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Wholesaling real estate is an investor’s best dream. Talk about passing the buck and reaping the rewards while someone else does all the work. Here’s the beauty of wholesaling real estate; you get the property under contract, make a quick payday, then pass it on to another buyer who will close and do all the work – and if you follow a few simple rules, your wallet should gain a few lbs. Best part? The most “wholesaling” will cost you is chump change.

 WHOLESALING REAL ESTATE = FLIPPIN’

Now let’s call it what it really is – flippin’ houses, wholesaling, bird-dogging…whatever – and let me give you the Cliff’s Notes on the “how to.”
TIP: As a bird dog, you don’t actually put the house under contract. You simply refer the deal to an investor who will pay you for the referral.

CONTRACT ASSIGNMENT

Step one to wholesaling? – anyone, anyone? Bueller? Bueller? Dahh….you first have to market, market, market. Letters, postcards, ads in the paper, driving for dollars….do whatever you have to do to find great deals. Once you think you have a deal, make sure its matches up with the rehab formula. The contract needs to be completed with the distressed homeowner as the seller, and you get to play the role of the buyer.
Tip: Be sure to fill in your name where the contract says “buyer” and “and/or assigns”, so you can “assign” or flip your contract to the rehabber investor.

The homeowner will expect a deposit ($500 bucks should do it – but you can offer less.) to make the contract binding. You’re probably thinking I left at least one zero off the deposit amount, right? Well you’re wrong, smartass. The key is – tell the seller, don’t ask – when it comes to the deposit. Never forget that your offer has to work for you – and for your end buyer. If you make some insane offer with a crazy earnest money deposit, you may not find a buyer who wants to front that kind of scratch.

The sooner you find a buyer like me for your deal, the sooner you get paid like Johnny Kemp. So in addition to marketing, marketing, marketing for buyers, you want to do the same to build a buyers list. The best wholesalers will have the deal sold before they even sign the contract with the distressed seller.

MAKE A SIGN

Place an ad that speaks to buyers, put out bandit signs soliciting for buyers, do a public records search for non-owner occupied properties near your deal, drive the streets looking for dumpsters in driveways….and reach out to all the investors in your “deal neighborhood.” When your “celly” starts blowin’ up, deliver the following script with your own flavor: “I’ve got a sweet deal with the following numbers (tell them the ARV, rehab estimate, and their purchase price). If its a hot deal, experienced investors like me will bite like Mike Tyson almost every time.

Wholesaling houses is a numbers and negotiation game, and dealing with the investor rehabber is no exception. It’s safe to assume that the distressed homeowner needs to get out quick. If you’ve done your homework, and you know what amount the homeowner needs to make the fast move, then you should know what to offer. What else do you know? You know what the home is worth, what the repairs will cost, and that the rehabber will pay 65% of the retail value. If the rehabber does what he or she (’cause I know you ladies are out there rehabbing too) is supposed to do, you should be looking at substantial profit, typically $5-10k, which does not suck.

Last year I paid $40,000 wholesale fees on two separate deals! $40-large! How could that one flip change your year?

HOW TO GET PAID

The paydays in wholesaling are so easy. At closing time (one last call for alcohol, so finish your whiskey, or beer, or scotch….oh, damn…sorry, stay focused Fuhr) your trusty title company will finish the job and stroke your fat wholesale check right at the closing table, so you can have the happy ending (me love you long time) you’ve been dreaming about.

You’re all wet behind the ears “and all what not,” and new to the real estate investment game, and you’re probably wondering what are the typical rookie real estate investor mistakes? What you should really be asking is, “How can I avoid making those mistakes?” In your defense, you need to recognize (you betta recognize) the mistakes first before you can avoid them, and you need a crash course on goal setting. So here we go….

Mistake #1: How to Be A Real Estate Investor. The Honeymoon Phase.

When you first start out, you’re all full of piss and vinegar and newbie dreams, ready to rock the real estate investment world, but as with all things that start out hot and heavy, the fire quickly burns out and passion fades into the sunset like Mel Gibson’s career. Heck, most quit before they even figure out how to be a real estate investor.

So, how can you avoid the burnout? Lay off the wacky tobacky (for starters), but more appropriately, set short-term goals for yourself over the long-term. That may sound like an oxymoron, but here’s the skinny; know your long-term goals, but then break them down into 90-day chunks that you easily measure, analyze, and extract valuable lessons from. Shorter term goals are more achievable and foreseeable, so you’ll stay on track and charged up to continue striving for success.

Mistake #2: Analysis Paralysis. Obsessive Compulsive Analysis. 

We’ve all got a lil’ “OCD”, which is no “BFD”, but if you spend more time analyzing a deal than checking out properties, you’ve got issues. If you have to smack it up, flip it, and rub it down, it ain’t a good deal dude, so move on with your life, and spend your time looking at potential properties. You’re in the stage we seasoned pro’s call; Analysis Paralysis. My good buddy, Steve Cook once told me, “You can’t steal houses in slow motion.”

Here’s the key; create “good deal” guidelines, and stick to them. If your deal doesn’t meet those guidelines, then it’s hasta la bye bye baby. Simple stupid, but take it from me, your real estate coach, goal setting will help you avoid the endless cycle of unproductive obsessive analysis.

Mistake #3: Going It Alone. Get a Real Estate Coach.

A good deal isn’t gonna fall in your lap like your girl at the strip joint. You create your own destiny, but not without some sound guidance. This market does not reward mistakes. Ok, it’s not rocket science. You gotta bust your ass, focus like a laser on your market, hone your deal spotting skills, and surround yourself with solid, knowledgeable people. Seriously, if you don’t have a real estate coach in this market; like Craig Fuhr – you’re setting yourself up for a short ride on the dead-end bus. Set your team up right and eventually, The Good Karma Gods will give you the wink and pinch on the ass that you deserve.


 

 

Some might consider homeowners facing foreclosure (especially in Arizona, Nevada, and the Big Apple) the luckiest sons-a-bitches on earth. Or are they? Bank of America is now offering a select few homeowners who are about to go toe-to-toe with foreclosure the chance to stay in their homes – but as tenants. I call it Rent-A-Center housing. They call it, “Mortgage to Lease.” Some feel the chances of meeting the criteria (listed below) required for “Mortgage to Lease” eligibility are as good as Nicholas Cage actually making a decent movie (by the way, what’s up with that guy’s hair?).

Mortgage to Lease Criteria:

· Have loans owned by Bank of America
· Are delinquent for more than 60 days
· Have exhausted modification solutions or have not responded to alternatives to foreclosure
· Have high loan balances in relation to their current property value
· Face considerable risk of ultimate foreclosure
· Have no junior liens
· Are still occupying the home
· Have adequate income to make an affordable rent payment

And the cherry on top is that participants will be selected on a strict solicitation basis. In this trial phase, there are fewer than 1,000 customers who will be invited to the party.

Deficiency Judgement?

What is a deficiency judgement? A DF is when the bank allows a short short sale or simply forecloses on your house, but then they sell your house. The amount you owe is generally the amount you owe minus the amount of the sale. So if you owed $400,000 and the bank shorted the house for $200,000, there could be a deficiency judgement for $200,000 levied against you.

For the lucky 1,000, titles will be transferred to the bank, and debts will be magically wiped clean from the record. Poof! Owners can lease their homes for up to three years, and their rental rate will be less than their mortgage. The new “Tenants” can even say “forget about it” to property taxes and hazard insurance.Sounds like a pretty sweet deal to me. Ok, so you have to give up your “homeowner” status, but who gives a rat’s ass when you consider the alternative – and let’s face it there county-boy, you ain’t cut out for homeless life on the mean streets.

The word slumlord comes to mind for some when BOA’s new program comes up around the water cooler, but I’m thinking more like….winning the lottery.

You wanna buy a house, and you want to make a profit. But how do you know what price is right? Ask Bob Barker? C’mon, I love Bob but he’s ancient! You’ve got to have a winning investment formula. For you veterans, this info is older than your Grandma’s pound cake recipe. Newbies…. check it out – I’m about to drop some mad rocket science on you:

MAO = ARV – Rehab – B/S/H – Investor Profit – Assignment Fee

·         MPO (Maximum Allowable Offer) is calculated by determining what the house will be worth after renovation

·         ARV (After Repaired Value) less the rehab dollars required, less the Buy/Sell/Hold (B/S/H) costs,  less profit for the rehabber less the Assignment Fee (your profit as a wholesaler)

·         If you plan to rehab the house yourself, just delete the Assignment Fee from the formula

DOWN & DIRTY FORMULA

Another More “Down and Dirty” Rehab Formula:
MAO = (ARV * .70) – Repairs – Assignment Fee

Now look, in this market – I play super safe when I can. I’ve been using a multiplier of .60-.65. What’s that mean Mr. Einstein? Well it means that I’m starting at 60-65% of the After Repair Value (ARV) then subtracting my repairs. This gives me a cushion bigger than J-Lo’s ass, and it accounts for all my holding costs, closing costs, and realtors fees. Problem is, in crazy market where investors are paying way too much for deals, you’re gonna get knocked out of the game on every deal if you use a 60-65% multiplier. Your offers will be too low. So go in at 70% for now. Be very sure about your ARV. Check out comparable sales data.

TIP: Be sure to also look at houses under CONTRACT or PENDING. Call the listing agent for those properties and simply ask, “I’m looking at buying a house around the corner. We’ll rehab it to a beautiful state. Can you tell me, did you get close to your list price for your house?

COMPS are KING

Are comparable sales recent (60-90 days) and close to the house your considering (.5 -1 mile away)? Are the home amenities, features, renovations, and square footage similar? If the house you’re considering is in a Desperate Housewives-type neighborhood, and you’re looking at homes in a Compton-“Bring your own gun” type neighborhood, you best be researching the definition of “comparable” – after you strap on your bullet proof vest and put on your best badass, don’t “f” wit’ me I’m a gangsta face.

Look at the home through the eyes of the future homeowner, and remember that renovation costs differ from house to house. It’s the scope of work that counts and what’s required to make the investment look like comparable houses? Confused yet?  Stay at it. If I can do it, so can you! I’ll be talking a lot more about this topic so stay tuned.

Just follow the formula to make offers, and apply an $8,000 – $10,000 assignment fee to make the deal worth your while if you plan to wholesale. Finally, don’t forget about those two little words – investor profit, which is the amount left for the investor to make the deal sexy. Stick with the current market trend (for investor profit) and start with $25,000 – $30K for an average price house.

 

I love the guys at TBWSdailyshow.com. Frank and Brian are middle-aged, a little doughy in the mid-section, and always chock full of good solid, and highly entertaining info. They’re the kind of guys you’d love to have a beer (or 7) with….kinda like me.

WHAT IS EQUITY?

Equity in terms of real estate is defined as: the difference between the value of the property and the amount the owner still owes on the mortgage. It is the amount that the owner would receive after selling a property and paying off the mortgage. Source Link

So what, Craig. I’ll tell ya, “So what!”

In the video below, Frank and Brian talk about how the average owner in America is leveraged to about 94.5% of the value of their homes. We are leveraged! Stated another way…the average homeowner is Ska-Roooooed, if the market takes another downturn in prices. Do you think this could translate to more foreclosures? Can I get a “Cha-Ching,” from the congregation?

They also talk about how appraisers are killing all of us! You feel me on that don’t cha’

THESE GUYS ARE SO SPOT-ON! 

 

You’ve seen the short line at the Target. You avoid it, because surely there must be something wrong with it – like the lady who wants to pay with a check? (Who the fetch uses checks anymore?). Then unlike the rest of the suckers in the long line, you realize there ain’t a damn thing wrong with the short line. But when it comes to real estate ethics, should you get in the short line, or take the long road to success?
I’m bypassing the short line and taking the long, high road here by saying that most of us get into the real estate biz with the best of intentions. All fresh and green, like baby poop, we strive to play by the rules, but saying “no” to all the short cuts that tempt and tantalize us like Oprah saying “no” to cake. It’s just not in the cards. Mama like her cake!



ETHICAL REAL ESTATE INVESTING

Let’s look at just one example. There are a TON of Guru’s out there who sell short sale products, short sale courses, short sale systems, and yes, even short sale schemes. Most could care less about your success because once they have your $1497.00 dollars and $37.00 a month fee, they really don’t care if you’re using the product, or even if the product breaks laws in your jurisdiction. I know for a fact that most short sale Guru’s would be in jail if they practiced their craft in Maryland – because Maryland has one of the strictest, most unforgiving foreclosure laws in the country in terms of how we investors can deal with homeowners who are late on their mortgage.
As the banks were writing mortgages at a break neck pace, someone whould have stood up with a huge flare gun and said, “WAIT! This is too much…” Who was watching them? Supposedly organizations like….Congress, Fannie and Freddie, and yes even the The National Association of Realtors (NAR). To me, that’s like having a room full of cops watching the Dunkin’ Donuts!


WHAT IS YOUR CODE OF ETHICS?

Who will keep you straight? Maybe you “forget” to disclose and get away with it. Maybe you “dick-over” a solid, well-established cash investor on a wholesale deal only make a few extra bucks. Maybe you make a quick payday, when you know the payday was meant for someone else. So keep comin’ back for more like Rihanna (oh no I diiiin’t!). Makin’ fast money may feel good at first, but when you catch another Chris Brown right to your eye, you’ll be out of a job and worse yet, you could end up in prison. And when you finally stop waking up in the night screaming “No Big-Ray, Please don’t make me your bitch again!”, the cashier gig at In and Out Burger is gonna be an even tougher pill to swallow.

So what’s the moral of the story, kids? Say via con dios to instant gratification, and ride the ever-sweet, sometimes boring, long road to success. A solid reputation and a network of clients, and the respect of other like-minded investors who trust and recommend you is what will make you profitable in the end. Your conscience and your ass will thank you.

 

 

All this talk about a lack of inventory. If I read another story about, “Where are all the foreclosures,” I’ll puke. The REO’s are out there people. They’re coming. Question is….when the shit really hits the fan, will you be standing there with a wash-cloth or an umbrella? (I have no idea what that means….just roll with me.)

MORE FORECLOSURES ARE COMING? YOU BETTER GET ON IT!

I’ve made a ton of money buying bank owned properties (REO’s) and I have every intent of making even more. How did I do it? I, along with some of the best wholesalers in the business, leaned from this real estate machine! You can make serious money buying REO’s for pennies-on-the-dollar, BUT you MUST Learn the Very Best, Tested, and Current Strategies for Buying Bank Owned Properties RIGHT HERE.

This chick is one fire (And she’s pretty hot, too). I’ve learned a ton and have actually made paydays from her advice – and you will too. <—- If you click the pic you can learn precisely how she is making huge profits in this 2012 market.

In the interest of disclosure, if you click the link above and buy this JAMMED PACKED info e-Book, I will also earn a small portion of your purchase. So lookey-look, you’re helping me keep this blog alive. Ain’t no one gettin’ rich here!

Seriously, Steph delivers the goods. Just last week, I had lunch with one of the hottest wholesalers in Maryland. He was telling me how he had to meet Steph on his trip to Tampa, because he’s made so much money from her e-Book. Do it. You’ll thank me when you make your first FAT payday!


You want to build a real estate portfolio, but you don’t want to deal with the hassles of managing an actual property. I’ve got two words for you – property funds. No, no property funding. This is not about being the bank. Investing in a property fund, like any other fund, requires research and know how.

HOW TO BE SUCCESSFUL? RESEARCH.

Other than beefing up your portfolio, what’s in it for you? How about minimum entry costs, for starters? Property investment funds can cost as little as $2500, which, when you consider the long-term benefits, most investors would consider “pocket change”. But before you fork over your 2.5 G’s, you gotta do some research. Yeah, I said it. Research. Quit whining like a girl, and listen up. Put your Sherlock Holmes hat on, and start investigating property fund management, their longevity, and their holdings. Remember, real estate funds should have minimum turnover rates and low fees. Pay attention to how the fund has performed over time. If rates and fees are high and performance is sub-par, run like Forrest Gump and don’t look back.

What about risk? When it comes to property funds, consider reducing your property investment risk with a REIT fund, which stands for real estate investment trust. REIT’s are, “liquid,” and no that doesn’t mean you can chill ‘em, shake ‘em, slam ‘em, then chase them with a beer. Liquid simply means that the fund is used for short-term fix deposits. Interestingly, REIT’s are also managed by a group of executive decision makers, instead of some cowboy ridin’ solo, and you know what they say about two heads…..
This is a long one, I know, but I’m wrapping it up like The Fabulous Thunder Birds, so hang with me. The beauty of property funds is that it’s absolutely possible to earn huge wealth without owning physical property assets and the stressful risks associated with them. Just like mama taught you, be thoughtful, considerate, and thorough when you invest, and with a patient approach – you too can make it rain like Lil Wayne.

 

 

At times it seems the chances of the real estate market recovering are about as good as Lindsay Lohan staying clean and sober. (Someone has just got to shake that girl.)

Housing In The USA

Here’s the straight-poop; you gotta look at two critical data points: home sales and home prices to determine the dealio in this market. The National Association of Realtors released this sweet graph, which shows that home sales are, in fact, on the up and up.  On the flip side, home prices across the country are still softer then a pre-Viagra pee-pee. Conflicting numbers? Really? We never see that!

So, long story short, the annoying answer regarding market strength is “yes” and “no”. Sales are in fact making a comeback, but we won’t see prices escalate until the market supply issue is resolved. Here’s a tip; don’t go all blue while holding your breath.

Flip This House.

I’m the FLIP THIS HOUSE King in Maryland (at least it feels that way) right now. Our houses are selling faster than Lindsay Lohan can say, “Can I have another bump,” once we get them on the market. Could it be a general lack of listings, or could this be a real recovery? What’s up with resales in your town?

 

 

 

 

 

Lead Issues EPAEffective April, 2010, the EPA’s new  Renovation, Repair, and Painting Program (RRP) has landlords, contractors, and homeowners spouting locker room-like obscenities at lead-laden homes built before 1978. Heck, I cussed like a sailor-on-leave the day I got a call from The United States Environmental Protection Agency.

This isn’t just a paint program, uh, uh – its more than that. If you’ve got lead issues in your houses, you best listen up!

Fact: ingested lead paint particles are hazardous to young children. Last Fact: reported elevated blood levels in children decreased by almost 90% in 2007. Really Last Fact: risk for elevated blood levels in 2010 was down to about .5%.

RRP is SERIOUS

So most are asking “where’s the fire, EPA?” What’s up with this new lead program? There’s a ton of confusion out there. Contractors , landlords, homeowners and yes, even us investors  are wondering, “Must I undergo training and certification programs, per the RRP,  and must I also pay out the ass to adhere to the new law? (It’s at least $6-hunge, people)

Bottom line, rehabbers and landlords who hire contractors should be prepared to bend over and take what’s comin’ to them…..increased costs. And, you better be prepared to be anally probed if someone decides to drop a dime on you by calling in a complaint to the EPA. If that happens, YOU WILL get a call from the EPA, and they WILL investigate.  So get your inner Cal Ripken on and keep those bases covered.

At the end of the day, contractors, landlords, and homeowners need to suck it up. As much as I’m a romantic dreamer, I don’t see the EPA going away anytime soon, and the RRP law, while vague and overreaching, will ultimately help save lives, and you’d have to be pretty obtuse to argue with that.

MORE THAN YOU EVER WANTED TO KNOW ON THE RRP LAW HERE:  Click it Now.