Imagine 1,000 cats chasing 500 mice if you will.

If you are better than just half of the other cats, you can eat.  If you are really good, you can feast.

Now, imagine that the mice started vanishing, and what was 500 is now 80.  Pretty much all the cats, even the best, are roughing it- starving….

What I am describing to you is hunting homerun deals among the preforeclosure market, people in foreclosure from 2000 to 2007.  How do I know?…because we became a very, very hungry cat in 2006.  I don’t mean to brag, but I would venture to say we were one of the best as well.

Over the past few months I have felt a “shift” in the market and in sentiment out there.  I’m not saying the market is recovering or even hit bottom, but I can say it is a fact that where I live sales volume is exploding, and it is also a fact that unsold inventory in the state of California (I consider to be the most important indicator of hitting bottom) has experienced a decline for 4 consequetive months.

So, on a whim about a month ago I ventured back into that niche we were forced out of 2.5 years ago.  What was my result?

Two scorching deals, and 7 out of the 11 homeowners in default I managed to reach on the phone would like to sell their house….(by the way, i don’t know if I made it clear, these are only homeowners with equity, none of this short sale crap).

I do believe it’s time to quietly sneak back into the alley where the mice are playing unfettered.  There are still only 80 mice, but in relative terms, I would venture to guess that 1,000 cats is now 100.  It’s time to be one of the first to eat as much as we can until the cats come back….see you in the alley.

Be Happy and Prosper,

Kurtis

Well, all you’ve heard me rant about for over a year now is, “REOs, REOs, REOs”.  We started screaming about bank foreclosures months before the banks would even play ball because we know simple math, and we knew what the banks were in for.

Well, we have now landed over 35 scorching bank foreclosure deals 70 cents on the dollar and less (our best one was 52 cents on the dollar) since the mortgage fiasco began.  This will remain a core of our strategy for the another year minimum, maybe the next two years.

However, we are officially contemplating maybe possibly considering thinking about shifting gears into the next stage (we have a tendency to move a little too soon, but when the event arrives, we are always in a prime position to take advantage of it, i.e. bank repos).

I really believe in terms of the last down cycle, we are approaching 1993-1994.  I think that this cycle is moving twice as fast as the last one- that it is more violent and severe, but will be shorter lived - (if you don’t believe, me look at this foreclosure chart for So Cal) http://farbelowmarket.com/trustees-deeds.asp.  When I was a stockbroker, my mentor who was a die hard stock jockey for over 30 years and who had seen many a crash (or, “correction”) said that a bone crushing correction was always preferable to a slow, lingering, long painful decrease in prices.

As I said in the last entry, I do not think we are out of the weeds yet- and a sudden spike in rates or similar event could definitely spell disaster- HOWEVER, we are seeing more and more and more buyers enter the market, this is undeniable.  The escrows in La Quinta Cove (our bell-weather neighborhood) at the time of this writing that are pending are 37….37!!  it was like 5 eight months ago!  Inventory will keep coming, and now it will become a foot race between the foreclosures and the buyers.

Well, when things stop rapidly declining and start going sideways, it will be the infant (okay, fetal) stage of a golden age for flippers, wholesalers, and investors because just as the market literally has to implode for a full year before the media jumps on the bandwagon and all those stubborn homeowners holding on to price realize they completely blew it,

…the market will slowly recover even while the media focuses on foreclosure numbers

 and homeowners think real estate is worthless!!!

I’m starting to get more excited now than when the banks started finally accepting our offers in the summer of 2007!  Again, don’t go out and start buying everything just yet, remember I am a chronic gun-jumper (I would much rather jump the gun than miss the party)…but this is precisely how market crashes begin to end, investors and bottom feeders tip-pie toe back in.

(*side note- two good friends and investors independently told me they think summer will be a blood bath- I’m not seeing it being as bad as they say- we’ll find out soon)

So, what does this increased activity have to do with buying repos?  Well, repos will continue to be good deals, but I have a gut feeling that it is time to start thinking about thinking about looking at preforeclosures again…maybe too soon yet, but getting there.  You see, there may not be much equity out there, but instead of 100 cats chasing 50 mice, after this devastating blowout, my guess is that there are 25 cats chasing 40 mice.  Heck, we walked away from the foreclosure market when we didn’t get a single deal for over 5 weeks at the end of 2006 and we had it down TO A SCIENCE- the writing was on the wall, and I know if we weren’t making it work, no one could have been.

We are also kicking off our mailing campaign to absentee owners here soon, we will keep you posted on that and share the same letters and techniques we use.  We haven’t done a mailer like this since I want to say 2005.  This time it will be a lot more automated using virtual assistants and more internet tools- will def keep you in the loop, stay tuned.

Besides all that, quite frankly, (you’ve heard me gripe this before)

…we are bored of bank owned stuff! 

I miss talking to a guy in Nebraska with second home here in foreclosure, he didn’t even know it was going to sale, and, “oh sure, you can take over my loan and send me $5,000, I don’t have time to deal with it”…..you don’t hear Washington Mutual say that!

Time to shake it up, we need some variety around here…. ; )

Be Happy and Prosper,

Kurtis

I would make a friendly wager that most people you ask what is ahead for the California housing market will say, “It’s going to get MUCH worse! Prices are going to drop like a rock!”…especially with how the media is pouring it on right now.

However, something is changing.  Something major.  Buyers are starting to wade back into the pool in increasing numbers.

Investors, market watchers, and the news media seem to be fixated either on foreclosure rates or year-over-year data…I almost pulled my hair out Googling trying to find recent data for unsold inventory levels over the past few months.

<You see, unsold inventory is a measure of unsold houses on the market.  I think that and sales volume blow away all other economic data for good news or bad when it comes to flipping houses.  I don’t care how much they say houses are worth if no one is buying!> 

….anyway, all the news I could find is about how unsold inventory has doubled since last year and median home prices are down 27% over last year…WHO CARES!?  Yes, we know sales have plummeted and inventory has shot through the moon- I just want to know immediately when unsold inventory STOPS increasing, I want to know month-over-month, you don’t have to tell me things are worse than last year.

Also, we never stop hearing about the exploding foreclosure rates….we know, we know….(we really do know because we have tracked them closely every week for the past decade).

…but what they are not looking at is that when home prices drop to a certain level (especially in California), first time homebuyers, buyers from other states, and buyers from other countries step in to support the price level - that’s what I care about and that’s what I’m looking for- because I need to calculate how long my property will sit and how much it will depreciate while it sits…let’s take a look at the last foreclosure explosion:

In 1994, foreclosures were exploding off the charts, much like they are now.  In Southern Cal, there were 58,372 foreclosures in 1994 (more than there were in 2007 by 25%), about 56,000 in 1995, and about 70,000 in 1996 and 1997.  This is still the all time foreclosure record, around 70k.

Yet, a peculiar thing happened.  Sales activity started to pick up when houses reached right around 40% affordability (40% of the population could afford to buy a house), and

…unsold inventory actually FELL in 1996 and 1997,
the very same year record number bank foreclosures were flooding the market! 

Buyers saw the historical opportunity and entered the market - more people could afford houses and they started to take advantage of it.  Now, home values did not go up, they just sort of went sideways, even declining slightly.  But once unsold inventory got under 8-9 months of unsold houses, that was it!  That marked the beginning of the next boom.

…So it’s like a giant race, can the market dump more foreclosures on the market
 than the hungry buyers can or will buy?

What about the time before that?  In 1980 foreclosures started going up until they exploded out of control to a “then” foreclosure record of 28,500 in 1983.  Again, unsold inventory started to drop, prices went sideways for a couple years until about 1985.

When unsold inventory went under 10 months worth of houses on market, voila!…another one of the greatest boom markets in California history that went from 1985 to 1989 until guess what?…houses got unaffordable, and unsold inventory started to jump, foreclosures started to explode, and the exact same cycle repeated itself.

So, what’s my point?….my point is that unsold inventory is currently going back down!  This is HUGE!!  Do I think we are on the verge of a boom market?…no.. do I think we must be starting to bottom if buyers refuse to let prices drop substantially before gobbling it up?…absolutely. 

So, what caused me to frantically start Googling these indicators?  Because of what we are seeing with our own eyes.  8 months ago Cindy and I couldn’t find a “sold” comp to save our lives in our farm area.  Now, we are seeing over 30 houses in escrow! 

Buyers are coming back in in droves!  Check it out- here is one our farm areas, The Cove in La Quinta.  Here are all sold properties over a 3 month period from July 1 2007 to October 1 2007 - this is it, all of ‘em:

ONLY 30 SOLDS IN 3 MONTHS!!!!!!!!!
July 1, 2007 - October 1, 2007; La Quinta Cove
(I’m sorry it’s hard to read, but just look at the 5th column in blue, these are “Solds” for June to October, not many of them at all)

Now, a boom market can’t happen until that unsold inventory shrinks down to manageable levels, and we are far from that…BUT just LOOK the activity over the past two months!

Over 40 Pending Sales and over 30 Solds!…..WOW!  8 Months ago is was RARE to see more than 2 Pending Sales!
(This is only page one! …it is the exact same geographical area over the same amount of time, the last 3 months - the yellow in the 5th column says “Pending”, houses that are in escrow being sold!)

So what did I find out when I checked the unsold inventory?  Did it match what we are seeing in our own backyard?…

UNSOLD INVENTORY LEVELS
(January 2001-March 2008)(again, hard to read, but this starts with Jan 2001 to present.  Note the very bottom of unsold inventory in June 2004.  That was the beginning of the end- I could feel the market slowing in early 2005- no one believed us - for future reference in the years to come, if you see unsold inventory creeping up, start selling inventory!)

….it SURE DID!  I really don’t think the drop in inventory is a hiccup.  Now, the media won’t start to pick up on it until all of these pending sales start to close, then you will start hearing how unsold inventory is dropping.  You heard it here first.

What does this mean?  Well, for starters, sales activity is what I care about most when we flip- I would rather flip in a price neutral market where the fish are biting then a supposedly climbing market where my house sits.  This means the fish are coming back.  There is one more reason this is important, you don’t have to guess in the dark what you can sell it for! ….man, 2007 was like a giant guessing games, no “solds” on the market, how do you know if it will sell!!?  It also signals a potential bottom which means you buy and holders out there better think about starting to get in gear or you are going to miss the party.

Cindy and I sold our primary residence right in 2005 because we saw affordability hit that magical 16% (the party is always over when affordability hits 16%- it has been the last 3 cycles), and we took our equity and ran.  We have been renting for the past 2.5 years, and now I think it is time for the Squyres clan to become proud homeowners again.  Again, don’t go out and say that I said the market is coming back, that is a ways off, but you should join us in scrutinizing inventory levels.  In fact, I think I will have an entire page we will dedicate to Unsold Inventory- be on the lookout.

Be Happy And Prosper,

Kurtis

We are approaching the one year mark for FarBelowMarket.com.  I want to extend a special thank you for those of you that have read our material, looked at our bank foreclosure deals, and have been in our community, and I hope you continue to derive value from what we do.

If you know me personally, you also know my number one biggest concern is to provide VALUE.  You may have also noticed that this marks the longest period of time during our one year old operation that I have not sent out some tidbit, announcement, or market report.  This is because we have been extremely busy behind the scenes creating a new infrastructure that I know will add TONS of value to you, regardless of your area of interest in real estate investing!

In our never ending quest to provide value, relevancy, and DEALS, we are developing a “split personality”.  It has always bothered me that we might not be staying true to our original purpose, bringing great deals to eager buyers. 

Many investors want more education, more inside scoop on what works, and training, and yet others just want deals.  Until now I haven’t had much ability to differentiate between the two, and everybody just got everything!  I feel like FarBelowMarket.com has gotten a little bit “blurry”.

…….So, we are putting things back into focus.

We are splitting into two factions: one with the sole objective of bringing value to our buyers, and another separate entity that will educate those that want to learn the art of wholesaling to other buyers - essentially to do what we do. 

Of course, there will be many of you who are just like us who want it ALL….fix and flip some, buy and hold some, and wholesale the rest…that’s great! …you can just sign up on our deal list and our “Insider’s Club” as well.

However, if you are just looking to be notified of a hot deal, that’s what you’ll get.  Even more exciting is that we are networking with other wholesalers and cranking up our own deal finding efforts to

DOUBLE the number of deals we bring to you. 

…We will send out deals, and timely foreclosure/market stats that directly effect
you if you are a real estate buyer.

Even better, we are working on bringing you “The Deal Of The Week”, an online presentation where you can log in and see an actual video presentation of our best deal, each and every week….sound exciting?!

If you love the idea of tying up incredible deals with almost no cash or credit and very little risk, and passing them on to other buyers for a fast finder’s fee, we will have a separate forum, newsletter, classes, webinars, etc. just for you. 

You see, we held our very first workshop teaching other investors the art of wholesaling properties.  Cindy and I agreed that if it wasn’t fun, it would be our last one.  What we found was that it was one of the most rewarding, fun, enriching times we’ve ever had.  We actually created our own custom list of bank foreclosure REOs and went out on a shuttle to check them out.

We even went inside the foreclosures, some were pretty scary!  Every single person in our class was a pleasure to have with us, had a load of fun (or at least acted like it!), asked lots of questions, and we couldn’t be more pleased with the result.

…we are hooked.  If you’d like to see a short clip of our field trip and what a few of our attendees said about the class, click here:

http://youtube.com/watch?v=ZLz2xSb8apg

 Be Happy and Prosper,

Kurtis
http://www.FarBelowMarket.com

It makes perfect sense-  bank foreclosures are flooding the market and banks are slashing prices to get them off the books.

…incredible deals abound! 

Even better, savvy investors, the ones who know that “buy low, sell high” is more than just a platitude, are starting to enter the market…and many of them have cash…

DO THE MATH!!….lot of great deals, lots of cash buyers who want deals- can you see how you can use the woes of the mortgage industry to create a stream of cash by giving the investors what they want? (A lot of investors already made their money and aren’t inclined to put in the time it takes finding deals).

Lock up some incredible bank deals, and then assign your contract to an investor for a nice finder’s, or assignment fee.  This is the best strategy we know of to create a river of cash with minimum risk and capital - we know because we do it full time.  This is called wholesaling.

There’s one little flaw in the math that kinda blows it….YOU CAN”T WHOLESALE BANK PROPERTIES!…huh?

Talk about a buzz kill- what a golden opportunity, and yet banks WILL NOT LET YOU ASSIGN a contract to another investor.  We learned this the hard way.  We got a fantastic deal, then we told the broker we wanted to change who the buyer was in escrow- the bank collapsed and the broker had to go to therapy…Okay I am slightly exaggerating, but not by much.  The only way they could do it was by cancelling the entire escrow (after months of tracking that property and risk losing the deal) and starting over.  We were able to do it, but the second one we did had the same result, and it really wasn’t worth the headache……we started asking ourselves, “How can we make this happen, the opportunity is just too immense!”

 So Cindy and I created the land trust technique about a year ago.  Now, we didn’t invent wholesaling, and we didn’t invent the land trust, but we are the only ones I’ve ever heard of successfully using this technique to move loads of bank foreclosures to investors for great cash flow………and guess what?…it’s not hard. (by the way, this is a huge service to the economy, it injects badly needed cash into the system, it’s win-win-win).

It takes some persistence tracking the bank properties, but getting a great deal in this market is not a miraculous feat.  Then, you need a hungry investor, also not hard.  After that, the technique is very simple, nuts and bolts. 

Simply tell the broker to write the offers as, “John Smith <or whatever your name is> trustee for the Elm Street <or whatever street the property is on> Trust”.  When you get a honey of a deal accepted by the bank, you immediately notify your buyer (more entries coming soon on how to build a list of hundreds of buyers in less than a couple months).  You grant ownership of the trust to the buyer, so you don’t have to change A THING with title- you don’t have to tell escrow, the broker, the bank, anyone, because you aren’t assigning the contract, you are assigning the trust!…make sense!? 

Your buyer puts the money in escrow, hands you a check for your work, and it closes.  No, you don’t have to sit down with 8 guys in suits at a big circular table to make a trust. 

In fact, you barely have to do anything.  A trust is simply an agreement - ours is a 3 pager and takes about 3 minutes to fill out.

After escrow closes, you simply deed the trust to your buyer (since you are the trustee, you sign everything).  We’ve done it many times, and it works incredibly.  We’ve even had a buyer flake out, and immediately replaced him with another buyer without a single problem.  Try doing that in the middle of escrow with a bank…talk about a federal case.  The nice thing is that you keep total control over the transaction! 

Be Happy and Prosper,

Kurtis
http://www.FarBelowMarket.com

Who else wants to know a strategy where the worse the market gets, the more profit you can make?

Could you use an extra $10,000 to $50,000 per month?  You see, two things forced us to overhaul our strategy towards the end of 2006.  One was the birth of our daughter (the last of four) (or else Cindy has some explaining to do), and the slowing of the market.

One of the most fatal diseases to investors is called “too-much-inventoritis”, and it is a real killer when the market starts to drop.  So, instead of fixing 6 properties at a time, we started passing our deals on to other investors for small finder’s fees.  We would pass on 3-5 properties for every 1 that we kept.  Now, can you see the beauty in a strategy like this?

First of all, we don’t have to slow down the marketing machine that took us so long to get going.  We don’t have to “turn away” deals.  Second, the worse the market gets, the more deals become available, make sense?  Third, the savvy, smart investors know that the right time to buy is when the market is running scared.  These smart investors tend to have cash, and they get hotter to buy with each passing market price reduction.

So what does this mean??….more deals, and more buyers!  It’s not hard to do the math on that one.  Obviously, the trick is finding the deals, and finding the buyers…neither is that hard to do.  You simply need to know a few things.  It took us a few months to get set up but now that we know what we know it would probably only take us a month from scratch.

Be Happy and Prosper,

Kurtis
http://www.FarBelowMarket.com

One day after returning from the Internet marketing seminar, Cindy and I both got whammied by a major bug.  103 temperatures and flat on our backs for 3 days, we’re finally getting our rhythm back.

We have hardly had any deals since our end of year blitz when we got STEALS from banks desperate to dump inventory before the 1st.  We worked a lot of very long hours right in the holiday season to makes these deals happen, but it was worth it.  We took a little breather in the beginning of January, went to Atlanta for education, got sick, and now we are ready to come back twice as strong.  Our goal is to DOUBLE our offer making.

An exciting new strategy we are going to bring back is direct mail to absentee owners.  An absentee owner is defined (my definition at least) as owners who are not owner occupants, and preferably live out of the area.  We will generate a list of them and send them a campaign of letters/postcards offering to take their burdenous property off of their hands.

The reason we particularly like this strategy is that these displaced owners may not be able to make the trip here to make repairs, call an agent, etc.  In fact, many of these motivated sellers don’t even know they are going to sell yet- until they get our letter.  I would say more than half of the deals we got from past mailers had no competition, because the property wasn’t even for sale.

For almost one year, we have focused on nothing except bank foreclosures.  If you’ve watched the news, or read any of my stuff, you know that that is where the motivation level is highest, and therefore where the best deals are.  We’re not EVEN going to stop chasing those!

…However, we are getting nostalgic.  Nostalgic because we dearly miss the simplicity of buying a house directly from the owner on our terms, with no cranky, stressed out brokers.  Ahh, the good ole days….Compared to dealing with the bank’s brokers, buying directly from the owner means you can wholesale the property without causing a federal case, there is no broker calling every other hour demanding to know why you haven’t returned the signed addendum he faxed you 13.8 seconds ago, no 138 page C.A.R. forms to fill out, and you don’t have to (usually) wait a month to get a required signature.  (It seems the banks are either screaming at you to hurry, or THEY can’t get an authorized signature for weeks!)

I promise I’m not complaining! (it just sounds like it)…Lender inventory is a consistent source of deals and will be for the foreseeable future.  However, like I said, I do miss sitting at a kitchen table and getting a deed in person - I’m kinda getting a twitch.  So I think this will make for some exciting blog entries…we will tell you exactly what list we are using, how many pieces of mail we are sending out and how often, how many responses we get, and how many deals it generates.  We are actually going to “split test” two different mailers to see what brings the best response.  I will do my best to keep a detailed account of it, and if it proves successful we’ll show you exactly how we did it, if it’s not…well, then you won’t care how we did it! ….(it will be ; )

Stay Tuned!

Be Happy and Prosper,

Kurtis
http://www.FarBelowMarket.com

Yes, the foreclosure onslaught has been good to us since the middle of 2007.  You see, we knew with mathematical certainty (we study default rates very closely now for over 7 years) that the tidal wave was coming.  We used to buy directly from the homeowners who were in foreclosure from 2001-2005, and we would track every notice of default that was filed, and what we saw with our own eyes was startling.  You see, there is a 4 month lag period from the time the default is filed to when the actual foreclosure sale happens, and the defaults started to grow exponentially.  We actuall starting seeing this in 2005-2006.

….so we started writing offers to bank foreclosurs in January 2007.  Maybe we jumped the gun a little bit, because pretty much everything got rejected, and the brokers were not very appreciative of our low ball offers! 

…The bank inventory started to explode in the summer, and lenders and bank brokers

went from hating us to loving us…

Each month after that, we got more and more offers accepted.  Not only was inventory exploding, but we started learning the mindset of the banks AND their brokers, and therefore wrote better offers.  We have grabbed ourselves some incredible deals, and got some really incredible deals for others, as well.

From October to December I think we bought over 30 properties.  We kept a small handful, and wholesaled the others to investors for amazing discounts.  Our finder’s fees over these 3 months amounted to $144,000, and our investors still got their properties at 80% of market value or less with repairs (and they didn’t have to raise a hammer, we already have our crews in place).  Talk about win-win.

Our investors are ecstatic, because they are getting “bread and butter” single family houses that are already 30% off the 2005 peaks, and we are getting them another 20% lower than that with repairs- they are actually cash flowing!…I tell you what, buy a solid 3/2 or 4/2 house, put a tenant, and hold on. 

…..If you had done this in Palm Springs area in 1992 (the last time we had a dip like this), you would have put $18,000 down for an $80,000 property, cash flowed it, and sold it for $380,000 in 2006 for a whopping 22% annualized return and put $300,000 in your nest egg….

The Vanguard S&P fund would have returned only 10.5% over the same period including dividend reinvestment.  It’s over $250,000 difference!!…shouldn’t you have a house or two in your portfolio?  Cindy and my personal goal it to responsible for creating at least 200 millionaires by helping families/investors buy discounted California real estate over the next 2-3 years. 

…Why do real estate returns obliterate the equities market?…

When I was a stockbroker at Merrill Lynch, they trained us to say that real estate appreciates across the country historically at a rate of 7%, while equities long term will do about 10%.  This is the most ludicrous statement i’ve ever heard because of LEVERAGE!!

…who buys a house for cash, buries it in the backyard, and waits 10 or 15 years??….

  They didn’t mention LEVERAGE!….who’s heard of OPM (other people’s money)?  You are borrowing 80% from the bank (at what I might add are historically bottom of the barrel rates right now), and you let someone pay your debt service!  Your appreciation explodes your returns!  The other serious flaw is trying to generalize the entire U.S. real estate market.  CA, FL, AZ, tend to outpace the rest of the country significantly.  I think this trend will continue.  The long term trend in migration has always been to CA, TX, FL, and the sun belt.  Buy quality, buy when it’s down, and hang on!

 *************************

Now, you almost never hear of anyone wholesaling bank owned inventory….WHY?!  Why does it seem we are the only ones in the industry doing it?-  that’s because banks are notorious for not letting you assign your escrow to someone else, and that’s how a wholesale transaction works.  You see, you:

1. Make Offer
2. Negotiate Offer
3. Get Signed Acceptance
4. Let Your Buyer Take Over Escrow With a Finder’s Fee

However, there is a way around it, which is called a land trust.  We offer trustee services when we make our offer.  Then, when we get an accepted offer, we make our new buyer the trustee of the trust in escrow, but keep our own trustee.  This way we are not technically assigning the escrow, only the beneficiary of that trust.  Once we close escrow, the trust simply deeds the property to the investor (remember, they already owned the trust that owned the property).  I know it sounds complicated, but it actually couldn’t be easier.

I know that if someone took away every single thing I had, put a gun to my head, took away my knowledge of real estate, and said you have to make $750,000 this year- this is the very technique I would jump on immediately.  It’s been a fairly closely guarded secret (anything unconventional makes most Realtors head spin around like the Exorcist!). 

But, our economy is in trouble.  I’ve said before in another blog entry that if our actions don’t serve the greater good, then they don’t amount to anything worthwhile.  By matching up armies of hungry investors to buy REOs from these desperate banks, we are injecting badly needed cash back into the system creating a huge benefit to our economy.  I personally think banks should encourage wholesaling because wholesalers build huge networks of buyers, and can blow out inventory fast.  In turn, these investors are fixing and selling  or renting clean, fresh, badly needed affordable houses for families who have not been able to own or have a clean house.

So we’ve decided to teach others to do what we do.  We are planning to throw some workshops on the basics of how to create your own foreclosure list, how to write offers, how to find the investor buyers, and how to use a trust to bypass the “no assignment” clause.  We also may come out with a homestudy course for those that can’t come to Palm Springs (although it is 65-75 and clear skies every day : )

If you are interested in either letting us find you a lucrative investment (out-of-state, no problem), OR you are interested in learning how to wholesale, sign in on our homepage to get our newsletter that will keep you updated, and we will also send you are wholesale deals as we get them.

 Be Happy And Prosper,

Kurtis
http://www.FarBelowMarket.com

We just got back from Atlanta for a two day workshop on internet marketing.

What does this have to do with real estate investing?  Everything, Everything, Everything!!

Actually, no matter what your business is, you better start learning some basic terms and fundamentals.  Why?

You see, there is MASSIVE revolution taking place that dwarfs the transition from the agricultural age to the industrial age.  This revolution is happening on a magnitude that will be a lot more obvious in five years….it goes beyond some passing advice to “learn computers” or “get a website”.  I am not simply stating the obvious that the Internet is changing things, either.

What is taking place under the radar is sweeping our country (actually the planet).  One major component of this change that I think most affects real estate investing is a phenomenon called “Local Search”.  You will hear more and more about it, and just remember that I told (warned) you about it!  Quite simply, phones books will be GONE in 5 years (straight from Bill Gates mouth). 

A good way to explain local search is simply that fewer and fewer people are picking up the phone book to, let’s say, order pizza.  What is happening now is that the majority of customers will simply Google, “pizza Palm Springs”.  If you haven’t noticed yet, a bunch of local directories specific to Palm Springs will pop up, along with a map, phone, number, and other info to the pizzerias that are NOT sleeping.  If you own a Domino’s, you will be directed to a national site which will then route you to your nearest Domino’s, at which time you can actually ORDER your pizza on the spot.

Now, if you are a mom and pop pizza shop, here is where the internet can sink you or launch you into the stratosphere.  Let’s say you are located in Palm Springs.  By taking a few moments to do a few simple things to your website such as plastering “Palm Springs” and “pizza” on every page of your site, and submitting your business to all the local online directories, then when your potential customers Google, you will pop up on the first page and they will hopefully call you. 

Your business can blow Domino’s out of the water because they can’t put “Palm Springs” all over their site (these are called “keywords”)!  In fact, they are calling search engines the “Great Equalizer”.  Relevance is king, and keywords ARE quickly becoming the new real estate.  The small guys (and smart guys) can beat the big guys by being more relevant.

Here’s another interesting fact, it’s the Wild Wild West out there on the onine marketing frontier.  Companies are scrambling to put together local search programs, Google, AOL, MSN, and host of other guys are fighting to the death- it is very brutal, and there is no way to know how it will all fall out.  But I do know there is usually a winner and things tend to fall into a conforming format (VHS, DVD, Email, etc.)  It will be interesting to see where it goes, but I would pay attention to this.

Why am I talking about this?  Well, the informal survey I just took said a majority of my readers would like to eventually invest in real estate full time.  In my own attempt to be more “relevant” to my readers, I think this is an important subject to talk about. 

…You see, over 90% (!) of home seekers are now beginning their property search online… 

So, if you want to make your living in real estate investing, you better learn a few basic terms.  It is beyond the scope of this article, and I don’t claim to be an expert, but you can start by Googling “Local search optimization” and read some articles. 

…Now guess who else is starting to start their search online?  That’s right, MOTIVATED SELLERS… 

Now, wouldn’t it make sense that to make it in real estate investing it’s either going to involve the purchase of a property, or the sale of a property?  Well, you better be able to find someone to buy from or someone to sell to!  If you’re still relying on “We Buy Houses” signs and an agent to put a “For Sale” sign in the yard to sell property in a few years, I think you are going to have a big struggle on your hands.

We paid quite a lot for this two day event, and it was worth every penny.  I am far from an expert, but I’ve got the basics down, and I will continue to educate myself.  If you put “foreclosure La Quinta” on Google, I will usually pop up on the first page…I am very proud of this! 

…yet I know if I stop educating myself, it’s a matter of time before agents, investors, bankruptcy attorneys, etc. send my page into oblivion.  If you have a business, put your industry in and see who is on the first page.  The good news is that it is still early in the game, but it won’t be for long. 

By the way, I am compiling a list of about 20 sites where you can post your business to so that you will have a lot more exposure to search engines.  It maybe takes an hour, but it is very worth it.  The longer you are present the more the search engines “like you”, so it’s good to start soon.  I’ve also got some good sites specific to real estate investing you can post info on.  I will create a link page and let you know when it is up.

Be Happy and Prosper,

Kurtis
http://www.FarBelowMarket.com

There literally has never been one single year over the time that we have flipped houses that I haven’t heard the statement (or some variation, and 90% of them came from agents), “oh, you can’t flip in this market”.

And each year, I answer, “Maybe so”, or “Hmm, could be”, as I wait for our latest escrow check to arrive.

You will never hear that statement come out of my mouth. 

This being said, I will say that flipping in a declining market does sort of remind me of learning to snowboard on a black diamond slope.  In 2002, 2003, and 2004 if you had started flipping then it was more like learning to ski or snowboard on a bunny slope.

The reason is that if you had miscalculated during 2002, 2003, or 2004, the rapid appreciation of the market combined with the greater fool theory bailed you out every time.  Leased land, floor-plans that resemble a labyrinth, war zones, glop ons (really bad add ons), overestimating value, underestimating repair and carrying costs, taking 3 months longer than you thought to make your repairs…all of these sins were quickly forgiven by the voracity of the market.

In this market, if you commit these sins, you can and will be punished, “Thank you sir, may I have another?!”

Right now, it is raining foreclosures.  You have to be spot on…spot on with your rehab, spot on with your repair estimates, and one of the most important factors, aggressive in your marketing of the property…in other words, you better have some idea of what you are doing. 

If not, the risk is that in the time it takes to fix up that property, 3 or 4 new foreclosures go up on your street that are priced $50,000 below the last lowest priced property.  There is a LOT for a buyer to choose from.

Without espousing all gloom and doom, there is still a SHORTAGE of freshly remodeled homes out there.  Even more excitiing than that, every month more and more families can afford a home who could not for the previous 5 years (and chance are their families are bigger!). 

There is a lot to be excited about…but you have got to be focused, you have to be accurate on your repair costs and timetable, it has to look GOOD (or why wouldn’t a family save $50k and pick the REO across the street?)…

You need to get creative and put something like a plasma HD flat screen with an Xbox in the living room, a spa in the backyard, or something that makes a family emotionally attached. 

You need to make the property enticing to agents and add at least 2% to the commission of the agent or a free trip to Catalina Island (not as pricey as you might think) for the agent who finds you a buyer……AND, you need to factor these costs in advance!

If you are a beginner and you are saying, “no sweat, I can do that”, then I will always reply, “Go for it!”. 

Really, no matter how much advice we or anyone else gives you, the only way to get to consistent success is to get that pesky falling-flat-on-your-face part out of the way…unfortunately, there is no way to avoid it that I know of.  It is the only way to get a deep understanding of the game the same as any other hobby, business, or sport.  You can read hours of books and videos about snowboarding, it’s not going to prevent you from feeling like a complete jackass the second you click your boots in and try to stand up!

This doesn’t mean you will have an unmitigated disaster, it does mean that at the end of each project if you don’t slap your forehead at least once and say, “Dohh, I should’ve”, or “I could’ve”, or “Why did I….?” then you didn’t really learn anything, and there is ALWAYS something you could have done better.

……..hey!….image how easy the rest of your snowboarding or skiing trip will be when you do learn how to get down a double black diamond! 

If you don’t like snow up your nose, and you want to take a more balanced approach, then I have another suggestion for you:  consider wholesaling.  The money can still be great and the risk is considerably less.

Again, CONSIDER WHOLESALING.  The money can still be great and the risk is considerably less.

If you are looking to change careers, get out of your current line of work so you can have your own hours and be your own boss, but you aren’t crazy about going down a black diamond right away, don’t you dare give up that dream or tell yourself that you’ll do it when the market changes.

Wholesaling means you go on the hunt for amazing deals, but then you take what amounts to a small finder’s fee, pass the lion share of the profit to another investor, and go on to the next one. 

But do NOT stop there - make it part of the deal that you can check out what your investor buyer does (or doesn’t do) to the property, how they market it, what it costs, and learn everything you can from it.  Who knows? …you may just get hooked on the thrill of the hunt and never even care about fixing them up.

I’m torn between the two.  The feeling you get when you take a trashed, smelly, abandoned pile of wood and turn it into a beautiful home….there is no feeling like it.  No matter how many times we’ve done it, my jaw hits the floor when I see the work my brilliant and artistic wife pulls off time and time again..

….BUT, for me, I’m all about the fun of the treasure hunt.  I’m not a fix up guy.  I tried to put in a doggy door once.  The box said 15 minutes.  It took me two hours and put me in a really bad mood, and Cindy basically redid it anyway…sorry, I just suck at it.  I admit it.  But if you want a direct mail marketing system to absentee owners or a screening system to find the best repos fast, stand back!…Cindy often struggles with email….if we were good at the exact same thing we’d be in big trouble.

But the number one reason is risk…no repair costs at stake, no mortgage payments, no agents and picky end user buyers to deal with…if you are bound and determined to get out of your job, don’t have a lot of money, and not a lot of contractor experience, give wholesaling a serious thought to launch your investing career……….and as always, call us if we can help you in anyway.  You can wholesale a deal to us if it’s good enough, or we can wholesale a deal to you if you are bent on fixing it up yourself, just don’t try and add a doggy door, it’s impossible.

Be Happy and Prosper,

Kurtis
http://www.FarBelowMarket.com