00.

Thursday morning I started calling everyone I could think of who had shown interest in the property and who might be able to come up with cash to close the deal on time. The hard money lender called people too. So, I showed the house to a couple of people on Thursday at 3:30. One was the man who had been going to fund the loan for the hard money lender to the first buyer. I'll call him funder guy. The second was partners - one of whom could come up with cash in the short period of time needed.

The funder guy and his wife looked around and left, saying that he would call me later. The partners stayed for 3 hours. They did a very thorough review. They talked about just letting them take over the contract and give me a note for some part of my fee... I wasn't comfortable with the options they were offering because at this point, I would really like to just sell it and move on, so I promised to think about it and call them if I decided to go ahead.

The funder guy called me later and agreed to close on the property on Friday for $145,000. So, I was on the phone with him all Friday morning, sent him documents, my rehab contacts and all that. He signed the assignment contract, after getting me to take out any non-refundable part, since we were doing the deal in just a few hours... and met the realtors and the seller at the property.

So, I'm driving to Golden for the closing, which is a half hour drive and the buyer calls me up 5 minutes before closing time. He tells me that the seller pays $140 a month for trash and between $50 and $150 a month for water (I'll just call it $100 to keep it simple). He thinks that this $240 a month changes the value of the property by $30,000 to $65,000. He steps out of the deal. When I get to the closing offices, where my realtor is, they're on the phone... negotiating a much, much lower price than the one we had agreed to. I told my realtor to tell him we'd get back to him.

We called a buyer who's been interested in the property the whole time, who buys around 10 houses a month and asked if they wanted it since it appeared the deal had fallen apart. They do!!!! So we got the seller to extend the contract, which wasn't an easy thing, let me tell you, because they were highly annoyed at being put off again.

This has been the most trouble I've ever had closing a property. I'm trying to keep the deal alive, but am very worried that it's not actually going to work.

Until next time.

Thursday, January 7, 2010

Holy Cow, It Works!!!

So, the seller of the triplex who had dropped $60,000 off his price on the phone called me the day after Christmas and again a day later. He really, really wanted to get rid of the property.

So, I figured out what I would be comfortable offering (which was around $108,000), then Skyped with Bill Twyford, who advised me to start at $120,000. The seller had the triplex on the market for $250,000. I got on the phone with the seller (nervous as all get out) and explained that I was embarassed to make this low offer, but the property wouldn't cash flow at $190,000 (which was what he told me earlier was the best he would do). He told me to just tell him the number, so I did. He told me I was a little off. For once, I actually remembered the negotiating tactic of he who speaks first loses... and I shut up and let the seller tell me how much I was off.

He said "$10,000."

So I said "You'll take $130,000?"

He said, "Yes."

So, I told him I had to think about it and would get back to him. I got off the phone, did the happy dance and called back a while later to accept the offer. I called up my fabulous real estate agent to write the offer on the 28th and we had it all signed and sealed up on the 29th.

Meanwhile, I started calling people on my buyers list... people that I was sure could perform. Well, long story short, I spent a few days working with someone who I greatly respect and he couldn't come up with the money and was kind enough to tell me that I could shop it.

So I called Michael Jake to talk to him about it... Now I gotta say that I feel extremely blessed to have access to Bill & Dwan Twyford and to Michael Jake. They are a giant help!

Michael told me how to pitch the deal at the IRR meeting the next night since it has both equity for a flipper (between $60,000 and $90,000) or is an excellent rental property which will cash flow some $1,200 a month. So, I called up my sister to watch the kids, made up my flyer just before the meeting - yeah, it was very badly organized... I put in the numbers, but forgot to put in the property address. I printed 25 flyers, thinking that would be plenty.

I have to admit that the IRR meeting was almost perfectly designed to sell a property. Brad and Andy were talking about getting past your fears of wholesaling and went through the 9 deals they had wholesaled last month. When I got up there with a property, which I must say is an excellent deal, I got mobbed. Literally. They had to restructure the meeting because so many people were running up to the front to get my flyer. Not only did I run out, I took approximately 8 other emails who were interested. And, one lady called me before she left the meeting because it was too crowded for her to get through. Trust me when I say that this was not what I was expecting.

I emailed the flyer to everyone when I got home Tuesday night and called back the lady who had called me first. Wednesday, the calls started pouring in. I showed the property to 4 people between 4:00 and 5:00 Wednesday afternoon & had a call from someone else who wanted to see it after I already accepted the first guy's deposit to assign the contract. Obviously, I had to tell him it was gone.

Now, the guy who I accepted is going through a hard money lender, so has to wait a week to close. The other people there could close faster. I called a Denver investor friend of mine and Bill Twyford (unfortunately after the fact) and got excellent advice to always accept the guy with cash first. Put the other guy in 2nd position.

Still, I feel as if I gave a newer investor a chance to get a great deal. It helped that I talked to the hard money firm he's going through before he ever did, so they're pretty forthcoming about whether they can fund the deal. At this point, it looks like a "slam-dunk." All they're waiting for is the buyer's list of repairs.
Which, of course, I helped with. I sent the buyer some contractor resources, including a roofer who had already given an estimate for necessary repairs.

My realtor told me to make sure the money commitment is firm by tomorrow in order to let the guy keep the deal. One of the excellent new clients he got from my showings really wants it - and they have cash.

So far, this has been a win for a number of people.

1. The seller who is getting rid of a property he doesn't want & getting a profit out of it.
2. The seller's realtor who is getting a commission.
3. My realtor who is getting a commission and a few new investor clients (Did I mention that he's the best investor realtor in Denver?)
4. Me - I'm getting a $20,000 assignment fee.
5. My buyer who is getting a property for $150,000 + $22,000 in repairs that will be worth $262,000 (10% CAP rate on NOI) when it's all fixed up and rented out.
6. The hard money lender who is getting points and interest.
7. The title company who is getting their fees.
8. However many contractors the buyer uses to fix up the property.
9. Some section 8 renters who will get a fixed up place to live in a decent area.

Well, to be fair, the last 2 haven't gotten any benefit yet... but they will.

This is a pretty cool business. The property must close by the end of next week, so I'll let you know what happens between now and then.

Until next time...