How To Get Deals: Part I – The Anatomy Of A Deal

December 10, 2009

I just wanted to drop a line out to share a few tips about how Cindy and I are currently getting deals. Right now, business is going stronger than ever. We had a lot of fun conducting our workshops, and frankly our wholesale and retail business is gangbusters and going to keep us out of the instructional business for at least months to come.

…but I didn’t want to disappear off the radar screen, and I truly want to offer some updates about what’s working for us. I thought you might find it refreshing to get some tips that work in this market from someone who has absolutely zero, nada, zip to sell…(no gimmicks, either)…we literally have no courses, no workshops, etcetera, etcetera, etcera. (except wholesale real estate deals of course  :   )

So….how are we currently turning 5-7 props per month? Just like most true answers, it is not rocket science or anything fancy.  It’s simply about making strong offers, catching the stuff that falls through the cracks, and a lot of follow up and “stick-to-itness”.  Let’s talk about how to make a strong offer, and when I get a chance the next post we’ll talk about catching the “shake”.

*** The Anatomy Of A Offer ***

There are 5 factors that make up an offer:

Price
Terms
Closing Length
Inspection Period
Earnest Depost

Now, usually price is going to be the weakest part of your offer…so the strategy then is to compensate as much as possible for low price…so simply make the other elements of your offer as strong as possible.

Terms – Terms are the conditions of your agreement that don’t have to involve price…things such as “as is”, “all cash”, “buyer to pay for closing costs”….it’s pretty simple, the stronger the language that assures the seller that the deal will close, the better…if the seller knows you aren’t going to ask for 800 things to be fixed, repair credits, and that you are a strong buyer, they will often take your offer over much higher but weaker term offers.

Closing Length – The shorter you can go to close, the less chance that something will go wrong.  A short escrow is usually anything under 30 days.  If you are using hard money, you can really use that to your advantage because you can close much, much faster than those using a bank loan.

Inspection/Contingency Period – This is essentially your “weasel” period.  You can pretty much back out during this period and still get your entire deposit back.  After this period, your deposit goes “bye-bye”.  The shorter the period the seller has to wait to be assured that you have “skin” in the deal, the stronger the offer.  In California, 17 days is hardwired into the contract (don’t EVER make the rookie mistake of writing “Subject To Inspection”…you needlessly make your offer look weaker).  Anything less than that is very strong.  If we know we can’t go wrong (you’ve got to be really, really sure), we’ve even gone with NO inspection period on rare occasions.  10 days will make your offer strong, but if you get an acceptance, you better BOOGIE and get your property checked out to your satisfaction.

Earnest Deposit – This is the “good faith” deposit that is due within a few days from the time your offer gets accepted.  The larger you can go, the better.  If you are a cash buyer, don’t screw around with $1,000 deposit when you can go $10,000, $15,000, or more!  It makes your offer VERY strong, and it is refundable in full if you back out within your inspection period!

I hope this breakdown of what makes a strong offer helps you beat out the competition.  Most of the offer makers out there are not experienced, and with some good old fashioned fortification, you will see a much higher hit rate on your offers.  More to come.

Be Happy and Prosper,

Kurtis

P.S.  Here’s a picture of my arm to demonstrate.

 

http://www.PortfolioSelect.com

http://www.FarBelowMarket.com

No Shadow Inventory!!??…This Is Big

October 15, 2009

No Shadow Inventory

 I’m sure you’ve heard it….just wait, the second wave of foreclosures is coming!

All of those foreclosures the bank is hoarding, tens of thousands of them, just waiting to flood the market…

We’ve been hearing that for over a year now. I’ve never quite bought into it, and what I’ve always said is that this market could handle more inventory than most would think…there is so much pent up demand it’s nuts.

The assumption I’ve never challenged, until now, is that these foreclosures EVEN EXIST!

Take a look at the latest numbers crunched by Sean O’ Toole at Foreclosure Radar.

I have not verified the numbers myself, which would be quite an undertaking, but I do know Sean is one of the sharpest guys I know, and I don’t know how you can argue with the data…basically, sales volume has been so great it is outpacing the numbers of foreclosurs hitting the markets…I’ve been saying that for over a year!…in the mid to late 90’s, it did the exact same thing amongst record breaking foreclosures (I still thought there was SOME decent buildup in the wings).

Now, it’s probably important to point out that there are massive numbers of defaults and foreclosure sales that are hung up…massive…but still, there’s not one person I’ve spoke to that didn’t believe that there masses of foreclosures post sale that were sitting inactive not even being placed on the market.

So, check it out for yourself- the implications are huge for investors, because investors who are waiting to buy may really, really miss the boat….waiting is harmful to your wealth! …cheers! (here’s that link):

I know it’s hard to read, so you can sign up directly to get this report at

http://www.foreclosuretruth.com/blog/sean/september-ca-foreclosure-report-more-shadow-inventory

http://www.ForeclosureRadar.com  it’s free and invaluable info…

Kurtis

Market Is Flipper’s Paradise (almost)

October 13, 2009

 Howdy.

We just finished putting our Cat City fixer up on the market after a 2 and-a-half week rehab.  By morning, we had two offers, one over full price.  An investor we wholesaled a duplex to just finished his rehab at almost the same time, put his on the market, and has multiple offers on his property as well.  We have a 5 minute quickie video coming soon on how we got this deal, estimated repairs, did the net sheet, and staged it.

68280 Alcita Road, Cathedral City, CA           
(Bought for $65k,  Over full priced offer, listed for $139k)

Kitchen Before

Kitchen Before

Kitchen After

Kitchen After

I think that was the longest gap I’ve gone without writing a blog post in the past 3 years (last one was July)

Part of the reason for this is that we have been so darn busy wholesaling and setting up for a new real estate investor’s association we plan to launch in January (cat’s out of the bag)…the other reason is that, well, not a whole lot has changed!!  We’re in somewhat of a holding pattern…inventory is at a trickle, buyers are getting more and more eager, and as to all that “shadow inventory”…your guess is as good as mine..

…but what I can tell you, the market can absorb A HECK OF A LOT more inventory…

We are still experiencing extremely low inventory, and fresh, remodeled houses are almost non-existant (outside of the flippers of course).  Buyers are becoming frenetic.  This is a flipper’s PARADISE.  If you can score a deal in the first place that is!  (I would rather flip in an environment where it’s tough to get deals but you know they will sell quickly versus the reverse ANY DAY OF THE WEEEK- it’s all about speed and volume).

Still, it’s not all perfect- appraisals are still undoubtedly too low and the 90-day anti flipping, anti-common sense rules for FHA buyers are still in place, creating challenges- but there are so many buyers that a little bit of gumption, a little bit of pickiness and restraint on which buyers you take, and a decent and clean entry level house WILL SELL.

So, we are making a shift in direction with our webinars, blog posts, and instructional stuff- I AM VERY EXCITED TO START COVERING NEW MATERIAL…yes, we still wholesale REOs full time as our living; however, we are on our fourth retail flip (not counting the many, many we rehabbed before the Great Implosion), and it really is fun again…so please stay tuned for a series of brand new webinars and content on:

  1. How to get bank foreclosures in a market that gets multiple offers
  2. How to get financing from private investors
  3. How to estimate repairs
  4. How to quickly sell your property for maximum dollars (staging, using online advertising and video, etc.)

Still, it’s important to mention that wholesaling will probably be our primary business model indefinitely because it stabilizes our cash flow and greatly reduces risk…I STRONGLY recommend that if you are short on capital and trying to break into REI, that you learn how to conjure money out of thin air (wholesale your deals)…

The good news is that we are having (what may be our last on wholesaling) a workshop on November 7th and 8th.  We have an early bird special for those who register by Sunday the 18th (save $400)…the event will be in Palm Desert (very close to Palm Springs) and will cover every single thing you need to know to go out and create cash money immediately wholesaling REOs. 

WE ARE GOING TO COVER HOW TO GET DEALS IN A HOT MARKET, IN DETAIL….

For more information and sign up link, go to:

http://www.FarBelowMarket.com/workshop-sign-up.asp

Don’t wait, every one of them has sold out, we keep it small so it can be more interactive.  We hope to see you there….more to come!

Kurtis

Market Update …(and a Hot Tip)

July 17, 2009

For the past few months we’ve pretty much seen a holding pattern.  Scarcity remains in the marketplace, with multiple offers on bank inventory commonplace.  The other common thread is that appraisals are not doing us any favors,  with overly conservative valuation models making  it tough whether you want to sell OR you want to buy.  Beautiful potential buyer-seller love connections are getting dashed by spiteful lending protocols!

The good news is that it looks like inventory may, MAY,  start to pick up again.  Yes, we have been hearing that for months, but for the “… third consequetive month, foreclosure sales have jumped significantly as lenders come off the moratorium”, according to Foreclosure Radar, the only company that tracks every single foreclosure in California.

Also noteworthy, Notice of Defaults, the first step in the foreclosure process, increased to the second highest level on record, also according to Foreclosure Radar statistics.  However, NOTICES of Trustee Sale, the final step that schedules the actual foreclosure sales have dropped by almost 30%, indicating that lenders are STILL holding back.

What does all this mean?  To me, it means that although lenders continue to hold back, I think we will see a slightly increased number of units finally making it to the market.  It also means that we will NOT get the “tsunami of REOs” that many have predicted…which could work out just perfectly for flippers/wholesalers because it will loosen up our ability to get deals without killing values.

In fact, I really believe a good healthy dose of new inventory will not only help get the wheels unstuck, but contrary to intuition, I think will actually INCREASE values.  Why?…because what is happening is that the lack of comps are contributing to appraisals being low because there are very few “Sold” comparables to prove value, so it’s a bit of a Catch-22; appraisers won’t let values move up without proof, and their low appraisals prevent the proof from materializing.  More inventory combined with these bidding wars would provide increasingly higher “sold” comps, give the appraisers more ammo for raising values, and basically get things “unstuck”….more to come, we’ll keep you posted…in the meantime,

…here’s a little “insider” tip we use to get deals even in this constipated market..
TARGET FAILING ESCROWS!

We always look for opportunity in challenges- and the fact that appraisals make it tough for us flippers to move our finished products is the down side; the flip (pun intended)  side  is that is also makes it tough for FHA buyers to close (btw, I am not for this, FHA buyers being able to close would be a healthy thing for all of us, but if it is a choice between investor buyers keeping things moving vs. the property rotting vacant, then of course we need to jump in and take over until lending practices get their head out).

There are a LOT of pending escrows that should have gone (qualified eager buyers, eager sellers), but again, because of the anal retentive lending practices, these escrows almost go the distance and fall apart at the bitter end…..CALL ON THOSE ESCROWS!!

Here’s the upshot, we’ve always said that the best chance to get deals is through relationships, and that goes double right now.

Calling on “stuck” escrows not only gives you a shot at deals
….BUT EVEN BETTER, IT GIVES YOU AN EXCUSE TO CALL REO BROKERS!

I can’t stress this enough.  When the inventory does give, which we all pretty much know it is a matter of time, the relationships you put into place now will reap rewards later (and very possibly now).  “Pending” and “Contingent” escrows are a great place to start, look them up in the MLS or have your favorite buyer’s agent help you out.

As always, I hope you find value (and profit) in our tidbits, be happy and prosper and we’ll keep you posted what happens next- if you want us to custom find you a deal, email us now at Deals@FarBelowMarket.com.

Kurtis Squyres

http://www.FarBelowMarket.com

http://www.FlipForeclosuresForProfit.com

Where’s The %^* Inventory!?

June 19, 2009

There is a lot of interesting events taking place in the foreclosure real estate market, at least in Southern California.

Right now, there is an obvious and blatant lack of inventory.  We’ve been hearing “multiple offers” now for months now, but yesterday we heard a new record….52 offers on a 3/2 in Desert Hot Springs!…holy cow!

Now, yes, I know, “it’s coming, it’s coming, just wait, another massive wave is on its way”….and I do believe there will be another surge at some point.  However, there are some peculiar behaviors on the part of the lenders that control whether or not the foreclosure sales go through.  A very large percentage of the foreclosure sales that are being put on delay are happening on the lender’s own accord, NOT because it is mandated by the moratorium…why?

Sean O’ Toole, creator/founder of ForeclosureRadar, has a fascinating observation, ”

radargraph061909

“While many complain that lenders are foreclosing too aggressively, and others claim a wave of foreclosures sales is imminent, the data actually shows that lenders are doing everything possible to delay foreclosure…The reality is that we have very few homeowners being foreclosured on when viewed as a percentage of those scheduled to be foreclosed on, in default, delinquent, or upside down in their mortgage”.

I wish I had an answer for you that was not conjecture.  It could be that the lenders are being very cautious that they are not construed of running afoul of new legislation.  Maybe it’s because they are waiting to see what plays out?  I don’t know, but what I do know is that there are many areas where a quality house (with equity) that is available for sale does not exist.

So, the important part is what does this mean to investors and wholesalers, and what should the strategy be right now?

…Well, here’s the thing, when inventory is this scarce,

IT COULD NOT BE BETTER for retail flipping!

Yes, you can get deals.  But because there are so many multiple offer situations, it’s almost like we are all bidding at the trustee sales, so you need to put the deck in your favor AS MUCH AS POSSIBLE.  The rules of offer making have changed.  You have to be able to read a little bit between  the lines.

I am going to give you a list of strategies that we have used to still come up with some great flip deals.  We currently have 3 fix up projects…2 of which are in escrow, 1 is almost finished and will probably be sold the minute we are done.

But first, a few more comments on what’s happening so the tips make more sense.

First of all, just like in all of 2005, 2006, and 2007 the market was LOWER than the common perception, right now I suggest to you  that the market is actually HIGHER than the common perception…why?

Let’s look at the dynamics of how this works with an example:

Rewind to 2006-  you are about to sell your house, and you know your neighbor’s house sold for $325,000  just 5 short months ago (and of course your neighbors just have no taste in paint color or landscaping so surely yours will sell higher).  So you put your house up for sale for $340,000….nothing.  Nada. Zip.  Not even a nibble.

So, of course you are stubborn because you are sure it’s a fluke.  So you decide to drop it to $329,000….again, silence.

This continues until 8 months later you are at $265,000 and still nothing!!…remember, the most common method for evaluating property is “running comps”, i.e. looking at what has previously sold.  Well, because there ARE NO NEW SALES, because everyone is refusing to drop their prices enough, we base prices on the last available comps, which in this example is $325,000.  Well, it’s not even selling for $265,000 which is an indication that prices have taken a tremendous hit, but it’s impossible to know where to place the market because it’s all guesswork until we start getting actual “Solds” again.

Sellers had to keep dropping prices until finally the buyers started to come back in.

In January 2008, volume picked back up and has been exploding ever since, gobbling up inventory.  This combined with the moratoriums and holding back of new foreclosures has creating a severe scarcity situation.

New homes that come on the market are experiencing bidding wars.   Properties that are listed for, say, $135,000 are closing at $150,000, just as an arbitrary example.  What can we imply here?  You got it, prices are going UP at the low end and the driving force is scarcity!

Here is another point, just as before, there is becoming a lack of brand new “Solds”, not because no one is buying, but because there is NOTHING TO BUY!

I’ve seen this in a few neighborhoods now, namely Fontana.  Can you see how this is just like the example except in reverse?  I really think that if we had some more inventory, prices would actually reflect the pent up demand and would demonstrate these price increases, but

…until you have actual “Solds”, you can’t PROVE prices are higher.  USE THIS UNCERTAINTY TO YOUR ADVANTAGE.

What does this mean to us as investors?  It means that flipping is fun again because if you can get your hands on a deal (which is the trick now), it will sell, and sell fast!  Of course, it is harder to get a deal, but it’s not impossible.  There may be bidding situations, but some investors are not reading the trends and are actually being too conservative.

Here is a real world example.  On one of our wholesale flips, our investor buyer was getting gun shy because of the existence of some low “Sold” comps.  However, we demonstrated a “bird’s eye” view, and pulled up EVERYTHING in a 3/4 quarter mile radius.  There were 25 “Solds”, 19 “Pending Sales”, and only 2 on the market!! And guess what?  We called the agent on one of those properties and….you guessed it, 10 offers and it was about to go pending.  We didn’t bother checking the other active listings because you can pretty much deduce that it was the same situation.

When our investor “read between the lines”, he couldn’t close on it fast enough, and he will undoubtedly make a nice, fast profit on that deal because it will sell instantaneously when he sticks it back on market (again, because it will be the ONLY thing money can buy).

***A word of caution*** How long will this drought last?  I think it’s impossible to say…and yes, it is possible that if you take too long to get your property rehabbed inventory will come out and torpedo your deal…I said “it’s possible”, but I wouldn’t overly worry about it too much at this stage…

There is SO much pent up demand, especially for clean and fresh houses, I believe that we will have a little bit of a warning period, BUT DON’T GET TOO COCKY…don’t mess around, get your flip cleaned up and on the market quickly.  Take advantage of the market while the iron is hot- move FAST.

Bottom line, we will get a little bit of a warning because excess inventory will be bought right away as it hits, and it just might even help your case by providing higher comps that will help your appraisal! ….but like I said, if you see inventory coming and you still have the entire fix up job to do….GET BUSY, you’ll be okay.

Next, do NOT over improve your house!  If you have the only clean house in the area available for purchase, there is NO reason to go overboard.  This is in stark contrast to a few years ago where the market was FLUSH with inventory, and you really had to give your buyer a big reason to choose your deal….not so much anymore, at least at the time of this post.

Another even more important and paramount reason not to over improve is APPRAISALS.  Excuse my Latin, but appraisals are horseshit right now..  If you are actively trying to flip a house or you are an active Realtor, then you likely have encountered this scenario….eg. 5 people want to buy your house for $225,000.  It’s beautiful, head and shoulders above anything on the market.  There are 5 comps in the area that are completely trashed and sold for $160,000 – $170,000….(and sold in 7 days nonetheless), you guessed it, appraisal on your property, EVEN THOUGH THE MARKET IS BEGGING TO BUY IT for $225,000, gets appraised for $190,000, making it  difficult to sell your house with financing.

The market is in a precarious situation- just as it is hard to find supporting comps on the upside because there is simply not enough solds, a new asinine House Bill has put the fear of God into licensed appraisers regarding coming out too high so it has made it even tougher….we are ARTIFICIALLY stunting the market’s growth!  This is a fiasco in light of our economy and how much we would benefit if we could let the damn market recover.  Yet that is another story for later.

…(more on this House Bill later, my post is already too long)

Now, I realize that the appraisal issue appears to contradict what I said about flipping being a piece of cake.  Well, it’s a hindrance and makes life more challenging for flippers (along with the 90 day anti-flip rule), however, these houses ARE getting sold, sometimes it just takes going through a few buyers.

The benefit of scarcity is that all the buyers get concentrated on your property, including the cash, and conventional (those with 20% to put down) buyers.  So don’t pass on a great deal for being in fear of not being able to sell….if you can get your hands on a property where there is nothing available, you WILL be able to sell it.

….Study comps, study comps, study comps

Okay, so that’s enough ranting for today- let me get to some “Bottom Line” tips for you that we are seeing work for our investors/wholesalers.

1.  Actives are MORE IMPORTANT than “Solds”. Study comps from a bird’s eye view….low sold comps are not so bad IF they have very low days on market (less than 2 weeks) and there is no inventory sitting on the market unsold.  If something IS sitting there NOT selling you MUST investigate..check property history, ignore it if it is a short sale, and don’t hesitate to call the broker and ask questions.

This is where you can get an upper hand b/c most investors haven’t figured it out.  You always want your flip to be the best value on the market, and that’s pretty easy when it’s the ONLY house on the market.

2.  Screen out the active short sales…they can make actives look very low, when they are artificial numbers that rarely have anything to do with the real market.

3.  Look at the trend…days on market, unsold inventory…if you see days on market shrinking over the past two months, inventory shrinking.  These are all signs that you have a very HOT area on your hands.

**Very important** you need to look at property history.  For example, let’s arbitrarily say a property will show 190 days or more on the market and looks like a horrible comp.  When you look at property history, however, it may tell a different story, it could appear to be sitting on the market with no one interested when in reality:

a)  it fell out of escrow multiple times, and in reality has gone into escrow within days before falling out

b) it’s a short sale that JUST got approved (after being on the market for 180 days!)

c) it experienced a drastic price reduction (it was on the market for $210,000 or higher for 180 days, then it got dropped to $175,000 and sold in 10!)...this is the stuff that will mislead the less savvy investors and cause them to be overly conservative-

…KNOW the REAL story! …’ya gotta dig, but it can pay handsomely

3.  Relationships!! – Don’t even think about sending in an offer to a broker without calling him or her!..Sometimes a great conversation can literally put your offer right at the top!  Close one with a broker and they may just bring you one before it gets listed!

4.  Although this is tougher to do for my wholesalers out there, increase your deposit amounts, and shorten your escrow periods in your offers as much as possible.  If you are a cash buyer, you have a big upper hand.  If you can team up with a cash buyer it definitely helps.

5.  Take MASSIVE before pictures and save every receipt.  Make it look as horrible as possible in your before pictures.  Get a statement if possible from a contractor or appraiser saying how horrible it is.  This is so that when you go to resale it and you put on your boxing gloves with appraiser (and you will), you will be fully armed with documentation of your improvements.
I literally decided as I wrote this post that this would be a great time to do a webinar on how to read comps and make offers in this market.  Join us and learn how to outbid the competition on these REOs that pretty much ALL have multiple offers now.

Join us Thursday June 25th online at 7PM Pacific time for an online presentation on how to get an unfair advantage by reading “in between the lines”…Be Happy and Prosper!
Kurtis

JOIN HERE, REGISTER BELOW:

https://www1.gotomeeting.com/register/932610377



Lipstick On A Pig

April 23, 2009

Here’s some inside scoop for you if you are planning a fix n’ flip… Across the board, every one of our professional flipper friends are pulling hair out over hitting appraisals.

Basically, the investors are getting killer deals, fixing them up BEAUTIFULLY, and when they put them back on the market they are getting offers right away (I’m telling you, flipping is fun again, Cindy and I have 2 going).

However, the challenge right now is that the end-buyers out there are actually qualifying for the loans, but the properties aren’t! …What do I mean?

These ludicrous appraisals keep coming back from the ultra conservative banks (NOWWW they decide to get conservative, it’s probably the safest time to lend in 7 years!).

They are comparing freshly remodeled houses against trashed lender owned stuff and being ruthless. A low appraisal means no loan for the buyer…what’s the remedy?

Well, a year ago we said your rehabs had to be really good- top notch- b/c buyers were sluggish, and they needed a GOOD reason to buy your property over the masses…well, buyers are now out in FULL FORCE, and we are seeing multiple offers on just about every good deal. So, what we are experimenting with, is get a killer deal of something that is in horrible shape, and do a clean, adequate job of rehabbing it (you always need new carpet and paint), but don’t go crazy with the appliances and higher end stuff..

..think clean, not glitz….

and put it on the market below the others and shoot for a lower selling price…don’t do a bad rehab, just a low end one- mow the yard, don’t re-landscape everything, see if you can get away with refacing or painting cabinets versus ripping them out, etc. With all the activity out there right now (be sure and confirm that with your area), you should still be able to sell quickly and make appraisal if you keep your end price down….we’ll keep you posted as the market continues to evolve….

Be Happy and Prosper,

Kurtis

…In Tough Times

March 2, 2009

I’m not a big “Ra Ra” guy.

At some real estate seminars, I get quite irked when 30% of the material is motivation.

I have two shelves of personal development, spiritual, and motivational books (not including what I’ve given away) and when I go to hear about how to make money in real estate, that’s what I want to learn.

THAT BEING SAID, forgive me if this post is a little bit “Ra Ra”, but I was cleaning out files recently and I came across something I had written 3 years ago during the hardest period of my life, and  I humbly share it with you just in case you might be struggling right now in the hopes that it may help.

In 2005 and 2006, when the onset of this crisis hit us personally, Cindy and I watched our savings and equity in our rehab projects evaporate.  We had a newborn, and my best friend since 8th grade passed away.  We lost two of our investments to foreclosure, and I really thought real estate was over for us.  At one point we had to yell at the kids not to open the refrigerator because our power had been shut off.  I had no idea what we were going to do.

Still, I did and do believe that a focused mind combined with bold action presents resources and genius that will create results that are mind blowing, even in the midst of dire situations.   The hard part, I think, is to stay focused on what you want when challenging times tend to pull our focus on what we DON’T want.

(At race car driving schools, they have a mechanism that disables the vehicle and causes it to start veering.  The instructor trains the driver to look forward in the direction he or she intends the vehicle to go, rather than looking at the wall, which is directly where the car would be heading!)

I had read  “Think and Grow Rich” by Napolean Hill more than once, so in the early part of 2006 sometime I dug it out and I took one his famous quotes and printed it out and taped it to my wall.  It said,

“Every adversity, every failure, every heartache
carries with it the seed of an equal or greater benefit.”

I had also read of a little exercise that helps keep you focused on what you want, versus what you DON’T.  The exercise is simply to write down every possible benefit you can think of about a problem you have.  The purpose is to help your mind loosen up a little and perhaps spark some creative solutions.

I asked myself, “What are the benefits, advantages, and opportunities in being flat broke right now?”

At first I drew a complete blank.  Then, some answers came to me.  Here is the exact unedited result that I banged out on my computer 3 years ago:

March 15, 2006

“What are the benefits, advantages, and opportunities in being flat broke right now?”

  1. It forces us to find a way to make big money now!
  2. It compels us to scrutinize our expenses.
  3. It compels us to pay attention to what we spend on.
  4. It makes it more exciting and meaningful when we become wealthy.
  5. Gives us a deeper understanding of managing money.
  6. Brings us closer together as a team.
  7. Gives us even deeper knowledge of real estate and how to make money in good markets and bad.
  8. we can share our experience with others who are struggling.
  9. we can help others one day, and even sell a book or something
  10. builds character.
  11. Teaches us humility.
  12. Teaches us to not be wasteful.
  13. Teaches us how to be better about hanging on to money when we get it.
  14. Stories to tell our kids and grandkids!
  15. Will give us confidence that we have the ability to get out of tough situations.
  16. Make us better people.
  17. Compels us to take action on a lot of different things.

I wrote this in March 2006, almost exactly 3 years ago.  At that point there seemed NO WAY OUT.

We scrambled like crazy, I tried many different things including:  getting my RE license to broker hard money loans for investors, internet marketing, a foreclosure processing company, a “staging” homes business so that homeowners could sell faster, and running auctions for homeowners trying to sell (we were getting pretty damn good at it trying to auction our OWN properties!).

After a lot of flailing and picking up a check here and there, but not nearly enough to support us, Cindy and I sat down and said, “Now what the heck are we going to do about this situation?”.

We went over our strengths and realized that finding deals was our greatest strength, and deals were starting to crop up.  We had no money to do rehabs any more, so we put our entire focus on finding deals for other investors we knew, and I used what I learned about internet marketing to turbo charge finding buyers, and things turned around for us.

I really believe that things changed because as hard as it was, we kept asking the question of ourselves, “How can we not just survive this, but prosper in a way that is fun and offers value to others?”  If you are struggling right now I ask you to just try this exercise, and keep asking the question, “How?”, NOT “Why?”.  Our minds come up with just amazing answers, if the right questions are put in!  I believe this with all my heart, even more now.

Now, this doesn’t mean that I believe that if you sit in a room and think very hard about you want but not take any  action or give no value that the universe will ring your doorbell and the objects of your desire will be special delivered.

Write down every benefit you can think of about the challenge ahead of you, even when it feels like there are none.

Put it where you can see it and everyday ask “How can I improve my situation?” You will find your solution no matter the odds, if you keep focused on what you want, not what you don’t, do what you have to do when the answers come to you, even if it’s scary, and don’t give up.  It will not happen overnight, but it will happen.

If you would like the audio to “Think and Grow Rich”, by Napolean Hill, you can download here.

http://www.farbelowmarket.com/thank-you.asp

Hang in there……and be NICE to yourself.

Kurtis

Second Wave Of CA Foreclosures Coming

February 13, 2009

Well, it appears that the results of California State Senate Bill 1137 accomplished what we thought it would, prolong a bad situation.

Bill 1137, what I call the “pull-the-bandaid-off-really-slowly” bill definitely did succeed in delaying foreclosures for a few months. However, it is turning out that the vast majority of the foreclosures are still coming home to roost, just in a delayed manner.

If you were following us toward the last quarter of 2008, we spoke a lot with REO brokers how listings were crawling almost to a halt. We knew it was mostly because of this legislation, but we didn’t know what the end result would be. Now that the moratorium is ending, we have some figures for you – check out this chart of California foreclosures from our friends at ForeclosureRadar.com.

fcr

Remember, Notice of Default is the first step in the CA foreclosure process. Lenders must wait 4 months after this is filed to actually foreclose, so there is a big lag time.

Now, if you look at the number of Notice of Defaults (NODs), the number plummeted to under 15,000 in September. By the end of December (following the end of the moratorium) this number was right back up to a new record, 43,000.

So it would appear as though we will be seeing another resurgent wave of foreclosures in 4 to 6 months following these defaults.

Now, there is a difference in what we are going to see in the next round.   Also, if we analyze the types of loans that went bad in the first tsunami, it  seems the subprime paper, the “warheads”,  that led the tip of the missile, are actually “contained” and have mostly worked their way through the system,  according to Mark Hanson of the professional Real Estate & Finance research group.

The new wave is actually alt A, higher grade loans that were a result of property values falling below the loan balance of the homes so even people with good credit had no way out but to rent and hang on or walk…NOT subprime loans…to me that alone is a good sign that we are at least working our way through the oceans of foreclosures.

Also, pending sales (properties are in escrow) continually increase. So we are seeing volume increasing and inventory decreasing.   If you read my past blogs you know that I feel these are much more important indicators than median home prices.

In summary, we will undoubtedly experience a large resurgence in foreclosures over the remainder of 2009, but the price levels we have dropped to have attracted a lot of buying activity and inventory levels are no longer exploding, possibly even decreasing.  We may not have hit bottom, but I personally think that the free fall we have experienced in the past has subdued.  We have historically low prices, low rates, you can cash flow properties in your sleep, and the government is taking pretty extreme measures to make sure that mortgage lending continues…it does not look at this time that home lending will “collapse” any time soon.

Bottom Line:

If you are a passive income investor and you are looking to build wealth, take advantage of these historic low prices, historic low interest rates, and now loosening investor policies (FNMA now allows 5 to 10 investor loans as opposed to 4 as of February 6th FNMA New Investor Loan Guidelines DO NOT wait to start accumulating properties..in the words of Warren Buffet, “…if you wait for the robins, spring has already come”.  If you haven’t signed up to receive FarBelowMarket.com steals, sign up now on our homepage here.

If you are an active investor looking to generate a living doing real estate, build a business wholesaling investment properties to the passive buyers we just spoke to, do a few retail flips if you have the cash availability (to do retail flips you will need a money partner or SOME cash, hard money is very conservative these days).  Definitely go sign up right away at http://www.FlipForeclosuresForProfit.com for lots of free video on how to flip and wholesale houses.

And both camps should start learning how to use existing financing to build a portfolio of rentals over the next two years, if you don’t I can just about guarantee you will kicking yourself.

Join us for a free webinar on owner financing this March 2nd at 7PM Pacific by registering here:

Register HERE

RARE 2-Day Workshop That Will Get You Wholesaling

November 12, 2008

I am pleased to announce a new 2 day very intense live workshop that will be held in Palm Springs, CA Dec 5th and 6th.

Cindy and I are not “gurus”.  We make our living wholesaling houses, not selling info products…in fact, we’ve never sold an info product.

However, we did have a workshop in March, and it was a blast.

We said we wouldn’t do it again if it wasn’t a positive event, and it absolutely was-  just about everyone in attendance (that we know of) has done deals and made money.

We purposely keep it small, it’s very personal and informal and we cover every single minute detail of our business.

You will know EXACTLY how to assign an REO for cash to an investor and go right around the “no assignment” clause.  You will know how to do a land trust in your sleep, and you will get every scrap of
paper we use to make it happen…this process took us a year to develop.

Also, we will show those who join the fun how to create a world class investor cash buyer list in days, not weeks, and not months…once you have investors, making money is snap because getting deals right now is a snap…(this is BRAND new stuff).

This will sell out because we are only going to open 25 seats plus guests so that everyone there has a fair chance to ask unlimited questions.
We are scouting the area for a perfect place.  Right now the weather is insanely perfect, there’s world class golf, shopping, and casinos everywhere…that’s why we leave Sunday open!

Stay tuned because we will announce the details over the next several days….this is just a “heads up” announcement… more to follow…K

http://www.FarBelowMarket.com

http://www.FlipForeclosuresForProfit.com

All Bank Owned Foreclosure Deals Completely Gone!

November 10, 2008

Just kidding…sorry, that was a dirty trick, but I wanted to make sure that I made a few things clear!

In regards to my last blog post, I had a couple respondents that were a little discouraged because they seemed to think that what I was saying is that bank foreclosures will stop being a source of deals. Another email I received read as follows:

“kurtis you are obviously on the cutting edge and I’ve enjoyed your perspective and opportunities in the past, but you are totally mis-guiding your following with these latest emails. time to get real”.

I appreciate and relish feedback like this, and through clash of ideas and debate we all learn and deepen our knowledge.

However, I don’t think I was entirely clear about my point- I take the blame for being obtuse with my message and I apologize.

First of all, I absolutely, positively, do not think REOs are about to dry up anytime soon, nor do I think they will stop being our primary source of deals anytime soon as well…nor do I think the market is making a u-turn and is about to head back up anytime soon.

Here is what I am saying…in the past decade Cindy and I have now experienced two major shifts where our methods of finding deals ceased to work (in what seemed) overnight…the first time was in 2002 (buying HUD foreclosure went from a booming business to almost completely dry in a matter of months).

Then, after experimenting with a barrage of impotent business models, we went to buying preforeclosures. It was such a hot competitive that it took months more of trial and error for us to start knocking out homeruns again.  Finally, we were knocking the cover off of the ball until, you guessed it, our solid ground gave way once again…in 2006, “Whammo!” …once again easy street went straight off a cliff when preforeclosures with equity became impossible to make a living from.

Let me tell you first hand, when this happens, when something really works well for a few years and you get it really dialed in, and then out of nowhere within several weeks it completely stops working…Well, it’s like being sideswiped by a Mack truck you didn’t see coming, and it is not fun…then the “OMG what do we do now?!” scramble dance begins all over again.  So, I am not trying to be Chicken Little here, we’re more like a skitish antelope in the Serengetti where the slightest shift in wind, the slightest sound, we stop and observe.

If you are a part-time investor throwing offers out there, that is one thing. However, if you are full time wholesaler or rehabber there is something to be said about having more than one source of deals so you will have a backup should things change. This is all I am saying…..and you cannot deny that we are experiencing massive change. It is impossible I think to predict with 100% certainty what the outcome of government intervention will be, and I was not exaggerating about the frenetic buying activity exploding in our area – things are moving and shaking out there.

For the last 2 years we have come to rely almost solely on bank inventory for our deals, we are regularly getting incredible deals; however,  I admit that this time around we ARE hyper sensitive to change …(people also thought we were crazy when we started writing bank offers at the end of 2006).

Although our business is thriving experience tells us to be downright paranoid; we watch the market like hawks and startle at the slightest bump in the night…we are on 24/7 guard duty for you.

So keep those offers going out, keep finding those bank deals, and keep your eyes open for new opportunities but don’t get too complacent if what you are doing works great, because the only thing that stays the same is that things will eventually change…and sometimes they forget to send you the memo first ; ).