Greener Grass

Trust me when I tell you the grass is not always greener on the other side.

What kind of oddball do you think I am here making this type of statement as a real estate investing lesson?

Well, for me this lesson was one of those rather costly, hard learned lessons that I’m sharing with you. This is one of the most basic fundamentals when it comes to investing in real estate that far too many people overlook when on the lookout for their first property or gaining more properties. They believe they’d be better off investing in an area other than their own backyard.

They see all the stories of where someone picked up a property cheap and they think, “I wish I could, I would have if I were in an area like that, blah, blah, blah.” Or they think of the area that has seen double-digit appreciation rates and think “if I was only in an area like that.” The fact is whether you’re in a red-hot market or a slowing market, there’s a way for you to make money investing in real estate. It starts by just realizing that you’ve got opportunity in your own backyard to make this a successful business.

Here’s why:

When you’re thinking of investing in real estate, you’re looking for sellers that have some underlying situation that’s causing them to want to sell. Usually, these sellers have a problem of some sort that’s causing some undue pressure. We call these ‘Motivated Sellers’ and if you’re not attracting motivated seller then you’re wasting your time.

And there’s not an area in the country without motivated sellers!

The problem with thinking the grass is greener in another market keeps you from looking in your own backyard for the next profitable deal.

Even though, this sounds basic, it’s easy to fall into this line of thinking. At one point, I was convinced that I could work another market that was nearly 4 hours from where I lived. I’ve got to confess that this was a costly lesson.

While you can make money in another market, I was stepping over dollars in my own backyard to pick up dimes in a completely different market. See I tried building my business wide instead of building it deep in my own market. Lesson Learned.

See, I want you to focus on your own market, instead of making the mistake of spreading yourself too thin. Once, I realized this lesson, I refocused my business and started building it like a business instead of a mom and pop shop. See, so many people are opportunist and just look for wherever they could make a potential buck. Just realize you know more about what’s going on in your own backyard than anywhere else. Also, it’s imperative that you work to build key relationships with people in your business. This was a major problem when attempting to do deals in too many markets – you’ve got to find new contractors, new realtors, new closing agents, and new investors to flip to. It’s like basically starting from scratch in every aspect.

So, the key lesson is to stick to your own backyard and master the system before you even think of looking outside your area.

That’s it for now,

Derek

P.S. Do you believe there are Under Ground secrets to investing in real estate? What if you could spy on someone that’s been living ‘under the radar’? Well, you’re about to get your chance, so be sure to keep your eyes opened. I’ll let you know more in a few days…

Analyzing Preforeclosure Deals

Ok, this week I’m a little late with my posts of Real Estate Investing Tips, however I’m getting back on track now.

Let’s briefly talk about analyzing pre foreclosure deals. Now, should you analyze the deal before you start your marketing campaign or do you market to everyone then analyze and evaluate the deals?

Well, it depends on where you’re at with your business. If you’re just starting out, I’d advise you to hit every pre foreclosure lead with direct mail between 4-7 times during the preforeclosure cycle. By mailing to all, you’ll get a lot of phone calls, then you can pick those that you feel you can do business with based on equity, the homeowner’s intent, liens, and the ability to discount those liens.

However, if you attempt to do all the research to find out all the liens and approximate values before you start marketing to these leads, then you’re investing a lot of time in leads that will go no where. See, many of your deals will come from homeowners that appear to have no equity at all.

Now, you could sidestep this issue by buying a quality list from someone in your area. These people hire title searches to research all the preforeclosure leads, then they sell the leads to investors on a monthly subscription basis. Now, I’m not talking about some of these websites selling out of date information, so please be careful. You should ask around at your local investment club and they will probably be able to point you in the right direction.

Ok, now that you’re getting calls, you’ve got to find out as much information as possible from the homeowner. Here’s a checklist of the information you should know before ever walking out the door:

· Name
· Number
· Address
· Approximate Value
· Foreclosure Sale Date
· Amount Owed
· How many liens? How much owed on each?
· Are they willing to sell for what they owe?
· If not willing to sell for what they owe, then how much do they need?

Now, don’t be confused into thinking that you should only talk to those with large amounts of equity because the deals with lesser amounts of equity can be discount by simply asking the lender for a “short sale”. Often times, the larger equity deals are the only ones investors market to; therefore the deals with lesser equity can be picked up without a lot of competition.

Ok, so now I’m going to go off on a little tangent here. I’ve gotta ask “why are you investing or wanting to invest in real estate?” Think about it just for a moment.

Is it the money? Is it time? Is it an escape from being the corporate slave?

Whatever you believe your reason is, it should be to buy yourself more time.

It should be to take back your life to spend with your loved ones and your family.

Just this last Friday, my Great Grandmother passed away. She was 85 years old and I admit I was truly blessed to have her as a part of my life. As you know, I normally don’t involve my personal matters in my posts, but I just wanted to reiterate to invest your time with your family while you can. All to often we get worried and caught up with business concerns and deals, losing sight of what was important to us in the beginning: having freedom. Having the freedom and the time to spend with our loved ones.

Till next time

Derek

By the way, keep checking for a new look for the REI secrets site and lots of goodies in the coming weeks!