Possible Deal #5 Update

- We tried to get a hold of the real estate agent to make our offer, and the property was already under contract. Just our luck. That was a solid investment property. We need to be quicker is the lesson learned from this. No more sitting back and e-mailing RE agents about deals. We are going to have to call them as soon as we find a deal and work out the numbers, that way we can get it under contract faster.

Lessons are learned everyday. On to the next one.

Goal #6

Start a Cash Flow game in Rochester.

Some Updates on Investment Properties

Possible Deal #1 - From previous post.
- it was a 3/1 HUD home, asking $24,000. We were going to place a bid on it once we got back from Arizona, because that was the first day it went up to investors. Got back from Arizona checked the web to see if it was available and it sold for $35,101. I believe that price is still a deal. I believe that house was worth around $60,000 - $65,000 so they got it at a good discount.

Possible Deal #5

This deal is a four unit apartment building. Asking price is $39,000, rents are around $350 per unit. My partner is going to view it today, and make an offer based in the viewing. The numbers look great on this property.

Goals for the 3/27/06 - 4/2/06

1. Finish forming a better strategy for bringing in deals that go with my purchase strategy.

2. Finish working up a communications plan with my partner.

3. Finish reading The Millionaire Real Estate Investor.

4. Write down our goals for our real estate investments (what we start purchasing at, when we decide to move up to the next level, etc)

5. Start implementing that strategy for bringing in potential deals.

Finished Goals of 3/20/06 - 3/25/06

1-3 are finished, and listed in a previous post

4. Try and figure out a better way to communicate with my partner (my dad), because we live in different parts of the state the majority of the time (I am in college).

- Started working on this, the Phoenix trip helped with this a lot.

5. Network with people at the get together in Arizona this weekend (3/23 - 3/36)

- Meet a lot of very knowledgeable people, read some of the previous posts

6. Start forming a better strategy for bringing in deals that go with my purchase strategy

- Started to get into this a little. This goal will carry over to the next weeks goals.

Last Day In Arizona

Well today was another fairly interesting day. We had a few round table discussions today on many different topics ranging from financing to personal experiences. We also got to network with many different people and see what they were personally up to in there real estate adventures. It was a more relaxed day, that had great value to us. I also got to meet Shuan from the link to the right. He was very interesting to listen to, especially his ideas and what not. Biophase's blog is also very interesting, and I will be linking that soon. He was another real nice guy to talk to. He is very very intelligent, and has lots of experience in his area of real estate. All together this trip was well worth the money and effort to get here. I have learned an incredible amount of information, and plan to start implementing what I have learned in the near future. A big thanks to Russ and Erin Morgan for setting this incredible get together up. I would also like to thank Les Gee for the life changing REST workshop, and the great stories to go along with it. I would like to throw another big thank you to Steve O for showing us his apartments here in Arizona, and a great presentation. And finally I would like to thank everyone else (JScott, Biophase, Kimberland, Phil, Snowbank (Bill), mandy, F8, Sonya, Doug, leon, Jon, Shaunstu, Joy and many others) that was there for making it the great time that it was.

3rd Day in Arizona

Today was my third day in Arizona, and it was another interesting one. Russ (Home_Theater_Guy), (Jayscott), and Steve O (Olafson ?) all presented different topics today, and they were all very interesting. Even Jayscott's presentation on what he does on the internet was really interesting, even though I had very little of the technical knowledge of how computer systems work. He is someone you can honestly say he is "scary" smart. He is constantly thinking, constantly planning even as he speaks. Not to mention that he is just an overall entertaining public speaker. Steve O's presentation was on apartment buildings, and everything that goes along with them. Here is someone that found a simple plan, implemented it and in turn got wealthy very quickly. He is someone that is just a wealth of information when it comes to apartment buildings, and someone that is just so outgoing and easy to talk to. Russ's presentation was similar to that of Les Gee's, but offered some different interesting twists. He is someone else that is just so easy to talk to and willing to help others. This trip so far has just been an amazing opportunity not only to increase my knowledge about real estate and increase my drive to accomplish my goals, but also to meet some simply amazing people. I would highly recommend that if you ever get a chance to go to a get together like this, go. It will not only change the way that you perceive real estate investing, but also how you perceive yourself.

2nd day in Arizona

Well, what can I say I am having a fabulous time in Arizona. I just finished my second day out here along with completing the REST work shop. I have meet some outstanding people that are involved both in real estate and internet businesses. They bring a wealth of information to the table that you can not get from a book. Some of these people include, but are not limited to Les Gee, Steve O, Rob W (Spideyman), and Russ (Home_Theater_Guy). These individuals are just so kind, and helpful not to mention packed with knowledge. And these individuals are just a hand full of the many that were there like them.

REST

I went into the REST workshop put on by Les Gee, not knowing anything about it or what it involved. I was planning on taking pages of notes, and placing them on this blog for others to see and hopefully learn from. But after going through the workshop all I can say is that if you have not gone through it, you are missing out. My father and I came here (Arizona) for 4 days, and the REST workshop made it worth it alone. It was by far the biggest eye opening opportunity that I believe anyone will go through. I learned more in that relatively short time period about my views as an individual investor and investment strategies, then I learned from all my real estate experience prior to this. It was truly that powerful, and I would advice everyone to take the REST workshop. You definitely walk out of that REST workshop knowing so much more then you did when you walked in. So to put it simply I decided not to put my notes on this blog, because I do not want to take anything away from it if you decide to go through it in the future. I also do not want to put my notes on this Blog because I want to encourage you to go through this REST workshop yourself.

A possible answer to my question

I was doing a little research on the question that I posed in the last post, and I found a great cite that started to answer my question. The website is

http://www.reiclub.com/articles/

It basically says in a very simple summary that there is a time for lease/options, and a time for subject-to purchases. Since the Deed is not in your name in a L/O it would be dangerous to use this method if the seller was not reliable, because the deed could be marked while you are holding it. With a subject-to purchase the deed is in your name, so the seller can not tarnish it. This is a clip from one of the articles written by Wendy Patton on that website that makes it a little clearer.

Situation
Sellers that Have Bad Debt

Solution
Get the Deed : NO Lease option!

Vs.

Situation
Sellers that Have Good Debt

Solution
Lease Option or Deed!

I willcontinuee to research this. If anyone has any input, or thoughts please do not be afraid to write to me and I will write it on this blog.

One Big Question to answer
I understand the technical differences between "Subject-To" and "Lease/Options" for purchasing properties, but why would you use one over the other? From my understanding you take over the various payments in both, the mortgage is not in your name on both, and both allow you to get into a deal rather quickly and with very little money. So why would you choose one over the other?

Any insight into this question would be greatly appreciated.

To me it seems like the "Lease/Option" would be a lot better. One can get the property under contract fairly quickly, and cheaply. I would think that one could set it up something like this. You find a desperate seller, and set up an lease/option to buy his/her property in a given amount of time. The payment for this lease/option is to catch up what is owed in arrears, and what not. Would this lease/option give you the right to rehab the property?

If this is possible I believe that if one could get favorable terms as far as length of the option one could purchase many more properties, and not have to worry about the "Due-on-Sale" clause.

The reason I ask this is because that clause has been a major stumbling block in having some investment properties at this time. My partner seems to be very worried about this clause being used, and because of that he tries to get the banks permission. Which like anything with the bank takes a lot of time. Which in turn has produced no deals. I understand why he is worried, and I have to respect that because it is his funding and credit that we are using. But at the same time I would love to find away around it so we can get the bus moving.

Trip to Arizona

I head out tomorrow morning the 23rd for a get together in Arizona. It should be a great time. I will be doing the REST workshop with Les Gee I believe, along with networking with some other investors. I believe that their are about 25 people going to this get together from around the world. I believe "biophase" "Home_Theater_Guy" and "Kimberland" are some of the bigger names going (Names from the RDPD forums). I believe that it will be a great experience, and I hope to learn a lot. I will take some notes, and post them for people when I return.

A little update...

Goals 3/20/06 - 3/25/06

1. Finish reading The Complete Guide to Investing in Undervalued Properties

- Finished reading this book by Steve Berges. It is a good book that basically covers the general basics. It has brought up some interesting questions though.

2. Make a list of contacts (RE agents, Lenders, General Contractors, Sub Contractors...Etc)

- I have a pretty good list at the moment. I believe that this list is a great start, and now everyone's names, numbers, companies, etc are all in one place and easily accessible.

6. Start forming a better strategy for bringing in deals that go with my purchase strategy

- I have begun to think about this. All I need to do is start writing it down on paper.

My Goals 3/20/06 - 3/25/06

1. Finish reading The Complete Guide to Investing in Undervalued Properties

2. Make a list of contacts (RE agents, Lenders, General Contractors, Sub Contractors...Etc)

3. Come up with a flyer looking for private money...and start networking for private money, and hard money

4. Try and figure out a better way to communicate with my partner (my dad), because we live in different parts of the state the majority of the time (I am in college).

5. Network with people at the get together in Arizona this weekend (3/23 - 3/36)

6. Start forming a better strategy for bringing in deals that go with my purchase strategy

Possible Deal #1

This house is a three bedroom, one bathroom house. It is located on a fairly busy street in a neighborhood that appears to be turning around. The houses right around it are in the process, or already have been rehabbed. The property itself has very out dated floors (yellow vinyl throughout), and walls (board looking sheets). The kitchen needs to be up dated along with the bathroom. All in all this house just needs some cosmetic upgrades, and will be ready for the market. I estimate the upgrades to be around $8,000 - $10,000 on the high side.

Possible Deal #2

This house was being sold at auction. My father and I unfortunately missed the walk through period to see what might have needed repairs, so we walked into the auction kind of blindly. (Note to self, don't do that again) From my dads drive of the place it looked in fair condition from the outside. It was a four bedroom, one bathroom house. It ended up selling at auction for $25,000. Not really sure why we did not bid on this one, but then again we walked in blind, which I believe is the main reason for not bidding it out a little higher.

Possible Deal #3

This house was right up the street from where I currently live. It is a three bedroom one bathroom house. From the outside it looked like it needed a lot of work, not to mention that it wasn't in the best house area. It was surrounded by small commercial properties. It was another auction deal, that ended up being sold before the auction period for $18,000.

Possible Deal #4

This house had four bedrooms, one and a half bathrooms. The siding was new, and there seemed to be a few, but not many repairs needed. I believe it also had a problem with the foundation that they repaired before the auction and would need to be repaid through the bid price. This house also was an auction house that ended up being sold before the auction took place for $38,400.

The Purchase Strategy That I Am Going To Focus On

My strategy for purchasing investment properties in the beginning is going to look something like this.

I really like the REO market, and the auction market for purchasing properties. I like how easy it is to purchase these investment properties at a significant discount. Like they say, "your money is made when you buy." I believe that this will let me get into houses fairly cheaply, and still let me have money left over to do needed repairs. I will come up with the money to purchase these properties through conventional mortgages, private lenders, hard money lenders and personal funds if need be. I personally like Trisha's style of buying with one loan (I believe a construction, or rehab loan), doing the repairs then refinance with a more conventional lender in order to get better terms and pull out money. I believe that this strategy will work the best for what I am thinking.

My Selling Strategy

Depending on what we need at the time, the investment property we buy and the areas market we will do one of three things after the rehab is done.
1. I will refinance, pull some money out and use the property as a rental
2. I will refinance, pull some money out and Lease Option it for a given amount of time
3. I put it on the market right away, preferably just under the FMV

My reasons for starting this blog
Well to make it simple. I found that reading Trisha's blog, Shuan's blog and AZ investor's blog (all three are found in the links)has not only been entertaining, but also highly educational. In my opinion more educational than many of the books out in the public today. They have given me many ideas and thoughts along will some much needed inspiration. One of my goals in this blog is to do the same for someone else. My other goal for this blog is to put my ideas, thoughts, goals, successes, and failures on here so that I can be held accountable for all of them.

Starting on Monday the 20th I plan on writing down my goals for the week, followed by how well I achieved them the following Saturday. I will continue this as long as I have this blog. I will also write down the deals that I am working on, and how they progress through time. This Monday I will start off on fresh feet for all to see, and hopefully learn from. Whether it is through my successes or my failures I hope that someone can learn even a small amount.

I congratulate Trisha, Shuan, and Az Investor for what they have done so far and I hope to continue to learn from them in the future.

Things that we have done so far

1. Studied studied studied
2. Talked to numerous Real Estate Agents, Lenders, attorneys
3. Viewed hundreds of properties with RE Agents, and by ourselves
4. Came up with systems for finding investment properties, managing them, taking care of them...Etc (Just haven't used them yet, with the exception of the first one)
5. We have added and attorney to our team, and a darn good one at that
6. Talked to people in the pre-foreclosure stage, and tried to take there properties either subject to, if their was enough equity, or short sale if their wasn't enough equity (Both of which hasn't seemed to work yet). We even tried to do one or two options which haven't resulted in owning a property
7. Tried to purchase a few investment properties from an auction (came out empty handed)

Overall we have looked at several house, to many to count, but have only put offers on a handful

Some things I wish I did and didn't do in the beginning up until this point.

1. I don't believe that one needs to form an LLC in the very beginning. This has done nothing but take money out of our pocket. Wait until you have one or two properties under your belt before you think about forming an LLC.

2. I wish I kept a list of everyone I contacted in the beginning, and a brief summary of what they said, and/or offered. In short get organized in the beginning, because it will be easier to stay organized as you go along, plus it will save you a lot of time when you don't have much. It would also be easier to go back and look at what people had to offer, and read it, rather than trying to remember it.

3. I wish I focused on one aspect of REI in the beginning. I believe that if one focuses on one aspect in the beginning one will get to the actual investing quicker. In my experience my partner (my dad) and I have been jumping from one strategy to the next. While we have learned a lot about REI in general, and generally know about most strategies we have yet to actually purchase our first investment property, because these strategies seem to get in the way. If you focus all your attention on one strategy in the beginning one can look for properties that fit that particular strategy and get one's feet wet fairly quickly.

4. I wish I got my feet wet early. I believe that it is important to get one's feet wet in the beginning and learn as one goes. I do understand that one needs to first have a base of education before one jumps in, but I believe having one property in the very beginning forces one to continue to learn at a higher rate then just reading about it. I also believe that it will give one the confidence that one needs to continue advancing one's real estate portfolio.

5. I wish that I would have been more forceful with people in getting what I needed, but at the same time be polite about it. I believe that one needs to be demanding in what one wants, and when one wants it done by. I don't mean be rude, and a pain in the butt. What I mean is that one needs to let the people around him/her self know that this is important to you, and that it needs to been done in a timely matter. I believe that I let a lot of people take me as not being serious in the beginning, and even a little now. I believe that if I was more demanding with what I want I would be further along than I am at the moment.

MY HISTORY

My history up to this day in REI is fairly simple yet I already have great insights for new investors looking to get into REI. I started about two years ago when my dad gave me a book to read in my free time. This book was RDPD's book ABC's of Real Estate Investing. This was the book that started me into the vast world of REI. From that point on I read everything that had to do with real estate, business, and investing. I immersed myself in everything real estate as far as books goes. About six months after my reading began I started to network, and try and find properties that I could purchase and invest in. I talked to real estate agents, Lenders, other investors on the web, and my dad. I believe that one of RDPD's books stated that you will be laughed at, and "no" will be a word that you become familiar with. Let me tell you, I was laughed at, ignored and pushed aside by many many people, and that was if they let me in to begin with. I did not let that slow me down, I continued to talk to people and learn as much as I could through that process. After about six months of doing that (a year from the start) I was talking to my father, and he briefly mentioned joining with me, or partnering with me. A few days later I took him up on his offer, and we started seriously talking as a team. We went through the whole process of setting up an LLC, and started to look for properties to invest in.