The family down the street is selling their home. If you didn’t attend the PTA meeting or go to the church with the family chances are you don’t know this seller. Unfortunately in today’s market we do know the seller. We can bet that the seller of that house is one of the following:

• Bank of America
• Countrywide
• Freddie Mac
• Fannie Mae
• Wells Fargo
• Chase
• Washington Mutual (WaMu)

I’m sure there are countless other banks that are selling Americas housing inventory but these are the major players right now. This, in turn, has created sellers (banks) that do not know the condition of the property you want to purchase. They have no idea that there could be cement hardened in the plumbing or that there was a leak in the roof, etc. This is the major reason why banks are selling their properties “AS IS“. In California they do not have to provide a disclosure of the condition of the property. Why would they, they didn’t live in it?

Banks are selling their properties, “As is” but what does, “as is”, really mean?

• Does it mean that once I make an offer I have to accept the present condition of the house?
• Does it mean that when I take a look at this house I have to sneak around and check everything before I make an offer?

This is what “As is” means:

“It means that you are purchasing this home in it’s present physical condition. The seller (bank) is selling you the house without any warranties or guarantees of its condition whatsoever. The seller (bank) will not repair or improve on anything, period.”

But does this mean that you have to purchase your prospective home blindly? The answer is NO.

Even though you are purchasing a property “As Is” you still need to know what “As is” is. Do you follow me?

This is why you should always elect to do a home inspection especially on a bank owned property where no one knew how the home was cared for and no one knows what happened right before the past owners left the property. They could have done some things that made the property unsafe or could have done damage that wiped out any profit you had calculated into the deal.

Since the banks want a quick escrow you should be prepared to throw out the custom 17 days to complete your inspections and bring it down to 10 days or sooner on your initial offer to the bank. I work with many investors here in Victorville California and the norm on home inspection periods has been 7 days and in some cases the banks have countered with 5 days to complete the home inspection.

You need to ask for this home inspection period so you can find out what the “As is” condition is of the property.  Once you are satisfied with the present condition is when you proceed with the purchase. If not, cancel!

Yes, you lose out on the cost of the home inspection but that is the price you pay for taking a bite of apple so to say.

The cost of the home inspection is well worth it considering the headache you would have had in the future trying to make the house livable. Go Watch “The Money Pit” starring Tom Hanks and Shelly Long and you’ll be making sure you know the “As is” condition of every home you purchase from now on.

Good luck in all you do America

Photo: aka Kath

This Article is Copyright © 2004-2009 BiggerPockets, Inc. All Rights Reserved.

What Does Buying a Home “As is” Really Mean??

It’s no secret that life as a real estate entrepreneur  is filled with ups and downs- it just comes with the territory. I’ve only been a full time real estate wholesaler for 3 years now, but I’ve definitely had my share of highs and lows during that time period.

There have been several times over the last 3 years that I’ve found myself in a serious real estate rut.  Following are five strategies I have used to help pull me out of my rut and get me back on top of my game.

• Take a break from real estate:  If you spend the majority of your days immersed in your investing business, try taking a day or two off (or more, if  you can swing it), and just relax- no internet, no Blackberry, no real estate!

• Count Your blessings: When I’m in a rut, I find it helpful to write out a list of everything in my life that I am grateful for. Oftentimes it is all too easy to take for granted the blessings we have in our lives. Taking some time to write them down on paper can be a real eye opener, as well as a great source of inspiration.

• Do something that makes you happy: Whether it be a trip to the beach, a weekend of camping, or a weekend of doing nothing but lounging around the house watching your favorite movies- do something for yourself that makes you truly happy. Something that makes your heart sing.

• Immerse yourself in motivational books and/or movies: What inspires you?  Are there any particular books or movies that really get you motivated?  For me, the movie Rudy does it every single time. No kidding.  Any time I find myself in a slump, I pop Rudy in the DVD player, and always wind up feeling ready to take on the world by the time the movie is over.

• Keep your eye on the prize- focus on your long-term goals: When I’m feeling burned out with my real estate business, I can always find motivation by focusing on what my life will look once I have accomplish my long term goals. I have a very clear vision in my head of what this will look like, and focusing on it creates a sense of urgency to get back on the horse and back in the real estate game.

While there’s no cure-all for getting yourself out of a real estate rut, implementing one or more of these ideas will surely get you headed in the right direction…

This Article is Copyright © 2004-2009 BiggerPockets, Inc. All Rights Reserved.

Five Tips to Help Pull Yourself Out of a Real Estate Rut

If you don’t have an accountability partner as you’re starting or growing your real estate investing business, you’re at a competitive disadvantage.

I feel strongly about this because I have seen examples of the power of accountability partnerships in both personal and business matters time and time again.  Even if you haven’t personally seen the power within a business context, I am sure that you’re familiar with successful accountability partnerships in fitness programs, support groups like Alcoholics Anonymous, and weight loss programs. With just two committed individuals, these partnerships work and will do wonders towards the achievement of your goals.

What is an accountability partner? An accountability partner is essentially a person who encourages another person and helps them to keep their commitments and make consistent progress towards their stated goals.  They can also assist with brainstorming ideas and help solve challenges.

What’s great is that your accountability partner does not have to be involved in the real estate business.  The partner simply needs to be:

• Goal-minded
• Someone you share a mutual respect with
• Interested in your success (as well as their own of course!)
• Someone who is willing to commit the time required to hold each other accountable
• Someone who is willing to call you out on your B.S. whenever necessary (and isn’t afraid of being called out on their own!)

Here are some ideas for how you can set up an accountability system once you have solidified a partner to work with:

• Be sure to exchange overall goals for the year so that you’re both clear on the “big picture”
• Consider putting a timeframe on the partnership and agreeing on it – for example, 3 months, 6 months, or 1 year
• Use online tools to share and track daily or weekly that you’re going to be held accountable for. Be sure to mark them in prioritized order!  Don’t have a laundry list of items – really think about the 5 or 6 most important things to get done towards your business that day and prioritize them.  Possible online tools include Google Docs or free private wikis (e.g. WetPaint.com, PBwiki.com, Wikidot.com).
• Send an encouraging e-mail, voicemail, or text message sometime during the week!
• Schedule a weekly 30 minute call with your partner to review the week and progress made – this can done via the online tools, but always nice to get some voice to voice interaction (or you can do Skype video calls!)

If you don’t already have an accountability partner, I strongly encourage you – regardless of your years of experience or level of achievement — to begin thinking of people you can work with to support each other towards stratospheric success!

Image: Photographer: Gregory Szarkiewicz via FreeDigitalPhotos.net

This Article is Copyright © 2004-2009 BiggerPockets, Inc. All Rights Reserved.

The Importance of Accountability Partners

Several months ago I mentioned Nevada was finally joining the 21st century in regards to foreclosure mediation. The first two sessions – Nevada doesn’t jump into these things – will happen on Sept 14th with two properties in Las Vegas as the “test” properties.

I know other states have already set up their mediation programs and have been up and running with what some say is a great success rate, i.e. the homeowners got to stay in their homes. In fact, Marquette University Law School on their website makes this comment: “…jurisdictions that have used mediation in foreclosure cases report a high success rate, and more and more jurisdictions are turning to mediation as a solution for this crisis.”

Because Nevada is the turtle in this race only 97 mediators have completed training and were appointed last week (Aug 17-21). The State expects to phase in more mediators over the next few months. They better if they are to be in compliance with state law and put out a program designed to help distressed property owners.

Mediations Per Month

I didn’t do any research to determine how many mediations Ohio or New Jersey, or any other state for that matter, are doing per month but Nevada expects to do more than 1,000 mediations per month once the program is operating at full capacity. This seems like a reasonable figure given to date the program manager has received more than 650 requests. Plus, with Nevada’s high foreclosure rate, mediation only makes sense for anyone wanting at least a chance to stay in their home.

If my state is an indicator, mediation may be all it was cracked up to be when it was being proposed as a viable solution.

Investors Still Out In The Cold

By the way, investors are still excluded from the mediation process. My best guess is that will change as the program proves its mettle. And, to me, investors should be included as well. In far too many instances, it is investors who step in to save the day.

In my area, it is the investors who have raised the sales figures quite handsomely. A real estate agent friend mentioned this morning his sales are investor only at this point in time. Not by choice, by default. Wes is quite active and doesn’t miss an opportunity to show a property. He walks around with his eyes wide open.

According to Wes, Mom and Pop are still conspicuously absent from the buyer side of the equation. His best guess is it will be that way through the end of the year given the layoffs that are happening in our county. He says that the investors are willing to buy because they are getting properties at severe discounts and renting them at below market rates.

Mind you the rental rates my be low but they are high enough to give the investor a return of investment in a very short time. One quick example comes to mind. A person bought a home for $60,000 and is receiving $800 a month in rent. At $9600 per year, the Return happens in a little over 6 years.

Factor in the tax benefits and this becomes an immediately (in most cases) profitable venture. If by some chance real estate does a magic turn around, this person’s return on investment could shoot to the moon.

Realize I’m speaking only about this neck of the woods and what one real estate practitioner is seeing as he trudges through his day. It may be different in your area. Real estate could be a booming business.

By the way, the investors are buying foreclosed properties. That wasn’t too difficult to discern but I thought I’d mention it anyway.

I guess if mediation turns into a raging success, we could see that spike upwards in real estate prices. At least that is my 2¢.

This Article is Copyright © 2004-2009 BiggerPockets, Inc. All Rights Reserved.

Foreclosure Mediation

Ok, so you got up this morning and jumped on the scale in the bathroom like I did, and you noticed you gained some pounds over the course of this year.  I don’t know about you, but I hate it when my pants do not fit like they should. Not only is it bad on the eyes but bad on the health.

So you ask, how does this tie in with real estate Winston?

My friends, I’ll tell you that health is wealth. What good is it if we have the world at our fingertips, but we cannot enjoy it beacuse we are overweight and unhealthy. So I got to thinking and I came up with a good way to get rid of those stubborn pounds, while at the same time uncovering some of those hidden deals that are just sitting in my neighborhood. The holidays are right around the corner, and if you put some of these simple tips into play, you can lose some serious pounds. You’ll also get the chance to make some deals happen that you wouldn’t have had the chance to do otherwise.

Here is the best way to drum up real estate business while at the same time losing weight and getting healthy:

• Take a walk throughout your neighborhood and pass out flyers to every single house letting them know about you and your service by door knocking. This works great for investors, real estate agents and loan officers. If you are an investor you can let them know you buy houses fast for cash or if you are a real estate agent you can let them know you can sell their house the quickest etc. etc. You get the drift.

Along with the above example try incorporating the following simple health tips and the pounds will drop.

1. Drink lots of water. At least 8 glasses and one extra glass  for every 25 pounds you are overweight. Water cleans you out and helps all functions of the body
2. Walk at least one hour when you do go out passing flyers. One hour of walking a day for 30 days will transform your  body.
3. Quit eating by 6pm. This gives your body some time to take care of business before you go to bed.
4. Be in bed by 10pm. Early to bed and early to rise makes a man healthy, wealthy and wise – Benjamin Franklin
5. Watch what you eat and try to avoid the stuff you know you shouldn’t be eating. Listen to that little voice in your head. It knows you best. It’s been talking to you all your life, lol. Start listening to it.

There are many other things you can do to lose weight but let’s keep it simple. This is one great way to stay ahead of your competition and own your neighborhood.

Remember out of sight out of mind.

If you are not in front of your neighbors faces on a consistent basis they are going to call the next person and do business with them.  I guarantee you that no one else is doing this. NO ONE!  No one is taking the time to walk around & hand out flyers. No one is taking the time to get to know their neighbors and become their go-to person for real estate.

I don’t know about you, but I’m going for a walk yall.

This Article is Copyright © 2004-2009 BiggerPockets, Inc. All Rights Reserved.

Lose the pounds not the Deal by Door Knocking

Want to learn how to save time and headaches when dealing with sellers? Well, the other day I was working with an investor who mentioned to me that he just couldn’t seem to close the current deal he was working on. It was a perfect subject-to deal, and the seller seemed pretty motivated, however, whenever it came time to sign the contract the seller delayed and said he needed more time to think about it. This had been going on for a month and a half.

So what did I tell this investor to do? I told him to give the seller a deadline. I told him to call the seller up and without sounding pushy, tell him the following: “Mr. Seller, this is John with ABC Realty. I just wanted to let you know that my supervisors told me we will need your decision whether or not you want to sell the house by Monday the 24th. We are looking at several properties right now and by the 24th we are going to purchase our latest batch of properties for the time being. So, please let me know by the 24th if you would like to sell your house to us. After the 24th we will be unable to assist you”.

A Deadline Works Every Time

I’ve seen too many investors spend months “playing games” with a seller trying to get them to sign a contract. They could have saved themselves a lot of hassle if they would have given the seller a deadline early on. When I have a half-motivated seller I give them a week to sign the contract. I don’t want to waste any more time with a person than a week… they’re either going to sign or not.

Now, I know a lot of you reading this are probably afraid of all of the deals you’ll lose by giving people deadlines. Here’s what you do: Let’s say you gave a seller a deadline and it passed without you getting a signed contract. Well, in 30 days from now just call or send a letter to the seller and let him know that your company is getting ready to buy some more properties and does the seller want to sell at this time.

What If a Seller Calls After The Deadline?

Also, a lot of times you will have a seller call you right after your deadline and they’re finally motivated and want to sell. You can do two things. You can let them know that you’ll make an exception for them and then go ahead and sign the paperwork and buy the house. Or you can make them sweat it out. Tell them that your company won’t be buying any houses for 30 days and that they will be first in line at that time and you will call them then. Or you could have them sign the paperwork and you don’t put your signature on it for 30 days.

It all depends on how much you have going on and also if the seller has been difficult or not. I’ve gotten some difficult sellers who missed my deadline and I made them wait (I was also very busy at the time). The people who you make wait, often become super-motivated and you can end up negotiating a better deal for yourself and getting them to pay closing costs, reduce the price more, etc.

Don’t spend another minute without giving sellers a deadline. Your time is valuable and should not be wasted on flaky sellers who may never sign a contract.

This Article is Copyright © 2004-2009 BiggerPockets, Inc. All Rights Reserved.

Why Deadlines Will Save You Time and Hassles

There are a lot of mistakes that can be made in Real Estate. In fact, many savvy investors still make mistakes or have overcome huge mistakes in their investing careers. The keys are to recognize, avoid, learn and move forward from these potential pitfalls.

Here are 7 Key Mistakes Beginner Real Estate Investors Make.

1. Speculate – Most new investors follow the herd, listen to the media and buy with the hope the property will appreciate. This is as much of a gamble as hand picking stocks or going to the Casino. Buy below market properties that cash flow.
2. Buy at Market Value – Beginners almost always buy property straight off the MLS for market value. You can find deals in any market and there are always distressed properties. Cherry pick from distressed properties at 70% or less of market value.
3. Fall in love with a deal and get your emotions involved – Many beginners are guilty of this one. Their first few deals they spend minimal time finding a deal. As soon as a prospect is located, they fall in love and do anything to get that property. Emotions drive the decision, instead of making an informed business decision. Key is to get as many prospects that fit the criteria into the pipeline, filter out the duds and cherry pick only the best deals.
4. Put too much down or too much of your own money – Real estate is an OPM or Other People’s Money industry. You should minimize how much of your own money is in a deal. And always make sure you have plenty of reserves to handle any not so pleasant surprises.
5. Only have one exit strategy – To minimize risk, it is imperative to have multiple exit strategies. If you cannot flip a property you can quickly end up upside down, behind in payments and lose the property and your credit. Instead, buy below market properties that cash flow. That way you can sell retail, wholesale, lease option, seller finance, refinance, even rent and hold.
6. Buy in Warzones – It is wish to buy property at a deep discount. In today’s market you can find huge discounts in many areas with the glut of foreclosures. Do your due diligence. Buying a property for 20K worth 80K sounds like a slam dunk, but not if the property is vandalized multiple times during repairs, surrounded by 20 other foreclosed properties and there is next to zero interest from renters or buyers due to the location in or near a warzone. Make sure there is strong demand from renters and/or ownership in the area.
7. Do not consult an expert or build a team – Many people are do-it-yourselfers and cannot fathom the idea of another person giving them advice or handling tasks. Real estate can be very passive if you build a solid team and many experts are more than willing to give you advice that could significantly impact your success and experience as a beginner.

Many gurus make real estate investing sound so easy.

News flash, it is not.

Many beginners make one, even all of the above mistakes and have a miserable first time investing experience. Whether you are a beginner or an expert, it is always a great idea to get as many expert opinions as you can. They will make you aware of many potential mistakes and red flags. Play the numbers game and cherry pick from as many prospects that meet your criteria as possible. Also always do extremely thorough due diligence. And finally, happy and profitable investing!!

Photo Credit: jurvetson

This Article is Copyright © 2004-2009 BiggerPockets, Inc. All Rights Reserved.

7 Beginner Real Estate Investing Mistakes to Avoid