Real Life of a Real Estate Investor

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Alright...I am going to post what happens every week in my real estate business. Why? So you will learn from my mistakes as well as get inspired by my successes. I also hope by doing this, BP Nation will help me achieve my goal of buying 10 houses a month (I am now at 4 houses a month).

So here is Week #1(highlights of what happened last week):

1. Property #1: Lake Forest home we sold during the Open House (March 15-16)...the highest offer of $840,105 backed out today (argh). We are calling the second highest offer of $831,075. This is a pre-foreclosure.

2. Property #2: Beach Park home...Worth $180K, Selling for $114,900 (got this deal from HUD).
I went to a real estate investors association meeting last night (Sunday) to market the property. I met 2 buyers interested and they are going there today. Two other members of BP are present also and I met them face-to-face. I got a letter from our attorney saying we need to close on April 18. I am not worried. This is an awesome deal and we should sell it soon.

3. Property #3: Calumet City - (got this deal from HUD). This is likely a dead deal because the numbers don't quite work out for investors but there's some discount suitable for end-buyers (worth $90K, selling for $80K). I will reduce the price today to see if we can move it quickly enough. I need to talk to Mark - our Sales guy for this property.

4. Property #4: Chicago (preforeclosure deal) - another dead deal. Bank did not accept our shortsale offer of $15,000 and countered $29,000. The bank (Chase) is so unrealistic with their expectations - they have to realize houses in the area sell for $5K to $20K and $29K puts them out of what buyers are willing to pay for.

5. Property #5: Bartholomew (Florida) manufactured home - we just got this last March 18 for a mere $13,800 (property value is $50,000). According to rentometer, rent is $850 a month. My business partner is going there to see the property and talk with the current residents (get them out or they pay us). Regardless, the return should be good.

6. Property #6: Ebson (Florida) manufactured home. We got this March 11 for only $7,000 (property value is $50,000). It needs about $8,000 in repairs. We should start renovation this week. Plan is to flip it for market value.

7. Property #7: Thigpen (Florida) manufactured home. We got this March 11 for only $9,700 (property value is $50,000). Same action step as Property #5.

What I learned this Week:

1. Right price + massive marketing + irresistible BONUS = sells a house (Lake Forest)

2. I was not a fan of manufactured home but that changed when we got Properties 5-7. The returns are awesome!

3. Marketing that worked this week: bandit signs. If they are positioned strategically with a compelling (but very short) message, they will pull a ton of people to call you. Now that the weather in Chicago is getting warmer and the ground is softer, we'll put our more signs.

4. Marketing that did not work this week: craigslist ads - some of our ads are getting flagged...need to figure out why and how we minimize this issue.

Thanks for sharing @Wendell De Guzman

I also look forward to following along.

Just curious, how low of an offer compared to asking price did HUD accept on your Beach Park property?

It's definitely a resource I plan to keep an eye on for opportunities, and I've just been trying to understand how flexible they are generally.

@Gautam Venkatesan , thanks for following along.

@Matt Overbee , thanks for following along too. Regarding your question: on Beach Park, HUD had it listed for $129,000. We got way below that and now selling it at $114,900 (which I think is the fair price for the rehabber buyer to buy it for). Generally though, HUD will go down only 80% of the list price specially if the property does not need any repairs. But, if you make a TON of offers through HUD, you will get an offer accepted at 70% of list price (and once in a while...even lower).

Great idea to do this Account Closed ! How are you funding all these deals?

@Sharon Tzib , combination of using our own cash + investors + putting houses under contract (with no to very little money) and then wholesaling them.

@Jarrett Harris , you are very welcome.

Great information! Thanks for sharing. I want to attend the real estate investors association meeting. Where to find the meeting information?

@Dave Lin, google Chicago Creative Investors Association

Get it. Appreciate it.

Right now, I'm marketing to absentee owners in the city and surrounding burbs. As far south and homewood, as far west as Naperville, as far north as Lake Forest.

Great work Wendell - thanks for sharing

How many people are on your team (boots on the ground and /or VAs)?

Keep on inspiring!


PS - Please let me know if you find any good flips in Logan Square, Irving Park, Avondale, Belmont - Cragin, etc. That's where we've done our last 4 flips with 2 more on the go. Thanks

I live on the Northwest side of the city

@Larry Smet , thanks for your kind words.

We have 2 VA's and 3 full time people on the ground.

I will keep you in mind when I encounter properties in those areas.

@Jonathan Avila , you cover a big area! We sold a house near Homewood recently...hope we get more deals there and I like that area too.

Naperville is tough right now to get a good deal...what's your experience?

About Lake Forest...because of the million dollar home we marketed, we have a ton of buyers ($300K-$700K) and now, my team is looking for houses for them.

great stuff Wendell. Thanks for sharing detailed info.

I just joined northwest indiana creative investors last month. I'll have to come over and attend a ccia meeting Asap.

Just great Account Closed ! I'm working with a lead on a Southside mf property! I'm planning to exit via wholesaling. You have just gave me inspiration plus I was a little skeptical about bandit signs but I may give them a try now! Thanx!

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Those are some excellent results Account Closed ! How long have you been doing this and how much marketing are you doing to achieve the great results?

@Tim Davids , you're very welcome. Network, network, will pay off HUGE over time.

@Sharlisa Elzy , bandit signs work. Just check the city's ordinances though before you put them out...some cities and municipalities impose fines to those who put out signs without permits.

@Lionard Lewuth , you're very welcome.

Here's Week #2:

1. Property #1: Lake Forest home - even the second highest bidder is renegotiating the deal. The primary concern of the buyers is the DRYVIT exterior (dryvit is good for warmer climates like California but not a good exterior for houses in the midwest). The 3rd highest bidder's bid is $787,500. We might go with the 3rd bidder if the 2nd bidder insists on her lower offer (lowered it down to $750s from $790s).

2. Property #2: Beach Park home...Worth $180K, Selling for $114,900 (got this deal from HUD).
A buyer from my real estate investors association put in his earnest money on Tuesday but a few days later (Friday) decided to back out for some lame reason - he's not familiar with the particular town the property is in. It's OK. I have back up buyers. One wholesaler - Bailey - said he has a buyer for $113,000. So I signed a Non exclusive option with him for $110K. I will follow him up Monday.

Property #3: Calumet City - (got this deal from HUD). I intensified my marketing on this deal. The million dollar home marketing occupied most of my time and I was not able to give Beach Park and Calumet city enough marketing push. As a result of my intensified marketing push I got several phone calls from my online marketing. Good. I am now marketing this as: worth$90K, must sell $64,900. One concern the buyers have is the high RE Taxes ($7900 a year - the house was last sold for $215,000 back in 2007). Could that kill this deal? We'll see.

4. Property #4: Chicago (preforeclosure deal) - dead deal. See last week's update.

5. Property #5: Bartholomew , Property #6: Ebson , and 7. Property #7: Thigpen (Florida) manufactured homes. No updates for now. My business partner will start the rehab on these properties next week.

I did not buy a house this week. This is the reality. There will be weeks where we will buy 2 houses and weeks where we will buy nothing. Right now...we average 1 house a week.

Here are some interesting leads of properties that we got this week and my plans in case we turn the leads into actual deals:

1. Lead #1: Glen Elyn - 3 bed/ 1.5 bath home. Worth $265K. Seller was not able to sell the house for 4 months (got this from the expired listings). He owes $142K. When we asked him what is the lowest price he would accept, he said $196K. When we visited the house last Thursday, we saw it needed $20K in repairs (no wonder, he can't sell the house). I made him 2 offers:

- cash: $170K, closing in 2 weeks (this follows the 70% rule) or

- a little bit of cash now and the balance in 6 months or when we sell the house:
total price: $190K, $20K now and $170K in 6 months

In a separate post, I will explain why I made 2 offers (specially offer #2 which violates the 70% rule). Unfortunately, he did not like either offers. He said he wants $190K but cash. We parted ways and I told him to give us a call if he changed his mind.

2. Lead #2: Glendale heights - 4 bed/2.5 ba home. Worth $250K. House is being auctioned at $99,900. This was referred to me by a buyer brought to me by one of my real estate agents. He said the only damage to the house is the basement - there was water damage on the wood paneling. No big deal. But, no one else was allowed inside the house but him so the other bidders at the auction are going to bid on this one blind....except me. I generally don't like bidding at auctions but if my competitors don't know what they're bidding on, they might bid too low so I might get this one. Let's see what happens.

What I learned this Week:

1. Expired listings - we tested this by sending 60 letters and we got 6 responses. Not bad. The typical direct mail campaign has a 0.5-1% response rate. Our expired listings campaign has 10%. So we're going to scale it up (meaning, send MORE letters - in the hundreds).

2. Postlets is an awesome marketing tool - through, which is FREE, I was able to get at least 6 new prospective buyers. Postlets blast out your marketing flyer to different sites like Zillow, Trulia, etc. On the other hand, Facebook ads don't seem to work...I might pull out the FB ad I have out there. Below is the FB ad (I got 1 phone call out of 129 clicks...I spent $30.81 so far). If you have any inputs on how to improve it, let me know:

3. Biggerpockets is very powerful - learn how to use it right. I sometimes sound like a paid endorser of BP but I am not. BP truly works. Kudos to @Joshua Dorkin for starting this awesome real estate community!
Here's an example...because of BP just last week alone, I got the following:
- 2 property leads (one in Florida and another in Indiana)
- 1 investor lead (he approached me asking me if I can give him an opportunity to fund one of my deals)
- 3 new cash buyers signed up in my website as a result of BP

Account Closed

What I like about this post is 2 things:

1. Your looking at the deal and covering a wide geographical location. Very open from $1M house to sub $100K

2. You know when to exit when the #s don't work. Trust the #'s don't massage the #s

Do you put your own offers on the HUD properties or are you using another Broker? I'm not seeing much HUD properties in the areas I farm.

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