Thursday, May 04, 2006

How to Find Foreclosures in your area

There are so many ways to find foreclosures in your area. I tell people to pick one or two ways that they like and work it at least four days a week. My favorite ways are letters and flyers. Some people are good at finding phone numbers, others use bird dogs (people who bring customers to you) some use the yellow pages, classified ads, realtors, and trades people such as plumbers, electricians, and carpenters.

I get a list that is updated daily, from the register of deeds. I then go thru the list and look for homes with equity in the areas that I like. Using my computer, I print out personalized letters and envelopes that I mail to each homeowner. I do this at least three times during the foreclosure process. Then I go out and deliver flyers to their front door on the first day the notice of default is filed at the register of deeds. That way I am one of the first to the door.

Why be first? My philosophy is be first last and in the middle so I am First to mind when the homeowner realizes that they must do something to solve the Foreclosure problem.

So you are first of mind when they think about solving the problem but what are you going to do to stay in first place and not get knocked out by the completion? You must come up with a unique selling proposition. Something your completion is not doing. In my area, homeowners in Foreclosure may receive up to thirty letters and flyers plus a dozen or so people knocking on their door and asking them to sell. You must do something different to set yourself apart from the completion. I have two things I do that work well for me. You need to come of with one or two and use them to set yourself apart and get the homeowner to call you when they realize they need to solve the problem.

Tuesday, April 25, 2006

Foreclosure ad writing

Writing ads for Real Estate wanted is a study in headline writing. Newspaper classified ads are a practice in economy. You have to wow the reader with your first few words otherwise they will skip on down to the next ad leaving you for someone who tells them what they want to hear within the first 3 seconds.

You have three seconds to get them; the time it took you to read this line, maybe less.
How do you get there attention and more importantly how do you get them to pick up the phone and call you. What do you say to them when they call? How do you find out if they have what you want and if you have what they want. All good questions and the answers are the key to making a profit from the ads.

There are several ways to write headlines, some people use shock, others say what they have to offer, some use cute lines. The most important thing to remember is seller are primarily interested in themselves. What the seller is saying to himself, as he reads down the column of ad is, What’s in it for me? What do sellers want? They want the most cash for their house, The fastest closing, no need to clean up there mess, plenty of time to move, no need to spend anymore time or money repairing the house. Somebody to listen to them and understand there needs.

Your headline in the ad needs to grab the sellers attention and tell him/her what you can do for them.

Tuesday, April 18, 2006

The Heavy weights of Detroit Foreclosure Investing

Learning about Foreclosure investing from the heavy weights of foreclosure investing.

When I realized how little I knew about Foreclosure investing I decided to apprentice under experienced investors. Since I was inexperienced, knew very few people in the foreclosure community, I started looking in the want ads under Real Estate agents wanted. As fate would have it I found what I was looking for one Sunday in the Detroit Free Press.

The ad said Real Estate investor seeks Agents to sell his inventory. I called and got their address and drove by the building. The sign outside said "The Real Estate Building." The building was a one story brick build around 1955. The neighborhood was called Rosedale park and it is a nice area with many colonials, ranches, and a few bungalows. Located near the Southfield freeway and McNichols Rd, the neighborhood is considered a good area. (Six mile for all you Detroiters) I later found out that my grandfather had delivered milk for Twin Pines Dairy in the same area.

I scheduled an interview with the sales Broker, Steve Barnes. Steve was A jovial guy who assured me that working for Jerry Waechter would be good experience and Jerry always paid his agents what he owed them, unlike Bruce Schlulseal of Gannon real estate who apparently had stiffed Steve some years back. Steve gave me a tour of the "Real Estate Building" and showed my where I would be sitting. The agents sales floor was a long narrow room with four cubicles on one side and three semi enclosed offices on the other. At the front of the sales floor was the receptionists desk. Separating the receptionist from the main lobby was a one inch piece of bullet proof glass and a huge steel door that Marion the receptionist had to buzz you in from. A big sign in the lobby said NO Cash Please.

A big reason for all the security was because a few years before I was hired one of the business owners on McNichols had been shot. So Jerry took some of the staff and moved to the Town Center buildings in Southfield, leaving the sales department in Detroit. The bad thing for me was that I would have little access to the buying operations.

What I did learn from Jerry was that buying was the most important step in making money in Real estate. You make money when you purchase the property. You simply collect the money when you sell the property. In other words if you pay too much for the property you won't collect much money when you sell.

Jerry did most of the buying for his company and that showed me how important the task was. Jerry used many methods to get sellers to call him. One day I got to see the accounting books and the first thing I wanted to know was how much Jerry spent on advertising. Jerry spent around $10,000 a month on Direct mail, newspaper ads and yellow page ads. Now let me put that into perspective. when I worked for Jerry we sold anywhere from fourteen houses a month to twenty seven houses a month. Jerry’s minimum profit per house was $10,000 net. Now that profit was after all repairs, insurance, property taxes utilities decorating costs, and sales commissions where paid but before office overhead, advertising, salaries of office staff etc.

Most of us don't have 10,000 a month to spend on advertising. I looked at what was the cheapest way to reach the most people. I decided to use the Sunday Detroit Free Press to attract sellers. If I spent $100.00 a week on an ad or $5,200.00 a year and I got one house that earned me at least $15,000 after repairs and holding costs; then it was worth it to run the ad every week. I ran the ad in the section called "real estate wanted," Sunday was the only day I ran the ad because the Sunday free press had the highest circulation. It worked for me because I worked it every week. Some weeks I didn’t get any calls and other weeks I got calls from people who wanted me to pay full retail for their homes. Then, bam! I would get a call from someone who was ready, willing and able to sell me a house so cheap that I would be able to repair it, market it and sell it to collect a decent profit.

To Recap

1. Buying real estate is one of the most important steps in the path to profits because you make the money when you buy, you only collect it when you sell.

2. Pick one or two ways to get sellers to call you, then work them.

3. Find a mentor to apprentice under so you learn how to advertise for, buy, repair and sell homes.

Next post, I'll show you how to write an ad that gets calls.

Monday, April 17, 2006

My First Experience With Foreclosures

Buying my first foreclosure in 1994 was both scary and exciting, I had never owned a house, the realtor assured me that I was buying a house that would make me lots of money. Having no idea how to "run the numbers" I had to take his word for it. My credit was bad and I had no cash. I even pawned my watch to get the down payment.

The house was a HUD house and I had thirty days to come up with the $17,000 thousand dollars. I had no idea how or who I would get the money from. I asked the realtor what I should do. He told me to call my relatives. I called my Grandpa and he said "I am not buying a house in the inner city." I called my Dad who said, "not in that neighborhood." Luckily, the realtor had a back up buyer. I was able to get my five hundred dollar deposit back and get my watch out of pawn. Although I didn't get any profit from the transaction I realized how little I knew about buying and selling foreclosures.

Before I bought my first house, I had attended two foreclosure seminars and bought hundreds of dollars worth of tapes, The tapes and seminars hardly prepared for the reality of foreclosure real estate investing. Now that I am experienced I realize that the tapes and seminars I had listened to where just stories that didn't teach you the fundamentals of foreclosure investing.

It took me two years of apprenticeship, under experienced real estate investors, to learn the fundamentals of foreclosure investing.

Since 1996 I have been actively involved in successful foreclosure investing. I am proud to say I have not lost money on any homes. A couple of homes came out with some slim profits but only if I violated the rules of foreclosure real estate investing. Just like any game you play, you should know and follow the rules.