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When I was but a budding, fresh-faced real estate investor, I couldn’t wait to get off of work, or get up on a Saturday morning to go out to look a bunch of houses. “Driving for Dollars,” is the term most often used – and to this day, I still think its a great way to find distressed properties. Its also a great way to farm your neighborhoods and to find new neighborhoods to invest in.

I would kiss my wife (then fiance’) good-bye, load my pockets with a few of my favorite cigars, stop at the Starbucks for a Vente’ black, and I would just drive. It gave me time to think, time to dream, and time to plan. Most importantly, it got me in touch with what the heck was out there. Hell, if she didn’t call me home – I’d be out there until it got dark.

Learn from my mistakes though. Use your time wisely. Pick a farm area first and know EVERY house in the area. The ONLY way you can do that is to “drive for dollars.” Its all so simple, really.

I don’t really need to do a whole lot of driving for dollars anymore, but as I was driving to my first house this morning I must have seen six or seven houses that jumped out at me. Spring is the VERY best time to find deals. Check the video for why…

From The Washington Post
(Can’t believe they didn’t interview me! I need a better publicist.)

By Ovetta Wiggins
Washington Post Staff Writer
Sunday, April 11, 2010

The house on 29th Street in Mount Rainier is a shambles. Mold and mildew cover the walls. The carpet reeks of urine. A chandelier in the dining room and dingy white curtains in the windows are the only reminders that the house was once a home.

“They let it sit so long it became a crack house,” said Karl L. Granzow Jr. as he walked through the building, looking out for rodents, roaches or their remains.

Despite the condition of the house, it is just the type of property that Granzow, his business partner, Patrick Ricker, and other investors have been snatching up in Prince George’s County since the housing bubble burst about three years ago. Granzow and Ricker bought the home on 29th Street a few months ago.

The properties are inexpensive. They are inside the Capital Beltway. And they are in communities where redevelopment projects and new construction are underway.

Granzow and Ricker said their company, Property and Industry Coordinators, has bought and renovated eight homes in the past year. Most of them are in Mount Rainier and Hyattsville. Bright Lusk Properties, a family-owned business in Hyattsville, has bought three since 2008. All are in Hyattsville, one of the Prince George’s communities hit hardest by the foreclosure crisis.

Last year, Prince George’s had 13,412 foreclosure filings, more than any other jurisdiction in the state. A filing could mean that the homeowner received a notice threatening foreclosure or that the property was sold at auction or was repossessed. The county, with 13.8 percent of the state’s housing units, had 31 percent of the state’s foreclosure filings.

Under the circumstances, housing and foreclosure experts said, it is no wonder that investors are eyeing places such as Hyattsville, Mount Rainier and Capitol Heights, communities with older housing stock near the District line.

“These are desirable locations,” said state Del. Doyle L. Niemann (D-Prince George’s), who has sponsored a number of bills dealing with foreclosure in recent years and who prosecutes mortgage fraud as an assistant state’s attorney. “Mount Rainier and Hyattsville are strong and attractive communities to folks, even in the current economic recession.”

Maryland does not track what happens to homes after they go into foreclosure or how many of those homes are bought by investors, said Raymond A. Skinner, state secretary of housing and community development.

But Skinner said it seemed likely that people would be looking for bargains and that many investors would focus on older communities, where the prices are lower and the chances of resale are greater.

Rebekah Lusk, a resident of Hyattsville and a founder of Bright Lusk Properties, said she chose to buy a house in the county’s Lewisdale section because her company wants to be part of the redevelopment effort in the city. All of its properties have been renovated and are being rented out.

“Our goal is to be active investors and be involved in the community,” she said. “We don’t flip. That’s not our goal. We’re not looking to put properties back on the market when there are so many already on the market.”

Niemann said the properties would otherwise become increasingly blighted or would be scooped up by speculators with no ties to the community.

Ricker said that he has made a living brokering real estate deals and investing in new developments — his company’s offices were raided by the FBI in 2008 during a probe of a proposed development near the Greenbelt Metro station — but that he had to refocus when the market dried up.

As he drives his black Cadillac Escalade through Mount Rainier and Hyattsville, he searches for signs of neglect in the neighborhoods. Brown lawns. Weeds. Missing curtains. He is looking for any possible indication that a homeowner is in foreclosure.

“When the bubble burst, I said, ‘Why not buy some of these homes?’ ” he recalled.

Instead of going to auctions, Ricker negotiates with lenders to arrive at an acceptable price.

He bought one house in Brentwood for about $100,000. He gutted it, installed marble countertops in the kitchen, new appliances and new bathroom fixtures, and he transformed attic space into a master bedroom. He said the house will sell for about $300,000.

“The positive is that they are not fly-by-night speculators who want to make a quick buck,” Niemann said. “Yes, they are making a return on their money, but there seems to be a strategy to make the community stronger.”

Man, it it a gorgeous spring day in Maryland today. It actually feels like summer. I headed over to house we just flipped on Kipling just to make sure all was still well. It was. The rehab turned out so nice – I just had to shoot a video talking about how the wholesaler made $6500.00 selling us this house.

Even if you don’t have deals, I can tell you where to look. If you do have deals and you need to flip them fast, I can tell you that NO ONE has more cash then me, and NO ONE pays bigger wholesale fees.

Check the video and hit me with some comments, people!

NOTE: In the video I say I paid $6500.00 to the wholesaler. That is incorrect, I paid $65000.00 for another deal. I paid a $2500.00 fee for Kipling. Just keeping it real.

This is off-topic, I know.

The new iPad is here and as much as I’m a fanboy of all-things-Apple (I would have given a kidney to Steve Jobs), I’m just not sure I see the need to buy one, yet. I dig the form factor and I think its very pretty, but its feature-set wouldn’t make me get rid of my kick-ass MacBook Pro.

Have you checked out the iPad? If so, let’s have some fun. Answer my slick (figured it out myself) survey below!

I’ve been getting a lot questions lately from astonished people, all asking, “How in the Hell can you do 13 rehabs at one time?” Fact is I solely (and with the help of three general contractors), am in the process of flipping 13 houses right now. To be perfectly honest, 5 are on the market and under contract, and I have yet to start on one of the rehabs – but until you collect that paycheck and the money is in your account, you are in fact rehabbing the house.

So how do I do it? Focus, great contractors and a lot of coffee. Sprinkle in a little luck and some pixie dust – and that’s my formula.  Seriously though, there is a rhythm and flow to every job. There is a process, and like the Ten Commandments, that process is etched in stone and should never change. If you follow the process, and you stagger your buying, you can easily do 13 rehabs at one time.

Here’s the secret:

When your life is really good or really bad birthday’s can be somewhat melancholy, right? A time of celebration and a time of reflection. This past weekend, I celebrated my 43 birthday. Yes, ladies and gents – I’m middle-aged and I’m having my crisis. No fast cars, or 25 year old bimbos for me, however. I’m just begging for more of the same wave I’m currently riding.

Life is pretty good these days, but it hasn’t always been this good. I savor each day. Less than 15 years ago I owned a bar in Baltimore City. At that time I was on top of the world. Business was great and the money was rolling in. I knew that I was destined to be an entrepreneur. Unfortunately, things didn’t work out with my partner – and I was forced to sell my 1/2 of the business. The sale sparked an almost 5 year turnaround marked with a seemingly endless death spiral of cascading debt, endless calls from bill collectors, horrible credit – and worst of all – depression and a complete lack of focus on my “next” destiny.

It really is amusing now, but I actually tried my hand at all of the following before becoming a full-time RE investor; mortgage loan officer, fine-wine sales, liquor store manager, desktop-support, server support, IT security – and finally RE investor. From a monetary standpoint, the jobs in IT were admittedly much better than the others, but I gotta be honest, I hated every one of those “in between” jobs.

Most who know me know that this was a VERY dark and depressing time in my life. Why do I tell you this? I tell you because I want you to know that its never too late to make a 180 degree shift in your life. If you hate the road your on, make a change! It may be a slow change, but if you never start, you’ll never finish.

At 43, and back on top of the world, I’m melancholy (at times) in knowing that so much of my early adulthood was spent in desperate search of something. And now that I’ve found all that I was searching for; my wife, my beautiful children and my dream-like “job” – I’m so sorry that it did not happen sooner.

I don’t wallow in melancholy, though.

So, Happy Birthday to me! Get out there and find what you love.

Last week I decided to go out to see my boy Bob Norton in Detroit. He didn’t need my help, but he was doing a bootcamp for some of his students, and some other folks – and I thought, what the heck, why not go have some fun, and hang with Big Bob. We had a blast, but my MacBook Pro did not.

Sorry for not posting lately…

…but my “brain” was severly damaged on the way back from Detroit. “Hey, F’ers in baggage, take it easy when chucking those bags!!”

So I get on this 20 minute flight from Philly to BWI, and the flight attendant says, “Sorry Sir, this plane is way too small to fit your carry-on.” With that, she takes my bag, and I don’t see it until I get off the plane.

The next morning, all bleary eyed from my mad-dash with Bobby, I open up my Mac and the LCD is shattered!  Yeah, that’s $1240.00 bucks people! Nice huh? And did I mention that U.S. Sc’Airways is giving me the cold shoulder?

Anyway, check out this video of me having fun, Commando-Style in Dirtty-troit. This is what Bad-Ass investors do. And if I was a bad-ass investor, I would do it more often. By the way, that is REAL blood in the end.

Now this is just plain silly. I walked in to a house yesterday, and just had to shoot this video. For all the hype “foreclosure parties” got in the media, I have been in only three houses where the previous owner trashed the place before leaving. Bob Norton and I took some fantastic video of a “foreclosure party” house in Phoenix. Hopefully I’ll get around to cutting that into a video for your viewing pleasure.

By the way – regarding that picture above of the ACORN workers; did you know in addition to believing that pimps should be allowed to use public money to open whore houses, ACORN actually believes there should be no more foreclosures, EVER? Hmmm…who do you think would pay for that little bail-out? Shout it out now, no need to raise hands here. Beuller…..anyone….Beuller?  You guessed it!!!  US….the american taxpayers.

What a friggin’ mess.

Photos are here:

I’ve had the great pleasure over the past several years of my investing life to meet and become friends with some pretty cool and amazingly, down-to-earth people. I’ve rubbed shoulders with and have been privileged to the inner thoughts of good friends; Steve Cook, Bob Norton, Shaun McCloskey, J.P. Moses, Fred Lewis, Steph Davis, etc… These are some big-time, very successful investors that I am honored to call friends.

I used to think all these people were so much different than me; so put-together, so firmly resolved, so on track. During lengthy conversations, my thoughts inevitably drifted to inner-doubts and questions regarding my own ability to succeed like them. My inner voice would say, “Gees, I’ll never get there because….,” or “If only I could be that lucky.”

Tell me if the following rings true with you.

I knew I could reach their level of success, but I didn’t really believe it. Like a snowball rolling downhill, my disbelief then generated layers upon layers of doubt and excuses. With the doubt then came reflex-like changes in my focus. I was a ship without a rudder. Every time I met a successful investor; each with their own niche, I then tried (and failed) to become that guy.

That is some SUPER-dangerous thinking, people. If you don’t truly believe in yourself and have 100% resolve in your personal definition of success, you’ll always be modeling yourself after the next successful person you meet. Meaning, success as you’ve defined it, will essentially become success as they’ve defined it. And when the inevitable frustration comes as you don’t quickly reach the bar they’ve reached, rather than that of which you’ve set for you, you’ll always make excuses for not, “getting there.” Like a ship without a rudder, you’ll blow with the wind to the next niche.

Making excuses for failure is so much easier than
constantly striving for success.
(I just made that up. Damn I’m good!)

That’s some pretty convoluted stuff, so I’ve broken it all down for you in a little video. Ever wonder why some people reach their goals and some don’t? The true answer is in the 5 minute video below.

Can someone, anyone, tell me where to find the ACTUAL lending rules for FHA buyers. Is it me or do they seem to change everyday? For the love of God, will the US Government just get the hell out of my way? All I want to do is buy super-crappy houses for pennies on the dollar, throw a chunk of money at them to make ‘em crazy pretty, and sell them for a huge profit. Simple, right?

Based on pure capitalism, my simple little business model seemingly flies directly into the face of the current administration, but its all I know – so I’m gonna keep on keeping on. That said, most if not all, of my buyers are first timer’s who use FHA or VA financing. I mean seriously, does anyone have 20% down anymore?

The FHA almost came to their senses by suspending the 90-day seasoning requirement on flips, and as we were all jumping for joy, we soon realized they didn’t. All the changes they made are now the subject of great debate. This is no lie – I’ve talked with lenders and other real estate investors just in the past few days who all seem to be confused regarding:

  1. What’s the deal with the 90-day rule? Can I sell a friggin’ house within 90 days or not?
  2. How many appraisals are needed and when a 2nd appraisal is ordered?
  3. What the rules are concerning flipping houses when you are an agent?
  4. What’s the deal with credit scores? Is it 580, or 620?
  5. Is there a new rule concerning raising the asking price to cover seller help?

Now, I KNOW, I read that they suspended the 90-day seasoning requirement and investors were jumping for joy thinking this applied to them- but then the FHA came out with more precise language. If you want to wade through it all you can do so by going to THIS LINK on HUD’s site.

The general consensus seems to be that the suspension applies only to buyer’s who are buying foreclosures from banks or clearing houses that sell bank REO’s – NOT – flipper who happen to get there rehabs done and sold under 90-days.

Tell me what you think. Tell me what you know! C’mon and chime in here and regale me with your knowledge on the subject.

More Helpful Links

FHA 90-Day Rule

FHA Considers Down Payment Requirements

FHA Increases Minimum Credit Score Requirement