This will be my personal journal to document my failures and successes during my real estate experiences in Arizona. All stories, thoughts, and successes will be documented..
Tuesday, January 31, 2006
Well, I just created my weekly forelcosure list. I'm still surprised that I haven't received a phone call yet from my letters... I paid special attention to the content, format, and how it is delivered. I expect to get some calls from sellers right before the trustee's sale.
This weekend, I plan to check some houses that I can do a twist on to create some equity. For example, there's a rehabed 1/1 house in the central area for sale. If I can add a room, I can create quite a bit of equity.
There is a local broker that is offering a short seminar on buying investment properties in Tucson. I am going to check it out this Thursday night. I don't plan on learning a lot, however, I want to get more educated on the new construction market.
By this weekend, I want to have my spreadsheets setup for calculating profits with developing. Actually, I did this last year, but I need to update the building and permit costs. Once I get comfortable with the numbers, I will know the approximate buying price I will need to reach my goals. This is a very competitive market for these type of investments right now, so I will need to act fast..
Bginvestor, 7:17 PM
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Wednesday, January 25, 2006
Not much action this week..
REI hasn't been too exciting this week because my marketing is weak. I only got one call so far which was from an old bandit sign.
My sign guy hasn't called me back yet, so I hope he is still available. He was good and relatively dependable.
Anyway, I've been researching developing projects and if I find the right lot opportunity, I'm jumping on it!
I generated my weekly foreclosure list last night and noticed there is a house just down my street. That would be nice for that one to work out. With foreclosures, just because they hit the list doesn't mean that they are going through the process. A lot of them sell, get money from family, or work out deals w/ banks so its not a good idea to market to just foreclosures.
Investing in foreclosures must be very popular right now. Every course I come across suggests this, in the Arizona investing magazines, there are several companies popping up that sell foreclosure leads. The competition is fierce thats for sure.
I will commit to marketing for 6 months at least.. My follow up letters haven't hit yet, so I want to see if I get better responses..
Lumpy mail is also an option...
In addition, to foreclosures, I now have letters being sent out in other distressed situations. I will also send letters to owners (motivation unknown) that have lots conducive to splitting & developing.
Bginvestor, 5:44 AM
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Friday, January 20, 2006
Last night, I noticed a "foreclosure notice" that turns out to be one of five properties that a gal from out of state sold last September. One of five was the tri-plex so I knew this gal. All of them were in foreclosure..
I sent her a note, and turns out that she had no idea that she was in FORELCOSURE!!!
These investors bought subto and never made a payment! Wow!
At least one of the properties appears to be in her name, however, there's a guy in the house living there and she has no idea who it is.. Amazing..
So, she going to keep me in the loop.. I see a offer (from me) coming her way ;-)
I love foreclosures...
Bginvestor, 11:41 AM
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Thursday, January 19, 2006
status on latest offer..
Owners wanted full market value, so its not a deal at over $300k. Oh well..
I have got to do something with my marketing right now! I haven't receive one call yet in Jan. This is depressing..
Time to call my sign guy and get some leads!
Bginvestor, 5:55 AM
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Monday, January 16, 2006
Made an offer down my street..
We were walking the dog yesterday and noticed an open house. We walked through and decided we like it better than our house so we made an offer on it today.
They are kinda of motivated so we'll see what happens!
Bginvestor, 11:29 AM
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Saturday, January 14, 2006
I've hit the mother load!
Talk about getting information over load. I decided to try and find some realtor sites that post basic MLS information so I can graph data to better understand the market trends.
Turns out the the Tucson association of realtors have monthly reviews. Check this out..http://www.tucsonrealtors.org/public/ressalesstats.html
There over ten pages of graphs comparing data back to 1996. This is awesome!
Bginvestor, 9:00 PM
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How to get "Free" comps
I posted this about a year ago, but there's easy ways to get comparables for real estate and alot of times its free. Tom, from his blog http://dbreakfast.com//
mentioned that realtors are useful because of their comps on the MLS.
I never use realtors because its too much of a pain... The easiest way to get free comparables is to work through a title company. They provided me with a free account that basically uses http://dataquick.com
. To some, this is a little known secret.
So, now realtors are completing useless! ;-)
Bginvestor, 2:11 PM
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Friday, January 13, 2006
Thoughts on mailing campaign..
One of the bloggers recently commented that my marketing is labor intensive. Yes, it sure is. Than why I am "sticking it to myself"? Why not do something easier like postcards?
Here's the reason. My audience is focused and my letters capture the emotions of that audience. The postcards won't be read as much because my letters are labeled such that they will be curious to who its from. Once they open the letter, they will be committed to reading some or all of it. Pre-foreclosures don't have much patience, so they could just throw away the postcard without reading the punch line.
In my opinion, postcards are better to "shot gun" hundreds of owners to stir up interest in buying houses. Many times you don't know their motivation level.
In my market there are about 50-60 foreclosures a week, so its do able to send well written and professional looking letters to these folks.
Still its labor intensive. However, I just hired one of the neighbor kids to stuff and label envelopes for me. I should have done this a year ago! The added cost is totally worth it and I plan to double my mailings spreading over more zip codes.
I will send 3 letters to each address. I should do 4, but I want to first test 3.
I will also send more letters to other motivated people. i.e., quit claim deeds, divorces, evictions, or probate. I will choose one of these and hit them with 4 iterations.
I network with several investors and I have to admit, I am the one that usually gets the best deals! However, I don't find them often. This has to change, for my business to grow, my leads need to increase.
This will help...
Bginvestor, 6:09 AM
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Monday, January 09, 2006
Offer #1 = No Deal..
She called me last night to tell me that she is now under contract with someone else!
I think I figured this one out... During the first conversation , she told me that someone had offered her 50k cash for the property, but she felt that was too low so she invited me to take a look at the property.
The next day I looked at the property in the morning (Sat.) and than made the final offer in the evening . I had already setup the seller financing idea, I just didn't commit to solid numbers. My offer was made 5:00 pm (Sat.) and she needed to talk it over with the husband.
She called me back at 8:00 pm and told me we had a deal. I setup an appointment for 12:00 pm (Sun.) to sign.
She called me up in the morning to postpone the meeting until 2:00 pm because she need to do something (Now I know what she was doing).
1:45 pm she tells me that another guy in interested and needs to call me back later in the day to tell me what she decided.
I got the call last night around 7:30 pm that she signed w/ someone else.
Ok, so I think I understand what happen.. The guy that who made the original offer probably is the one that is closing with her. So I forced him to buy the property at a 10k higher price. I thought my offer was solid because she commited to the deal Sat. night and she was leaving the state on Monday so she didn't have time to find another investor!
However, my mistake was that I forgotten about the original 50k offer so time was still the essence. And I didn't give her the "ok we have a deal no more investor speech"..
As properties goes, this was so-so because it was a mobile home affixed to a lot w/ a 1000 sqft addition. It was a pure fixer-upper. As a fix and flip the numbers are poor, however, the financing made a a excellent deal long term. Shit, after 5 years as a rental the loan would have been paid down to 35k!
Comps was non existent so I had to go off of two MLS offerings, and one comp from last summer. The confidence in the comp value was not high, however, the addition and covered garage showed a lot of potential.
Clearly a long term stategy is a no brainer. I was going for lease option w/ no rental hadaches. However, the tenant -buyer financing was going to be a huge issue. There would have been very FEW banks willing to finance a 80k property w/ a 1963 mobile home.
Profits would have been at least 25k-30k.
Until the next one!
Bginvestor, 6:44 AM
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Sunday, January 08, 2006
Lead#1 = Offer #1 = Deal??
I can't believe this shit... I had negotiated an awesome deal yesterday where I was going to buy a property via seller's financing 60k w/ 8k down. Unfortunately, she calls me up 15 minutes before going over there to sign paper work and she tells me that a neighbor caught wind of her moving and they may be interested in offering 60 k cash for the property!!
I did all this work to negotiate her down from 80k and this guy may reap the benefit from my efforts. Here's the kicker, she AGREED to carry back at ZERO percent interest rate because she was extremely motivated (she's leaving the state tomorrow).
She rather have 60k cash now than financing which I can understand. Although she'll do better tax wise w/ financing.
She told me the guy needs to look inside and its definitely a fixer-upper!
She is going to call me tonight to tell me status. I can't wait.. ;-(
Bginvestor, 2:21 PM
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Tuesday, January 03, 2006
My 2006 Financial Goals
Here it goes.... These are my financial Goals for 2006. I won't mentioned my family and health goals. I have high expectations this year because I know that I've learned the tools to invest, I can and will find more awesome real estate deals, and I have more of a drive than ever to close!
Before I start, I heard a segment from "Dr. Phil" on goals which I agreed on. He mentions that people make goals based on emotions
and that is why most fail. Don't make this mistake! Create procedures to make the goals a reality. As Gerald Romine states, "There's two things in life, excuses and results!"1) Determine how much borrowing power and/or other people's money you have access to investing.
I have enough liquid capital/credit to keep purchasing some properties. Not many and this does not make me happy. If my land deal hits this year (we are working hard to get it sold), than I will be in a even better position to buy several investment properties in CASH.
Private money is setup and ready for the right investments.
Goals for 2006, find other people's money. Right now, I do not have partners w/ CASH or anyone willing to loan me money out of a IRA, etc.. I am working alone, which I would rather not do. I have a friend my age that partnered w/ his agent and they have built up 2 million dollars of investor money to do deals. This is the way go.
However, my best friend who lives in Palo Alto is interested in investing w/ me. This is a possibility if a big project comes up and I need more capital support. This is a deal by deal basis so there's no formal partnership right now.
Hindsight is a wonderful exercise, if I had more access to cash, I would have bought more property (before the huge appreciation in the last 3 years) and would have been much better off. This should be one of my top priorities. My best bet is going to my local REI meetings. I am searching , buy have not found the right investors yet.
I will also consider signing deals and finding the money! If its good deal, the money will come. (Thanks Trisha)2) What is the current state of YOUR Real Estate market and what techiques are best suited to maximize profits in your local market?
The other day, I realized that I didn't REALLY understood my local REI market until July of this year! Thats amazing... If I knew the numbers and the story , I would have done many deals that I gave away! (Yes, I gave more than a few deals away) At the time, I didn't want a negative cashflow of $75, or maybe a slim margin of 10k flip, if I knew the market correctly, I would have made $75k of equity on the rental property and 30k on that flip! It was my choice and I lost the profits.
So, how do you know your market? I learned the market by taking a REI class w/ a realtor (investor) that is the real thing! He needs to know the market because he's growing his business. He publishes a real estate letter that contains tons of graphs w/ solid numbers in Tucson. Graphs on appreciation in the last 5 years, monthly inventory levels, affordability indexes, etc.. You need to see the numbers and the story becomes clear. Research your county recorders, talk to investor agents, and/or go to real estate club meetings and understand what other investors know!
Goal for 2006, track the local RE market on a monthly basis. Especially now.3) How risk adverse are you?
From a scale of 1 to 10 w/ 10 being high, I would say that I'm a 9-10 in taking risks this year. I haven't done development yet, however, I am ready to do it in 2006. Why? Because I've talked to too many people that are successfully doing it right now! Of course the numbers need to work.
Goals for 2006, make an offer on every property that I analyze from my marketing campaign (Caller screened of course).Overall 2006 Strategy
: Pretty simple, first, generate cash via wholesale or fix/flip. Secondly, buy a rental property! Repeat again! The goal is for the business to generate enough capital to buy the rental properties for me. I expect to do at least 4 projects this year. I am looking for two properties w/ huge lots that can be developed. And two rental properties that will cashflow (need to be bought at around 70 LTV). These types of deals are getting harder to find in Tucson, but I'm up for the challenge.
Getting the developments complete in the summer is perfect for maximum profits and buying properties in November/December is best because inventory is at its highest.
To summarize, I want to raise around 40k-80k and spend it on long term investments.
I'm a firm believer that 80% of the effort is in the marketing, so if I'm successful, I should easily make the goals.
In addition, now that I understand my goals, I can tailor my marketing efforts.
- Spend less time working on properties
- Do marketing more efficiently (time factor) --> Direct mail
- Market to produce enough leads to make many offers to close a deal
- Make offers on every property that I analyze
- Touch bases with seller after you make an offer that was rejected
Bginvestor, 5:57 PM
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Monday, January 02, 2006
Good Real Estate Investing (REI) articles.
Gerald Romine was a small time investor in the mid 90's in Phoenix, Arizona. He then formed a real estate club in Phoenix which became relatively successful. He promotes his wholesaling techniques and he's getting quite popular now. I went to one of his "seminars" last year bringing in national speakers and I actually learned a lot.
I stumbled on one his websites where he posted a summary of his personal articles. I agree w/ all of them and states the facts clearly! I would him to be my mentor!http://www.geraldrominearticles.com/
Bginvestor, 3:36 PM
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