Wall Street Bailout and impact on REI

The drama in our financial systems is on the news 24/7 this MAJOR $700 billion bailout may be inevitable. If the government buys all these bad debts what happens to all those REO properties out there on the market? I've gotta think that whatever the government does on this, there will be a real opportunity for the creative investor to capitalize. We've been waiting for a week to hear what is going to happen here and hopefully this will close soon. WAMU was seized by the feds and sold off to JP Morgan so things are just nuts.....gotta run. Looking forward to the first presidential debate tonight!

Automating the real estate investing machine

So its already crystal clear to me why real estate investors need to automate their business as soon as humanly possible. It takes quite a bit of time to put up bandit signs, you play phone tag with sellers just to find out that they are a tire kicker or don't have a property worth purchasing, and you can get hand cramps writing out addresses on 25-50 letters each week. All of these activities are necessary BUT having others do them could focus us more on finding properties in the MLS, making offers, and getting deals ONLY. We'll have to get really smart about this sooner rather than later. Having someone answer the phones and do pre-screening will probably be the first thing we need to invest in. Once we solidify our first deal I think it will be easier to make these expenditures. I may sound discouraged, but I'm definitely not. Just thinking about how important it is to work smarter rather than harder. Truth is that my husband and I both work full time jobs and we have two young children so time is precious!

Finally - our first offers!

Today was a good day. We put out our first group of offers! A total of 9 offers. A good friend of mine is a part-time realtor and she was incredibly helpful with finding comps and helping identify properties based on search terms I gave her. The goal was to do 10 offers but it turned out that one of them was a townhouse and not a single family home so we dropped that one at the last minute. We've had issues with HOAs so we're not even trying to deal with those.

I'm really wondering about this major bailout that the government is planning for this week. I'm curious to know what the impact is going to be on all of the homes pending foreclosure as well as the homes that already bank owned. I guess this is why Tim Winders kept saying that you can't be a one trick pony. Things change and your business must be able to adjust.

Meanwhile, we put out bandit signs again this weekend and got a few calls. My husband spoke with 2 potential investors and I spoke with one seller who owes more on mortgage than the property is currently worth. Not much we can do with that.

Now that we got over the hump of getting those first offers done, time to start all over and do it again! I'm also going to price ad space in The Flyer and the Sun-Sentinel classifieds this week. Since we're making offers we need to be ready to have some buyers!

Bingo!

Wow, it's been over a week since my last blog post. We were really fortunate to be spared by Hurricane Ike down here in the South Florida area. Our hearts and prayers go out to those in Haiti, Cuba, Galveston, and Houston who were impacted by the storm. I've dealt with major home damage from hurricanes before and it is a real pain...but nothing compared to what some of the people on the islands have to deal with.

This past weekend was pretty productive. We put out our bandit signs for the first time. I can see this getting old fast though and understand why people pay others to do this. It takes time...and while putting them up isn't so bad, its having to take them down less than 72 hours later that's a real drag! Some of our signs were missing when we came back to pick them up, but we fully expected that to happen. We got 3 calls from the signs so we'll see what comes of that.

On Friday I hit pay dirt. We've been looking for a company that would provide a proof of funds letter so we could make offers on some REOs. The hard money lender didn't want to give the letter unless they actually checked out the property and new it was something they wanted to back. Makes sense but when you're trying to do offers in volume it doesn't help too much. So what I found was companies who do "Dough for a day" loans for back to back settlements -- typically costing about 2 points. Not bad if you have a great deal on your hands don't have a lot of cash laying around or a private money lender. The company will provide our proof of funds letters so we can make cash offers on properties as soon as this week. So we're going to get busy. We have a number of properties that our realtor friend sent us on the MLS. Plus we're going to go through some of the REO properties listed from the banks and contact the listing agents directly.

Goal by Friday of this week? Make 10 offers on properties.

Banks and Hurricane Distractions

So our goal for this week was to establish relationships with small local banks and call some hard money lenders (HML). We want to begin making offers on some REO properties this week. We had to rule out many of the banks for various reasons but we have two potentials to work with. We just need to have meetings with the loan officer next week so that's progress. I spoke with two HML as well. They started sounded a little bit like a regular lending institution which was a surprise to me. They wanted 10-25% cash for a down payment and some want proof of X reserve dollars. I suspect they have to be more selective these days....anyways there was one lender that will loan 100% including rehab costs so I think that one may be a winner depending on how things go with the banks.

We also met with a couple real estate agents this week. We're going to focus on recently expired listings, unsold listings with at least 4 months on the market, and listings that include keywords such as: divorce, distressed, HUD, pre-foreclosure, vacant, handyman special, investor.

We were supposed to get our bandit signs out this weekend but we're going to hold off on that. There's a threat of Hurricane Ike - a nasty category 3 storm - and everyone is running around buying up everything at Target, Wal-Mart, Lowes, and Home Depot. I'm thinking its probably not a good time to be putting the signs out. So we'll do that next weekend once the storm has passed and hopefully the storm doesn't impact us much at all!

Inspirational Words

I thought I'd quickly share the motivational words on my desk that I look at every day :-)

But my God shall supply all your need according to his riches in glory by Christ Jesus.

Philippians 4:19

--------------------------------------------------

Now faith is the substance of things hoped for, the evidence of things not seen.

Hebrews 11:1

--------------------------------------------------

If you can dream it, then you can achieve it.
You will get all you want in life if you help enough other people get what they want.

Zig Ziglar

--------------------------------------------------

Press on: nothing in the world can take the place of perseverance.

Talent will not; nothing is more common than unsuccessful men with talent.

Genius will not; unrewarded genius is almost a proverb.

Education will not; the world is full of educated derelicts.

Persistence and determination alone are omnipotent.

Calvin Coolidge

Labor Day Weekend Fun and Planning

It was a nice Labor Day weekend for the family. We spent most of Saturday with my husband's family -- we almost got rained out thanks to effects from Hurricane Gustav but fortunately the rains let up and the kids could still go swimming. Today we spent the afternoon with friends eating and playing games. We managed to get some work done as well. This week we're going to be focusing primarily on funding. I researched online to find as many local community banks as I could and my husband is going to go into these small local banks and work to establish relationships with them. We will also contact several hard money lenders so that we can begin to understand the terms and know what our options are. I was inspired by a training call from one of my new favorite websites flippinghomes.com by Steve Cook. I've been lurking on the site for a couple weeks, but plan to be an active participant shortly. This site is a wealth of information and has a very supportive community of investors ranging from newbies to pros. If you're interested in the audio from the call, check it out here. Once we know how we're going to fund deals, we're going to get busy and make some offers on REO properties.

We're also going to expand our network by participating in REI clubs. There's a few here in our local area so we just need to make sure to get to some of those meetings. I'm sure we'll meet plenty of other investors, hard money lenders, real estate attorneys, and title companies. That's all good because we could benefit from relationships with all of the above!