Roger's REI Journal - Twin Cities!

How time flies. It has been two weeks since I last posted. Shame on me. How am I going to ever catch up with you SuperStars at this rate!!! I will try to fix that. Look out Indiana Joe!

This is just a short note to say that I have been working on a couple of deals over the last week. I will give more details when they close.

Other than that, I have been learning so much! I have made visits to county officials here in Minnesota and elsewhere just learning how the foreclosure process works.

I have met with lawyers, real estate agents, banks, county workers... its just fun getting to know all these people. I obviously have a long ways to go but it is fun putting this together and starting to understand a little about how this all works.

Roger
The Jaguar Investment Group

Things keep happening faster than my mind can get a good fix on them.
Here is what has been happening lately.

I had a few extra $$ sitting in a "Real Estate Friendly IRA" that can only be used for Real Estate Investment so when an investor placed an ad on this website looking for a money partner, I decided to give him a call.
I went to look at the properties, and I liked one more than the other. However, the most important part I thought was the investor mindset that I was very happy with and so I decided that I would like to participate in this deal. .... (I'm not sure being the bank in a deal would qualify for one of my deals for the success academy... I kind of doubt it) Nevertheless, without a money partner, some of these deals are just not going to happen.
The investor's intention is to purchase, fix up, rent out, and cash-out refinance against the cash-flowing property. Here is why I like the deal: 1) The bank. I have been looking all over for a bank that will do a cash-out refinance against FMV, with No Seasoning... The bank is doing 80% FMV on the cash-out refinance - no seasoning. 2) Motivated Sellers. These properties will be purchased at > 50% below FMV. 3) Motivated Buyers. (The investor).

So I wrote up a contract to fund the purchase and rehab of the properties with a Promissory Note and a 3 month Balloon Mortgage, along with a Quitclaim Deed. The only thing that kept me going forward with the funding is that I have been trying to run this past a Real Estate Attorney to make sure my contract will do what I think it will (what my intent is --- to facilitate the purchase, rehab, rent, and refinance of the property with minimum to no hassles) Unfortunately, so far I have not gotten the Real Estate Attorney to work with on this. I had one attorney look up a few things for me but he recommended that I use an Attorney in the jurisdiction of where the property is located so I have been trying to get in touch with a RE Attorney there without luck so far.

Fast forward. Last night I went to the MNREIA meeting and talked with cathyb. Thanks Cathy! She thought I should check into whether the Quitclaim would work the way I intend. Therefore I talked to the head of the MNREIA about it and he said the only way I can finance a property and not have to go through foreclosure should some unfortunate situation present itself was to purchase the property outright and then sell it to the investor as a Contract for Deed. So I was ready to run with that. Thinking about it more though I began to realize that if the property is in my name then that will sabotage the cash-out refinance for the investors because now the property is in my name! and so how can we do a cash-out refinance for the investors?

Next, I talked to a hard money lender today and he is going to sit down with me for a couple hours Saturday to try and structure this for me so it works out for everyone. He does them all the time.

Roger
The Jaguar Investment Group

way to go! i hope if you do this deal, the Academy will allow it to count as a deal. i sure would check!!!

The hard money lender was able to give me the information I needed. Also, my coach felt that the deal would qualify.

Roger

I cannot believe its been 5 weeks since I've updated this journal. How pitiful is that!? Well its been a long haul but it is all good news. I closed on my first deal on August 2nd for a property in Des Moines, Iowa. Basically, I was the "bank" for that property. The property is currently being rehabbed by my investor friends there in that city.
I provided the funds for the purchase of that property, and for the rehab. The return is around 20% for 1 to 3 months depending on how long the rehab takes.
Also taking place in August; We have moved to a new residence 5 miles from our previous location. We now have tenants in our previous residence under a 2 year lease.
Finally, just today I made a verbal agreement with another investor to purchase a home together... It was my decision to work with this investor on the rehab and not to just purchase it outright at wholesale. I would have gotten more money to just purchase and do it all myself but since this is my first purchase, rehab, and sell I thought there might be some advantages to working together on this one.
Just thinking... wouldn't it be interesting to do one deal of every different kind and then just settle on doing the one thing that is the most fun for you?
I am also going to be looking closely at foreclosures now since I just finished my training in that with one of the greatest foreclosure/short sale trainers out there! (Ann Sanfelippo)
I will keep you posted on how this second deal goes down.
One other thing that I forgot to mention. I will be getting a new coach on Monday. Things have been pretty weak between myself and my current coach as far as actual value/benefit so I am excited about my new coach who is someone I already met at my first 3-day event here in Minneapolis about 4 or 5 months ago.... Bobby G! with Global Education. We will have our first brainstorm on Monday.

ROGER
The Jaguar Investment Group

congratulations! i think you might have an interesting idea about trying different strategies to see what you like the most. congrats also on getting a new coach and the good training you have had. you're on your way.

Hi Linda,

Thanks for stopping by. I am definitely on my way here. I have signed the second deal and I conservatively estimate $10K on that one. What is also exciting to me is that I had my first conversation with my new coach BOBBY G! He is the real deal. He did more in one phone call than I have gotten out of 3 months with previous coach. When things were not going too well from the beginning with the previous coach I told him my concerns and that I was considering getting somebody else. I wish I would have followed through with that because things have not improved. When the chemistry isn't there you should move on.
Bobby G came through with ideas right from the first conversation, he is also a personal coach for some highly paid execs so his expertise does not stop with Real Estate deals. And he is more 100% more accessible despite coaching a large number of students. Can you tell I am excited about my new coach?
Now that I know I can do these deals and they are plentiful its time to get seriuos about organizing some financial backing. I think I have a few ideas on that.

ROGER

Been a while since I caught up with you! Congrats on your deals - you are doing awesome! As far as the coaching - we dont always "click" with everyone - so its good you found someone you are excited about.
I had to smile when you said you may try every strategy...you should talk with Rina! I think she only has one or two left to try lol

Hey Roger, all I can say is WOW!! You guys are really working it.
It was a pleasure meeting you two at the EDGE. I see like many others you got home and went to work.
best of luck on your deals!!

Richie

Hey Laura and Richie, thanks a lot for the encouragement.
I appreciate it.

I worked from 3am to 9pm on Monday getting everything squared away for closing today on that second deal, but, there was one line on one document from the title company that was incorrect and in the end, closing will now take place tomorrow instead. I am purchasing cash and the title company doc stated that there was a mortgage note backed up by real estate so I don't know where that came from. People go to lunch, don't return calls in time, miscommunication... you know how it goes.

Anyway, I am excited about the house we will be acquiring... in this deal I have 60% interest, and my shotgun marriage partner on this deal has 40%. It's pretty cool though, we are learning from each other. When I told him I had only been into REI for 5 months he was surprised and said that I had done quite well.... I told him its been too slow... then he told me about others he knows that have yet to do a deal after 2 years. Hopefully Dean's SFL series can help the DGers that are in that situation here on this site.

Anyway, unless some unlikely major blow up I will have accomplished my goal of acquiring a property by the end of August... (thank you Jesus!)

Dang it all, now I have to set another goal !!! )

Roger
The Jaguar Investment Group

Congrats on property. Sounds like you are moving right along. Would love to hear all about it. Maybe we'll see you at beginning of Sept at the MNREIA?

Way to go Roger! I had my closing put off for two weeks because of the title being recorded wrong on the sale before me. So hang in there and i am sure they will clear it up and you will close soon.

keep up the good work
Richie

The deal went through for the Minneapolis property. Therefore, we are now officially in the rehab phase. The big decision is how to contract out the work, whether use a general contractor or just locate the electrician (have one) and various subcontractors. Only thing, time is of the essence because we would have to have this home on the market ideally right before October begins. We will most certainly convert this home from 2/1 to 3/1. It would probably be convenient (to the home owner) to also add a bathroom upstairs but I have to keep in mind that this is a 75-80K home and is probably a waste of time from an investor standpoint. The idea is to get a family in there in a rent-to-own situation. I think that will assure that we get somebody in there before the snow flies. Cash flow? Super cash flow property too.
I spent about 4 hours today in the home and I really felt comfortable there. I put together all of my BEFORE pictures and a video. And took a lot of measurements of the upstairs area.
Oh, I went ahead and got the SFL series so I will now plug in all of our rehab plans and measurements to see what HammerPoint has to say about the rehab cost. We have budgeted 10K so should be interesting to see what numbers the software comes up with.

OK. Now, I think I should mention that these deals are being done with money I have in a self-directed IRA. Its nice that I now have that money working for me... but.... all of the money has to go back into the IRA when I am done with the deals. ALL OF IT.

Therefore, I now find myself in a situation where I need to see some cash flow right into my bank account and not into the IRA.... So..... I have issued a challenge to another DG'er here on this site to figure out how to do a deal without any of our own money in the month of September. This is an abosolute necessity for me going forward. I have to do a no money down type of deal.

My goal for September is to accomplish 2 deals that do not use any of my own money. I will be working this POWERMATCH from SFL, getting lists of Cash Buyers, working on the business side with website, marketing, etc. I can do this! I might even have to take a trek back there to that MNREAI monthly meeting again to shake a few hands and eat their lousy cookies. Yuck.

Roger
The Jaguar Investment Group

congratulations! as for no money down, don't forget about sandwich lease/options, as well as wholesaling. you can also wholesale lease/options when they don't have much equity.

Thanks for mentioning those No $$$ Down opportunities. I am really going to focus and try to understand all of the different possible No $$$ Down opportunities. The more ways I can figure out to do No $$$ Down the more candidate properties I will have available to do some kind of deal.

Roger
The Jaguar Investment Group

Hi Roger,
I'm just checking in to say hi, and was wondering if you were going to the next MNREI meeting. Is the next one this Tuesday, 9/7? I had sent you a PM about it earlier. We met at the 3 day seminar held in Bloomington earlier this year. If you are going I'd like to meet up with you.
Talk soon,
Jerome

OK. I am going to commit to being there at the MNREIA meeting on Tuesday, 9/7. I will get there at 6:00PM and am going to have a salad at the restaurant -- Axel's I think it is called whether anyone shows up early or not. Would be happy to sit with you in the meeting room as well. Hopefully if I stuff myself with salad I won't eat all those free cookies! Would be happy to tell how things are going with the new Mpls property...

Roger

I'll try and make it @ 6:00. Never been there before, if I can get off work soon enough.

Would like to hear about your property and your experiences thus far.

Talk then.
Jerome

I will try and be there by 6. Need to find child car however.

It's time to catch up with where I am at today in REI.

First I have to say I am so glad for Dean who just won't say quit. And he won't let us say it either. I for one have really needed his encouragement. I have to admit I have been on the wrong side of the tracks as far as my confidence is concerned.
Its not so much the challenges that I face in Real Estate Investment as it is my belief as to whether I can navigate the waters. It is like I have all the tools at my disposal but just don't know what to do with them, or am just not as organized as I should be in order to put them to use.
Its kind of like a sprung a leak in my boat and just choose to let the water rise instead of figuring out how to fix my leaky boat! Anyway, Dean's posts have a way of pulling you out of that mess and setting you back on the right path. So thanks Dean!

Here is what I have done so far with my Real Estate business:

I have two deals done. Two closings (why aren't these called "openings"?) to get me into properties. My first property was a deal in Des Moines, Iowa in which I helped make a deal happen for another investor. I provided the funds for both the purchase and rehab of that property. The rehab is now complete and the property now has tenants. I will exit that deal within the next week. I put a mortgage on that property with the Polk County Recorder, and once the bank swoops in here in about a week to give the investor a cash-out refinance against the already-rental-leased-property, I will bank my $7,000 fee and do a mortgage satisfaction document to remove my first position lien from the property.
My second deal I also partnered with another investor. In this case, I had a property assigned to me in order for me to do my first rehab. Because it is the first rehab for me, I wanted the investor to stay involved in the deal so we could collaborate on the rehab. This has worked out well for both of us. Each of us has different strengths and both of us are pulling our weight. We already have one contractor signed up for some foundation work and we should have the GC signed up tomorrow as we have already done the walk-through and are in agreement for price and timeline. We ran this past 3 GCs and the costs for the work we wanted done came in at $11K, $17K and $24K. We are going with the $11K bid. There is not any difference that we can tell with the quality of time and materials that will be going into the project between each of these three bids.

Here are the Numbers:

DEAL #1
OUTGO
PURCHASE: $25,821.08 (includes closing)
REHAB: $14,010.92
MISC FEES: 168.00
TOTAL: $40,000.00

INCOME
REPAYMENT $40,000.00
LENDERS FEE $7,000.00
INTEREST $538.00
TOTAL: $47,538.00

GROSS PROFIT: $7,538.00

DEAL #2
OUTGO
PURCHASE: $45,000.00 (includes $3K assignment fee)
CLOSING: 788.87
REHAB: $12,500.00 (estimated)
MISC FEES: 200.00
TOTAL: $58,488.87

INCOME
ARV $75,000.00
REPAYMENT $58,288.87
REALTOR 4,494.00 (estimated)
CLOSING: 728.00 (estimated)
GROSS PROFIT: $11,489.13

60% CUT = $6,893.50 (ESTIMATED PROFIT)

In my next post I will state what some of my current challenges are on the Real Estate investing front. I am not complaining just will state it like it is. Some of the "ISSUES" that I have run into.

Roger Schafer
Jaguar Investment Group

Laura,
I was just re-reading some advice that you added to my journal on June 17th and was that ever good reading! It was about the lows and the highs and I sure have been living that!! It is so important what you think and focus your mind on. I really appreciate the vision that some of the DG'ers have.... if nothing else just because you and others have already experienced the same issues. I am feeling much better after seeing how "REAL" Dean and others are about themselves. Its so encouraging to know that I am on the right path with REI. Super.

Roger Schafer
Jaguar Investment Group

This is a followup on my previous Catch Up Post.

For DEAL #2 above, the use of a realtor to sell the Minneapolis property is not a foregone conclusion. I have talked to two realtors, but we are currently doing our own marketing with bandit signs, newspaper ads, and online postings. That will be more money in our pockets by using these creative marketing techniques.

Going Forward

For deals going forward I will be using creative financing, or financing to have my deals underwritten with OPM (Other People's Money). The reason for this is that both of the above deals were done from a self-directed IRA. Funding your own deals through a self-directed IRA is a great skill to have and I will continue to do this in the future, however, this method has its own limitation in that every dollar that comes out of the IRA goes back into the IRA. All profit on these deals must be plowed back into the IRA and so I don't really get any $$$ into my own pocket immediately.

Of necessity I need to have the cash flow come through my own household and not through the IRA because I've got about $1,000 a month greater outgo than income. 80% of this outgo is from credit cards that I used to pay for my Real Estate education through further advanced training, success academy, coaching, etc. I am certainly not sorry about the training and education I am getting!! I now have a great coach named BobbyG - a midwesterner Real Estate Investor and Life Mentor that now lives in Florida. Needless to say I am no longer afraid to use credit cards for the right things, but I would like to see each of these payed down to around 40% or so of the credit limit.

Therefore, I am now focusing on deals in which I can see a real check in my pocket. I have not seen an actual check yet in my own pocket since I started my Real Estate journey. The IRA is taking my checks!! So my challenge to myself here in October is.... Show me the fruits of your labor!! Then brag on the results for all to see and enjoy.

I just told you the "WHAT" needs to happen and now I will keep you informed of the "HOW" it happens in near real-time posts. ROGER. Over, and Out.

Roger Schafer
Jaguar Investment Group

wow! what can i say? i appreciate you sharing the ups and downs, and how you are dealing with that. have you seen Zion Properties forum on building business credit? i think it's really good and here's the link if you are interested:

http://www.deangraziosi.com/real-estate-forums/financing-and-credit/5696...

Linda, Hello again and thanks for the link. I have had some communication with Tammy here and there on a few topics. I will certainly check out that link. I think I finally "get it" about using these great resources and people we have at our disposal here.
As far as my current challenge it just goes to show you that, yup, we all have them!
I appreciate you stopping by.

ROGER. Over and Out.

Roger Schafer
Jaguar Investment Group

Quite embarrassing. Now that I am gearing up to do deals with OPM, or No Money Down deals I have to face the fact that I DO NOT HAVE A BUYERS LIST. Quite amazing that I have not done this given that it is the place to BEGIN.
I am tracking Joe Jurek's Set For Life journal so I will be hitting this buyers list hard -- one of the first thing mentioned in that journal. One advantage I have here getting started with the buyers list is that I already have so many contacts. I just haven't done the formality of identifying specific needs or qualifying my buyers.
I attended our local Real Estate Investment Association meeting on Tuesday and wrote down quite a few names and numbers of investors there. About half the audience at the meeting raised their hand that they are rehabbers. So to start with, I will follow up on those leads. In addition, I will choose my two counties from the SFL system to generate a cash buyers list that way. Another thing I can do is that I have an investment home for sale that will be available November 1st. Sounds like a craigslist ad is in the works to get even further leads that way.
OK. Now I need to compile my list of questions to qualify these buyers....

Roger
Jaguar Investment Group

In the last few posts I have spelled out the deals I have done. Basically, I have partnered with other people to get a few deals on the books. One thing I am now just realizing is that basically, I have taken advantage of other people's marketing efforts... I have let them bring the deals to me. I have not been out beating the bushes myself to find them. Well.... I have this sneakin' suspicion that this is about to change... and quickly. I think its pretty much a given that I will be making some offers on homes next week.

Roger
Jaguar Investments, LLC
Jaguar Investment Group, LLC

It has been a pleasure to follow your posts from when you started to now. One question, right now, I'm feeling like the man on the leaking boat; years of education in real estate but sinking. What is one thing you can say that can help me from drowning. I do have a rental property but it seems that its hard to jump on the fast track. I have buyers, sellers, renters, contacts, etc., but things aren't messing or going as I want them too...thanks, again

My name Kent and I live in Brainerd. I just dicovered your journal. Thats great that you took action immediately after losing your job. So many may have decided to sit and feel sorry for themselves. Tons of properties up here but not so much ont the private investors. I've done a couple deals and good luck on them. I do flooring also, so I prefer to fix and flip because of knowing so many other contractors I can get pretty good deals from them at a geat price and quality work, since I have seen their work prior to hiring. It would be good to chat with all of you folks from the cities, maybe we culd all help one another. I also have the SFL so driving people to the properties will be that much easier. I hear there alot of private investors down there. Hopw to hear from you and maybe hook up! Good for you and your positive outlook!

Thanks for keeping an eye on me guzmanhomes ! The biggest and sometimes most difficult thing is to not lose heart. When we are discouraged it is hard to see a way forward and frustration can set in big time. Believe me I know! Easy to say, harder to do. The great part, is that despite your circumstances, if you can still find a place to believe in your heart that this is going to work for you... then when someone comes by with a word of encouragement... Dean is really great at this!!! then it doesn't take much to get you wound up again!!!
That is what keeps happening to me over and over. I might hear something from Dean's weekly video... and it might be something just really, really simple and I get encouraged again. BECAUSE... when I get excited again, then it is amazing how things start opening up again... I begin to see again what actions I can take TODAY to make some kind of progress, ANY kind of progress, to get me closer to my goals.

Kent
Thanks. Feel free to send me a PM and I would be glad to talk to you. I don't know the Northern Minnesota market at all, perhaps eventually I will stray up that way. I have a brother in Grand Rapids that tells me to keep him up-to-date about my progress. I have another brother in Miami so there is another market altogether! I am still on my newbie steps in all markets, this one included (Twin Cities)! Ha! But there is definately opportunity here.

guzmanhomes,
The other thing I was going to mention is to keep an eye on some of these posts about 1st time deals. Take a look at the journal entry by Eugene.A about his 1st deal. I think there is definately some useful information further down in that post where he explains in detail how he did the deal.

Roger Schafer
Jaguar Investment Group