But still, there are some key, noteworthy shifts we should all be aware of. So I’ve decided to post a few of them in a series I’m calling “New Market Rules”.  I hope they’re helpful to you, and I’d love to hear a comment from you at the end if you don’t mind.

So (ahem) here’s part 1…

Why MAO Can Be a Moving Target

If you’ve been around the investing sphere for even a little while, then you know that MAO is most certainly NOT a tasty white sandwich condiment (or French fry dip if you’re from across the pond).

It’s a staple formula investors have used for years for calculating the most you can offer on a residential flip deal.

The classic and widely accepted MAO formula is:

ARV x 70% – Estimated Repairs = MAO
(ARV is “After Repair Value” & MAO = “Max Allowable Offer” )

And of course, if you’re a wholesaler, you’ll want to slice your wholesaler’s fee off that amount too.

But in a squirrely market like today’s, things aren’t so cut and dry anymore, are they?  Some longstanding rules are being bent or broken, and formulas (like MAO) are often being retooled to reflect the realities of a staunchly buyer’s market.

Specifically I’ve noticed more and more of us investors (myself included) are now tweaking the 70% in the MAO formula to be 65%, 60% or even less.  And it’s basically because we’ve gotta be more conservative these days.  To put it simply, you need a better buffer, and if push comes to shove, you gotta be able to liquidate at a lower ARV and still make some coin.

The “moving MAO” became glaringly obvious to me during the REI Deal Evaluation Intensive, as I grilled a bunch of my investor-friends from across the country about how they’re currently analyzing deals in this market.  It was really interesting to see the array of MAO variations they used in their own local arenas.

The Enhanced “Localness” of Real Estate

You’ve probably heard it said before that, just like the weather, all real estate is local.

What this means is, you’ll never hear the weatherman say “The average national temperature is 65 degrees today!” or “Today’s high in California will be 82 degrees!”  True as it may be, that’s just crazy talk.

In the same way, there are unique real estate micro-climates in every city and town across the U.S.  And whatever the national trends may be – whether booming or busting – what should matter most to you is what the market conditions are in your region, town, or neighborhood of choice.  Never ignore the local market place.

This is not something new – real estate has always been a very local and relationship driven business.  But it’s truer now more than ever, my friend.  And because of this, in today’s arena your MAO formula may well need to be tweaked and adjusted based on what your local market (or even the neighborhood/school district) requires of you.

Said another way, you gotta get to know what your market is asking for…which means knowing the numbers in your market really well (recent comps, pendings, average DOM, etc.) and then also knowing what other local investors are successfully accomplishing in your market.

If you know your market numbers well, and what other investors are successfully doing in the arena currently, then it becomes a matter of reverse engineering a killer MAO for yourself.

The Bottom Line

Beware, the classic MAO may not be the sure bet it once was for you.

I wish I could gaze upon my crystal MAO ball and tell you exactly what formula your local market is asking of you.  But you, my friend, will need to uncover that for yourself.

Use the classic MAO as a starting point, do the work of asking your market what it truly wants of you, and tweak it from there.

What’s Next?

Well this is my first “New Market Rules” post.  I’ve got a few more in mind, such as…

• New Market Rule: Slow and Steady Gets His Clock Cleaned
• New Market Rule: Knowing Your “Fast Sale ARV”

But ultimately I’m not sure how many I’ll end up doing – Honestly it kind of depends on how many “new rules” I can systematically think of when I’m in blog-writing mode.

But hey, I’m wide open for your input!  I’d love to hear your thoughts on this post, and also if there are any other major “New Market Rules” you’ve identified, please feel free to share them with us in the comments below.

My best,

a

And by “noobs” I mean newbies.  I.E. anyone who’s been at this real estate investing thing for a couple years or less. If that’s you, then this post’s for you.

Truth be told, there’s is there’s a heap of things I wish someone had shot straight with me about when I first got started in this game back in Y2K.  And ah boy, the headache and heartache it could have saved me.  Oh, and money.  And the TIME.  I sure as heck would have gone a lot further a lot faster if I’d had a clue on some things.

So if you’re a little green – God love ya – let me do you a solid and share with you a few things I wish I’d have known. I can think of a bunch more, but I’ll start with three things for now and go from there…

Thing #1 - Avoid First Deal Desperation

Here’s something I’ve heard from new investors over and over through the years…

“Heck, I just want to do a deal!  Even if it’s only for the experience and to show myself I can get one done.  I’d even be OK just breaking even on it – it would be worth it to have the experience of doing a deal!”

Nope.  (BUZZ!)  Sorry, wrong answer.

Man, I remember all to well the wonder years of being a green, wet behind the ears investor. So eager…so hungry to get out there and slay my first dragon.

That hunger is awesome.  Embrace it.  Be motivated by it.  Let it drive you to taking action.  But watch out, because it’ll also totally mess with your head and cloud your judgment if you let it.

Let’s be crystal clear about something: You’re not in this business to do deals, you’re in this to make money.  

Don’t let your hunger to “just get a deal done” fool you into stepping into a marginal (or even bad) deal just for experience’s sake.  Over the last decade plus, I’ve been friends with, mentored, partnered with and otherwise crossed paths with many, many new investors.  And trust me, this is a mistake and will almost always end up biting you in the butt.

Moral of the Story:   Yes, work hard to get that first deal done.  Notching that baby into your belt feels super, and it’s a huge milestone.  But make sure you have a clear picture of what a good deal is, stick to that picture, and keep “making money” top on your list of priorities, second only to “maintaining integrity”.  Learn your market and the fundamentals of analyzing profitable deals, and then stick to the wisdom of good, common sense numbers, even on your first deal.

I’m not saying don’t take risk…but don’t let hunger make you fool-hearty.  Trust me, you want to feed yourself some wins early on, and that means making money, and not just breaking even for the sake of “experience”.

Thing #2 – Choose Your Local Mentors Very Cautiously

If you’ve been around here for a while, you may have heard from me before about my first local mentor, and how he took me “under his wing” to the cleaners.

Understand, I take full responsibility for my own actions; I’m not looking to blame others for my mistakes.  But also the fact of the matter is, I was so green that I just didn’t know what I didn’t know.  And that makes for a fairly easy target.

Yes, I learned a lot from him.  And for this, I’m earnestly grateful. But I also got taken to the cleaners……

• As it turns out, those patch-n-paint rehabs he was letting me “steal” from him at 80% of appraisal – well they weren’t rehabbed all that well after all, attested by how they started falling apart within a few months of buying them.
• And all those second mortgages he took back and assured me he’d simply forgive?  Turns out that was loan fraud.  Yeah, OK, wow.
• It also turns out $600/month rent minus $400/month PITI does NOT really equal $200/month “positive cash flow”.  Go figure. Repairs? Maintenance? Reserves?  Nah, who needs ‘em…
• Turns out buying his poorly rehabbed houses all over God’s creation was not actually the overall best investment or property management strategy.

I could go on and on.  Long story short, I cozied up to the first real investor I met who fogged a mirror and seemed to genuinely take an interest in helping me.  And in the end he saw me for exactly what I was to him: A naive noob he could “take under his wing” and sell a bunch of his crap to under questionable (sometimes illegal) terms, until I finally one day figured out the difference between my butt and a hole in the ground.

It took me literally years to recover from this one, seriously tough class in the school of hard knocks.

Moral of the Story: Don’t get starstruck by the first real-deal successful investor you meet.  Just because someone’s a successful investor and is willing to “take you under their wing” doesn’t mean they’re a good mentor or even have your best interested at heart.  Don’t get in bed too quickly and if something seems unclear or even a little off to you, don’t be embarrassed press into it until you really understand it.

No , I’m not saying “trust no one.”  What I’m saying is, “Trust cautiously, and verify well.”

Thing #3 – Don’t Be an Education Junkie

We’ve all heard it a thousand times by now: “Smart investors invest in their education.”  And it’s true.  As the great Brian Tracy aptly said, “If you think the cost of education is expensive, try the cost of ignorance.”

But sadly it’s also become the enchanting mantra of everyone who’s got the latest and greatest course or bootcamp to sell you.

Here’s another important truth to consider:

There’s a big stinkin’ difference between wisely investing in your education and buying, BUYING, BUYING whatever the latest bright shiny object happens to be in front of your REIA group or on your computer screen.

Yes, investing in solid educational products can absolutely slash your learning curve and hand you the keys to the castle.  But it can also totally overwhelm you, suck your life away and drain you dry of thousands and thousands of dollars if you let it.

Ah, bright shiny object syndrome…

As hard-wired entrepreneurs, we’re all prone to it.  And oh, the horror stories I’ve heard from far too many who’ve been to a “free seminar” only to be convinced to drop $25,000, $35,000 or more on “education” they can realistically pick up at their local library.  It’s a crying shame.

My advice here is simple: Yes, be willing to invest in your education, but have a plan, set a specific education budget and have some self-control.  Know that most REI product are expertly marketed (and nothing’s wrong with that) and that they’ll most likely hit every greed gland and pain button you’ve got.  But even still, resolve to resist the endless temptation of the next bright shiny object.

My general rules of thumb are… 

• Watch out for the “free seminars” held in hotels:  They’re almost always following the same formula, designed to lead you down the same type of sales funnel…one that gives you as little as they can get away with, while extracting as much as possible from your wallet, for as long as they can keep you hoping and dreaming.

• Watch out for the credit limit scam:  Don’t ever buy something from someone who shared with you the secret of how to raise your credit limits as part of their presentation (hint: they’re going to be asking you to pull that freshly raised credit limit out for them a little later)

• Watch out for obscenely high priced education:  Never give in to the guys who price their stuff in the $10,000 and up range.  I mean seriously… that’s just too much.

• Start cheap and slowly move up: Start with books you can get the library or Barnes and Noble/Amazon.  That’s where I started, and you’d be surprised how much you can learn there.  Then gently move up to courses in the $97 to $497 range.  Then, once you’ve found your niche to focus on, go ahead and invest a few thousand into something you’re really going to commit to focusing on (i.e. bootcamps, large courses, etc.)

• Consume quickly, then give yourself 90 days:Once you’ve made a noteworthy investment into a piece of core or continuing education (in the hundreds or thousands), DO NOT let it sit on the shelf.  Don’t procrastinate.  MAKE YOURSELF GO ALL THE WAY THROUGH IT AS QUICKLY AS POSSIBLE. Then (next) give yourself 90 days to actually give it a fair shake…meaning actually give the concepts you’ve learned a try and see how they suit you.  Then you’ll be in a much better place to judge whether or not you need to invest in more education yet, or hunker down with blinders on for a while.

Moral of the Story: Again, I’m 100% in favor of investors paying for quality industry education.  But I’m also tired of seeing so many of us addicted to buying courses and endlessly pulled along by the ring in our noses to whatever today’s hot offer happens to be.  There IS a better, wiser way, and it involves some self discipline, common sense and frankly, putting on blinders when it makes sense to do so.

Anything You’d Like to Add?

Heck, I could go on and on, but I’d love to hear what you think.  Leave a comment and let me know your thoughts, and if you want me to follow up with more things like this I wish I’d known early on.

a

And while there I got the chance to go see a bunch of Craig Fuhr’s rehab projects one afternoon.

Let me just say…

.

There’s nothing like spending a day with the Fuhr.

I say this because…

1. Craig is hands-down the BEST rehabber in Maryland…
2. He’s ridiculously entertaining…
3. His beaming smile and shining bald head gleam like the morning sun…
4. And he’s a dear friend.

So anyways, here (below) is some video I grabbed of his “Haunted House” project (he has pet names for all his projects) I think you’ll enjoy and might even learn a little something from.  Stuff you’ll hear us talk about includes:

• How he’s dramatically changed a functionally obsolete layout
• Why he turned a kitchen into a laundry room and a bedroom into a kitchen (wha?)
• Why it’s called “The Haunted House”
• Which “Craig Fuhr Special Touches” have been added, and why?
• The pièce de résistance (probably sells half his houses)
• Hardwood vs. Carpet? (and why)
• How to get the “subway feel” with your tile
• How to drop your iPhone in a shower
• The numbers on the deal (i.e. how much he’s gonna make)

We also cover “The Big Three” for today’s market:

1) Buy houses where people want to live
2) Create overwhelming value
3) Understand your pricing strategy

Yeah admittedly we’re both a little corny, but hey, that’s really just the way we are. You’ll probably chuckle a couple of times at least, even if only out of sympathy.  So this is his Haunted House rehab…

www.youtube.com/watch?v=NabNJyAd35Y

Now please do this next:

Now that you’ve beheld the clip above, please leave a comment below with 3 things:

1. Ask any questions/comments you have for Craiggers about the deal. (I’ll make sure he answers)
2. Give something you double dog dare him to do when his TV show starts shooting (Oh, didn’t you hear?  He’s just signed on for a big, fancy TV show…so we can all say we knew him before he got famous
3. Find a way to somehow mention a forest creature in your comment

Don’t ask me why. These things just entertain me. Craig will most definitely be stopping by to see your comments…so be creative. Heck, be insulting if you like. Let’s all have fun at Craig’s expense for a bit.

OK…GO!

a

Sure, if you’re like me then you probably learned about it in Rich Dad, Poor Dad at some point.  And it seems to make good sense, doesn’t it?…

• Bad debt is debt accrued on “stuff”, like toys, vacations, fancy cars, etc.
• Good debt is leveraged debt that you use to make you money. Like when you borrow from a lender to purchase houses that earn you positive cash flow.

But What if We’ve Got it All Wrong?

Could it be that “good debt” we’ve grown to appreciate and pursue, is really just more bad debt in disguise?

Consider this: These are certainly trying times for many, and we’ve probably all heard of big, successful investors who found themselves belly up in the last couple of years, right?

Right now I’m thinking of two of the biggest investors in my neck of the woods once upon a time — guys I used to wholesaling a large number of deals to — who aren’t even in the game anymore.  And this can be found everywhere.

So what happened?

Now consider this: Have you ever heard of a debt-free investor going out of business?

Me neither.  Kinda makes you think, doesn’t it?

If like me, you’ve ever bought into the “good debt” myth (and yes, I do believe it’s a myth at this point) then I have a short, paradigm shifting video for you to chew on.  And whether you agree with me or not, I guarantee you’ll find it thought provoking.

You’ll hear about three different folks who have wrestled with this very issue. All of them are savvy, successful real estate investors who earn great money through lots of profitable deals…

• A well known, big name flipper with 4.5 million in “good debt” to contend with
• Another big investor with 1,100+ solid rentals in his portfolio (all “good debt”)
• And third who’s average yearly income hovers around half a million or so, who somehow can’t scrape by on less (thanks to “good debt”)

I submit to you that only one of them is really successful. The other two are slaves in denial of their slavery, but living steeped in it nonetheless.  Whether they realize it or not, most every decision related to finances, time, life and personal freedom is, in fact, dictated by their “good debt”.

Are You an Unwitting Slave?

Leave your preconceptions at the door, and see what you honestly think…   (and feel free to LOL when he tells the guy at 7:43, “Ya know, you’re nothing but a FAKE.” )

a

So where have I been? What the heck’s been going on?  Where do I start! Frankly the last couple of months have been a crazy whirlwind of stuff…

• We Went to Uruguay!
  I was able to take my whole family on a mission trip to Uruguay for the whole month of July.  Yes, even our 9 year old and 4 year old!  What a huge blessing this was to our family!  I’ll save the details for another time, but I’ll just say God was good, we saw clear reasons we were supposed to be there, and the experience left a profound impact on all of us.

• My Little Girl Went Under the Knife!
  We returned home from Uruguay to our youngest daughter Kelsey (age 4) needing kidney surgery.  She’s had kidney reflux for a while now and we knew surgery was a possibility, but the suddenness of it all still just kind of threw us for a loop.  I’m sure you can imagine it was just so, so sad to see her like that!  But thankfully she’s really back at 100% now and doing just great!

• I Got Funky!
  Returning from Uruguay I found myself in this strange, funky mix of feeling inspired and exhilarated by our experience, and at the same time oddly unfocused and unmotivated, and really struggling to force myself to work (which is very unlike me).  It’s even made me question what I’m supposed to be doing at all. I mean real mess-with-your-head type stuff.

• My Dad Got an Air Head!
  The short story is this: I got an unexpected call from my sis after church last Sunday that my Dad was in the ICU in his hometown of Columbia, SC.  Apparently with a sudden and severe brain injury due to a badly broken nose, which started seeping tons of air into his brain and spinal fluid started leaking out.  Now he’s in just a heap of pain, and the hospital’s still trying to sort out what to do.

So that’s the roller coaster we’ve been on these last couple of months, and why you haven’t heard from me in so long.  Today I’m sitting in room 849 beside my poor Dad, just being here with him as he battles through this.  I’ve been here since last Sunday and I’m not sure how much longer I’ll be here. Time will tell.

Which brings me to two important things I want to share with you…

First, Regarding My Dad…

Frankly I’d really covet your warm thoughts and prayers for my him.

Imagine like the worst migraine you could possibly think of — times ten — nonstop. Big doses of morphine and Vicodin are just enough to get him temporarily to a 6 or 7 on the 10 point pain scale, and really for only an hour or so.  It really just sucks to see him in this much nonstop pain, and to still not have any solid answers on what’s next.

He seems to be slowly improving, but we’re far from being out of the woods. There’s still a half dozen different things that could go wrong at any time.  The guy’s only 62 and has a lot of life left him him.

So I know this email reaches people of many faiths, but if you’re the praying kind, I humbly ask you to please offer up a prayer for him. His name is David Moses. AND THANK YOU.

Regarding My Personal Funk…

Can I continue with the vulnerability for a moment?

As mentioned, I returned from Uruguay simultaneously exhilarated and inspired by the whole experience, and also flat out unmotivated, totally unfocused, and baffled by feeling this way. I’m not a lazy bones – just ask my wife!  But I’ve felt stuck in the mud of uncertainty, and really struggled to get much done.  A tough, weird, and challenging place to be sure.

But I’m happy to say, I’ve started to turn a corner…

All this time in hospitals lately has given me a lot of time to think…to ponder…and to really wrestle with all this.  And all this time in my own head, plus some heartfelt counsel with my lovely wife, my pastor, some close friends and even those crazy FLIP VIPs cats, I believe I’ve come to a welcome, albiet sobering realization…

“I’m Seriously Lacking a Specific, Clear Life Vision”

And I’m now convinced this is the core issue underlying this crazy funk I’ve found myself in.

Now hang with me here…

It’s kind of a weird concept, this “life vision” thing. But trust me — once you start to get it, the light bulb goes on and you realize just how huge it really is. Let me explain, and see how this resonates with you…

Here’s how my buddies Steve Cook and Shaun McCloskey (of Lifeonaire) aptly put it…

“With Lifeonaire, we teach people how to come up with a vision for their lives.  Having a vision  might sound a little bit foo foo and even complicated, but it really doesn’t have to be. In essence it just means knowing exactly what you want life to look like. It means deciding and planning your outcome in advance rather than waiting and responding to whatever happens to show up each day.”  

“I speak with far too many people who find themselves waking up one day asking themselves, ‘How did I get here?’  Sadly most people spend more time planning a weekend vacation than they do planning the rest of their lives. They simply let life happen and end up wondering why they’re not very satisfied with the results.  But the most truly fulfilled people I know didn’t just get there by accident.”

So there is is…and this is exactly what I’ve been facing head-on lately.  And it’s forcing me to wrestle with some really tough questions. Questions I thought I already knew easy answers to, but I’m realizing now how sadly mistaken I was.

I started at first slugging it out with questions like:

• What will it take to get me excited & motivated again?
• Am I really doing what I’m made to do?
• What is it that truly brings me the most fulfillment?
• Am I doing what am I best at?  And what I’m really most passionate about?
• What do I do that brings others the most value, satisfaction and joy?
• What’s my real motivation for doing it all anyways?

And man, them are some tough questions!  But that was just a starting point.  As I’ve continued trekking through the vision crafting forest, I’m pressing into questions like:

• What are the things that are really most important to me in life?
• Does my life truly reflect that these are most important to me? (Youch!)
• What do I want to be most remembered for?
• If I could write my own eulogy, what would I want it to say?
• What experiences in my life have brought me the most joy? Real, lasting joy that I can still experience today when I think of them?
• At my core, what is it I will need to do in order to truly win the game of life? (Hint: having the biggest bag of money is not the right answer)

Ouch!  Clearly these are gut-check questions dealing with a heck of a lot more than MONEY. They deal with your MISSION. Your CALLING. Your SWEET SPOT. And ultimately finding and fulfilling your PURPOSE in life.

“So What’s the Point?”

Ha, I’m so glad you asked!  ;-)

Well I’m still working through this process at the moment.  Things are getting clearer for me, but I’ve still got work to do.  More questions (beyond those above) are still to be answered.  And to be really honest it’s kind of painful, but also exhilarating, inspiring, re-focusing and inspiring at the same time.

But I’m sharing this with you for two reasons:

First…
…This process will absolutely craft the shape of things to come from me.  Including REI Tips, real estate, family time, church, friends, service opportunities, and everything else I do.

Once my vision is crafted, rebooting myself will become an exciting process of refocusing myself on exactly what it will take to get me there.  Which will mean saying “Yes” to many things and “No” to many others, with crystal clarity of how they will and won’t help me accomplish my vision.   (Yesssssss….)

Secondly…
…I’m inviting you…no, I’M CHALLENGING YOU to delve into this process for yourself!

Look, I’ve a feeling more than a few others can relate to all this. And if this stirs anything within you, don’t ignore it!

Don’t be Afraid to Wrestle with the Tough Questions

Yes, these are questions that really rattle your cage and mess with your mind…in the best possible way.  Questions that force you to clarify who you really are, what you really care about, what you’re really made to do, and whether or not you’re really accomplishing it.

These are very good questions, well worth wrestling with.  And within the honest answers I’m convinced you’ll discover what true fulfillment and ultimate success really look like — for you.

So what say you?  Are you up for the challenge?  Anyone else stirred up?  Convicted?  Alarmed?  Confused?  ;-)

Do This…

Start by taking some time to seriously ponder the questions I’ve posted above. Do it on paper, not just in your head.  And plan on investing at least 30 minutes up to a couple of hours.  And if you’re really serious, consider a larger paradigm shift.  Consider becoming a Lifeonaire.

Also, here are some other vision-related articles I really found helpful…and you may as well…

• “What’s Your Vision?”
• “Life: Define it Backwards, Live it Forwards”
• “What You ‘See’ is What You’ll Get”

And Do This…

As always I welcome and appreciate your comments.  Please share what you think about all this below!

Thanks for listening and caring…

PS – UPDATE ON MY DAD…

Thanks again for keeping my Dad in your warm thoughts and prayers.  I’m happy to report he’s been released from the hospital and is doing much, much better now. The air that’s been pressing on his brain seems to have finally been reabsorbed by his body, and spinal fluid no longer seems to be leaking. His head’s still hurting pretty bad, but not nearly on the super-migraine level it was for a week plus. He’sstill  likely got another 2-3 weeks of bad headaches ahead, but all things considered, we’re feeling very good right now.

I’ll be honest – I came to Columbia with funeral clothes packed. We weren’t sure he’d make it. But God’s done his thing and verified this 62 year old cat still has the best of times ahead of him!

Hear me when I say THANK YOU for your warm thoughts and prayers during this last week and a half.  THEY’VE BEEN FELT, and mean more than you know. What an honor to have a community of folks to lean on when life throws tough crap at you like this.

Now…back to working on my vision…  :-)

a

Besides our in-person meetings thrice yearly, another big, fat benefit I enjoy from this posse is the ongoing collaboration and free flow of information we share privately via email.

So just this week my friend Russ dropped a memo on us about a really great HUD deal he unexpectedly snagged…which started some back and forth HUD-related banter that was noteworthy to say the least.

It seems HUD may have finally become a motivated seller.  Meaning they may actually be really to start wheeling and dealing with investors on some of the tsunami of inventory they’ve been sitting on. They’re not coming out and saying it…but the indicators sure seem to be there.

Said another way: You might want to start slinging some mud at HUD right now…you might be surprised at what’ll actually stick.

So here’s a transcript of our email string…I’d love to hear your thoughts in the comments after you read it…

Subject: Holy crap I just got a HUD

Russ Lebrasc wrote:
I just got my first HUD EVER, and I’m super surprised the bid, was excepted…
they had it listed for 94k, it is in the the extended bid period, and i just re-credited my bid login for HUD last night, and on a whim i offered (something ridiculously low, private for now) last night and they excepted my offer…. Usually i go look at properties, but i have not looked at this one, there are pics on line, but i guess i better go see what i’ just bought…
Blessings,
-Russ

Steph Davis wrote:
Holy $%!@ that’s a nice discount!

Nate Andree wrote:
A guy after my own heart!! Making blind bids, then getting them accepted, then messing your pants. I love it man! Just sent my Realtor 8 bids about 10 min ago and closed on a HUD yesterday.

Now…..go wipe and go out and see what you bought!!

Yahoo!!!!!
Nate

Ken Holmes wrote:
Ah man, I offered 19,900 and you beat me!
Watch out for that pit bull in the living room when you go.
Just kidding… You have to update us, photos and all.

Steve Cavanaugh wrote:
Congrats Russ. How long had it been listed?
Steve

Russ Lebrasc wrote:
According to the mls listing 74 days….
-Russ

Nate Andree wrote:
Listen to this one guys……the agent that listed the hud I closed on yesterday said they are only taking 82% of the current list price and there isn’t anything I can do about it.

After I laughed on my own spit I told her that the one we just closed on came out last year at 80K, then went to 70K, then went to 46K, then we got it for 25.5K. Doesn’t look like that’s 82% sweetie pie.

Bottom line……..make the offer no matter how ridiculous it is or what % of the list price it is in regards to HUD’s. I’ve been buying them for many years and some of the so called “experts” have theories on % of list pricing, how long they supposedly have to be on the market before they take your offer, blah blah blah.

The heck with all of that folks. Just make the offer on HUD’s and press on.

Russ……heck of a job!!
Nate

Russ Lebrasc wrote:
I heard from my reo broker who i hang my licence with, that he got an offer for one of his clients in another county accepted, $250K list, offer bid was 55K, hud accepted…. hows that for 82% of list….
it’s what made me make my crazy offer, maybe i should have offered lower
-russ

Craig Fuhr wrote:
That’s awesome Russ.
Nate – you are in fire today. I’m roaring at your comments.
Sorry this is short. It was sent from my iPhone.

Steve Cavanaugh wrote:
Cool on the HUD – I actually just won another Hudson and Marshall auction, not even a week after bidding – and I just placed what I thought was a B.S. bid one night before going to bed. Woke up the next morning and they accepted! I forgot to add my agent on as buyer’s agent, and they even put her on after the fact!

Steve Cook wrote:
Note to ALL! HUD is opening the floodgates. Your story Russ is the second time I’ve heard it in the last week and the last guy got 5-10 houses at similar discounts.
I rode a wave of these back in 2001 and got 27 of them in 6 months.  Let the offers fly- they’re biting.

Blessings,
Steve

Craig Fuhr wrote:
Just signed up on the new HUD site and made my first bid. I intend to make a bunch more tonight. BTW, all HUD houses on my MLS are NOT on the HUD site, so be sure to set up a HUD search on your MLS.
Sorry this is short. It was sent from my iPhone.

Nate Andree wrote:
Great point Craig! Same thing happens here.

Craig Fuhr wrote:
Don’t miss the nuggets, Baby. Them nuggets is out there!!
Sorry this is short. It was sent from my iPhone.

Russ Lebrasc wrote:
Lets have a hud bowl… who can get the most huds by the retreat? Putting in another bid now
-Russ

Lawrence Roberts wrote:
put in 10 last night..got 30 more to go.  Then its on to the next county..:)
Law

Ken Holmes wrote:
What’s the deal on yesterday’s house, Russ? Deal or no deal?

Russ Lebrasc wrote:
Ken, its a deal it works for me on several levels, once i get signed confirmed contract, i may try and whosale this puppy, it needs work but nothing major, cosmeticy stuff
-Russ

Steve Cavanaugh wrote:
On a somewhat related note, I just ratified my second Hudson and Marshall auction in the past three weeks. The deals are out there right now for sure.
-Steve

Brian Meidam wrote:
What was asking price relative to your accepted bid on the H&M auctions?

Steve Cavanaugh wrote:
On the first one it was $149k, I’m buying for $105,500. The second was $129k, I’m buying for $105k
-Steve

Ken Holmes wrote:
Steve, are you using the “bid now” part of the H&M website, or waiting for the actual auction dates.?

Steve Cavanaugh wrote:
The bid now. I’ve never been to a h&m live auction. In both cases the auction period had not yet ended and they accepted.
-Steve

Ken Holmes wrote:
OK…I got 5 HUD offers in today. And they are low. Maybe not as low as Russ’ offer, but plenty low enough. We’ll see what happens. In honor of Nate, I didn’t go look at 2 of them.

Nate Andree wrote:
I’m blushing Ken I put in 9 today as well.

Steve Cavanaugh wrote:
This is happening here also.  One of my students just locked up a HUD that was listed for $145k.  His price: $80k.  Renovation will be around $30k, ARV is $199k.  That’s a deal! Then I spoke with another investor locally that got one yesterday also.  Listed for $165k, buying for $90k, needs around $30k also!  ARV on that one is around $215k!  Get out there and make HUD offers today!
-Steve

Lawrence Roberts wrote:
Is it one asset company you are noticing that are taking the lower bids. HUD has 5 asset companies in any given area.
-Law

Steve Cavanaugh wrote:
Don’t know Law, I will look into that.
-Steve

Ken Holmes wrote:
Steve, do you get counters on HUD bids? Nate says he does but we just get a yes or no. Really now even a no…just a yes or nothing at all.
Ken

Steve Cavanaugh wrote:
Ken, a yes or nothing at all in my experience.  My student was not countered, I know that for a fact.  Funny thing was he really didn’t want this particular property, so I told him to lowball it just to compensate for that.  Well, look which one he ended up with!
- Steve

Ken Holmes wrote:
Awesome advice Steve….some of my best deals were on properties that I didn’t want and offered low assuming they would not take it but then at least the seller would be offended and go away.

Russ Lebrasc wrote:
I think every offer should be treated like you dont want it…..

So…what say you?  Agree or disagree with the Flip VIPs?  Leave a comment!

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Here’s the deal:

On a recent Saturday, we broadcast our first-ever live MLS market research webcast.  Maybe you recall hearing about it?

It was a very raw, real workshop in the truest sense of the word…

Imagine Bob Norton and I on 3-way with one of our KISS Flippers, totally unscripted, cracking open an unfamiliar MLS in real-time, then massaging the data around for a while to uncover where the money’s hiding.

Nothing held back here, folks.  And in a matter of minutes we quickly stumbled upon a nice little opportunity market that made our little hearts start pitter-pattering.

This was a private session, but now I’m inviting you to enjoy a healthy dose of this workshop – around half an hour or so.  This is where we really clear up what your initial searches should be from the get-go, and how to start looking for the “run ups”.

If finding opportunity-rich markets in the MLS is a mystery to you, then I think you’ll find this extremely worthwhile to take in.  So here you go, you happy campers!

.

Any thoughts?  Epiphanies?  Brilliant notions? Please leave a comment below!

Also, wondering about the whole enchilada? We do these sessions monthly behind closed doors for our KISS Flipping Bleeding Edge Masters.  The whole 2 hours of this session, plus tons of other awesomeness is posted inside there.

So maybe you want to check it out.  Go with your gut, but I’ll bet dollars to doughnuts you’ve never seen anything quite like it.

“KISS Flipping Bleeding Edge Masters”

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So back in January 2010 we reported (and rejoiced) that the FHA had decided to suspend the 90-day anti-flipping rule for 1 year.

The now-infamous rule was originally intended to prevent shady speculators from defrauding the government, but it also stifled the purchase and renovation of foreclosed homes by legitimate investors like you and me.  Yep, dumber than a bag of hammers.

But the 90 day flip rule waiver in January 2010 effectively enabled qualified buyers to once again get FHA mortgages on properties that were acquired by rehabbers less than 90 days before. Great for them, great for us, great for the economy – thanks for the bone FHA.

And now, in an effort to keep up the momentum gained by the housing market, they’ve just decided to extend “anti-flipping rules” suspension for at least another year to increase FHA lending.

Yay for Sound Logic and Good Reason!

Yep, this is (again) great news for investors trying to flip properties to FHA Buyers. But (again) keep in mind the same caveats and important nuances apply…and you really need to be aware of them if you aren’t already…

• The seller must hold title (no back-to-back, same day closings)
• You still need short-term funding
• The 20% Rule still applies
• The property still can’t demonstrate a “Flipping Pattern”

If you want to read the original waiver from HUD, here it is.  Or for a rather exceptional executive summary of these must-knows, you can read this FHA property flipping waiver post I put together with the first waiver.

So 2 Questions…

It’s nice to finally have something nice to say again about the FHA, isnt’ it?

My question to you is…

1. How much or how little effect do you think this will have on the real estate market and/or economy?
2. Also, how will/won’t this decision effect you personally?

Please post your comments below…

…jp

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Now Mike and his wife Christina have done hundreds of deals since they got started back in ’99, from wholesaling, buy-fix-sell, buy and hold, to short sales, and new construction. They also manage several hundred rentals.  So I guess you could say they know a thing or three about finding great deals.

A Quick Note From Mike About This List:

Download audio file (ferris-25-ways.mp3)

1. Homepath.com (Fannie Mae)
2. Auctions (Realtybid.com/ HudsonAndMarshall.com/ WilliamsAuction.com/ REDC.com/ Auction.com/ REDClive.com/ BidSelect.com/ EconoHomes.com)
3. Bandit Signs
4. Craigslist advertising
5. Craigslist estate sales
6. Facebook
7. Pay per click through search engines…Bing, Yahoo, Google driving to website
8. HouseBuyerNetwork.com (and other ‘we buy houses’ sites)
9. Direct Mail: absentee owner
10. Direct Mail: open estates (probate)
11. Direct Mail: driving for dollars
12. Direct Mail: late payer mortgages
13. Foreclosure sales (sheriff)
14. Gas station signs
15. Pawn shop signs
16. Grocery store flyers
17. Inserts with coupon distributors
18. MLS (by neighborhood, estate sales, fixer uppers/handyman specials, etc)
19. REO brokers
20. HUD foreclosures
21. Newspaper Ads (main and pennysaver)
22. Phone book
23. Networking and Referrals (from agents, investors, bird dogs)
24. Vehicle signs (Magnetic or Vinyl)
25. Wholesalers

So Tell Me:

1. Which method(s) have you found work best for you? (for me it’s #’s 9, 10, 11, and 18)
2. Which method(s) would you love to unwrap and learn more about if you had the chance? (Remember my post with Steve Cavanaugh about RE auctions?  Think along those lines.)
3. Anything missing from this list? (What would you add to it?)

Would you please leave your thoughts in a quick comment below? And also maybe an “attaboy” to Mike for passing along his neato list.

Thanks!
…jp

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“Ok, help me out here guys. Looking for your input….

Auction.com just called me to confirm that I got the accepted offer.  However, they are different from REDC.com where the bid is the bid and you win.

With auction.com the seller has the right to say yes or no within 1-2 weeks. What they want me to do is sign the OTP that they are sending to me and wire them the full amount of 23K. I have 24 hours to complete this. If the seller says yes then it’s a done deal and we proceed.

If the seller says no, then they refund me the money in whole or the seller can counter offer me. This is written in the terms of the agreement…..you know…..the same one that we never read, just check the box, and make the offer

So……with that said…..how would you guys proceed? Tell them to take a hike? Would you trust them? etc etc.”

Nate

Now just so you know, this email came to me within our little Flip VIPs mastermind group I’m lucky enough to be a part of.  We email each other privately with deal related questions like this and whatnot.

What followed was a revealing email banter with another of our colleagues – fix-and-flip guy Steve Cavanaugh (LaPleda, MD) – who turns out to be somewhat of an underground expert in the real estate auction arena – both online and off.

Call me intrigued.  I’ve done somewhere close to a couple hundred deals, but I’ve never bought one via auction. So I asked Steve if I could call him on the phone for a few  and grill him with whatever the heck questions that come to mind.

4 things that happened next…

1. He said yes.
2. It was awesome.
3. I recorded it.
4. And posted it for you here

Listen and enjoy…
Download audio file (01-11_cavanaugh_on_auctions.mp3)

The whole shebang’s only around 19 minutes or so, and well worth eavesdropping in on if you’re even remotely interested in gleaning a few choice, firsthand insights into buying real estate via online or offline auctions.

Questions and stuff we talked about…

• Online vs. offline vs. “simulcast” auctions
• How the auction process basically works from the investor’s perspective
• How much liquid capital should you have on hand before bidding?
• How much opportunity do you feel there is in online real estate auctions right now?
• How do you get the best results possible from the auction arena?
• Why you should start out by going in person to the live auctions?
• One thing you should always do at every single auction you attend to identify the players
• Where should you sit at live auctions?  (and why it matters)
• What are the minimum qualifications to bid online?
• One big advantage to being there live vs. online: bid increments
• Any favorite auctions of yours? (online and off)
• What about the “buyer’s premium”?
• Tell me about any recent auction deal you scored?

And for anyone who’s interested, I, Steve and 10 other folks do open-line Q&A calls each and every month.  And it’s remarkably affordable at only thirty-nine bananas.  I just finished mine up for this month – we had around a dozen folks on the line for about an hour and a half.  Good times.

Here’s a link to that if you want to check it out…

Got comments?  More questions?  Bring it.

Just leave a comment below, and I’ll gladly ee if I can get Steve over to answer ‘em for you.

My best,
…jp

PS – It snowed last night here.  Yep, it rarely happens in Memphis. Pigs must’ve just flown by too.

So I got the girls out and we build snow forts and I coaxed everyone (Kara included) into about a 10 minute snowball fight – YEEEEHAWWWWWW!

So here’s one of the pics we took – Kelsey and I admiring our SNOW FORT OF DOOM.  If you wanna see the rest, I posted ‘em for you over on the Crackbook page here…

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