April was a great Month

In The DFW Area we currently have 40 Properties for sale
5 Pending and we sold 6 properties

Since January 1st we have sold 12 properties
And expect it to pick up.

Houston and San Antonio are also picking up
We sold 1 last month in San Antonio( we have only been listing there for 2 months)
And 3 in Houston.

We currently are now opening the Austin market so Austin lets sell some properties
With Tyler and East Texas next.

This past week has been a very busy week for listing
I may need to hire someone soon!
Yes I take care of everything by my self
Well over 70 plus properties per month and growing.
So the agents that cant keep a hold of 3 -6 by themselves makes me laugh.

Those of you that know me know I had good Teachers.
Thanks Larry and Linda.

Incase you want to know a typical day for me is I am up at 430 am in the office by 5:15 am
I don’t normally get home until 6 or 7 pm

I try to get home for Dinner as my 3 year old has no idea why I have to work he just knows IM gone
A side note to other Realtors This is not a 24 hr a day Job there are other things more important
This is why I get up early so Those other things know I care.

Mini Camp started for the Cowboys so lets hope the DB’s we got can cover this year.
I was a little disappointed that they didn’t get offensive line help.
As we all saw the great job the fill ins did.

Anyway got to sell your houses bye

How to Buy Reo Properties(bank foreclosures)

So you want to buy a foreclosure ?
You have some money, and an ok credit score.
Heck you’ve been watching HGTV and DIY for the last 6 months, and well you think you are ready to go.

Well let me give you some things to think about before you ever start looking at houses.
If you plan on doing the work yourself you need to be experienced.
Do not attempt things if it’s your 1st go around.
Every time I see new investors do this they all ways lose money A LOT of it.

So the 1st thing you need is either a good general contractor or a lot of contacts for good inexpensive contractors in all phases.
You will need foundation people, roofing, plumbing, electricians, landscapers, floor installers, dry-wallers ,cabinet installers ect ect.

This is THE MOST INPORTANT PART OF REHABBING ANY PROPERTY. You need to have knowledgeable contractors who know real prices and will cut you a break on the repairs.
This is the stage where you make your money.

The Bank prices houses by having Real Estate Agents do a BPO. Brokers Price Opinion
Their job is to find out everything that needs to be repaired. NOT UPDATED but repaired.
If it is broken or is in need of repair i.e. Carpet is too dirty to clean, the walls need paint, there are no appliances.
They will then estimate the needs at retail (if you can get these things fixed below retail you will make money if not you will not)

Then The Agents will pull up similar properties preferably in the same subdivision and the same style of house.
These are called comps.
They will compare those to this house and figure out an average price per sq ft. Then minus the amenities and repairs and then they have a rough idea of what it should sell for.
80 % of the time the bank ALL WAYS OVER PRICES IT.
The agent has no control over the listing price.

Each property has between 5,000 and 10,000 that they can negotiate.
Even if it’s a 250,000 they at most can only lower it $250,000

Every 30-60 days (some at 45) they ask the agent for a new BPO and that’s when the lower the price.
Things that factor them changing the price are
#1 Their investor if the company says they need a certain amount for the property even though the agents BPO shows that that’s too high they will still market it at that price and will not take less(I know its stupid but these are the same
Business’s that lost billions and billions of dollars. I guess they don’t factor in holding costs like the rest of the world.

#2 Offers.. The Asset manager is the banks representative and he is the one to go to the head of the REO dept and say look all of the offers we are getting seem to match the agents BPO so we need to lower the price.

#3 The agents BPO each bpo will show either no properties are selling or they are selling at less prices ECT ECT.

So when a property is 1st listed that is not the best time to buy it as it is at its most expensive price typically around the 2nd or 3rd price change is when all of the action heats up(other investors know this too.)

You have contractors so now you need funding
There are many ways to fund your purchase.
The best holds true make money with other people’s money.
You want a certain % of return for the money you spend.
Or ROI Return on Investment.

You are going to need to add a bunch of extra cost to this house when you sell it so the less you spend out of your pocket the more you can make.
Good investors Target about 20-30% of what THEY SPENT OUT OF THEIR OWN POCKET.

The easiest is buy the property and live in it
Then you can get into it for 3% down and just the repair costs

Otherwise nowadays you’re looking at 15-20% down
And most rehab projects cost about 10-20k
There are Hard Money lenders but they are going to want to see a bout 40% value in the property.
So you will need money the days of no money needed are over.
There are hard money lenders that will treat it like a construction loan
They will ask you to get them a very complete estimate of repairs the property will need
And add that to the price of the house, then they will ask you for 15% of that and give most of that back to you at closing for you to rehab the property.
In my experience you will need 20-25% to make sure you can cover all unexpected things.
Like more repairs then you realilized longer holding time(takes longer to sell) or it won’t sell for what you thought.

Which brings us to my next point

You need a good agent someone who KNOWS these types of properties
Your average century 21 agent does not! They say they do but they do not.
They are not familiar with the entire process it is much different then buying a normal retail house.
In larger markets there are only a handful of agents that list all of the foreclosures(you will never ever get to talk to them as they have a complete team that works on these) however you will find that their asstaints are agents and they are the ones that do most of the leg work. That’s the person you want.

You need accurate comps and an accurate DOM DAYS ON MARKET and will it really sell and at what price.
Sites like Zillio go by Tax value. Well in most Markets that dose not mean didley. Tax values are all ways off either too high or to low.
So Your REO AGENT is your best friend

Next you need to be able to sell it
Craig’s list and forsale by owner sites only hit 10-25% of the people
And you have a product that you are trying to sell for top dollar IE retail.
So where are there the most of these sold?
On your local MLS. There are many companies that do Flat fee MLS listings
Like the Best Choice Realty.
Where traditional agents charge you 3% to list and give 3% to the buyers agents.
Flat Fee companies only charge you anywhere from $49-1000 to list
This saves you money and this helps you sell for less then your competition.
Make no mistake about this this is a product and there is competition a lot of it!
Real Estate is based on the law of Substitution . NO One will pay more for something if there is another similar product like it for less.
You say your house is different. To you it may be but fore the most part all of the houses in a subdivision are going to be similar.
Also it’s only worth what people are willing to pay for it.
I get people telling me all of the time that it’s appraised for this or it’s worth this.

Yet it is still for sale. What does that say?
No one is willing to pay that much for it so it is over priced.
This leads to my next point
To make money you need to have all of the repairs done with in 30 days and get it sold with in 3 months other wise holding costs will eat up your profit.
So list it for what you want.
Don’t over price it thinking that oh they will just try to beat me down.
That is not the case
If your property is priced better then any other property it will sell faster and it my get competing offers(a bidding war) also you don’t have time to waste (unlike the banks) you need to know right away if you can get what you need or not.
Otherwise you will need to either owner finance, lease or come up with another exit strategy.

After you have all of this in place then its time to start looking
You need to trust the agent that they will show you what areas are moving and at what price.
When it comes time to make an offer cash is all ways best.
As the banks feel it will close faster
Also closer to the end of the month.
They do get bonus for selling so many properties .
There is so much more to this then just looking a a fixer upper
You need to have a complete team in place before you start

Also the more damaged the better .
The banks only discount for damaged goods not ones that need updating
And as you will most likely be replacing all of that stuff anyway you want it damaged.

There are many views and many ways of making money at this .
However I promise you no infomercial or quick conference will get you to make money right away.
It will only get you to lose it right away.
If you do your home work slow down and take your time this is a great way to make money a lot of it.
If you just got fired or need quick cash this is not the way to do it.

3 things in this world you can count on
You will Die
You will have to pay taxes(how much is up to you)
People will Buy and sell houses and each year it will be more and more.
Why
Because the population is all ways growing so there will all ways be a need for housing.

Good Luck!