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..
Monday, March 20, 2006
Increased marketing! Yeah!
Ok, its about freakin time. I will be increasing my marketing starting this week. First, I have subscribed for 6 months to a local paper using the following ad. The ad actually is bolded and has stars, but I couldn't get the formatting to work in html.
I like this ad. It does a good job screening folks, it just doesn't say, we buy houses. We buy houses is your behind in payments, etc.. I look forward to track results on this one.
I also selected a smaller paper for this ad. The paper is equilvalent to the "thifty nickel". This smaller paper covers a lot of area and is better bang for the buck.
*WE BUY HOUSES*
Are you making payments
on a home you can't afford
or don't want?
Is your house in need of repairs,
in foreclosure, behind on
payments or vacant?
We buy houses from
people just like you!
This will be placed in two sections, the "house for sale" and the "real estate wanted" sections. I don't have high hopes for using classified ads. I tried this several years ago and well, it was ok, but I got a lot of tire kickers. I'll be tracking the results.
At this point, I just want my phone to ring!! Please ring!
P.S. On my pre-foreclosure letters, I've sent approximately 500 letters and I have only received 1 call. It was a good one, but didn't work out. This illustrates how much of a seller's market it is right now in Tucson. The sellers don't feel that they need to call a investor to sell their property. If I was single, I would be moving into a emerging real estate market. My buddy is moving to Austin in the next couple of weeks for this reason.
Bginvestor, 2:43 PM
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Sunday, March 19, 2006
Details on previous offer!
As promised from one of the bloggers, here's the details on my fourplex offer. This was actually printed out and attached to my offer to the seller. Why did I do this? For several reasons.
1) I have to prove to the seller that a property is "valued" at what the property can take in and I will only buy a property if the numbers work.
2) On this deal, I am asking the seller to carry back his equity in the amount of 168k. I figure that the seller will feel more comfortable with the carry back when he relaizes that I don't have huge amounts of negative cash flow.
For creative offers like this , keep in mind that you can get lower mortgages by reducing the SALES PRICE or TERMS OF THE LOAN. In this case, I am offering only 3% to the seller for the carry back. This allowed me to increase my offer price so I didn't have to be low balling him.
Bginvestor, 11:59 AM
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Thursday, March 16, 2006
Offer #5 Another Fourplex..
I made another offer on a fourplex last night. The lead came in from a birddog!
Bginvestor, 7:27 PM
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Monday, March 13, 2006
Philosophy of break even investments..
Ok, some of you guys must be thinking, damn, why do an investment when it only breaks even?
First of all in this market, if your breaking even its because you either had a huge downpayment, got it for a great price, or terms are great.
The rental rates in Tucson have been real soft for many years. Based on my research, I think rents are going to go up real soon! So, a drip of water will turn into a stream and than a river in the future. Thats the plan.
In 2004, I only looked for bargain, bargain properties and I lost many great opportunities because I read books that said , "I passed on properties with $10 dollars negative cashflow!".
Bginvestor, 8:00 PM
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Offer #4 Fourplex..
Made an offer on a fourplex that I found on craigslist. I saw the units tonight and the guy is quite motivated.
He owes 212k on a 400k building. He has five of these fourplexes.
I offered a 5% down payment with a carry back for the difference of what he owes. I will bring in new financing since he has an ARM. The terms are good for me, so if he accepts it will break even assuming all costs (including management!)
Bginvestor, 7:55 PM
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Wednesday, March 08, 2006
I have to tell you, my thoughts on time has changed drastically in the last few months. I consider my "time" very precious right now. Since my promotion at the JOB and my new son, my life has changed.
I am trying not to work over 40 hours, but its been tough. In addition, I have a 50 minute commute each way.
Spending time with my son has been great and I do it everyday. In addition, my wife and I decided to take one day out of the weekend to just "chill out" with the family. Without allocating time to do this, we end up filling out schedules doing chores and work. We have actually forgot how long its been that we went out on a date. ;-(
So, I have accepted these changes, but where does this leave me with real estate? I no longer want to scan listings at lunch, and can't do much one day of the weekend. I estimate I can only do 5-10 hours a week at most.
This includes: finding deals, creating lists, talking w/ sellers, education, checking out houses, writing offers, closing deals, working on houses, renting them out, quick books, selling, marketing, advertising, rehab, networking, education, etc...
Not much time when you want to buy many houses, huh? And if I want to have any fun, real estate will be zero for the week. I'm still trying to figure this out, but my time will have to be focused like a laser. I need people to find me deals, enter and exit criteria need to be easier.
I have read time management books, and I have ideas, but I'm going to have to trade money for time.
Bginvestor, 6:16 PM
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Tuesday, March 07, 2006
I dumped this one like sack of potatoes..
I have mixed feelings about this one, but I ultimately went under contract and ended up walking away from this one. Here's the story..
I got a call from a seller in foreclosure last week. He had a house in Vail, and said it recently appraised for 505k! Anyway, he showed me the house, it was built in 2004 and was on the GOLF COURSE on the 18th hole! Below shows the numbers, he owed just over 350k so I thought that he had a lot of equity. At the time, the banks wouldn't let him re-finance and he had some financial trouble so wasn't making his $3150 a month payment! (Yes, I know, thats lot). He was a real nice guy and treated me like a professional.
After he showed me the house, I told him about my plan. I would buy the house subto and give him his money back on either a re-finance or until the house sells. The only exit criteria was a flip, I did not want to rent it out , although a lease option could have worked. Surprisely, he accepted the deal, and would go under contract for $374.
At this point, I had 90% due diligence done, but it was the weekend and I did not talk with my realtor. The next day, I got a market analysis from her, and the story unfolded quickly. There were over 50 houses in this neighborhood. There was high competition with the builders. The days on market were long (as I discovered), however, there were two properties that I missed from my research. The square footage and build dates were the same and were selling for 415 and 435k respectively. If selling using a realtor 6%, my breakeven point (no profit) would be 425-430k. This was very alarming. Do I want to invest nearly 40k to make 5k-10k at most if the market is weak? What sucks is that if the comps were stronger, and I could sell it at 475k, I could make nearly 40k easily! I was hoping that 445k would be on the low side, but unfortunately, it was not. :-(
I decided this was not good, so I called him to renegotiate. I told that I would give him 5k at closing and buy it subto. This was essentially 10k lower. After several days, he told me that he would pass. He ended up contacting a bank that said he can do a re-fi.
What a shame, I decided that I did not want to take the chance even if my numbers were on the conservative side. Secondly, my mortgage broker told me originally that I could not do the re-fi. He found a loop hole with a fixed interest to get it done later in the week. The problem is that most banks will give you 80 LTV of the purchase price or appraisal
which ever is lower. Since my purchase price was so low, this would not work. However, there was a way if I got a appraisal when I bought and get another at time of re-fi and they would take which ever is lower.
My wife was a good sport for this deal. She supported me through the analysis and inspection of the property. She told me that she was relieved when I told her that I had re-negotiated. And I was too!
Until the next one..
Bginvestor, 6:58 PM
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Sunday, March 05, 2006
Another article on foreclosure investing..
For those of you interested in foreclosure investing, check this out...
I agree with the article completely, however its not stopping me from investing in this area...http://money.cnn.com/2006/02/07/real_estate/foreclosures_money_0603/index.htm
Bginvestor, 6:30 PM
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