Jonny's Journal

Were All Just A Number Thursday April 9/09

So last night I got to bed at about 4:30 A.M. I got up at about 9:45 A.M and quickly got ready with my meeting at Starbucks for a possible deal. The meeting went ok really, but there's several problems. She wants me to possibly take over her payments and do a lease-to-own or a rent-to-own type deal. Problem is her monthly payment is almost $1300 a month... I make $2000 a month on average. Second problem is that she owes $120,000 on the house.

The city's appraisal of it says its worth $170,000, but no way its worth that in its condition. Based on my quick estimate of repairs for the property,(I've been in it several times before) I'd probably need about $15-25K to fix it up and update it. The kitchen needs a complete gut, every room in the house needs to be cleaned, painted, and floors refinished. It doesn't have a garage so that's another $10-15K(Oh by the way, I'm handy with remodeling. I could pretty much build a house ground up, I should really add that to my pros in my first post...). Basically I don't see myself purchasing it anytime soon because she wants more that the $120,000 based on just talking to her, and a lower offer would definitely offend her.

At 11:30 A.M I had my next meeting, with a lender. I was a bit nervous, well not so much nervous but I just expected to be turned down from talking to my bank the day before. My hands were sweating and I read the newspaper just to ease my mind. I the lender's name and number from a friend of mine. I'll tell you what, that meeting couldn't have gone any better. I'm PRE-APPROVED FOR AN FHA OF $125,000! I couldn't believe it. Guys always pay your bills on time!!! He gave me my credit score on a printout with the report. I've got a score of 750, 715, and 751! WOOOO! Amazing. Next thing I did was ask him a few questions about lending and real estate in general. Great guy to work with.

The lender also gave me the name of a real estate agent that he works with. I called the agent when I got to work(slow day) and talked to him a bit, I'm not sure if I'll use him or a previous agent that I talked to because I liked the first one I talked to as well. I also asked him about making lowball offers. I didn't exactly tell him about bidding 30-50 percent off but he said he would make whatever offer I told him to. We'll see how it goes. He said he would try to email me some houses tonight, but there's nothing in my email from him yet. Not a huge deal. I contacted him at about 4:30 P.M. so I can understand him wanting to probably go home from work and get to me tomorrow or something...

Well that's it for tonight. OH I forgot to mention I've noticed a lot of people don't know the facts about what they are talking about when it comes to loans and real estate in general. Make sure you check on your own about the advice or facts someone is telling you to make sure you get the correct information!

J

Hello Jonny,

I am very impressed on how you took action. Not everyone I know will be blunt on writing down, there pros and cons. My hats off to you on a job well done. You will be amazed how many people today do not even know there credit score until they have to buy a house or re-finance one. I was that person for many years. Now I print one out every 6mos. I am in the 650's last I checked. I am working on bringing that up soon. I dont plan on buying housing under my name. I plan on lease options, or working my first deal where the owner will carry the note possibly just to get out without foreclosure. Anyways keep up the good work, I am very impressed by your way of moving forward and getting it done.

LilyfrmLA

Hey guys, its been a crazy few days for me. Well I found a house and put an offer in, here's how I did it. I was just driving around on Saturday around my neighborhood, you know looking for property. Well I see this sign on the road "OPEN HOUSE TODAY". So I went to the property and talked to the agent. Turns out I was the only one that came and saw it that day. Its a duplex that was owner occupied and didn't get rented. A mother and daughter lived in both the halves and that house it absolutely in mint condition! So I took a look through it and was drooling pretty much. Its got 2 bed/1bath each a kitchen and nice living room. Best part about it is the basement is somewhat finished, there's another bath and a bar down there. And there's a nice 2.5 car garage. Updated everything!

So they want 179,900 for the house. Well that was completely out of my budget! I can only get one for 125,000! Now of course after reading Dean's books, I know I'm not gonna offer a price anywhere near what they are asking. So I went and got some more advice. I went and had lunch with my Grandpa and after talking to the guy for a bit he wanted to check it out! He was amazed as well. So after going through the entire property again with him, he did some negotiating for me. Now my Grandpa is a people person through and through, hes got experience with tenants and owning rentals and was a real estate agent himself. So basically I showed the agent my approval and after talking to him for a while I said "I know this isn't anything near what they are asking, but this is what I can offer. I don't mean any disrespect to the owners, but I am pre-approved for $125,000". So we wrote the offer, the agent was awesome and explained everything clearly to me, very nice guy, I might end up using him down the line.

Now I've been wanting to get into real estate for a while. My parents have always been against it(I still am living at home). So when I got home after making me offer naturally I was really really excited! I told my parents about it...and that conversation pretty much went how I thought it was gonna go!
Parents: "Why don't you wait 2 or 3 years and buy a house then?"
Me: "Now's the time to buy while rates are low and house prices are cheap!"
Parents: "What about if you can't pay the mortgage or lose your job!"
Me: "What if I keep my job and easily pay the mortgage with my renter?"
Parents: "What if they don't pay you or destroy the place."
Me: "What if they do pay and I live rent free?"

Basically all they were doing was talking about negatives, while I wanted to focus on positive stuff. Just like Dean talks about in his book, your gonna run into a lot of people that will try to talk you out of making deals and making money in real estate. Sure, listen to what they are saying if they are someone you respect, but I usually try to talk to them about the positive side. Yea, a renter could wreck a place, or not pay rent or god knows what else, but that's part of the fun. Most likely every month I see 700-800 dollars of money that i didn't have!

Hey Lily thanks for responding I also plan on doing some lease options and other types of deals that dean talks about in his book. Good luck out there in LA!

You are definately on the right path. My ex sounds just like your parents. He kept on telling me why are you reading that garbage? You have to be strong, dont let up. I kind of don't say what Im doing in the REI business due to the fact of all the negative stuff that follows. If I told you how much seminars here in L.A I have gone to or how much money I have spent on my dream of financial freedom, well then you would know why I am alone. Trying to get that first deal has to be the hardest to achieve. And to make it worse your loved ones should have faith in your dreams as well but you just have to prove them wrong and Make It Happen! I am very proud of you that you did talk to your g-pa and you took action, even better the Realtor was nice to you. Keep up the good work!
Sundays L.A. Times had a 3 Units in L.A. $199k asking. I emailed my realtor to check out the comps in that area. Get the physical address so that I can check it out. Looked like a dump. but all I saw was $$$$$$ There has to be a reason why noone has bought this one yet. Bad Location/Gangs?
Anyways my realtor is super-cool shes my sisters best friend, so she does basically anything I tell her. Shes not embaressed to offer low-ball ones.

Been a few days. I've been really busy with my "real job" and side work doing remodeling, so I've hardly had any time to re-read Deans books like I wanted to. On top of that I've got a list of about 170 properties I need to go through and narrow down to take a look at! I'm feeling so drained at the moment. As I write this it's almost 3 a.m. and I've gotta get up at 9:30 and help out gramps with a remodeling project. He's 83 and stubborn as hell, so he'd probably just end up doing it himself, but he's hurt himself a few times because he doesn't think hes 83! Hehe. Well hopefully Saturday will be the big look at 30 houses day for me! I'm gonna put that agent to work!

Lily,

Thanks for the response! Well I hope you got a ton of information/motivation from those seminars because I've got a friend that went to one for a week and it cost him $10,000 so I can just imagine... all I've spent so far has been $40.00 L.A. has some big money for homes, but with big return I bet. I've actually been there a few times to see my Aunt, but I don't have much love for big cities... Anyway the homes that I've been looking at around here are between $20,000-$100,000 for the most part. I really want to get one for about $50,000 or less and get some cash flow going! It's good to hear you got a decent agent! Every agent I've talked to except the one I'm working with now was like "Well are you working with an agent!?! Choose me!" Kinda freaked me out, they sound desperate. Well good luck! I'll keep ya updated on my offers on monday!

I've decided to get this journal going again so I can look back on it and laugh. I'm doing this REI thing for real now, no more excuses. I feel like I'm unstoppable at the moment. My rental home I bought is just about done and I'm moving on to new projects. I've been talking to just about anyone I can. I've got about 4 tenant buyers on my list and 7 investors. I'm going to try and assign a property this week and see what happens I'll keep you all posted.

-J

Met with a new "investor" today, guy doesn't seem like he has what it takes. Hes all setup with the business end of it, but doesn't have anything to show for it. He said he's enrolled in The Success Academy, but he hasn't done anything with it in a month. I feel bad for him.

-J