Foreclosures Down — But Are They?
June 12, 2009
We are getting some more mixed news this morning on national foreclosures. On one hand, foreclosures have dropped compared to last month. On the other hand, the number of foreclosures is above 300K which is still a HUGE number historically. Now that the foreclosure moratorium is beginning to lift, we will definitely see some of this type activity for a while.
In today’s Washington Post, they write:
Foreclosure filings fell in May compared with the previous month, but remain at elevated levels, according to data from RealtyTrac released today.
The firm counted 321,480 filings nationally, which can range from default notices to bank repossessions. That was down 6 percent from April, but an increase of nearly 18 percent from May 2008. RealtyTrac, a private firm, says its data include more than 90 percent of U.S. households.
Despite the dip, this was the third month in a row that foreclosure filings exceeded 300,000 and the third highest monthly total since the firm began collecting the data in 2005, according to RealtyTrac. The company estimates that in a normal market, filings would fall to under about 100,000 a month.
As we move forward through the coming months, we will continue to see a lot of mixed data such as this.
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Investor Alert: Bank Owned REOs Without Pictures?
April 2, 2009
Many people believe that now is a great time to buy a bank owned properties (see yesterday’s poll). In some locations, you can literally buy for pennies on the dollar.
In addition, in some select areas, properties can be rented to generate 18-25% cash-on-cash returns while still picking up substantial equity.
That is the good news but what do you need to worry about??
The “No Bull” version is that these properties are being offered by everyone, with many of them junk. Heck, it wouldn’t surprise me if Joe The Plumber was trying to get in on the action.
Over the last few months, we have sat in on about 1.2 million webinars (or at least if feels that way) of different groups “pitching” their homes. There is a lot of things to consider to separate junk from good, but let me give you one insider’s tip:
If the offered property is supposedly rehabbed but the provider has been “too busy” to take pictures inside & out, it should raise a flag.
We have been actively looking for the best cash flow homes for ourselves and our clients and it is amazing how many providers don’t have inside pictures. At least for me, I have a hard time believing in a property if I can’t at least see what the inside of the property looks like.
BE REALISTIC In Your Expectations
Please realize that this is a FAST MOVING industry. So, it is not unreasonable for providers to have to sequence the process. From the best providers, here is the process that we have seen:
- You get exposed to the property immediately after their purchase (raw form):
- You decide you like that location and then go to contract (with only exterior picture);
- Their team hits the ground, gets pictures, finalizes their game plan to rehab, and gets info to you;
- You then close AFTER seeing interior pictures
Now realize that these pictures can still be a little rough….. rehab is typically scheduled shortly after you close. It is paid for by the property provider. So when you look at the pictures, DON’T EXPECT pristine condition…. it won’t be. However, you will be able to get a good idea of layout and current condition before they rehab it for you.
Are You Really Ready For What You Will See?
Having been in this business for quite some time now and having seen my share of preforeclosures, VA Repos, and bank REOs, I am over the “shock factor” when I first got in this business.
When someone goes into foreclosure and gets hounded by creditors and debt collection agencies, many go from being an upstanding citizen to being a wild cave dweller. Believe me that most will not “tidy up” the property on exit. Rather, they are much more likely to do cosmetic damage, steal light fixtures, trash carpet, bang holes in walls, etc. 
For the unprepared, this can be quiet shocking. I know when I walked into my first VA Repo, I recoiled in horror.
Now let me tell you what the pro’s know that most people don’t. Most of that stuff is cheap and fast to fix. We have picked up homes that would disgust most people and with a couple thousands dollars and a “mow and go” clean up on the outside, place looked great. However, if you don’t know what you are doing, you can get in way over your head doing it yourself.
As long as the rehab/cleanup is being handled by the property provider, and they and their crew are experienced, then your job is to look past the cosmetic things and really quickly assess what this property will be like with a little TLC.
Is Now The Good Ole Days Of Real Estate Investing?
February 16, 2009
Are The Good Ole Days Here Again?
I was thinking the other day, boy, do I miss the good ole days…… You know, like back in 2005 during the heyday of the real estate bubble.
At that time, it was actually very simple to buy & sell houses and put a six figure income in your pocket. I personally was doing this and will even share my “secret, can not fail, so easy to do it my dog makes money” GURU System. And I won’t even charge you.
Here were my steps from back then:
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Step 1: |
Be located in a hot area; |
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Step 2: |
Convince a good local realtor that you are in position to close houses fast, all you need is deals that are “below market”. In my area, these are referred to as “back pocket” listings and they were not on MLS yet; |
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Step 3: |
If the property was in good shape but maybe needed a LITTLE cosmetic work, then buy it and get permission to market and do alterations before close of escrow; |
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Step 4: |
As soon as people moved out, order a “mow & go” which was a quick yard clean up, maybe do some touch up paint, etc. but keep expenses below $1,000; |
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Step 5: |
Have the same realtor from Step 2 start “spreading the word” that they have a hot new listing coming on the market; and |
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Step 6: |
Sell & close in about 45 days. With a small market discount, a little clean-up, good remarketing, and 45-60 days of appreciation, this was a little goldmine. |
While there were fancier methods to avoid some of the expense and risk, this approach was easy and could be implemented by the realtor, my wife, and about 2 hours total of my time per home.
Net Profit Per Home? About $15,000 to $20,000.
Boy I miss the good ole days…..
One interesting note here is that while this was QUIETLY going on, most other investors were whining about they couldn’t find a good deal anywhere.
Are The Good Ole Days Here Again?
It does not take a rocket scientist to know that we are in a very unique time in real estate history, although depending upon your age and experience, you have also probably witnessed some other “interesting times” like in the RTC debacle.
Like during every other real estate market, I am hearing reports of some individual investors “slamming it” and a bunch of people saying, it’s impossible to get anything done (some things never change). The people that are really making hay during this market (no, not the ones trying to sell you guru courses) all have systems in place that are working in their market.
The ones that are saying its impossible are saying
- Banks are being uncooperative;
- Takes 4-5 months to get a short sale approved;
- Everybody is upside down with no equity;
- As soon as somebody shows up on a pre-foreclosure list, they are hammered by every realtor and would-be investor in town;
- Etc, etc.
Even with these issues, there are a few people that are putting 6 figures in their pocket annually and some of them are doing it monthly…..
For them, THESE are truly the good ole days.
This Approach Is A BUSINESS, Not A Hobby
I have to laugh every time I hear a “Guru” advertise their latest product or coaching course as “work only a few hours and make XXX/Month”.
In actuality, they are right about that but only AFTER you have the business set up and IF YOU set it up correctly. Let’s return to my example of the good ole days. If you look, I was averaging $7,500 to $10,000 per hour of MY TIME.
With that statement and the proof I could provided, I could have gone out and sold courses, coaching classes, workshops, etc. But here is what I know (and the Guru’s know it too), that to get to that stage usually takes a heck of a lot of work.
Nothing wrong with that but to generate active investment income like this, you will need to be IN THE BUSINESS of real estate.
Usually what this means that you take somebody else’s concept, you adapt it to your market (lots of trial and error), you then assemble an external team around you, and then you are in a position where hopefully this is highly profitable.
Right now, I see a few people that seem to have a “good system/business” for making great money in this market. Each has there own little twist, and many of them have learned it from a guru. However, they have then worked hard to adapt it to their market and style.
I can assure you that there is very big money to be made in this market given all the turmoil that we are in. However, you need to decide “are you looking for just a couple of investments” or “are you looking for an active business”.
If you are looking for a way to make active income and are willing to put in the effort to establish a good business, then there are great opportunities out there right now. If you do not want to take on this much activity, then you may want to consider looking at what we call Assisted Active or Passive investing. These topics will be covered in detail in our next two e-mails/articles.
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Who Is "REALLY" Making $ In Today's Real Estate Market?
Our 29,689 Members Tend To Agree...
It's Usually Not The GURUs
Have you ever noticed that every "Guru" real estate pitch sounds the same........
They once were poor, but now are rich working only 5 hours per week, and you can be rich too if you just buy their "can't fail system".
Or have you noticed that every property promote has a can't miss proposition, if you just buy TONIGHT.
At the NoBullRE club, we are huge believers in real estate investing...... but we also know that every approach has two sides: Nothing is perfect.
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