Louisa's Journal - The Sky is the Limit!!!

I read your journal and action steps. Awesome! I like the way that you have listed goals from monthly, weekly and daily. It is definitely a great way to track your progress.

Great journal, you are motivating so many people!

See you tomorrow!

Anndra

Success is all about attitude!

After reading your last blog I thought Boy I know just where your at! I seem to be finding alot more rehabs than buyers, yes that buyers list just isn't looking to great right now for me.what about bird dogging a few of those rehabs you've found. a bird in the hand is better than two in the bush. on contracts my SCORE advisor sujusted a local book store that carries all kinds contracts, assignments, used them before. see my Lawyer tomorrow with contracts in hand, CPA next week. Not much of a typer my two fingers tire pretty fast.LOL Keep up the good Work. Michael J

Hello All! I'm finally on page 2 of my journal YAY! ...scrolling-wise, that is! Tried to send this through at midnight last night, but issues with my server ----so this is from THURSDAY!

Tom ---thank you for your note! Glad you enjoyed the rehab notes. It's great that you've found two groups to sync up with and that you're meeting some contacts in each group (even the ones that tell you "it won't work, as I totally think they are the ones that can motivate us even more! ha!) Know what you mean on the DG group being the most creative...it's so refreshing, isn't it?!

Anndra ---we are on here at the same time! I just wrote in yours Thanks for your comments! I am enjoying our little Nashville DG group, and hope we keep learning and growing together...our education and support right now is priceless in this group! I look forward to keeping up with your journal!

Michael J ---Thanks for the comments! I may just bird dog a couple rehabs...absolutely! Exit strategy options...more than one...good thoughts...awesome. Will keep it in mind. What a great bookstore recommendation/find. Good luck with the attorney meeting! Hope you get everything you need and if you get a sec, send me your contingencies/exit clauses in your assignment contracts. Very interested in these. Thanks!!!

TODAY
My work day has finally come to a close - real estate work, and then regular work... I have vowed to write each day, SOOO, here I am to track today's progress.

REFLECTING & CORRECTING From now on, I'd like to reflect on what I accomplish each day, then reflect on whether I "worked to capacity" today, and comment on what I could do in the future/tomorrow to 'correct' my schedule to get more done and manage my time more efficiently. Knowing I'll have to "report here later" in the day will also hopefully help me stay motivated to "stick to my commitments" and keep me accountable. I'm hoping that making this distinction each day will help me grow leaps and bounds as I try to get more done in one day and get closer to a deal.

REFLECTING ON ACCOMPLISHMENTS TODAY:
--8:30am Prepped for Mortgage Broker Meeting ---Reviewed Dean's books and site and pulled questions to ask and overall guidance for our meeting. Put together a one-sheet with my company logo & business card and included types of properties I'm targeting, goals for number of houses, and types of clients I'm targeting (per info in books)

DROVE TO MEETING (30 minutes)

--10:30 MORTGAGE BROKER MEETING ---This was awesome! Granted, it is a friend...I should say casual acquaintance --best friend of a really good friend of mine...but still, very exciting! She has been in this business for 14 years, and is currently looking for a "referral" source and ways to get creative as she says this year has been much more competitive than years past. So she was extremely receptive to everything. And I just have a GREAT gut feeling about her. You know when you just feel as though someone is on the ball and trustworthy and just a perfect fit? I'm not sure I could have hand-picked her better! We established a base line of what she needs to qualify someone for purchasing a home, and for someone at the end of a lease purchase (ready to purchase). Something interesting ----her company has partnered with another that analyzes exactly how someone's credit score can be raised within 6 months. So when she reviews the application, she can give a complete analysis and say for example "right now your credit score is at 580...if you pay $2000 off this particular credit card within 6 months, your credit score should go up to 610, and we can get you approved." So we of course worked this into our base line equation too to be sure we're helping as many homeowners as possible over time.
Noon-12:45 Left meeting and drove to library – called rehab contact from last week to be sure I got his schedule to schedule these walk-thrus with properties.

12:45-1:45 CALLS TO HARD MONEY LENDERS (from library conference room) - made many calls, got a hold of only one, directed to voice mails and left messages.

MY ONE CONVERSATION with a hard money lender - He laughed at me. Followed by "NO MONEY DOWN!? Well, GOOD LUCK....I mean, would YOU finance someone else at 100% if YOU had the money? haha!" We then got in a brief conversation where I confidently said: "of course I would if the deal was right, and someone was getting a property for pennies on the dollar for instance if ARV was more than double the current worth (before repairs), and I would be reaping a higher interest rate on my short term loan. Win-win! Definitely!" Which he followed with a sarcastic... "yeah, yeah, well ...you're not going to find that in today's market. I mean, if you find one, call me and tell me about it!" Good news, due to all the support from this website, info in Dean's books, Dean's site, the Edge program, etc....I wasn't discouraged. I have faith I will find one! NEXT!! One down, more to go to get to the RIGHT one! How fast can I call these folks and get through the numbers!!?

CALLED SUCCESS ACADEMY to validate my thoughts - to be sure that 100% financing for a rehab project---getting 65% to 85% ARV from a hard money lender (covering the purchase and the rehab with no money down) was actually possible and that "NEXT" is right. And it is! NEXT!

1:45 DROVE home and had to do non-real estate work from 2:30 through the evening. Got a 30 minute break and made more calls to lenders.

DID I WORK TO CAPACITY? Yes, absolutely! Nice that I'm happening to start this question on a good day I used any break time/spare time (even just 30 minutes) to get on the phone and make phone calls constantly. I also had one hour between a meeting and work, and was on the phone for real estate the entire hour. I have had days where I did not use my time as wisely, but today was a model day. I could not have worked any more diligently or effectively with the time that I had. I was driven as the previous day wasn't as "capacity successful".

HOW WERE MY GOALS? I over-programmed myself as even working to capacity, there was no way I could make the 8 phone calls to properties as I was tied up talking to lenders for every spare minute, however, these were valuable minutes. I could have stopped calling lenders (and point definitely taken here!), but I was really on a roll! Calls to properties are #1 tomorrow!

Tomorrow's goals:

---8 phone calls to properties (at least 4 today, 4 on Saturday)
---Write mortgage broker friend thank you email
---Call back 2 previous properties to schedule walk through with rehab contacts to estimate repairs
---Call back 3 hard money lenders to get a hold of and discuss their process (been playing phone tag)
---Attend our local DG group meeting from 11-1pm Focus: Offers/Offer Formulas

I have to do non-real estate work from 2:30 forward tomorrow, so the above is what I believe I can accomplish!!

Cheers!
Louisa

Louisa,

Have you joined the Success Academy....Just curious.

Wish you all the luck with your 5 deals By EOY 2009.

Bimal

At the end of August. I am working towards my first deal. I have not taken NEAR ENOUGH advantage of it yet, but I LOVE having a trusted resource I can dial in my daily activities to ask "am I doing this right? what is the angle here? with my given figures, is this a good deal? etc...

So far, it has been priceless and I highly recommend it to everyone. I'm just starting the videos and all the materials given, and I continue to see how priceless it really is!

But BTW, if you decide it's not for you right now, I totally believe that the support, motivation, advice and overall accountability through journals especially here, can help you get many deals done with or without the academy. I just decided I wanted an extra push and an "instant" resource for great advice.

My best to you and your success!
Louisa

Louisa,

Thanks for your honest response.

Now the reason I asked was one of Dean's coaching staff approached me stating that the admission to the Academy is by invitation only (Is this true) and they guaranteed me that whatever money I put into establish by RE business will be paid off within two months after joining, as I would have made deals.

Reading your journal I found that you are a hard working individual and I am positive you will have your 5 deals accomplished by EOY 2009.

I can't wait to hear about your success.

GOD Bless you with many many deals in 2010.

Bimal

Great journal. You'll get to finish line soon than later because of your enthusiasm. When you land that first day make sure you do just what the first guy requested wave it in his face "this could of been you". lol J/K

Atlcamel --thanks so much for the note and your support!! I REALLY appreciate it!

Bimel - thanks for your blessings and well wishes! Success Academy - there is an interview process which may be this "invitation only" aspect, so if you're interested, I highly recommend for you to call directly and go through it. It is not a sales pitch as they want people who want to succeed with them, so it is OK if you are not interested after your phone call...I felt no pressure at all. I really believe that as with anything in life, you get what you put into it and I do believe the possibilities of making deals in your first few months is very real as the information and resources the provide are great, but it is up to you and your efforts and your "call to action" in response to the program laid out for you. There is as much daily self-discipline needed with the program as without, which is key to any individual's success! Hope this helps fill in those blanks for you!

TODAY
-7:30am Came way too early today as I was up too late on this site after work!
-7:45am On this site reviewing journals, recent posts etc...
-9:30am Left the house for our Local DG Meeting
-10:00am Arrived at the meeting place early to make a few phone calls and review material for meeting
-Scheduled walk-thru of property for Sunday with seller (will pass along details after this meeting Sunday!)
-Scheduled rehab contact I met with last week to be on-site for repair estimates.
-Collected thoughts/figures for our meeting on offers & offer formulas
-11:00am to 1:00pm Local DG Meeting (I had to go at 1:00pm, but we could have stayed another hour! So much to connect and talk about...great meeting!)

Discussion: Focused on offer formulas and applied them to properties we are looking at now. Spoke about our cash buyers, their "wants", and collectively partnering our soon-to-be-deals with one another's cash buyers.

1:00pm Drove home, took care of a few personal items before getting some non-RE work hours in starting at 2:30pm So my real estate day was pretty much done!

Then, 30 minute break ---

HARD MONEY LENDER PHONE CALL
I happened to get a call back from a hard money lender I had sent an email response to regarding needing a hard money loan for a rehab project. We had a great conversation. He is actually not the lender, but sounds like a "broker" representing 6 hard money lenders although he calls himself an "intermediary" and said he doesn't have a brokers license, but represents these folks....who all have different ways of doing business according to their interests with their private money. I had to get back to work, but it sounded like he did have one hard money lender that worked with loaning 75% of ARV (After-Repair Value) on properties, which is the type of lender I'm looking for. I'm calling him back tomorrow to continue the discussion. We'll see...we didn't get into the specific numbers as far as what he could do, so I'll shoot out some details after we talk again.

EMAILS - Received budgets and references from rehab contractor from previous projects. Need to review these.

HOME by 9pm - dead tired! Catching up with my husband, my dog and Dean's site!

REFLECTING AND CORRECTING
Still over-scheduling my real estate goals a bit on days when I have some J.O.B. stuff to attend to! As far as "work capacity"...I was a bit worn out today from lack of sleep, and felt like I got as much as I could get done under the circumstances. I'm not discouraged but thrilled that Monday and Tuesday will be complete REAL ESTATE days for me and trying to fit as much in my planning and mainly calling, calling and more calling for those days. I have received some calls back, but haven't been available due to work, so I look forward to my "available" days!!

TOMORROW:
-Real Estate: I get 2 hours tomorrow, then I have to work on some other paid work. Calls, calls and more calls to sellers and properties are my goals.

-The rest of tomorrow and the evening is either work-related (about 10 hours) and/or getting some "catch up" things around the house and with my husband. I SERIOUSLY CAN'T WAIT UNTIL REAL ESTATE IS THE ONLY JOB! Right now, I'm tired, and I'm ready to have more time to spend with my husband for sure!!

SUNDAY:
-Church in the morning
-Afternoon: 2nd Appt w/ seller and contractor to estimate repairs - I'll give details after this meeting
- Back to non-RE work tonight

MONDAY & TUESDAY: I'M FREE to do RE today! Goals coming soon!

HAPPY FRIDAY and WEEKEND EVERYONE!
Louisa

Ok, doing my best to write here each day!

Today - spent just a couple hours - not much but here goes!

My Real Estate Work Today:
-Looked up 6 properties on Total View from my driving around the other week in an area I'm interested in. Ran offer formulas on a couple of them.
-Called one of them I was highly interested in - phone not in service. I wrote an email to the email provided in the FSBO listing.
-Confirmed 2:00pm walk-thru of a property tomorrow with contractor for estimates
-Planned for our next Local DG Meeting for next Friday and re-capped our last one: Next week: FOCUS: our buyer's list - qualifying and conversation + role play - calling sellers, for rent ads, and offer negotiations
http://www.deangraziosi.com/content/next-meeting-fri-october-16-1100am-1...

-HARD MONEY LENDER - spoke to the same guy I talked to yesterday who said I could call him over the weekend. The intermediary between several hard money lenders. We had a good conversation. Basically one of the lenders he works with would be the best fit for my needs, if in fact he will "deal with lending money under $500K for such a small deal". He lends up to 70% ARV. He is going to send me the "application" specific to this hard money lender (I still don't know if I'll officially qualify, but we'll see)...I had questions about the short term loan, the interest rates, etc...and he said along with sending it, he would send me this particular lender's "one-sheet" that would answer a lot of my questions. He was very open with me. Since my $50-$100K rehab of a $250K property (just one of the properties I'm looking at) is considered "small beans" to these folks, I don't want this to shut me "out of the party"....heck, if they want commercial deals, I'll bring them commercial deals!!! Just tell me your cap rate, your percentage of ARV, and what you're looking for, and LET'S PLAY!! I made sure this guy knew that I was working with a "group of investors" (my little DG group here counts, yes?) that are consistently coming across deals, and aside from this hard money loan for this particular rehab, if there is a way we can partner to make sure his lenders are happy and getting the deals they want on "their level", along with investing in another market for them, then let's do it!

It reminded me of a great post I saw a few weeks ago from Land Czar about his $1.3 MIL deal that said along the lines of "commercial property is the same as negotiating residential property....it just has a few more zeros behind it!" http://www.deangraziosi.com/real-estate-forums/my-deals/29548/13mil-apar...

MY AGENT ---another thought ---this gives me a good excuse to call my agent. I had put her "on hold" for a few weeks as she is ready to go to work for me, but I wanted to get my buyer's list firm (as I'm doing all assignments). My goal in working with her is by November 1. In the meantime, I have wanted her to know how serious I am in getting her involved...and she had mentioned in our meeting "if you come across any serious big time commercial buyers, I own some property in a prime location and have some thoughts on developing it etc..." (she is an investor herself)...SOOOOOO, this gives me a perfect excuse to give her a ring and get the details to see what she's looking for on it and let her know I may have a potential contact, who knows, but at least a connection to buyers that may consider it...somehow of course down the line working in a win-win if a deal is ever made. And most importantly, just the importance of my continued connection with her...that I can call her now with "something" to let her know my wheels are spinning in her best interest, keeping her in the loop, and that I'm in the process of potentially connecting with big money.

FINAL "NEXT STEP" with INTERMEDIARY TO HARD MONEY - he is emailing me the application, along with this particular lender's details. Whether or not I "get these funds" from this lender or not for the rehabs I'm looking at, I'm glad to be in touch with this intermediary because it sounds like if I have the right commercial deals, he's got the right people to hook me up with...was very open, friendly, and would have stayed on the phone with me for longer. I get the impression he has these contacts due to his sister's investment company and while he is not a licensed broker, has helped connect deals to her company, and to his 6 other hard money lenders across the country. He also sounds as if he is "learning" a bit too. He filled me in on an overview of details --- which of his lenders is really into vacant land or others that want no land deals, but large property development, shopping malls, etc..., and some details, etc...and I was so excited that when he couldn't think of the word he was looking for, I filled in the blank for him saying "cap rate" and I was right! I didn't know what cap rate was until a few weeks ago (or if it is in Dean's books, I had forgotten and was reminded by Land Czar's post!)

So, happy conversation! Happy moment on a dreary Sunday here in Nashville!

I also was able to give away some of my night work, so I can do some other more high-paying work from home on my computer tonight and tomorrow night, which also was a very unexpected surprise at 3pm today. YAY!

I know it's not much movement....not a deal, not locking up a property, but if a few conversations lead to some BIG MOO-LAH connections long term, then AWESOME!! I'm having fun doing this! I could do this all day! I soooooooo see why people really love this business.

OTHER HARD MONEY LENDERS - BTW, my eggs are not all in this one basket...I'm not stopping my pursuit of this! I have 3 more to call back on Monday...had a couple brief connections but no time to talk last Friday. I followed up with emails apologizing for my time being short Friday. And goal is to get some good talking in with each one on Monday/Tuesday.

NEW MARKETING CAMPAIGN FOR BUYERS THIS COMING WEEK - I have a plan for Monday that I would like to be in place by Monday night or at least by Tuesday morning. I'm SO PSYCHED about this! I'm putting it together on Monday. I will share the details if my results are good! (after all, you don't want to hear about it if not, right? It is a posting technique that I came across in another business 6 months ago, that I suddenly realized could DEFINITELY apply here and is priceless (or so I think!) The timing is coming together as our local DG group is collaborating and sharing our deals among our buyers, and it makes the timing for this campaign perfect as that helps my post, I believe, be even more effective. So we shall see! Details to come!

PROPERTY WALK-THRU & NEGOTIATIONS I'll report tomorrow on my walk-thru/estimate of this rehab. I have some "negotiations scripts" to review as I'm hopeful to lock this up if the numbers work once I have estimates. Will give property/deal specs tomorrow.

Good night!
Louisa

I just got the hard money lender questions/application in email tonight (who knew that people could send you such amazing business news at 10pm on a Saturday night!!), and got the "flyer" he sent to answer a lot of my questions specific to this hard money lender which is the "good fit" of the ones he represents, and YAY!!!!!!!!!!

I'm thrilled. Just what the "intermediary" said...this guy is more flexible, and his 'lending of money' is set up specifically for the SUCCESS OF INVESTORS, not their actual $$$ they put into the deal. 0% down (by me), they pay up to 70% of ARV, 6% interest rate, covers 100% of the purchase, 100% of the rehab, and 100% closing costs. WHOO HOO!!!

WOWOWOWOWOW!!!! Now to convince him he's got someone to work with!!! I got the questions he needs answered to evaluate whether or not he would want to work with me, and it really seems reasonable. I can tell due to his questionnaire that yes, indeed my one-off rehab is "small beans" and he asks for "what package of properties and amount are you looking for?" but HEY....let's get the man what he wants....HUNT DOWN SOME MORE PROPERTIES and/or the commercial ones he wants to make it as profitable as he needs it to consider the deal.

I feel fortunate...honestly, I got through one "laugh in the face" and my second one is REAL. Cool! Still not stopping me from talking to the others...after all, the more buyers the better! And I'm not qualified yet! But I feel GREAT ABOUT IT!!!

Did I add this guy even has "no pre-payment penalty"...so if you pay him off in a couple months (rather than the 9 month term), you are literally talking a 6% interest rate on his loan for 2 MONTHS!!!! I think this one literally fell from heaven!

Night!
Louisa

So quick update on my walk through of this property:

Details & Specs:
-FSBO - been on market for over a year and a half
-Owner inherited property from parents - he lives next door, continued renting out the units in this quad-plex for awhile, but it's not his thing, and he just wants to sell. I looked at it last week and he hadn't had anyone look at it in over a year. Not been too aggressive...in fact, no for sale sign outside, I just found it online.
-Neighborhood has lots of rehab work and new construction which is encouraging....it is on the edge of a great zip code/area

4 Bed / 4 BA / 1845 sq. ft.
Sale Price: $110,000
(priced about $60 per sq. ft.)
Average per sq. ft in neighborhood - sold comps $100-$124 per sq. ft.
TotalView Estimate: $158K
(although I believe this is very low due to nearby sold comps)

Is divided into 4 efficiency units. Previously was rented out weekly which totaled $525 per month per unit, however, I believe there were vacancies and seeing the condition, I see why!

Walk through: This place needs gutting in several places. Overall outer structure is nice, outside looks good, but inside in bathrooms, there is some mold, some flooring is uneven. Would need central heat/air (currently has a furnace and air conditioning units), and needs completely new electrical wiring. Needs new roof. Definitely a project to convert it and change the layout a bit so that it flows.

My vision for it: rehab it back into a single-family home: 4 BD / 3 BA

Putting this much rehab $$ into a multi-family and trying to flip that I believe would not be a good investment as people are looking for cheaper "cash-flows" than $200K+ I believe this property could be a beautiful single-family home.

My thoughts (without getting the estimates yet from the contractor)
Rehab costs would be:
$50-75K

Let's go with $62K for something in between

ARV: $206,680 (based on $112 per sq. ft...the average of the neighborhood)
I believe this would be very conservative, but let's stick with it.

ARV minus $62K repairs = $144,680 = "AS IS Value"
For my purposes, I'm going to take 60% of "As Is Value" $87K
and for kicks 70% of As Is Value = $101K

So I was thinking I would start offering an "all cash offer" of $75K and my bottom line walk-away offer would be $93K. Let me clarify that my "all cash offer" would be someone else's cash, or short term loan from a hard money lender to do this rehab, or I could just assign or birddog this....I'm running with the numbers as if a hard money lender is giving me $$ to purchase and rehab the property.

After expenses (holding, selling, closing), I'm figuring my profit after the repairs, depending on the accepted offer, would be ballpark $35-50K. And I feel that ARV at $206K is more than conservative. It's definitely not the top end of what you could ask for, but rather, would be something that would sell within 30 days.

We'll see! I'm curious now as to the actual repairs/budget the contractor comes up with.

I'll keep you posted!
Louisa

I would budget any where from 40 to 50% for overages from your estimate to make the repairs for any unknowns. That way you're giving yourself a nice cushion for any surprises, jmho.

40 to 50% ARV?? I'm confused? That sounds really, really high. But maybe you mean 40-50% of something else? Thanks for your input...just want to make sure I understand!

BTW ---I love input, suggestions, constructive feedback from anyone ---I completely welcome it!!

I definitely agree with being very conservative on budget due to unexpected surprises. Good news is I'm working with a 20-year rehab veteran who has not gone over budget and will give me a low and a high on budget (with the entire break down). He has gone over "time" involved due to the city taking it's time on code inspections, etc...which now, knowing how the city can hold him up, he pads his budgeted time "just in case" so there will be no surprise "holding costs" associated with the delays.

But I'm definitely curious about what you mean by "40-50%" ----of what number?

Thanks for the input!

TODAY SO FAR:
--Met with a friend this morning...just a catch up coffee.
--Unexpectedly (to me), this friend will be looking for a house in the next couple of months
--Like everyone out there right now, looking for a "deal"
--She and her husband are trying to move into a smaller place to kill some debt
--I found out what areas and price range....so I've added her to my buyers list

NOW:
--Off to a networking meeting in my current area which is good as I'm trying to build my network near my house verses just the city, which I'm more familiar with as far as real estate and contacts, etc...

THIS AFTERNOON:
--Spending time calling the rest of my hard money lender contacts
--Filling out current questionnaire from current hard money lender
--Calling For Rents, Sellers
--Drive by that property I emailed to see if someone is home since phone doesn't work
--BUYER'S LIST WEEK!!! Glad Dean is revealing something by tomorrow per his video blog to help this list! Today I'm also developing my post to use that MARKETING TECHNIQUE I mentioned and get it ready to go for tomorrow morning!! Will share if success is high!

More later!
Louisa

is what I mean. You never know what you may run into with a renovation due to the age of the dwelling. You always want to figure in overages.

I'm stating it will be a great day although much has yet to happen!!

I touched base with Atlcamel, and understand now! Good thoughts. If I end up taking on this rehab (and get the funds to do so), we'll be gutting a good portion of the downstairs...in this case, we don't have to look "into the walls" to see that it needs to be gutted. There is clear evidence that it does! So considering the gutting that needs to be done anyway, we better get all of that in our expenses for sure! Good thoughts on being conservative on these costs. I'm glad I am working with a guy who knows his stuff and understands we may or may not take this on, but it is a good exercise in budgets, and in seeing the break down of what everything costs in order for me personally to come up with better "guesstimates" on lesser and more minor rehab projects.

INSPIRED
by today's newsletter Dean got out on building a buyer's list. Will try as many of these things over the next 2 weeks as I can. And I also look forward to launching that post I mentioned before...more later.

I also re-read Dean's newsletter from last week about his trip across the country. You know, every time I read something from Dean or re-read it, I always pick up something new, something I haven't thought of before even after previously reading it. LOVE all that he shares. And love these stories of how people did it.

BABY STEPS TO UNCONVENTIONAL THOUGHTS/WAYS OF UTILIZING YOUR OWN MONEY
I plan on sharing those stories with my husband. I realize it takes "seed planting" with him and baby steps in terms of sharing unconventional ways of using money ----something like a HELOC (and paying ourselves back), and/or using IRA funds etc... He thinks of things very conventionally (and thankfully, we are different souls who work well together), however, him taking that leap with the little he knows about real estate (he's not in this game like I am)...is too scary for him. It is all very "risky". The more I learn about finding a true deal, the less risky I think real estate is....IF you know how to recognize a true deal!

MENTORS IN REAL ESTATE
In that Rehab Tour of Homes I wrote about a couple weekends ago, those last couple homes where I mentioned "the true DG Tour started!"...were owned by that one guy who built himself in the last 10 years in real estate (and now has TV commercials), due to assigning properties, and now, really become a professional wholesaler and "buy & hold" guy for cashflow in the 150+ homes he has owned or assigned in the last 10 years. Most profitable residential property: purchased for $285K or so and sold within 30 days for over $600K....happening this very month.

He said something towards the end of his presentation that struck me....in a good way. It was SO great to see someone I would consider "mentor" in the real estate world so boldly say...."People tell me all the time 'real estate is sooo risky'...I don't think I could ever get into that. I just tell them there is next to no risk involved when you know how to structure a great deal. You know how to run the numbers. And you know if something is going to be profitable or not. And you only buy when it will be a win-win and you have multiple exit strategies so you're never stuck. My favorite thing to focus on is exit strategies and always having a few to choose from in every deal that I do."

I LOVE IT! I'll let the rest of the world think it is risky, and join my DG family in succeeding to learn the best practices in finding and structuring a great deal with multiple exits!!

Of course I'm "preaching to the choir" here but just thought I'd share someone out there who "thinks outside the box" and is a true DG'er at heart whether he knows it or not....who has taken action and has a passion about what he does that parallels Dean's...you can just see it in his eyes and in the presentation he gave.

OK ---I will record my action steps and progress here later today...excited about today!!!

Cheers for now....Happy investing everyone!
Louisa

So today was interesting. While I didn't get some of my action steps accomplished due to long conversations with hard money lenders....that is OK...after all...long conversations with hard money lenders is what I'm looking for right now and my top priority!

WHAT I HAVE LEARNED FROM THE HARD MONEY LENDERS SO FAR:
-My "deals" are definitely small beans
-If I get out there and look aggressively (either on lining up 3+ properties for quick flip/or rehab, or one or more commercial deals), then, I will have PARTNERS who will be the cash behind me! This is EXCITING!

MY NEW APPROACH:
I'm finding out their lending minimums, finding out their interest rates, prepayment penalties, deals they are interested and how much they lend (i.e. up to 65-80% ARV on a $400K project and higher).

Instead of letting them "count me out" of the game since I'm dealing with $200K and lower, I'm asking them "what does it take to play?" (in different terms of course , "what can I bring to the table that WOULD be of interest to you" rather than waste their time wrapped up in the details of my own little project.

OK, so I know what you are thinking:
Must be nice Louisa to have the credit/collateral to get $400K from a private money lender.

Let me tell you, this is definitely not the case! My credit does happen to be great, but I don't have near the collateral to cover that kind of loan.

No, someone isn't handing me $400K tomorrow, HOWEVER, this is the deal:

From any hard money lender I speak with:
---I'm finding out what the qualifications are for that type of private money loan and more importantly if they will lend upon the specs of the deal
---Asking what total collateral is needed, if any, so that I may partner up with someone else so that we can together go after a project based on BOTH of us, not just me.

MY MOST EXCITING NEWS
came when I spoke with one locally who will truly partner 50/50 split. Basically, I would go to him bringing my deals. Minimum being a $400K loan (that he would attain from his lenders), and it could be a residential project (up to 3 houses found at the same time in a "package" for the loan) or a commercial project. Bottom line, he would get the loan in HIS name (0 money from me) up to 80% ARV from one of his lenders...although he said if we can keep it in the 60-70% ARV range we do have a better interest rate. And he would line up contractors etc..., but we would split the profits 50/50. The interest rates are a little bit higher 10-15%, however, it's a short term 6 month or less hard money loan with the lenders he already has established relationships with. So basically, I gotta go find the deals, and be sure they are DEALS and bring them to him, and I have a partner who will use his money/loan capabilities with his hard money lenders and we will split all profits 50/50. Then I can use those examples, before/after pics of completed project, budgets, final sales and profit etc...and hopefully continue to do business with him, but also have SUCCESS stories behind my own work to get more private money lenders to work with me ----doing MY OWN deals for 100% of my own profit. So, it's completely a win-win. Low risk. I find the right deals, validated by him and his partnership. He gets the loan. I get 50% profit.

HOW QUICKLY CAN I FIND THESE DEALS?!!! YAYAYAYAY!!!

Now, I don't pretend to think this will be easy, and as with anything in real estate it takes time.....but knowing I've got some avenues for hard money in the realms of $400K + (and I need to remember the plus!!), I can play with these bigger projects/offers, taking it and knowing if the right deal is there, I have some people I've spoken to to get the cash behind me!

Now, don't think I'm stepping out of the loop of the single, smaller deal houses. Not at all. After all, it is the basis of success on this site! I just believe now that I have found this other avenue that it is always good to have multiple "ways to work it", and when I go about finding properties, residential or commercial, I do have yet another set of "buyers" to look for...and I must say, I don't mind working a little extra for another set of zeros in my profit. Even better, is that Dean's techniques apply in both worlds! And I believe this to be an advantage no matter how big or small the purchase or investment. "Thinking a little Different" always plays a part.

Hope all is well in your investing world.

More tomorrow!
Louisa

So something I still can't get OUT OF MY HEAD from Dean's newsletter from last week (not to be confused with this week's awesome info too!):

If you read it, I know I'm not giving you any new information here...but rather sharing/reflecting on this awesome story. This one just happened to pop in my head again this morning:

DG member: Lubertha ---rode her bike (her only form of transportation) to go look at a property for one of her buyers. While that particular property didn't work out for that one buyer...she is lining up another buyer for it. But bottom line - she rode her bike!! HOW GREAT! HOW INSPIRING! This woman gave no excuses - no car - no problem - I'll just ride my bike and GET IT DONE! (and I know teamed with the awesome Sandra (Bernadette) to make other amazing deals happen!)

These are some motivated women! I'm going to continue to read her story over and over anytime I get down on my real estate day.

Heck, if she can RIDE A BIKE and GET IT DONE....I certainly can stop wallowing in any "so-called hard times" at the moment and/or real estate obstacles, and get my attitude up and GET IT DONE TOO!!

No excuses. Moving forward. Action, action and more action.

I wrote this just as much for myself as anyone else! God Bless these women for having faith and going for it, and for Dean bringing their story to the forefront ---people who did not let any obstacles, even transportation stop them!

Cheers to many more deals for them!!

Back to work!
Louisa

I have to say that story has a special place in my heart too. These ladies are a TRUE example of not letting anything get in their way of success. Everybody can learn from their example.

Keep knocking those doors down Louisa.
Barb

Barbara - Thanks for the note...glad to see that story resonating with someone else here too! And thanks for the words of encouragement! I definitely appreciate those and need them! Hope you are having a great week and knocking down some doors yourself!!

OK ---so today, I'm making an offer!

YAY! We'll see how it goes.

Most importantly, I'm glad to be making offers, regardless of whether they are accepted or not. And getting this offer ball rolling. There are also 2 more properties of owners trying to work around some financial/divorce/bankruptcy situations that the guy I'm working rehab with has come across.

SPOKE TO ANOTHER PRIVATE/HARD MONEY LENDER (represents both) YESTERDAY Confidant that if this were accepted by the seller (which is why I've lowered the numbers) that I would have no issue getting all the money needed. I have more private money contacts now, so if the one I spoke with didn't work out, the next would.

Same property as I spoke of before: Multi-Family turning into Single Family
Asking price: $110K
Offer: $50K (new amount due to latest lender conversation)
Repairs: $58K (conservative + long story, but we should be able to shave that by 10-15%, lots of gutting involved)
ARV: $205K (very safe, conservative number)
MAX Profit (not including closing,holding,selling): $90K
Closing, Holding, Selling Costs (my shortcut is 10% ARV) = $20K (and due to my cash buyer, don't know that the full amount of "holding" will apply here, but at least it will cover my interest and is definitely safe)

FINAL PROFIT: $70K (somehow split with this rehab guy ---I'm getting the money and found the deal ---he is doing and/or subbing out all the work) --trying to figure out the split on this one right now percentage-wise. And trying to come up with something fair. He is bringing me two more properties, so with those, I'm thinking his percentage would be higher. Look forward to getting in a rhythm).

TIME INVOLVED: 2.5 months. I'm saying 3 to be safe.
ON THE MARKET: I'd like to get it sold within 30 days (wouldn't we all Of course we'll see where the project ends up, and I would get a second opinion from the agent, but I believe the $205K is a really solid, "sell it now" retail price as it is on the low end of all the most recent comps. We'll see.

Offer sounds really low, I know. If you saw the property, you'd understand why a private money lender (whom I have no prior relationship) would want to only offer $50K on this one. It needs complete gutting. "AS IS"...it is probably not worth over $70K. There are too many issues. However, it could be a lovely home once finished and put some massive work into it.

WHY SELLER WOULD TAKE IT: Inherited property with nothing to pay on it except taxes. Recently gone through a divorce and a bankruptcy (which leads me to wonder if he would even get to keep this money anyway due to bankruptcy----I could easily see this property ending up in auction and it would make little to no difference to him on what price I really end up with). I believe this is why he hasn't been that motivated to advertise it or get it sold. Has a week to week tenant in one of the units, so he gets a little weekly cash. After all, I found it online, no buyer had looked at it in over a year, and he doesn't even have a FSBO sign in front of the house!

MY ANGLE: Quick close - cash in 15 days - and/or assigns contract (a safety net just in case, but if he accepts this price, getting quick cash from one of my private money lenders will not be a problem and I prefer to go at this as a rehab because of the greater profit involved over time).

I'm basically going to sit across the kitchen table from this guy. The exercise of it will be good. I've read up on some of this, and tried practicing what I will say, but in my past, I have talked to a lot of homeowners, so I'm pretty comfortable with not being too scripted, but preparing something, and developing rapport, which in his case, I feel that we have already with my two visits (however, just writing all that I have makes me realize I don't know ENOUGH for two visits - I'll get better at this!!!) I'll let you know what works or what doesn't for me. We'll see!

LET'S GET ON WITH THE RODEO! I'm not holding out for this end-all-be-all-one-property-have-to-get-it-offer! I'm really going in with the attitude of "it would be nice" but if not, NEXT! And I'd rather be in this process with at least 5 properties right now.

GOAL: "Get to here" more quickly on my next ones and have multiple "next ones" actually going at once. This is what will be required of 5 DEALS BEFORE THE END OF 2009!! But just getting through this process once, will save me oodles of time and be a little more seamless.

Good news is, if this one is a go, I'm calling my agent immediately to get us started. If not, I'm still that much closer to calling my agent to start working for me finding deals, because I'm feeling more confidant about my buyer's list and their needs. And I'm hopeful that my agent will trust me there.

Find the deal and the money will follow! Just taking that leap is a little scary! I don't have earnest money or big attorney money or anything to go on here, so I will share my "creative funds" or how I worked it, every step of the way for sure!!

I just need to keep getting phenomenal deals at this point. (Not that I don't always want to get those) but when it comes to rehabs this will really be necessary even more-so for these out of state private money lenders who want .50 on the dollar and not a bit more until they see some experience and actual finished projects.

Rehab guy is sending me those two other properties to look up and look at today. These are "minor cosmetic work only" jobs that we could turn around more quickly.

Keep you posted!
Louisa

I love your journal and seeing how you make progress each and every day... It's almost like reading a good book where you can't wait to turn the page to see what's going to happen next...

Keep on...keepin' on!! Great job!

Suzi : )

Great recent post, I can feel how excited you are just from reading it. REI is exciting, and I love all aspects. I recently learned at an REI meeting, that if you want to sell faster, make your house the best in that pricepoint. For example, if there are all sorts of 80k houses available for buyers, maybe your shower has one of those rainforest heads from the ceiling, or other upgrades. I'm not saying go all out on with designer stuff, I'm just saying spend a "little" more and give it something extra, because after all you would probably be happy making 50k extra and make someone very happy I know this prop. is a MF but I'm talking about SF of course.

Cathy

Ok, so I've been dying to get in here, but had work to do tonight, so it's just after midnight and I'm finally here! Will have to keep this brief! I need the rest!

Suzi - thanks so much for your comment! Makes me feel good to know you are reading and enjoying. I know I write a novel and feel as if I probably bore people, but I also think about how it's OK since it's my journal and by writing I'm given a whole new perspective, regardless of who is reading! Thanks for your words.

Cathy - great point on selling! Actually, this multi-family, if it works out WILL turn into a single family, so your advice in this instance works too! It is the little touches that mean a lot for "value" in price points. And I will look at a few nice touches if this all works out! Totally agree and good point! For this one, top of the line everything would place it in a price point out of this particular neighborhood, but even with mid-grade rehab, I definitely plan to add unique touches here and there without adding tremendous cost. And we've already discussed instead of full-out granite counter tops, doing a granite tile countertop....so keeping the class there, without going well over price point but hopefully things a family will enjoy. Don't mind giving up a little $$ to add extreme value to a place! Thanks so much for your post! Congrats on your deal(s)! I see you have a deal maker badge...yay!

OK, so not doing good on the "brief"...here goes, quick bullets:

*Told my husband I was "making an offer on a house today"
*He had a slight look of fear and said "That doesn't mean anything to me right?....no money, right?"
*I just giggled...and said "right, no money down"
*Met with seller
*Good talk, really nice guy
*Not willing to take $50K (I don't blame him)
*Not motivated enough to take that little - no bills, just utilities and taxes
*If I had the cash, I would offer $70K
*We had a good conversation, he understood where I was at with it and said he would call if anything changed and he decided to take it (in other words, never). And I know my hard money lender won't budge with the expensive repairs on this one.
*As I was driving home, I had an idea
*I remembered something he shared after my offer, he revealed that someone came by last week to see the house
*He was offered $75K if he would knock down his house entirely and sell it as a vacant lot. (which they were going to build a few nice townhomes which are on the other side of his primary residence which is next door to this property - so he definitely cares what happens to it. And BTW, he doesn't want the townhomes, he wants the home to stay there. Prefers a single-family house.)
*He looked into it - but it would cost him $10K to tear down the house - he's not willing to put up that kind of money, so he refused.
*So I was thinking, I don't have any room to budge on my offer price on the front end.
*BUT THE BACK END, I DO!
*In other words, what if I gave him a percentage of the profits, once this house sold? So I would buy it with $50K upfront to the seller (with my hard/private money), and then after rehab, when I re-sold it, on closing day, he would get a percentage of the profits to make up for his $50K. I would be out a little profit, but honestly, on this one, there is a good chunk of cash there, and I'm OK with that!! Even if my profit was more minimal, I'm at the point of wanting to make it work just to get it done and get the experience going. I believe I'm getting this still at a great price...the land IS for sure worth that much!

***Did I mention that I had a conversation with my rehab guy (whom hopefully we will partner with splits in the future, is strictly going to be the contractor on this)??!!! I asked him upfront and he said "oh, no...I budgeted for my work on this one...the first couple we do together will be your profits entirely. This will get you comfortable with how I work, and see if we want to actually partner up and work together long term." What joy! Great! That helps this situation immensely too! (BTW - We originally met from a Craigslist post of his wanting to partner with investors with funds. That was actually kind of funny...not his post, but the fact that I was responding...I have no funds. But all I thought the whole time was "I will find the funds" As it turns out, he has done 3 homes for a good friend of my husband's, so good news!)

**AHHHHH!!! THis is getting long! Have to go to bed!

**Long story short (or as my husband says, "sorry, it's too late" I called Success Academy with idea. Said it was good. THEY also offered up an idea about doing a separate contract with seller for a loan between me and seller of that $25K amount which would be due upon close of the house, and would be at a certain percentage of interest.

**I decided to go with this contracted loan between seller and I of $25K, because with the percentage profit, there are no guarantees that seller would get what he wanted. He may get more, but he may get less, and to me, if I let him in on "percentage profit", he would suddenly want a say on the rehab of the house and even if I put in the contract he would have no control of that, I just see it being a bad thing. If he doesn't get the profit he wanted, then he's upset. He would have to live next door and every time he saw the house, he would think "man, we would have gotten more $$ for it if they had done this, or done that" I figure it is easier to appease the seller forever by setting that amount in stone regardless of our profit made. Now that contractor is out of deal, there is enough spread for me to share.

**Note: It's not worth doing for a dollar over $25K on the back end, and not because I'm being greedy, but because it doesn't make sense to do for more. It's a giant "project" many don't want, and he's lucky I'm a newbie who is so excited about it that I'm trying to make this work ----but the final $25K at the back end it is literally my walk away price ----$50K upfront, and $25K of the profit when re-sold. That's it!

*Called seller with idea
*He said "Ok, that sounds interesting, you come up with the numbers and I'll take a look"
*Rather than waste my time coming up with something so he could "take a look" ---I was pretty direct with him...in the nicest way possible, just said, "Well, Mike, if you know that it is going to be exactly what I'm telling you, and that you'll end up with your $50K on the front end, and your $25K when the house sells, rather than me spin wheels to get you a document you're not really interested in, could you tell me now, would this be a contract you would sign?"
*His response: He wanted to talk it over with his brother who is more financially savvy than himself (his words), so he said he would give me a call within 48 hours to let me know whether to proceed and get this together. Fair enough.

**I hope to hear from him!!

*In my very honest opinion, if I were on the other side, I would want my own MOTHER to take this offer! It is literally the best offer he is going to get for this house in this condition with the minimal to no effort he has put forward in it's 450+ days on the market, yet, it is still a wholesale deal when it is all said and done due to the value of the property, and what it "could be". And even my goal of a single-family home is exactly what he wants next door to his primary home. **THIS IS TRULY A WIN-WIN!! So I HOPE HE TAKES IT!!

**Ok, NEXT! Onto other properties. (And in the meantime, I hope Mike is thinking HARD about this!!!)

Local DG Chapter meeting tomorrow morning...so much to do to prep for it!!

Good night!
Louisa

will and deal! You go Lousia Reading your journal gives me such inspiration and ideals of how to get deals done that I hadn't thought of myself. Its great when other DG fam share their perspectives on any deal(s) that they're considering or have done. So others can see how they would approach it, if they were doing the deal, from a different angle.

That was a great post. I was thinking as I was reading the top part, that you should have him carry note for difference and VOILA! There it was in the post. You are definitely thinking a little different and hearing what the seller needs and then finding a way to get him what he wants. Congratulations, I think you just got a deal.

Cathy

Atlcamel - Thanks so much for the support and encouragement!!! So many people on this site get into these details which has helped me so much! I hope to give back as much as possible myself. Whether or not these deals work out, it's all a great learning experience. Had I already done this before, I would have thought about this "back end" part at his kitchen table during the first round which would have saved me some time and potentially "sealed" it more with one shot. I see how people can get better at this once they have thought through these things!

Cathy - Sounds like you were on the same page with your thoughts! It took me a little longer to get there (my car ride) But hopefully this will come to me sooner in the future now that I get that that is possible!

UPDATE:
No word yet. I'm not taking that as good or bad. Yet. He had to work on Friday and the weekend may be the first time he has a chance to talk to his brother, so I may hear from him yet. If not, 'tis ok. I definitely did the best I could with it! And since he is "not that motivated"...he could decide weeks from now to call me up again. Which brings me to another point...

I may start a few forum posts as I have a lot of questions swirling, but if anyone has comments on these, I'd love to hear:

QUESTIONS TO EVERYONE (if you have thoughts on even one of these, I'd love to hear those! Thanks!!):

CLOSING THE DEAL
Obviously, the sooner you close after the offer, the better the chances. It is always that way in sales, etc... When sitting down and making a verbal offer (ready to put in writing on a contract you bring with you like I had ready the other day)...

***THE CLOSING TABLE ---Any thoughts on what to say/how to word it in order to not leave it all so "open ended" in terms of time, but also being tactful/respectful/no super-pressure-investor attitude? This wouldn't have worked in my case since he said no to begin with, but what if they "ponder an offer" for awhile. Is it just a matter of you leaving the signed contract with them and the contract itself stating that it "expires" after a certain point (say 5 days from issue) if not accepted? If that is the case, how is it worded in the contract so I can add it to mine? Or is it just verbal ---As far as speaking it ----- My thoughts were to say, my partners and I (which are my cash buyers) have a few houses we are considering right now, so we would really need to know in the next 48 hours (or 2 days, whatever sounds better), as we will be placing offers on other properties at that point. Thoughts? Suggestions?

***REOs / WORKING WITH AN AGENT ON ASSIGNS ---Coming across more listings under an agent - specifically REO's or other investors' properties that ran out of funding for rehabs, etc...
*I have an agent - open to wholesaling to my cash buyers
*I can tell she doesn't get the steps of how it will work (and neither do I)
*I understand what an assignment is, and have a contract, but I've searched this site, and still lacking a few details...here is what I get:

*Find property one or more of my cash buyers would be interested in
*If it is an REO, offer half of what the bank is asking thru the agent
*Offer is accepted by the bank. (know this takes time and could be up to 3 offers placed over the course of 90+ days to finally get this to work which is why bids on multiple properties is necessary to "keep things going")
*I get that ultimately, per Joe, it is great to establish relationships via bank asset managers, etc...I'm just trying to get this other process down as it relates to my every/day on assigns with an agent anyway.

NOW WHAT? PLEASE CORRECT MY STEPS!
*If offer is accepted by bank. What are the detailed "next steps"

*MY PURE GUESS from reading here:
--I have signed off on offer, so, if it hasn't been required of me already, I'm sure I have to provide proof of funds to bank.
--I provide a proof of funds (possibly from Coastal Funding as it is a popular source here on the site)
--What does agent require of me here? I'm assuming agent gets "close date" to me.
--I go to one or more of my buyers that would be interested - ASAP!! yes?
--Once found, I must get some kind of contract in place between the cash buyer and myself of the assignment fee, say of $10K. Any best resource for this contract?
--From my buyer - I must get proof of funds, bank statements, etc...within 72 hours of offer. Anything else from buyer?
--Should I be worried if my proof of funds from buyer comes from Coastal Funding? haha...just something I thought of...

--Oh, I just realized something, so banks won't do assigns on REOs (from what I hear) ---SOOO can I double-close? Or is bank all specific about using their own title company and it is too complicated since I can't control it?

--ALL OF THE ABOVE - BUT TAKE OUT THE REO/BANK ASPECT - and let's say this is a regular agent/assigns with no bank involved. How are these steps? What am I missing in the details?

*Offer made through agent
*Offer accepted by seller through seller's agent
*If it is accepted, then it means my contract said and/or assigns and everyone was cool with that seller and seller's agent yes? So it is a matter of me just getting the buyer signed with a contract I have individually with them on the property, yes?
*Buyer must be cool with specs without having to walk-thru the property, yes?
*How does that work? Don't they want to see the inside?
*What does the agent need to feel good about this assigns?

Sorry for the unload of questions...I just see some general forum questions like "what is an assignment? how can I get started? how can I get proof of funds? where do I find a contract?" But I totally may be missing something so feel free to send me to the forum, but I really can't find some of these above "missing details"

Thanks for any help you may offer...even just a tidbit of info on any one of these questions helps! I realize I may only have an audience of "3" here so I may post to the forum, but thought I would give this a shot!

Thanks everyone in advance!
Louisa

So I have an appointment to see a house listed in a "For Rent" section of the paper.

It was my second call last week (on For Rents) and I spoke to a lady that sounded like an enthusiastic on-the-ball landlord. She quickly told me a bit about the property, and then I mentioned that I was an investor, and would she be open to a lease purchase. She said she would (fairly enthusiastic about it), and when would I like to look at the property. I'm sure there were more questions I should have asked, but I hadn't had one of these "For Rents" bite yet, so, I said "how is Monday at 11:00am"...and that works for her, so here we are.

Since then, I've looked the property up on TotalView. And looked it up on the Register of Deeds site.

Details:
2BR/1 BA 750 sq. ft. home
hardwoods, yard, basement)
Rents for: $750 a month
(haven't seen it yet, so that is the details I have)

TotalView value: $84,832
Previously purchased for $38,000 in 2005 (which DEFINITELY was a time to buy for this neighborhood!) under an LLC through this landlord who looks like a savvy investor.

Part of town: hot part of town, but need to be a little weary of safety depending on exactly where on the street it is or what it intersects. Definitely an area that has lots of rehabs, and property values are only going up, however, some are over-valued, and some sketchy stuff is still happening as this neighborhood begins to turn around.

****
Ok, so I will go see it today at 11:00. Just trying to figure out best case scenario on how this will work:

I'm thinking a sandwich lease option may be the best thing, but I also feel like it is priced fairly on rent (just looking at comps in the area)....not sure I could make up the difference here, but I know there has got to be a "way to work it"

Maybe (this might be a dream world, not sure of how these things usually work out...but walking through for the exercise)

Owner Financing
1 or 2 year lease purchase
Offer Price: $58,000 (although unless this woman is super-motivated, I would think she would negotiate a bit and I assume she had to put some work into it)
My lease/purchase option: 2 years with option to exercise purchase
Downpayment: 5% of $58000 = $2900
Monthly payment with 40% going towards equity = $750
Tenant (myself) takes care of all maintenance under $250 (which would be my subleaser)

My sublease/purchase option for tenant: 2 years with option to exercise purchase
Downpayment: 10% of $88000 = $8800 (profit on front end = $5900)
Monthly payment with 25% going towards equity = $975
Tenant takes care of all maintenance under $250

Over 2 years time: My profit: $5400 (cashflow)
Maintenance: tenant is paying for anything under $250. Owner (not myself) is paying for any maintenance over $250.

If my tenant exercises option to buy - with 25% equity from each payment, $82,150 ---->given to me from tenant

I will then of course exercise my option to buy - 40% equity from each payment
$50,800

My profit from sale: $31,350 (of course minus any closing costs, etc...) + the cashflow I received of $5400 over two years.

My total profit:$ 36,750 (minus closing costs)

So, we shall see! Don't know how motivated this investor/landlord is, nor how much work she put into it 4 years ago to get it ready to rent, etc...Not to mention, it looks like she got a DEAL!

It was just so unexpected to me for her to be so "chipper" about me wanting to do a lease purchase. But I guess she would be thrilled with the consistent, on-time rent which I'm sure she is making a boatload on, the possibility of doing less maintenance, and she got a great deal on the house, so after another 2 years of cashflow, it would have run its good course for her, and she could be willing to sell for the right price.

QUESTIONS ON ASSIGNMENT THROUGH REALTOR
So, I'm hopeful to get some of those questions answered. I'm ready to move forward on some of these bank owned properties through my real estate agent. I already feel like I'm missing out on lots that I see out there, and trying to figure out how it will all work! I think if I can get this in the mix, I may have more "deals" out there, and just more action out there, so I can have one of these deals close, and get closer to my goals!

Our local DG chapter has some exciting things going on too, and we may partner on a couple properties....I'll mention more here when that becomes more of a reality!
More soon!
Louisa

Your journal is surely detail oriented, love that. I will have to keep up with you now. I have learned quite a lot from your posts and will be looking forward to hearing about the landlord deal. Let's look at it this way, by God, it is a done deal. God Bless,

Sandra

Ok, so more movement/action going on...

BTW ---no word yet on previous rehab property offer. Still thinking positive, but NEXT for sure!

--PROPERTY #1 (details above)
--Met with the investor/landlord at that sandwich lease property above.
--Very nice, straightforward, open to letting it go w/ lease option if price is right. I want to run numbers quickly and get back with an offer, but not spend too much time on it, because she admits she is not that motivated and price would have to be right. Trying to come up with something fair, but DEFINITELY worthwhile....not sure if this one is a winner since she's not wanting to let go too much, but at least through conversation I got her bottom line of what she has spent on it, and know what she paid for it.

PROPERTY #2
--Landlord on property #1 let me in on another property that she is trying to sell with 4 units in a different area that she just no longer wants to travel to (but is closer to my neck of the woods). She said investor she is working for is dragging his feet. Gave me address and said I could take a look. I have all specs of property...her asking price and other investor's offer. Will run numbers on this and see if worthwhile.

PROPERTY #3
--Local DG Chapter member called me about getting involved on an offer/rehab with him. Have a 3:00pm walk through today with rehabber to estimate repairs, and basically owner has already verbally accepted (says minor tweaks to be made) an offer of $15,500. Inherited property he just wants cash for. I have looked the specs up on TotalView, and even if we have to tear down and re-build, I'm thinking this deal has win-win all over it, and want to seal it up as soon as possible. Getting appt. with owner tomorrow to hopefully get this done and signed. Want to move fast or someone else will move on this!!

PROPERTY #4
--Meeting with FSBO owner tomorrow ---found from drive-by 3B / 2BA Sq. ft 1453 sq. ft.
--Spouse died and he has moved on to another residence, but completely rehabbed this house, and wants to sell it
--Asking: $165K ---won't rent it ----we'll see, just need experience of continuing to meet and walk through places

PROPERTY #5
--Meeting with FSBO owner tomorrow 2B/1BA Asking: $161K Owner is investor wanting to purchase more commercial property but has been great rental and ready for a little updating and expansion to be in price range of surrounding houses ($260K+) Honestly, seems high for a 2B/1BA, but I need the experience of meeting, so I'm going for it.

GOAL FOR FUTURE: for Prop #4 & #5 ----I really need to read up more on the qualifying part on the phone so I don't waste time with too many needless walk throughs. Trying to get my numbers in line, so I could possibly have the talk on offer right on site tomorrow to either move forward, or know not to waste my time. And then knowing some of the info I land on, I'm hoping to really only end up visiting places that may be able to come down on offer price more quickly and more quickly identify TRULY motivated seller.

I also have several bank owned properties I'm looking at, and want to get my agent involved but still need those questions answered. Will be calling the Success Academy shortly. Gotta get moving with an agent as I want that piece in the mix too!!

I have SOOO many questions!!! AHHHH!!! But leaping is good, I'm getting through it!

Louisa

Sandra ---How wonderful it is to hear from you again! Thank you for your comment. I totally missed it earlier today, but I believe it is because we were posting within 1 min. of each other, and I didn't see that you had posted! I was so excited to see you and Lubertha on Dean's blogs weeks ago, and then read again about your successes in his October Successfest. I'm glad the detail here is helping you as YOU have helped SO MANY of us! Thanks for being an inspiration! Hope your week is going great!

UPDATE ON PROPERTIES

REHAB PROPERTY (first one I made offer on last week) - no word. You never know, but I've decided I'll no longer comment on it unless I have a phone call! BTW, if I had the funds to rehab it (which I don't as it is $50K+), but I had been advised to go the "sweat equity" route ....put no money down and get the agreement with the seller to start rehabbing it (instead of a down payment) and then I could do a double-closing (giving the seller the 50 or 75K) and selling it to my end-buyer, and never have the low comp (of my 50 or 75K) hit that area! (The low comp would bring down the area making it difficult on the re-sale of the property ---I sure had not thought of that) The seller would agree to this because if I walked off and didn't sell it, he would have a rehabbed house in great condition with SO MUCH MORE value! Win-win for him. So I'm taking this advice and seeing if I can apply it to a more cosmetic job in the future that may not cost so much. Of course I have read about Dean doing this, but needed the reminder in my own situation to keep it at the forefront of my head ---I see why people read and re-read his books!!

PROPERTY #1 (from above - sandwich lease option)
Rental property has rented for 4 years (both tenants had leased it for 2 years each) for $750 per month. I'm offering a lease option (with subleased tenant to make it a sandwich lease).

Running the numbers:
$38,000 Price owner paid for it in 2005
$20,000 Repairs owner put into it in 2005 prior to renting it out ---put in new central heat/air, refinished hardwoods, new flooring in kitchen, rehabbed bathroom
TOTAL: $58,000

I called landlord as a "For Rent" ad, so not out there trying to sell. Landlord has gotten a nice run the last 4 years. Not a "tired" landlord. Lives close. Loves the area. Neighborhood is continuing to appreciate in value. She is open to a two year lease purchase if the offer price is right, but again noted that she is not particularly motivated. This has been maintenance free since she "did it right" the first time as soon as she bought it. Currently, just needs to attach two gutters which she can do herself before selling it to anyone.

SO ---don't want to spend too much time on this. Just come up with a number and offer tomorrow and get it done. This is a CUTE house!!!!

Thoughts to add value to home: I could add another room and bathroom (there is plenty of room to do so) and/or finish out the basement. I could enlarge the current bathroom and closet space. I could also update the kitchen a bit and upgrade appliances. Add a little landscaping, and whah lah, I would have a cute single, family home a little larger and more than double it's current worth. Need to look at comps and see if this makes sense.

How would this work? Hmnn...I could get all work completed within 30 days time. Maybe 45 days time. Maybe I offer an attractive enough price to seller to purchase now instead of lease purchase, with the contingency of getting a contractor to go in and work on it from now until closing. Then I do a double-close. Ok, so I know I have to have money again to do a rehab upfront. I don't have that money. I'll think on it and get back to this update tonight! Ha ha! I was supposed to be quick about this one, and I'm already WAY TO into it!

PROPERTY #2 (from above - 4-plex previous landlord is trying to get rid of)
I totally see why. I saw it late today. I am not interested in this property at all. I think it would be difficult to rent out and she currently has 3 units vacant. Asking price: $257 ---another investor has offered $250 and has it under contract, she said he is dragging his feet though. And after I went to look at the property, I SEE WHY! I have no interest. The area is not terrible, but not good, and the property just needs more TLC than I would want to give for this so-so-only-depreciating-in-value neighborhood. Decision made! It is a NO GO!

PROPERTY #3
We shall see on this one! Looks like a total tear down. Contractor going back tomorrow AM to continue to evaluate. Property lines are so confined that depending on "who owns the trees" a property may or may not be able to be built on this tiny lot. (Trees need to be cut down to be within building code). I would love for this to work..it just scares me a little in all honesty! If I thought it was in a "hot market" neighborhood, I would be a little more excited.

PROPERTY #4 and #5 For tomorrow's meetings at these properties ---running the numbers tonight ----and reading up on how I can better qualify people on the phone in terms of what percent on the phone do I need to qualify them "down to" if that is even do-able in a respectful/tactful way on the phone? I know there has to be a "sense" as to how motivated and what price or range someone is willing to come down to, and if it isn't less than a certain amount, then you know not to waste your time or theirs with the walk-thru. I want to get this down pat! The second property is owned by another investor going after commercial property ----WHICH is an area I am interested in, so I'm interested in their project. Maybe the meeting will be worth the contact and potential partnership and/or buyer going forward! Which brings me to my next topic...

COMMERCIAL DEALS
Today I had a hard money lender follow up with me...I was amused. This was someone I had already talked to about "where I stood" last Thursday in terms of my one property, and there was no other reason for him to call me, than to just keep me thinking of him as a lender to turn to WHICH I LIKED! Let me clarify that this was another "mediator between the hard money lender and myself" who talks a mile a minute and this time said "Go after the commercial deals ---the 100 unit apartment complex ---you find the deal, I can find you the money. It is so much easier for me to get the money for you if it is on a larger scale and it is based on you getting a trusted commercial contractor with trusted repair estimates, and that it is truly a deal of 50 cents on the dollar" So this brings me back again to the commercial. I want to play. After some things I have learned this afternoon in digging to the answers of my many questions previously in this blog and on the site, I have some ideas now in working with a real estate agent on a commercial level. Contracts are always "contingent upon buyer financing" ----I'm just trying to figure out how to get around "proof of funds"....ah, maybe Coastal will cover that too....but I would think it would get pretty pricey on the commercial side. I was trying to avoid looking dumb to the hard money lender, but I may call him up tomorrow and just ask about the process in terms of "proof of funds"...because if he thinks enough of me to continue to talk to me and track me down to try to get some business for him, then I would think he would want to give me the specifics in how I'm going to represent his lenders and get these higher dollar deals done. Writing here has helped me!!!! That will be a huge learning step for me, because once I get there, I will be comfortable enough to start looking at commercial property through agents, get my own agent involved, AND understand how my proof of funds will come to pass if I get the deals these lenders want.

Alright...off to run some numbers....

Cheers!
Louisa

Thanks Louisa for taking us through this journey with you. I am new to the forums & working on getting back "into" RE investing. (We have a couple of rentals). I'm impressed with Dean's site & the people I am finding here. Looking forward to getting to know everyone.

Again, thanks for the journal & inspiring us to do more!

Blessings,
Cris