In today’s post I’m going to share the second key element to a succesful short sale.

Verify Property Value.

In order to have a succesful short sale you’re going to need to find comparable sales (comps) within the past 90 days.  The sale prices for your comps needs to be considerably lower than the amount owed on the property you are trying to short.

Criteria for Comps:

• Property age +/- 5 years.
• Comp must be within 1.5 miles of subject property.
• Square footage +/- 10%.
• Property must be in similar condition.

Where to find property values.

The internet has tons of AVM’s to choose from.  AVM’s should only be used as a guide due to inconsistencies in the data.   Some of the most popular sites are:

• Zillow.com
• Trulia.com
• Cyberhomes.com
• Homegain.com

I typically pull reports from 2-3 of these sites and compare the data.  Another great source for comps is your local property appraisers website.

*These sites are easily found using your search engine.  Just type “your county property appraiser” into your preferred browser.  Remember to replace “your county” with the county that you’re searching for.

Don’t forget Realtors

I could be biased since I am I licesned real estate broker, but I think the best place to get values is the local MLS.  Since the MLS has restricted access I think it’s important to have a Realtor on your team.  The data on the MLS is typically the most up to date.  Anytime a property is sold the MLS requires the information to be updated within 48 hours.

Read the first installment of “The 7 Key Elements to Successful Short Sales” by clicking here.

This week I’m taking a break from real estate talk because it’s boring the sh*t out of me.  Since most of my readers are people I actually know, I’m sure that you’re not using social media.  For anyone that IS using social media, this post my be a bit elementary.

Social Media defined by Wikipedia:

Social media is an umbrella term that defines the various activities that integrate technology, social interaction, and the construction of words, pictures, videos and audio. This interaction, and the manner in which information is presented, depends on the varied perspectives and “building” of shared meaning among communities, as people share their stories, and understandings.

Now my interpretation:

Social media is THE KEY to make the internet yours.  Did you know that you can you can customize your entire experience based on what you like?  You can keep up with friends, listen music you like , find interesting videos and even find websites that you’re almost guaranteed to like by using social media?

Where to start?

The first place I went was Facebook.  Facebook is a social utility (similar to MySpace) that allows you to connect to your friends, family, and the world.  You can share pictures, have conversations, and find people with similar interest.  It’s the perfect place for a beginner.

The next step I took was social bookmarking:

If you know how to bookmark a page, then this should be a snap.  The idea behind social bookmarking is sharing.  When you bookmark a page on your browser it can be cumbersome to share.  Social bookmarking sites make it easy to bookmark and even easier to share.

The same concept that applied to facebook applies here, find people with similar interest, befriend them and start sharing.

My 2 favorite sites for social bookmarking are:

#1 StumbleUpon is an internet community that allows its users to discover and rate Web pages, photos, and videos.

Stumbleupon is the best thing I’ve ever found on the internet.  I’m not sure what I was doing on the internet before stumbled upon it.  Basically you can surf the web, find sites that you like, bookmark, comment and share.

It gets better when you start using the stumble button.  When you sign up it takes you through a questionnaire to determine what you like, then when you use the stumble button it delivers websites based on your interest.  Once you start using it you can give websites a thumbs up or  thumbs down.  When you use the thumbs up it figures out what you really like and gives you more of it.

#2 Digg is a website made for people to discover and share content from anywhere on the Internet, by submitting links and stories, and voting and commenting on submitted links and stories, in a social and democratic spirit.

Digg is a lot of fun.  I use it for political news, odd ball stories, and even some business news.  The great thing is that you get to vote on what you like and it moves the page up the ranks where more people will see them.

Don’t forget Blogs. Believe it or not blogs are part of social media.

You may be asking yourself, “How is a blog part of social media?”

It’s pretty simple, blogs are maintained by people and they are available on the web.  Most blogs have a comment section which gives readers a chance to interact with the blogger and fellow readers.

If you’re just reading blogs and not commenting you’re actually missing out on all the fun.  This is your chance to add your two cents.  Take advantage of this opportunity by telling me what you think of this post in the comment section below.

How to get started:

• Participate in the discussions
• Be honest about what you like and dislike
• Find friends with similar interests
• SHARE (sharing is the basis for all social media)

** It’s Uber important to learn Social Media etiquette before you dive in, so check out this post.

I hope this was helpful to you.  I plan on writing more about social media and WEB 2.0 in the future, so take a moment to subscribe to my feed so you can keep up to date.

Definitions by Wikipedia:

Social Media

Blog

Social Bookmarking

Digg

Stumbleupon

Lets be friends, here are my profiles:

Facebook Profile

Stumbleupon Profile

Digg Profile

I make my living investing in real estate.  That means good and bad times alike I have to stay focussed to be successful.

Three years ago being in real estate was quite an easy job.  Basically it went like this:

• Locate Property
• Get a Contract
• Buy
• Fix
• Sell
• Rinse and repeat.

This is ALL you had to know to call yourself a real estate investor.  You didn’t need any kind of knowledge to get in the game.  All you needed was a few dollars (none of them had to be yours) and a mortgage broker.

My how things have changed.

Today you need to be quite savvy to survive this rotten market.  You need to have multiple exit strategies before you buy and then you need to have a back up plan if your exit strategies don’t work out.  If you’re not buying in the right area for your pre-determined exit strategy you will loose your shirt.

These are five tips that I have used to stay in the game:

1. Your Team: Whether your  full time investor or a part time hobbyist, it’s important to know that you can’t be everywhere.  Team up with other professionals that will help you get your deals closed with minimal effort.  Right now my power team consists of two Short Sale negotiators, One buyers agents, One Real Estate Attorney, One accountant and the most important one, My title company.
2. Budget: Keep an eye on your bottom line.  Running a business costs money, so if you want to last you need to have an idea of your expenses.
3. Specialize: Stop spreading yourself thin trying the newest and bestest investing techniques that late night infomercials have to offer.  First decide whether your investing strategy will be short term flips, or long term holds.  In today’s market I recommend long term holds for cash flow if you want to survive.
4. Market, Market, Market: If no one knows what you do, then why would they do business with you.  There are so many homeowners in trouble these days that leads should be fairly easy to come by if you are marketing.
5. Plan: This is the hardest part for any business.  You MUST sit down and plan your strategies.  Everything from marketing for sellers and buyers to  your buying criteria and marketing budget should be mapped out before you get started.  If you know where your going, it’s a lot easier to get there.

Remember that Real Estate is a business.  You have to plan, budget, and execute if you want to succeed.

Now I ask you, what other tips do you have for anyone in today’s real estate market?  Share them in the comments section below.

For those of you keeping score at home here are a few stats:

• Foreclosure Filings are up 120%
• 220,000 homes were lost to foreclosure in the 2nd quarter of this year
• 1 in every 171 US households has received a filing

Obviously this is an important topic, so I thought it would be appropriate to go over the three most common questions to see how this will effect you and the people you work with.

What is this legislation supposed to do?

It will allow qualified homeowners to re-fi the existing loan with the current lender for 90% of the current value.

Doesn’t that sound super?  It’s not.  There are some problems in this little equation.  First, the lender has to agree to the re-fi, because they will be the ones carrying the note.  Second, if your not behind in your payments, then they will not approve you.  There are tons of people hanging on by a thread that will not qualify.

Who is eligible?

Families who spend at least 31% of their monthly income on their mortgage.  Keep in mind that it has to be a primary residence.  I guess this doesn’t help the owners of the 2.2 million vacant homes for sale.

Where do you apply?

You can either speak to your lender, or contact HUD directly

I’m in Florida, so there are a lot of homes that will not qualify for this program and will end up in foreclosure or sold on Short Sale.  Although I think this bill will be helpful, more needs to be done to shore up our housing market.

Inevitably some properties will need to be sold to investors at prices that would make sense.  The banks need to get on board with this idea.  As an investor I think it would benefit the lenders to go ahead and start liquidating these properties before foreclosure to avoid all the costs associated with the foreclosure as well as reducing some of the load at the courthouse.

These foreclosures not only cost the lenders money, but they are wasting our tax dollars with all these hearings.  The only people benefiting are the attorneys shuffling paper and collecting fees.

OK, so I’m not so positive this week, but sometimes you’ve just got to vent, right?

What do you think about this new bill?  Is it helpful?  Share your thoughts in the comments section below.

If you’re like most other investors then chances are you’re bank account has taken a hit because of the market. I know mine has.  So I’ve decided to try something different.

I’ve decided to challenge myself to take $2,000 and turn it into $10,000 over the next 90 days.

There are two reasons why I’m doing this:

1. If I were to loose everything, How would I make it back?
2. If I were starting out today, How could I get involved without too much risk?

The good news is that if you fall into one of the categories above we can do this together.  I’m going to take you on this journey with me.  I will share the whole experience with you in hopes that you will join in on this profitable adventure.

Yesterday was the first day of the 90 day challenge.  We have 89 more days to make this dream a reality.  Join us on this adventure by clicking here:

Learn How To Turn $2,000 into $10,000 in 90 Days

P.S.- Next week we will be back to our regularly scheduled NEWS commentary.  Thanks for reading!

The news all over the web is the potential collapse of the Government Sponsored Enterprises, Fannie Mae and Freddie Mac.

• Did you know that Fannie and Freddie control 90% of the secondary market and 50% of the total mortgage market?

For those of you that have been reading, you know that I’ve been positive on the real estate market for the past month or so.  I’m feeling quite challenged to say something positive this week.  If you listen to the news, then you “know” the world is ending any minute now.

Here’s the thing, no matter what happens people have certain basic needs:

• Food

• Love

• Shelter

It’s a little known fact that humans were actually populating the earth before there were cars, houses, or even McDonalds.  If we made it then, why can’t we make it now?

Food– From personal experience I know that no matter how broke I’ve been I’ve always been sure to put food on the table.  People will always find a way to nourish themselves.

Love– If we’re not loved then we feel like we have no purpose.  I am blessed to have a loving wife and a supportive family.

Shelter– We can’t survive without some sort of shelter.  If you can’t afford to buy a place then it’s likely that you CAN afford to rent a place

Let’s see…two out of three of our basic human needs have nothing to do with Freddie or Fannie.  We’re off to a good start.

The third basic need, “Shelter” is the opportunity.

We are real estate investors and our job is to profit from properties.  With this “terrible” news the opportunity has become even greater for us.  No matter what happens people will still need a place to live. Every family can’t live in apartments, nor are there enough apartments to house them all.  That means that people will need to RENT single family homes.

As an investor you should know that rentals are the key to long term wealth in real estate investing.  When you buy a property that cash flow’s today, then chances are that this property will always cash flow. Just so we are clear, when I say CASH FLOW I mean that the rent you collect is enough to cover the mortgage (if you have one), the taxes, the insurance, and the repair budget plus a small profit.

Although that may sound tough these days, the increasing foreclosure market is driving the price of properties down to levels which will make this a reality.  I have a TOP SECRET Formula that I use to make sure properties I look at will cash flow.  How would you like to learn this formula?

The TOP SECRET formula:

Anticipated Monthly Rent (you will have to do some market research to get this number) multiplied by 100.

For Example: If you know you can get $700 per month multiply that by 100 and you get $70,000.  This means that you can’t pay more than $70,000 including your repairs and holding costs.  If the place needs $10,000 in repairs, then you can only offer the seller $60,000.

By using this simple formula you can figure out what your max offer should be on rental properties.  Typically I deduct another 15-20% from my offer price to be sure that I have some cushion.

If you’re one of the people that believes that there’s no hope for a recovery in the real estate market, then I assure you that you WILL be left behind. For the rest of you that play smart and conservatively, I will see you in the millionaires club.

OK,OK…I know that some of you are saying, “I don’t have $70,000 and I have no way of getting it.” How would you like to know how you can start generating cash flow and cash with only $2,000?

Sound interesting?

Then take a moment to post a comment in the box below.  All you have to type is, “I’m interested.” and I will reveal my master plan for turning $2,000 into $10,000.

It’s getting serious out there.  “Vulture” real estate investors are now having their way with sellers in today’s market.  That means smart investors are now picking up deals for pennies on the dollar.

It’s just like I’ve been telling you for the past few weeks, it’s time to buy.

We’ve finally worked through the first two waves of foreclosures and we have another one coming early next year.  With trillions of dollars in ARM’s getting ready to adjust more properties will go into foreclosure.

Now I will look into my crystal ball and make a prediction…

After the next wave of foreclosures has come and gone, I predict that:

1. Lender’s will become more flexible in loan workouts.
2. Investors will buy up large packages of defaulted paper.
3. Sellers will be forced to offer “seller financing” to sell their properties

To the untrained eye this may seem like a cause for panic, but I assure you that this is a cause for celebration.  These three things will lead to the greatest opportunity to get RICH in real estate ever.  If you know how to handle these types deals you will be able to profit by using these techniques:

• When lenders become flexible on their loan workouts they may even offer some sort of “debt forgiveness” by rewriting notes using new appraisals.  The opportunity to take these “re-written” notes “subject to” will be a great tool for investors.
• When the Investors buy up all the defaulted paper they will need money.  You can invest in these funds to get a good return on your investment.
• And last but not least my favorite thing about Real Estate.  When the market SUCKS it’s tough to sell a property.  Owners are typically motivated to hold some or even all of the paper on your purchase.  This phenomenon is where the “No Money Down” craze started.

In the past 4 years we really didn’t have too many of these opportunities.  Now that the market has tanked say HELLO to real estate investing the way it was intended to be.

I’m planning on taking full advantage of this market.  I’ve devised a plan that will guide me through this time and I would like to share it with you.  Here’s my two step plan:

1. Buy all the Real Estate I can afford
2. CELEBRATE

Read what CNNMoney.com had to say about this spectacular opportunity by clicking this link: “Vulture Real Estate Investors.”

While doing some research I found out who is buying up all the Real Estate.  Private equity investors like The Blackstone Group have been buying packages of properties from builders like Lennar and Syntex at 30-40 cents on the dollar.

That’s a 60-70% discount.  Now do you beleive real estate is on sale?

As I mentioned in last weeks post, if you wait to hear that real estate is making a recovery then you will already be too late.

Get the whole story by visiting Forbes.com

According to CNNMoney.com Florida has 5 out of the top 10 markets set for steep losses.  This is a tremendous buying opportunity.

On Tuesday the Case-Shiller home price index was released and it concluded that prices have retraced to where they were in 2004.

In case you forgot, 2004 was the year where everyone decided they were going into the Real Estate business thanks to shows like A&E’s “Flip this House.”

What does this mean?  It’s time to start buying properties!

Saavy investors understand that if you are serious about making money, you HAVE to be counter intuitive. Have you ever heard these cliche’s?

“When everyone is selling, you buy.  When everyone is buying, you sell.”

“Buy on the Rumor, sell on the news.”

In 2004 the news was that everyone and their grandma was buying real estate.  What did everyone else do…they jumped on board and bought Real Estate as well.  With SO many people buying real estate, it was inevitable for the prices to go up rapidly.

The peak of the market was sometime in 2005.  By the middle of 2006 prices were already declining.  That meant that all the people who bought in 2005-2006 were in serious trouble.  Now everyone wanted to sell.

The smart investors saved their money for the opportunity we have right now.

It’s 2008 and the news today is that property values are in the toilet and everyone needs to sell to get out from under their large mortgage payments.  With so many foreclosures and short sales on the market you can’t even give a house away these days.  This is the time to BUY.

Seller’s are more motivated than ever to get rid of properties. Even people with equity in their properties can’t get rid of them due to the stiff competition with builders giving huge incentives and real estate agents who are shorting mortgages to all time lows.

The days of Cashflow rentals and owner finance are BACK! If you haven’t already thought about getting into Real Estate, then I urge you to consider it.  There are deals everywhere and no one to buy them.  If you wait until you hear the news about a rebounding Real Estate market it will be too late.

I can tell you that my partner’s and I are now putting together money to start buying everything we can get our hands on.  Don’t be fooled by the media.  It’s times like these that make millionaires.

“Home prices post record 15.3% drop” CNNMoney.com

After reviewing the new FHA rules, they are not what most people thought they were.

If you’re like me, then you’re buying properties pre-foreclosure, so this change will not help us at all.

This new ruling is actually for the benefit of the lenders who have foreclosed on properties.  It will help them get rid of their inventory quicker.

To read the actual changes, click here