Black Friday, Online Shopping, and Growing our Buyers List

Today is one of the craziest days of the year....Black Friday. People trample all over each other, wake up at 2 AM, and stand in ridiculous lines to save money on Christmas gifts. I just can't do it. After enjoying a wonderful Thanksgiving dinner with the family, I went through the sales papers to see if there was anything at all worth inconveniencing myself for. Turns out the answer was no. I did go to a couple stores at 8 AM but the 6 AM shoppers had already taken everything - LOL!

So I came back home, turned on the computer and bought a bunch of stuff online. Mission accomplished.

Instead of spending my time on the streets today (and since my hubby is working and daugher is off with her cousins and grandparents at the Cirque de Soleil), I decided to spend some time working on my homework assignment given by our private money mentors. Oh, and on Wednesday I did my first presentation with a close friend of the family (I also consider him a mentor) and he gave me excellent feedback that I will incorporate in the presentation.

Finally, I decided I needed to spend some time working towards growing our buyers list. We need to find more active cash buyers here. I'll be going to the Broward Real Estate Investor meeting this week and I just bought a mailing list of non owner-occupied home owners in my key zip code areas from Listsource.com (people who purchased homes in the last 6 months but are not living in the homes they purchased) and then used Click2mail.com to send off some postcards to these 180 folks. Click2mail.com is very effective and inexpensive. Depending on the results of the mailing, we'll contact these same folks again in early January. We want more buyers to sign up for our mailing list so we can contact them about the deals we're getting.

Deal #1 Closed - woo hoo!

Thank God we closed on the Sunrise property today - it was looking like it may not happen until next week, but its D.O.N.E. Woo hoo!

Now its time to get busy on the repairs.

Looks like the Ft. Lauderdale property will close on Wednesday of next week (assuming the bank accepts our contract extension which they'd be foolish not to since there are no other buyers). The appraisal came back fine (after repair value of 90K) so the lender is happy and we're ready to move forward.

More pics and (maybe even video?) to come soon.

That's all for now. Happy Thanksgiving - gobble, gobble!

Patience is a virtue

Today was a test of my patience and hopefully I passed. Patience with the appraiser who is taking FOREVER to finish his report so that our lender can finalize our loan amount (for the Ft. Lauderdale property). Patience with the closing agent who sends emails out saying:

WE WILL ONLY ACCEPT A WIRE TRANSFER FOR
DEPOSITS AND/OR FUNDS TO CLOSE

ALL  LENDER INSTRUCTIONS/PACKAGES MUST BE RECEIVED
48 HOURS PRIOR TO THE DATE OF CLOSING.

**ABSOLUTELY NO EXCEPTIONS WILL BE MADE TO THESE RULES** 

*****NOTE: Our office will be CLOSED Thursday November 27th
and Friday November 28th for the Thanksgiving Holiday.  
Closings must be scheduled by November 25th
or extensions will be needed. Have a Happy Thanksgiving!!

The closing agent got a little snippy with my pal "Paula" .... they have all these weird policies like they won't pay for insurance the day of closing..we had to have it pre-paid (not typical) and this whole thing about having packages a whole 48 hours prior to close. For what?!? Like Paula said "Um...its just paperwork. It's like they need 48 hours to press the print button" LOL! They still haven't even given Paula the final HUD but whatever..she managed to get the paperwork out anyway.

Anyways, I called up Miss Snippy and covered her with kindness and it sounds as though even though the paperwork got to her at 4:30 pm vs. 2:00 pm, she's going to go ahead and close us on Wednesday. We'd really rather not wait til Monday because we'd require another contract extension and we'll probably have to deal with closing the other house on that day anyway.

Thanks to Mr. Slowpoke Appraiser, we're not going to close on the Ft. Lauderdale property on time -- more on that later. I am praying that he gets that report in tonight or first thing tomorrow morning so we can move forward with a closing date.

Again...a test of my patience. I had to channel Job today...stay steadfast. Focus. The blessing is just around the corner.

Oh, and I did meet my goal of getting offers out over the weekend - a total of 13 offers went out ranging from $32-40K. The listing agent for the Ft. Lauderdale property also told me that she just got a full duplex listing that hasn't sold for 4 months (listing expired with another agent so they gave it to her to try to sell) and asked if we wanted to take a peek. We're going to check it out. There may be a darn good reason it hasn't sold for 4 months ;-).

Looking forward to my second private money recruiting mentoring session tomorrow with Trevor and Pat. I still haven't finished the pitch and I need to get one of my mentors to critique my delivery before the Thanksgiving weekend is over. That's the goal.

Ok, I'm rambling now.

The master rehab plan

So my husband and I spent an hour today discussing our rehab master plan. Looks like we'll be closing on the Sunrise property on Wednesday of this week (yeah!) and then the Ft. Lauderdale property on Monday of the following week (long story).

My dad is a master handyman so we're going to hire him to help us with the properties....he's reliable, does great work, and won't cost an arm and a leg! We'll hire specialists for things like electrical and roofing.

Here's the master plan in a nutshell:

Sunrise property:

• Pay $60K for the property.
• Finance $50K through my new friends "Roger & Paula".
• Spend no more than $12K on repairs -- replace fuse box w/ circuit breaker, replace roof, put new glass in a couple windows, patch up the ceiling in the living room, and some small cosmetic issues (like get rid of that terrible beehive in the back of the house)
• Rehab should be complete in 6 weeks -- ready to go in early January
  
• Call back the landlord/investors and end-buyers who were interested in the property and have them take a look
• Market like crazy
• Sell for highly discounted retail value and pocket up to $20K [we're not looking to do a major updating/rehab and sell at full retail value because of the high amount of inventory out there]
  

Ft. Lauderdale property:

• Pay $56.5K for the property.
• Finance $50K through a high cost hard money lender :-(
• Spend no more than $12K on repairs -- lots and lots of cosmetic work (this is where my dad's genius comes in), modernize kitchen, add kitchen appliances and washer & dryer, do some basic landscaping, paint both interior and exterior of home
• Rehab should be complete in 6 weeks - ready to go in early January
  
• Advertise on gosection8.com and find ourselves a tenant [there are TONS of them]
  
• Rent for $1300/month - nice cashflow for us
• Refinance the property (or get a private investor) as soon as possible so we can lower our monthly cost for hard money financing

As we go along, I'll post more details (and pics!)

First Again: A new day in lending

Today I did business with a company that really made my day....

I was never so happy to incur debt....

This is coming from someone who prides herself in having little to no credit card debt and living debt free. My desire is that we will even have a debt-free real estate investing business within the next 5 years and be a lender for others instead of the borrower. BUT....in the meantime I wanted to finance our rehab costs for our properties with an unsecured loan instead of using our own cash. And boy oh boy did I find the right company thanks to Brian in the Flipping Homes community.

One of my biggest pet peeves is unnecessary paperwork and ineffective processes that don't take advantage of good ol' technology. I absolutely despise the mortgage lending process and the piles of paperwork involved. I've closed on 3 personal residences in the past 9 years and every time I complain endlessly to the people at the mortgage companies regarding their ineffectiveness. I know its not that employee's fault but SHEESH! Can somebody pay attention here and pull us into the 21st century?

The answer is YES... here comes First Again. Their slogan is "A new day in lending"... and it most certainly is. They are backed by Merrill Lynch too....If (and only if) you have excellent and substantial (e.g. 5+ years) credit history, First Again has the single most effective and painless process for obtaining an unsecured loan up to $100K at a competitive rate. It is exactly what I've been asking for the past 10 years.

So here was my experience....

I filled out a very simple online form that asked for the basic info including assets and liabilities, income, etc.

Then within 3 hours of submission (and I think it would've been more like 10 minutes if they were on the East coast time zone), I get a phone call from a rep who wants to grill me a little bit about the purpose of the loan...she was super friendly but asked very specific probing questions.

After the call with the friendly probing woman, I receive an email asking for a few pieces of documentation to support my application ... and get this... they allow you to UPLOAD it through their system. The next morning I simply created a nice PDF document and sent it right over through the site.

After sending the documents, I get another email within a few hours basically saying we can't give you the exact dollar amount and length of loan you want BUT click on this link and we'll show you the terms we can provide. I click on the link and it breaks down the difference between my request and what they'll provide.

Then they tell you that you have a few weeks to accept the loan if you want it. Heck yeah I wanted it...the terms were awesome! So do you think they make you sign and fax a doc back to them? No way...they let you use your mouse and attempt to sign it or you can click a link that will create your name in cursive automatically using a script font...then you check off a couple disclosures after reviewing a very clear loan doc (no small print - no prepayment penalties, etc).

After that you tell them when you want the money...they can do it the same day (depending on the time) or the next business day. Then money is wired to your account.

48 hours from start to finish. That's it.

I cannot wait until the mortgage companies catch up to this too.....oh if the healthcare industry can get it together that would be a bonus (do we have to fill out the same daggone forms a million times at the same office?)

Ok, that's all for today. It's rare to have such a satisfying customer experience so I wanted to publicly applaud First Again for getting this oh so right. Thanks First Again!

My philosophy on business expenses

This has been on my mind so I wanted to write about it quickly.

(SOAPBOX BEGINS)

I am a firm believer in spending money on things we need for our business, including education (carefully selected).

When I was in college I had a good buddy (we'll call him Anthony) who always seemed to be doing something entrepreneurial....his philosophy was that if he didn't spend money on a business, he'd be just handing it over to Uncle Sam with taxes anyway. Even when his business venture fell flat on its face, it didn't matter. It didn't really cost him anything anyway due to the tax deductions. Basically he said that either we can be enterprising American citizens or we can just be tax payers...and relatively big taxpayers at that because we were both software engineers making decent incomes. I've heeded Anthony's advice for 9 years now (since leaving college)...way before we were even thinking much about real estate investing....you don't have to spend money you don't have (although it can be done successfully leveraging other people's money)...but if you have it, start a business - even if its a very small one - and enjoy the tax benefits, and make some extra money while you're at it!!

Yes, there are other ways to get tax deductions...like giving money away (tithing and/or charitable contributions). We give away around 15% of our income now and want to do even more than that in years to come....but don't forget about business too. Even if you don't have big dreams for your own business, you can even turn a hobby into a small business and write off all the things you'd spend personal money on anyway. :-)

If you do your own taxes with TaxCut/TurboTax, you can model this idea in the software very easily and see the difference in taxes you pay and whether you could've benefitted from spending some of that tax money to make a business (no matter how big or small) out of something you love.

(SOAPBOX ENDS)

Smashing roadblocks

Ok, now that I have time to breathe I wanted to write about what's been going on with the funding for our deals. We've had plenty of roadblocks but through prayer and persistence we've overcome several.


(That pic really cracks me up....anywho....)

Let me just say that excellent personal credit seems pretty useful these days due to the credit crunch and fortunately both my husband and I have FICO scores in the high 700s. After SEVERAL calls to hard money lenders over the past week we finally secured two lenders who will provide 90% of funding for our deals. We also negotiated a 8.99% fixed interest rate on a line of credit with BoA to fund the light rehab work and down payment. We were really fortunate to find a local lender that is charging us only 3 points on the loan...that is NOTHING compared to what others were asking for. The lender is a husband & wife business (for the sake of anonymity let's call them Roger & Paula) and they are super nice folks. I think we'll be doing a lot of business with them (or referring others to them) if they keep giving us financing like this.

What we've found is that the hard money lenders definitely care about credit more than they used to...they also only want to fund 65% of the after repair value (and sometimes only 50%)...they want you to have some skin in the game. The terms, rates, etc. that are advertised on the websites aren't the same as what they are offering in the current market conditions. The key is PERSERVERE...you can't give up. Even if you have to call 15-20 different lenders.

Moving on...the numbers look good for the properties -- IF we rent them they will each cashflow a few hundred a month (even with high interest hard money financing) but I don't suspect we'll be holding onto both of them after the rehab is complete. In fact we met with yet another potential buyer today on the Sunrise property.

So here's the current focus (very near term goals)...

Make Offers
7-10 offers out the door by the end of the weekend. Only low end properties that we can wholesale for $40K or less at this point.

Network
There's a Broward Real Estate Investors meeting the first week in December and I will make arrangements to be there. We definitely want to network and find an investor friendly title company that will do simultaneous closes and some landlord/buy & hold investors.

Private Money Recruiting
* Finish powerpoint pitch for private investors (thanks for the template Pat!) this weekend
* Practice pitch and receive critique from at least 2 people before end of next week
* Set up appointment to give formal pitch to our first potential private investor by Dec 6.

Read / Listen to Audiobooks
* Read "Maximum Achievement" by Brian Tracy in December
* Finish Dr. Creflo A. Dollar's audio book entitled "8 Steps to Create the Life You Want"

Hmm....Self-directed IRAs?

I know I haven't written for nearly a week, but we've been really busy working on closing things with these homes. Will have an update on that very soon.

In the meantime I wanted to just make note of something I'm starting to learn more about which is self-directed IRAs. These IRAs allow you to invest in non-traditional vehicles such as private business investments and real estate. It has some restrictions but so far on the surface it seems like a great opportunity considering how things are going in the market right now. I'll be discussing this more with a company that was recommended by Steve Cook over at flippinghomes.com and also will be chatting with our private money mentors to see what ideas they have on this. It can help us with private investors and can also help for our our own retirement planning. More on this soon as we begin to learn more. Gotta run for now -- tonight is my first mentoring session on private money recruiting.

$$The money hunt $$

We've switched gears and focused on finalizing funding to close on these deals. We had a buyer who really wants to the Sunrise property, but his financing source won't close on a property that needs roof work done. Oh well! We've even had realtors calling us trying to show the Sunrise house to their clients too so I really think we can get a retail sale out of that one with VERY little work...just fix the roof and call it a day.

We also have a potential private money lender who is one of my husband's clients. She is reviewing our proposal and wants to have her adviser take a look at it too and will get back to us. Speaking of private money...we've secured a couple mentors (Patrick Riddle and Trevor Mauch) to help us out with these efforts...its a bigger deal now since conventional financing is harder and hard money lenders are very expensive. Plus with the market tanking, people are looking for other ways to generate returns on their money. Anyways, one of our mentors (Patrick) is an expert who has raised $6M in private money for his real estate deals over the past 5 years...and he started when he was a college student! We'll be sure to track our adventures in these efforts as well.

Our free mentoring with The Freedom Equation is over now...it was a pretty good experience. The coach we worked with was definitely knowledgeable, supportive, and responsive. I think mentoring in this business (or any business for that matter) is essential and we're going to continue to seek out mentorship whenever we can.

We may have a buyer.

My husband met with a potential buyer yesterday who is really interested in getting the Sunrise property. He's working on getting his money together so we should know more tomorrow. We also have a second potential buyer who said he was going to drive by the property today so we should know about that tomorrow as well.

I'm pretty sure we'll end up holding onto the Ft. Lauderdale property and then wholesaling the Sunrise property. That's fine with us because they are both really great cashflow properties for renters.

Oh, and not that this is a political blog but hey, I absolutely would be remiss to not acknowledge that history was made in a MAJOR way last night with the American people electing Senator Barack Obama as the first African-American president of the United States. It was an exciting moment that I think even folks who didn't vote for him could appreciate!


So back to real estate - we're still making offers on additional properties for $30-35K a piece. Eventually we're going to find a bank who wants to offload a property for a real steal :-)

Gotta love those bandit signs.

Our phones rang off the hook this weekend due to 30+ bandit signs all over the city this weekend (thanks to Steph in Tampa for giving us a great idea for a compelling ad on our handwritten signs). We're definitely growing the buyers list and its good to have a chance to talk to some of the investors in the area. We have 6 solid leads for our current properties and we'll see what transpires over the next week. Some of the other folks who called were just tire kickers and others ignored the part of the sign that said "CASH ONLY" so we wouldn't be able to do a quick sale with them. They still are potential future buyers but just not on something that we need to move really quick on. In the meantime we're gearing up to line up the funding with the hard money lenders (and potential private lender) for the properties in the event that we rehab them ourselves.

We're also working on establishing business credit for the business. Dustin Mathews has some great training on this topic and we're already putting the plan into action. We applied for a Dun & Bradstreet number so we can establish a credit file for our business. We'll also apply for some trade credit and then some cards. The idea is to establish a good history over the next few months so that we can get some lines of credit available to us to help with funding deals in the future at a lower interest rate.

That's all for now. I'm on pins and needles awaiting the results of this election.