Why? Simple! Using private money lenders is the way to go. It’s so much easier to do a transaction with a private party who is glad to lend you money at a nice rate of return (10% at least).

Private lenders are actually on your side, rooting for you to succeed. They might actually even like you (most of the time.)! A private party will be more flexible with all the terms of the loan, and they won’t pre-qualify you like a bank will. Actually, a private lender won’t check your credit or ask to see your savings account statement. I love private money!  

The private lender has money in the stock market, or a CD or an IRA or 401K or some other investment vehicle that is not performing. Or they want diversification. Either way, you can help.  What better way to invest money than to put it into a house that the investor (you or I) is buying at a discount. The lender gets a deed of trust and a promissory note as collateral, and the money is secured at a low loan-to-value, no more than 70%. You can offer this sort of deal because you are a good buyer and you found a deal that you are purchasing at a bargain price.

There are so many reasons why this is a ‘win-win’ for all of us, that I will have to continue this conversation in another blog. I’ll also talk a little bit about finding those lenders.

Right now I am going to the bank to deposit the check that I just received from closing a property in the Antelope Valley…

…and my private lender got his money from this deal (principal and interest!) via wire this morning.

He just called to ask me when he can loan on another property…funny, I never got that call from Countrywide in the past…

Thanks for taking the time to read my blog and I’ll talk to you soon.

Dave Berens

Home Buyer, Seller, Mentor

Dave Berens Real Estate

dberens@roadrunner.com

Fishing is a great pastime. It teaches, above all, patience. And patience is exactly what’s needed when dealing with banks and trying to buy REO’s. (How’s that for a segue into Real Estate?)

A couple of weeks ago I was complaining about not being able to buy REO’s anything and getting beat out by the compettition. Today I can tell you about the Happy Ending.  All it took was to make fifty or so offers, take a few days off for R & R,  and come back to find I am now the proud ‘owner’ of four brand-new deals!

Two of the properties are duplexes in Los Angeles, and two are single-family homes here in the San Fernando Valley.

I say ‘owner’ in quotations because, while I have the banks’ accepted offers on all four, I may get creative and flip one or two, and I may try and re-negotiate a lower price on one of them based on the necessity of more repairs than originally thought. However, as is, all four are good deals, with combined equity of close to $300,000! Not bad for a few days of fishing! 

The REO part of my business is frustrating at times, but it’s almost predictable. If I am diligent about making offers, have strength in my offers (proof of funds and no contingencies),  am consistent and timely (making offers quickly), then I will get deals. 

True,  I have to know the area in which I am making the offers, but being smart about my business is a no-brainer, right?

And true, I need to have some resources for funding, and some resources for finding the properties. But all that takes is a good private or hard money lender and an aggressive Realtor.

And true,  I need to actually work and look at properties and do what it takes to reach my weekly goal of making 15-20 offers…every week.

But all in all, it’s a  simple formula that most who want to be in the business do not follow.  Of course there are thousands, or more likely millions of people who don’t succeed in any business because they do not take action. They don’t do what is necessary and if they do, they are not consistent.

So to keep me on track, I like to keep this quote in my head:

“Do what is necessary to succeed and keep doing it”

There you go.

Or as Wayne Gretzky once said. “100% of the shots I don’t take don’t go into the net”.

So work your business plan, take your shots, line up your resources and then go fishing. I’ll bet that when you come back good things will be waiting….

Thanks for reading my blog and I hope you tune in next time.

Dave Berens

Home Buyer, Seller, Coach, Mentor

dberens@roadrunner.com

Real Ventures, Calabasas, CA

Dave Berens

Today is Thursday, and since last Friday I have made 19 offers on REO properties…and I didn’t work Tuesday! So that means I have reviewed, studied, run comp reports, title profiles and gone to see 19 houses in four working days.

Unfortunatley, as of today, I have been informed that 15 of those 19 houses have gone to other buyers. I am still ‘in play’ on only four of them.  I know buying houses is a sort of numbers game, but things here in the San Fernando Valley are just ridiculously competetive right now.

And just so you know, my offers are GOOD! They are not low-balls, and they are not weak offers. They are all cash with proof-of-funds and a high deposit amount (10-20%)….definitely strong enough to get the bank’s attention.

But I am not getting enough of their attention. As a matter of fact, to put it bluntly, I am getting blown out of the water for the most part. Here’s an example…

A house is listed for $235,000. I write an offer for $225,000. All cash. No contingencies except a routine inspection of the interior. $30,000 deposit. We get turned down because there are TWENTY other offers, and a handful of them (according to the listing agent) are OVER $300,000….that’s $65,000 over list price!

Don’t these banks know that I need to feed my family, and the only way I can do that is to buy and sell houses? How can I compete with someone who can pay 25-30% over asking price? The answer is I can’t.

So I guess things are rxtra hot in my neck of the woods… And actually we are seeing the same phenomenon in the Antelope Valley as well. I recently fixed up an ugly house there and sold it only two weeks after listing it–Full Price.

The market is very good for sellers right now IF the house is listed at the correct price. And the list prices on bank-owned (REO) houses are for the most part very good for the end-use buyers (people who want to buy the house to live in, or investors who want to buy and hold).

For us ‘flippers’, we need to continue writing a lot of offers, continue to make the right connections, and branch out into other areas if necessary. We still need a reasonable discount so we can make money after the repairs or remodel are completed.

So the long and short of this today’s  blog  is….SEND ME SOME DEALS!  lol…

Have a great 4th of July everyone and thanks for taking time to read my blog.

Dave Berens

dberens@roadrunner.com

Yes—these and many other creative deals are out there, but they were much more plentiful in the past…(at least from my experience this is true).

So what am I doing to make money now? (Glad you asked!)…

My business model has changed, and will remain changed until this foreclosure wave has receded.

I think the best way to make money in today’s market is simply to buy REO properties, fix them and either hold them or flip them (and a combination of those two exits is probably the way to go).

What you get with REO’s: 1) An unemotional seller, 2) A relatively smooth transaction (although they can make you wait a while to close), 3) Loads  of inventory from which to choose, 4)   Leverage with agents (they can write up your offers, submit them and keep track for you), 5) You also get competition from other buyers, so its not always easy to get a great deal.

What you don’t get with REO’s: 1) Financing from the bank/owner (so you need to use hard or private money to close), 2)  A Wishy-washy seller that you have to coddle and develop a relationship with before they will sell to you, 3) Any special stuff—you buy the house ‘as-is’ and that’s pretty much it, especially the Ugly houses. With houses that are already fixed up you can get some things done by the bank, like termite reports and repairs, but you most likely will be competing with first-time home-buyers for these ’pretty houses’ and they can pay more than you can. In short, don’t make offers on pretty houses because odds are you won’t be able to buy them.

Stick to the Ugly houses! 

Now that we determined that REO’s are the best way to go, I suggest you go get a good agent, farm an area, and write up some offers.

You will need Proof of Funds and a decent deposit check, and that’s what stops most investors from buying…

Feel free to contact me and we’ll talk about how to raise private money.

Thanks for reading my blog and I hope you tune in next time

Dave Berens

Home Buyer, Seller, Coach, Mentor

dberens@roadrunner.com

Real Ventures, Calabasas, CA

So now that’s out of the way…

What I want to talk about here  is something that should be fairly obvious to most Real Estate buyers, sellers  and investors today, especially given the market conditions that are seemingly inhibiting some of us from making good deals and good decisions about exisiting deals (predicaments?).  The most important thing to remember today is that we have to ’roll with the changes’ (yes I liked REO Speedwagon in the 80′s and there I go dating myself again!).  

What does that mean? Well, for starters, when you enter a real estate transaction, you must make sure you have various exit strategies. If you don’t, you may fail. If for instance you purchase a home with hard money and you must sell it quickly to avoid piling up costly mortgage payments to your lender (which eat into some or all of your profits), then you are setting yourself up for a hard-knock lesson.

Instead, consider buying homes with private money loans. Then you can negotiate a ton of good stuff (terms) with your private lender.  For example, no payments. This is a huge plus and really helps your cash flow situation! Also, consider a longer term note than most hard money lenders will give you.  Private lenders may give you three to five years to pay off a note. after all, what else are they going to do with the money if you pay them back in nine months??

Another ‘change’ you need to ‘roll with’ is the mortgage banking situation. Today rates went down .25 after last week’s bump took them up almost a full point. When rates fluctuate ‘up’, it hurts potential buyers and their ability to afford, or even obtain,  the new mortgage that YOU were counting on in order to close your FHA buyer’s escrow!  So consider selling on a wrap-around mortgage, or a contract for option. The ability to seller-finance in the face of this banking storm will help you sell more quickly. True, you won’t cash out all your houses right away, but you will get immediate cash flow,  a decent down payment, and (maybe most importantly), you will help a good family get a good home. Heck you might even get the home back if they don’t end up buying it or exercising their option. Wouldn’t that be terrible? Then you would have to go and sell it again and take another deposit. Oh well, you can’t win ‘em all!

The bottom line is to consider all remedies and avenues to make your buisness work. After all, someone is going to make a ton of money in Real Estate this year—might as well be you!

Thanks for reading my blog and I hope you tune in next time.

Dave Berens

Home Buyer, Seller, Coach, Mentor

dberens@roadrunner.com