The Art of REOs

- - Borrowing

We’ve talked about Equity Deals and Attending Foreclosure Auctions. But what happens if no one bids on a property at auction and how can you benefit? If you’re unfamiliar with the process, listen up! This alternative property acquiring technique is not only a viable option (especially to those without cash to purchase homes), but thousands of people just like yourself obtain properties this way every year.

What happens to an unsold house?

When an auction house has not sold, ownership of the property transfers to the foreclosing lien holder. When the principal owed, interest accrued, foreclosure fees, and other expenses total more than the value of the property, there is no equity to attract third party bidders. So, the property reverts to the lender for the opening bid amount. At this point, the bank now owns the property and the mortgage that was in default no longer exists.

This property is now referred to as a REO or Real Estate Owned property.

What bank does to it?

Most of the time, the bank handles the eviction of any tenants or homeowners lingering in the property. This saves you a tremendous amount of time and energy. They’ll usually take care of some needed repairs—anything that poses an immediate danger or threat to the property’s condition such as missing exterior doors, unsafe wiring, or winterizing the property should to stay vacant. They’re not going to sink any more money into a house than needed. And why would they? They’re likely taking a loss on the property.

The house is now sold “as is,” with the condition of the property already in mind.

Other benefits

With the bank expunging any second or third liens on the property by this time, you’re looking at a clearly cheaper piece of property than if you’d worked directly with the owner.

Another upside to buying REOs is the ability to look at the property before purchasing it; a luxury not often awarded when buying at auction. You’ll also be able to have the property fully inspected to determine the estimated cost of repairs to bring the house up to full market value.

Not only are you paying below market value for one of these properties, there never seems to be a shortage of inventory.

REOs are not always made available to the public. Banks generally like to make these properties available to investors. Although they prefer to bundle them and unload a big batch at a time to million-dollar investors, you can take advantage on a single property basis.

As an added benefit, you can often save money by using the same title company that the lender used during foreclosure.

Where to Find Them

First the obvious; pick up the phone and call the bank. Because banks don’t want the properties (they want the money), they normally have entire departments that handle foreclosures and REOs. You can contact the REO or Asset Management department of the bank or mortgage company for information on available properties.

Network with real estate professionals. (How many networking events have you attended this month? Was it at least 4?)

Contact a local real estate agent, preferably one with experience working with REOs who can supply you with a list of primary lenders. If you need help finding an agent, check out my guide HERE.

When in doubt, go online. Any search engine will produce a multitude of leads for you to wade through. Type in “foreclosures” or “bank owned properties” with your target town and state. Just set aside some time; you may have to do a little digging.

Another way to find REOs is to track a property you’re interested in from the day the first. You can contact the individual conducting the sale to follow up on the status of the property. It can be more profitable for you to purchase a property after it goes unpurchased at a foreclosure auction, especially with consideration to any other liens, interest, or fees the bank has now cleared.

How to make an offer

Some buyers misunderstand the bank’s motives, thinking that banks are in a hurry to sell these properties, but that isn’t true. The bank has the money, they’re not paying interest on the property and don’t have holding costs associated with it. They aren’t in a rush, so never assume they are motivated when you make an offer.

Still, make sure to run proper inspections to understand what you’re offering on. Check all major factors: the condition of the roof, foundation, plumbing, electric, insect problems. Like any property you purchase, you’re not only offering on the property, you’re inheriting all its problems. Although the bank is not likely to discount the property greatly—understanding they are selling it “as is”—you can still factor these into your offer.

Your offer should include inspection contingency time frames that allow you to cancel the offer if your inspections uncover unacceptable damages.

Once you make an offer, they are likely to counter. Often, they do this to show their shareholders and auditors that they’re doing their part to get the best possible price. Don’t be afraid to counter back.

With your offer, always include a pre-approval letter from your lender to make your offer as attractive as possible. Don’t have a pre-approval letter? No problem. We can help you with that. In fact, if you attend a Funding Tour we will give you a pre-approval letter for up to $250,000. Not a bad deal considering the valuable education you’ll receive and the valuable, hands-on experience we’ll pass to you! For details, visit fundingtour.com or call us at 800-533-1622 to secure your spot.

Now what?

Be patient and consistent! 

To Your Success;

Lee A. Arnold

CEO

The Lee Arnold System of Real Estate Investing

Follow me on Twitter: @CogoCapital  and @LeeArnoldSystem 

Have a deal? Visit us at www.cogocapital.com to fill out your fast and easy quote. Want to learn more about COGO first? CLICK HERE to get to know all the ins and out!

Warm up to Cold Calling

- - Communication

What if I told you that you’re sitting on a gold mine?

At one of my recent events, I had a woman in the crowd who told me, “Lee, I want to grow but I don’t want to make outbound calls.”

I said, “Well, I’ll make you a deal. I’ll hire you to come work in a cubicle in my office as a full-time employee, give you all the leads you need, give you a phone and a script and all you have to do is sit there and dial all day, every day, and I’ll pay you $100,000 a year. You’ll have to move out to my office to do it.”

She looked at her husband and says, “I’ll take the job. We’ll move 3,000 miles to come work for you to make $100,000 a year.”

Who out there would like the same opportunity? Do I have your attention?

Now, wait. I’ll tell you the same thing I told her. I said, “I wasn’t trying to employ you, this is just a scenario. But I’m trying to make you understand how valuable your leads are. If I’m willing to pay you $100,000 a year to dial those leads, how much money do you think I’ll make off those sales? I’m looking at a five-to-one or even a ten-to-one return on every dollar I invest in my employees. So, I stand to make up to a million bucks.”

And I’ll ask you the same question I asked her… “Why would you let me make that money if you’re doing the very work that you have to do to make it yourself?”

 

I’ve been in business long enough to know why people don’t pick up the phone and call leads.

  1. You’re afraid of rejection. You never know what is on the other end of the line. Maybe you’ll get hung up on, maybe you’ll get yelled at or asked a question you don’t know the answer to. You’re afraid you’ll be put on the spot without proper preparation and it’s terrifying.
  2. You don’t want to do it. You haven’t seen the benefit of the dial. I can tell you, I’ve made more money on the telephone than any other tool in business. No matter how you’re getting your leads, if you’re not calling them, then that’s money wasted!

 

So, what exactly IS cold calling?

Cold calling is calling a potential client at any given time (not an appointment), following up with potential clients that have responded to your ads, calling people when they have no expectation of hearing from you, or even calling or emailing referrals.

It’s you, the phone, and the unknown.

Why is it necessary?

By now, you should have a good idea why it’s necessary.

In a perfect world, you’d plaster bandit signs on every street corner, mail out fliers to homeowners, and place ads in the local newspaper or on Craigslist and have you phone ring off the hook. But, if the only deals you’re making are a result of people who are reaching out to you, how many more are you missing because you aren’t picking up the phone?

 

How can you do it better?

  • Contact Management System/CRM. Simply put, these are technologies or systems you can use to control your interactions, improve your business relationships, and help retain clients. I like my CRMs to follow up on the leads and get people committed to appointments because I don’t like making outbound calls more than you do. If technology does the hard work for me, I’m suddenly calling someone who is interested in hearing what I have to say, and that means less dialing for me.
  • Hire telemarketers with a script to turn cold leads into appointments. Get your kids to make the calls or pay someone $10 an hour to dial and set appointments. Then, you’re not making cold calls, you’re dialing your appointments because they’ve weeded out your list for you. You can value your time and make calls. (Check out this article on TIME MANAGEMENT.)
  • Be organized. You can use Excel or Google Docs, or even an old-fashioned lead-sheet, printed on paper and filed in a folder. Whatever way works best for you, make sure to notate the lead—“disposition” the lead as called and schedule a follow up. (For more information on the importance of following up, CLICK HERE.)
  • Don’t waste time. Learn to spot a “real client” from a “tire kicker.” It can be hard to decipher at first, but you’ll get the hang of it. A tire kicker might say all the right things to keep the conversation going, and then casually mention that they don’t have any offers on their property, and admit they aren’t motivated. A real, potential client is going to tell you 2 things: What they want and when they want it.
  • It’s a numbers game. For every 30 calls you make, you may get 10 leads, and from those you’re looking at 1 deal. Is it still worth it to make those 30 calls? Yes! You got a deal!
  • Self-analyze. Go over your notes or record the phone call. What could you have done differently? Learn from your mistakes and your triumphs and improve.

Without leads, you don’t have much of a business. But, getting those leads is just one part. Unless you communicate with those leads, it doesn’t matter how good they are or what potential they hold.

If you’re not picking up the phone, you’re sitting on a gold mine without ever tapping into it.

If you’re ready to kick it up a notch, join us for a FUNDING TOUR and we’ll provide you with a $250,000 pre-approval letter to support your next transaction. For more information on what a FUNDING TOUR is and why I believe so strongly that you should attend that I’ll pay for your $497 seat, visit fundingtour.com or call 800-533-1622.

To Your Success;

Lee A. Arnold

CEO

The Lee Arnold System of Real Estate Investing

Follow me on Twitter: @CogoCapital  and @LeeArnoldSystem 

Have a deal? Visit us at www.cogocapital.com to fill out your fast and easy quote. Want to learn more about COGO first? CLICK HERE to get to know all the ins and out!

Finding Remote Deal

- - Borrowing

Maybe you live in the best market available, with potential deals down every street. This guide is not for you (unless you want it to be). Finding a deal in your own back yard is the best way to go, in my opinion. To read more on why CLICK HERE.

But not everyone has the greatest opportunities in their zip code, and that shouldn’t stop you from putting good deals together.

You can find great properties all over the country.


Where Should You Look?

With 50 states, one of which you occupy, it’s impossible to say what would be best for YOU. Is there a hot market you’ve repetitively heard of? Do you have a friend or colleague who brags about the abundance of distressed properties where they live that are getting flipped all the time and selling like hot cakes? Is there an area where you could purchase a house and wholesale it fast?

How Can You Find the Properties?  

How do you get your feet on the ground in another area without being there?

  1. Call a Friend. This also helps narrow down your field of search because you can only call those areas where you have connections. Try a cousin, a friend-of-a-friend, or even connect with a member of a REI group in that town and make a new friend. Use caution: results may vary depending on the motives of those with whom you work.
  2. Use Craigslist and other online platforms (like WeGoLook.com). Not only can you get a glimpse into what other people are listing in your desired areas by checking Craigslist, but you can also hire people to do some ground work. Hop on Craigslist in your chosen location and write up an ad saying that you’re looking for people to drive by properties, take photos, and communicate thoroughly. You can pay by lead or by the hour. Sure, you’ll probably get some seedy people who reply to the ad, but once you weed them out and with a little instruction (Check out this guide on Driving for Dollars), you’ll have someone (or multiple someones) on the ground, bird dogging areas for you.

What Mistakes Can You Avoid?

First, just like any deal, you need to do your research. You should understand the area you’re searching, the neighborhoods that sell fast and which to avoid. Don’t jump into a new market without first researching it.

Along the same lines, you should understand the laws and regulations in each state. At the very least, grab a mentor or coach to step you through what is needed in each step of the process to avoid long-distance mistakes that can cost you big bucks.

Don’t spread yourself too thin searching in so many areas that you can’t keep your finger on the pulse of your region. If you’ve never searched for a deal outside of your town and you’re interested in trying it, start with an area within a day’s drive. Then you can spread your wings further away or out of state.


Finding, wholesaling and even flipping properties from a distance is a bold move. It takes time, research, and know-how. But, it can also mean high profit if done right. If you’re interested, why not try this tactic. Next time there is a Funding Tour outside of your area—a 3-day training where we teach you how to acquire a deal and how to fund it—get out of your area and attend. We go out into that town and tour local real estate deals. What better way to dip your toe in another area than to do so with a professional team!

If you’re interested in attending a Funding Tour, either in your area or somewhere new, CLICK HERE or call us at 800-533-1622. In fact, we believe so strongly that this is the education you need to start with that we will give you a $250,000 pre-approval letter simply by attending.

We’ll see you there!

To Your Success;

Lee A. Arnold

CEO

The Lee Arnold System of Real Estate Investing

Follow me on Twitter: @CogoCapital  and @LeeArnoldSystem 

Have a deal? Visit us at www.cogocapital.com to fill out your fast and easy quote. Want to learn more about COGO first? CLICK HERE to get to know all the ins and out!

 

Blue Tape Inspections

- - Fixing, Flipping

You’re so close to the finish line…don’t stop now!

Just like with new construction, when you’re renovating a house, you need to do a final walk through. Regardless of the size of the project–whether you only needed fresh paint and new appliances or whether it was a complete overhaul–you need to throw your fine-toothed comb in there and pick out all the nicks, splits, and smudges before paying your contractor’s final bill.

Even the best contractors miss things. A final walk through is part of the job. But if you don’t know what to look for, you can end up missing the same things they missed, you run the risk of the potential home buyers pointing it out (or their inspector), and can spend more money when you thought the job was done.

There still may be things you didn’t notice–a bathroom vent dead-ending in the attic instead of going through the roof, for instance–but you can arm yourself for success with a quality walk. To avoid frustration and wasted time and money, review the items you’re looking for before you go in with a roll of blue tape.


First, let’s talk about your tool kit: 

Bring a level, measuring tape, notepad/pen, these checklists, a flashlight, mirror, and your camera phone or a camera to take pictures of problem areas (even if you take notes, you should have a visual on anything larger than a golf ball).


Before you start, keep these tips in mind:

Take your time. Schedule more than enough time for this processes. A quick 30 minutes isn’t going to cut it. If you don’t want your contractors short cutting you, don’t shortcut yourself.

Assure that work is complete before the final paycheck is issued. They want to get paid, so this not only it protects you for the resale value of the home, it motivates them to complete the job.

Stand your ground. If you’ve hired a trusted contractor who’s done their job on time and budget without unnecessary complications or stress (of what THEY can manage), then you should be able to trust their professional opinion at this point. But, don’t let them pressure you into disregarding something that you know needs to be handled. If you have a laundry list of outstanding issues, they should be gracious and eager to fix them. Again, this is a standard practice for them, too. They know it’s part of the job.

Double check it after they’ve gone back in for completion. Keep your notes, pull up photographs, and make sure you have all your questions answered on the spot.


 

Exterior

  • Walk the perimeter of the house to check for cosmetic deficiencies.
  • Check all exterior doors, insuring frames are secured and painted on all angles
  • Walk in and out of each door, looking at the home from every angle to assure everything is painted or stained uniformly and on all sides.
  • Check all windows, insuring frames are secured and painted on all angles
  • Assure the steps, sidewalks, and driveway are free of debris
  • Check that patios, decks, and balconies are accessible, safe, painted, free of lose nails or screws, and free of debris
  • Check window wells on egress windows, assuring they are free of debris, and if covered, that the cover can be removed in the event of an emergency.
  • Check the gutters and downspouts, checking that they are free of debris, in working order, and deposit water into to the ground and not onto another part of the house that can cause rot or damage.
  • Be sure the garage door opens and closes and is sealed securely on all four sides.
  • Open the garage door, especially if it was painted, and check all angles for uniformity.

Doors

  • Open and close all doors. See that doors are well-fitted and operate as intended.
  • Make sure all six sides are painted – front, back, top, bottom, and both ends.
  • Check all locks, including deadbolts, operate properly without binding, and that thresholds are adjusted correctly.
  • Look for warping.
  • Hinges should be clean and free of paint.
  • Sometimes doors must be trimmed to fit. Make sure the cut is at the bottom, that it’s straight, and that so much hasn’t been cut off that the door is now hollow at the bottom.
  • Check that locks are well-installed and do not rattle when the door is closed.
  • Check that the exterior doors have been sealed with weather-stripping.
  • Make sure all closet doors are secure and open and close easily.
  • Make sure all closet door knobs are secure.

Windows

  • Open all windows.
  • Determine that locks operate properly.
  • Tracks should be lubricated to prevent binding.
  • Make sure screens are in place and not torn.
  • Look for broken panes.
  • Check that any glossing was done properly.

Walls

  • Walk the perimeter of each room.
  • Check all floor and ceiling moldings for uniformity, paint/stain, and security.
  • Search for gaps that need caulking, protruding nail heads that need repair, and for proper
  • Scrutinize all wall and ceiling surfaces under natural light and under artificial illumination (close blinds or do so at night if possible). Poorly done drywall work tends to show most when the lights are on.
  • Check for visible seams, nail heads that have popped out and other irregularities.
  • Assure the walls are square, and consequently that it matches the angles in the flooring.
  • Inspect the wall finishes for uneven paint coverage, holidays (or spots with missing paint), and that texture has been applied evenly.

Electrical

  • Check all wall outlets and switches, assuring they operate correctly.
  • Test light fixtures; are they attached securely and contain the correct-wattage bulbs?

Stairs

  • Assure that flooring on stairs is secure, especially carpet. Check the corners.
  • Check handrails for stability and proper height. Most states require the top and bottom to run back into the wall to avoid catching.

Flooring

  • Tile and vinyl flooring should be clean and free of chips and cracks.
  • Check for missing grout, and be sure molding is installed and painted or stained.
  • Walk all carpeted areas, checking for loose fits at the edges, ripples in the middle or squeaks in the subfloor.
  • Walk across all floors in different patterns. You should have minimum squeaks spring when under pressure. Wood floor systems will have some unevenness, this shouldn’t be severe.
  • All flooring types should have a relatively flat surface.
  • Examine seams in carpets and vinyl to ensure they are tight and meet the edges of the room securely.
  • Inspect ceramic tiles for surface cracks. Joints between ceramic tiles should be well-filled with grout. Grout should be in good shape and free of chipping.
  • Inspect flooring for damage.
  • Examine carpeting for stains or shade variations, assuring the correct carpet and pad were used.

Kitchen

  • Check countertops for scratches and abrasions. Counters are a magnet for toolboxes.
  • Make sure the cabinets and appliances are level and properly anchored to the wall or secured to the countertops.
  • Check all doors and drawers. They should open fully and close easily.
  • Assure that every appliance works, is level, and free of debris.
  • Check faucets, outlets, and lightbulbs.
  • Check under the sink for any obvious signs of damage, leakage, or debris.
  • Test the range hood fan and light.
  • Make sure there are electrical outlets above the counter.
  • Check garbage disposal.

Bathrooms

  • Look for scratches and nicks in the sink as well as the shower enclosure and tub. Toolboxes often collect there, too.
  • Check that the sink and tub stoppers hold water.
  • Assure the shower strainer is fastened securely.
  • Flush all toilets.
  • Check that the toilet is securely fastened to the floor by sitting on it. (Don’t test the commode by trying to rock the fixture back and forth as it can break a seal that’s correctly installed.)
  • While sitting there, close the door and closely examine the walls and other surfaces to make sure they are acceptable.
  • While sitting there, check that the toilet-paper dispenser is at the right distance and height to avoid contorting to reach the roll.
  • Check for chips in bathtubs, toilets, and sinks. Check all grout, calking, and seals in the tub, sink, and around the backsplash.
  • Ensure that all faucets work properly, and check under the sinks.
  • Check that cabinets are securely fixed to the wall, all doors open and close easily, and all drawers work properly.
  • Assure that all installed towel racks are done right and will hold the weight of their intended product.

Heating/Air-conditioning

  • Test for cold A/C.
  • Check the furnace and hot water heater.
  • Locate the furnace filters and assure there is one in there.
  • Be sure the heat registers are not located below a thermostat.
  • Check the location and number of cold air returns and make sure they are unobstructed.

You should now feel armed and ready to tackle that “blue tape” inspection. If any of this was new information for you, or you still feel overwhelmed with the process, take a breath and rest assure that we have your best interest at heart. In fact, if this is an area with which you struggle, don’t let the fear of making a mistake stop you. Join us for a Project Management Home Study Course where you’ll learn in vivid detail what you need to know from the very start of a rehab project to the finish line.

If you would benefit from this course, call us at 800-533-1622 to speak with a business consultant to get enrolled. Not only is the return on your investment a wise move for any rehabber, you’ll save time, energy, and frustration by easily learning what TO do instead of difficultly learning what NOT to do.

It’s always easier when the experts help you.

Happy inspecting!

Lee A. Arnold

CEO

The Lee Arnold System of Real Estate Investing

Follow me on Twitter: @CogoCapital  and @LeeArnoldSystem 

Have a deal? Visit us at www.cogocapital.com to fill out your fast and easy quote. Want to learn more about COGO first? CLICK HERE to get to know all the ins and out!

Not as Seen on TV: a Guide to Foreclosure Auctions

Even if you are new to real estate investing, you likely know what a home auction is. You’ve probably even seen one on a TV show where people buy a house, and after thirty minutes of airtime have completely renovated and sold a home. Just as the shows can give an inaccurate representation of the rehab process, they can poorly portray an auction, too.

Foreclosure auctions are a viable way to purchase a hot deal with a healthy profit margin, but let’s clear up some misunderstandings.

If you’ve never been to a home auction, I recommend putting one on your calendar to attend. If you live in or near a city, you won’t have to look hard to find one. They usually take place weekly, if not daily in some areas, and are highly educational.

But, what if you aren’t in a position to buy a home at auction yet? Should you still attend?

Absolutely. And if you can, go with someone who will be purchasing a property to see how they do it. I don’t recommend going in blind, however. Here are 6 things you need to know about real estate foreclosure auctions before you attend.


1. You need cash to bid.

If you attend an auction and plan to buy a property, you need to make sure either you or a partner has the money to place a bid or make a purchase. Very few online and TV advertised auctions have available financing.

If you don’t have cash, should this stop you from attending? No! An auction is an excellent place to network. You see that guy over there that just purchased a house for $80,000? Let’s say you’ve run the numbers on the property and the MOA (maximum allowed offer, or bid in this case) is closer to $100,000 to allow enough profit after repairs. Go over to that guy with a business card and make him an offer!

If you say, “Hi there, I’m a real estate investor, too. You just purchased that property for $80,000. How would you like to sell it to me right now for $85,000?” What do you think he’ll say? With a little paperwork and almost no time invested, he’s just made $5,000 (unless he’s smart enough to counter), and you just got a house that you can finance with private money.

I tell people to do this to me at auctions all the time, and they rarely do. It blows my mind! Take the opportunity.

2. Anyone is allowed to bid at auctions.

Some foreclosure auctions require a bidder’s fee of a minimum amount (i.e. $10,000) to prove you have money. You may have to arrive at an auction with a cashier’s check made out to yourself to prove you have money. If you win the bid, you have to sign over your cashier’s check and the remainder of the amount by the close of the next business day. The deed will come in the mail 2-3 weeks later.

(Check the individual rules for each state and each auction as they vary. This is an example.)

Do your research on what the auction requires and be prepared.

3. Always know what lien you’re bidding on.

A property lien is “a legal claim on a tract of real estate granting the holder a specified amount of money upon the sale of the property. Such liens are often used to ensure the payment of a debt, with the property acting as collateral against the amount owed. A mortgage is the best example of a property lien.” (Definition according to Investopedia.)

Have you ever been to an auction where a “property” goes for as little as a few thousand dollars? There are markets where this happens, but the more likely reason is the bid is actually on a second or third lien against the property.

There’s money to be made in having a second or third lien position, but this can be an incredibly costly mistake if you don’t know what you’re doing. You do not want to inherit all the other liens on top of your bid if you can’t afford to buy them and the numbers don’t make sense for you to finance it.

Let’s say you purchase a 2nd lien and inherit the first lien, which is of a substantial amount. You would need to pay that loan off, too, including any past due interest and foreclosure fees and any past due property taxes. The first lien could still foreclose on the property if the loan is not paid off on time to stop the sale. If the first is foreclosed, then anyone who purchased the 2nd could then be wiped out.

Know what lien you’re bidding on by doing your research first. If you want to attempt bidding on a 2nd lien because the property is oh so tempting, know what you’re doing first. In fact, I recommend having an expert on your side. Let us know if you need help with that! Call us at 800-533-1622.

4. Research the properties.

Before attending an auction, drive by the ones you’re interested in to get a good look at them and their context. Make sure you check the property condition and neighborhood. Check whether the property is vacant or occupied. Is it located on a major street or intersection? Kick the tires here, walk the perimeter, do your due diligence. It’s worth the small investment of time to make sure you’re not bidding on something that could sink you.

Also, find out whatever you can about the property. Knock on a neighbor’s door and ask a few questions. Pull the numbers on the property and the comps in the area. Arm yourself with as much knowledge as possible before you put your money where your mouth is.

5. Pay attention to “Redemption Rights.”

Check the laws in your state. Some states allow a homeowner to buy back the property within a period of time if they’ve lost it to foreclosure. You’ll want to be aware of this before you spend money on a property that isn’t yours yet.

6. Secure the property.

Once you own a property purchased at auction, and you are clear of any “Redemption Rights,” move quickly to secure the property. If the property is occupied, call your real estate attorney to start processing an eviction. Call your general contractor to discuss the work and estimates. Start changing locks, boarding up windows and cleaning up. Do a walk through to assess what needs to be repaired and build a budget. Don’t sit on a property, push forward ASAP. Time is money, especially if you have any amount of financing on the property.

Would you like the chance to attend an action with me? Call 800-533-1622 to learn about attending my Inner Circle where you can even attend an auction with me, and get the inside scoop.


2 Bonus Benefits of Attending Foreclosure Auctions:

1. Networking.

Even if you don’t approach a bid winner and offer to purchase their newly awarded property, you can still visit with a stack of business cards and network with people. This is an excellent way to meet people that you may someday wholesale a home to or purchase a house from one day.

2. Staying aware.

Not only do you keep an eye on other investors in your area (what they’re doing, who they’re working with, who you can work alongside), but you gain a consistent feed of information. You can find out which neighborhoods are consistently repeated at the auction (and are worth driving though) and at what amounts others are purchasing properties for.


Like anything else, you want to prepare yourself before you start spending money. If you aren’t “there” yet, let us help you. Have you attended a Funding Tour to learn the basics and tour houses that need to be rehabbed? Have you worked with a coach to understand what you’re fully capable of and how to take the next steps toward success?

Remember my motto, “We get more of what we want by helping you get more of what you want.”

What do you want and how can we help?

To Your Success;

Lee A. Arnold

CEO

The Lee Arnold System of Real Estate Investing

Follow me on Twitter: @CogoCapital  and @LeeArnoldSystem 

Have a deal? Visit us at www.cogocapital.com to fill out your fast and easy quote. Want to learn more about COGO first? CLICK HERE to get to know all the ins and out!

#1 Proof of Funds Mistake

If you’re crunching the numbers, making consistent offers that are at your MAO (maximum allowed offer), and you’re coming up bust, you may be making the #1 mistake with your Proof of Funds Letter.

But before I tell you what the #1 mistake is, let’s talk about rejection. Having your offer rejected is common. In fact, if your offers aren’t getting declined consistently, you aren’t making enough offers! Remember how we talked about making an offer on every single place you look at? (READ MORE HERE!) Even if your offers are strong, you’re still going to have some dismissed.

It’s a numbers game, and it’s all a part of real estate investing.

First, look at how many offers you are making every week. Is it enough to sway the numbers in your favor?

Good. Now, why aren’t you having more of your offers accepted?

You can greatly increase your chances of having your offers accepted or countered with one little thing, and I guarantee you aren’t all doing it.

The #1 mistake people make with a Proof of Funds letter is not using one!

The seller wants to know if you have:
a. Cash
b. Financing

If you don’t have a briefcase full of cash to hand over (okay, that’s not how it works, but it might as well be for the majority who don’t have the funds), then showing that you have financing is your next best level of support to your offer. But you don’t get financing first, you find the deal first. (READ HERE FOR MORE.)

Catch 22?

Nope.

The bridge between having proof of the funds before you have the funds (because you have to find the deal first) is the Proof of Funds letter. It’s an easy solution, and thousands of people use it to support their offers and gain traction in acquiring more houses.

What is it?

Before an agent agrees to work with you, they often require a Proof of Funds letters. And many times, a Proof of Funds letter is required along with a purchase offer contract in real estate transactions.

In short, a Proof of Funds letter gives you, the investor, verification to provide to the seller of a property that you have the funds available and ready to use toward the purchase. You can provide this letter to the necessary parties involved in your real estate transactions, proving that you have access to the funds to buy the property.

Why does it matter?

Some buyers will argue that a Proof of Funds is unnecessary or unimportant. Some (especially those doing well for themselves) may even see it as insulting.

Don’t take it personally. It’s a good business practice. It can set your offer above the others, make it more enticing for the seller, and give you a leg up on the competition.

This letter shows that you are capable of affording a large-scale purchase, such as a house. The document is relevant to the seller and anyone else involved in the deal. It’s easy to obtain and increases your chances of having an offer accepted.

If you have a proof of funds letter, use it. It’s an easy mistake to avoid!

If you don’t, how do you get one?

That’s the best part! Cogo Capital® makes it incredibly easy to generate a Proof of Funds letter to provide to real estate agents or other interested parties.

Visit https://cogocapital.com/lp/home/get-a-proof-of-funds-letter/

Need one that’s greater than the dollar amount available online or have questions about restrictions? Call COGO Capital at 800-747-1104 for more information.

If you’re ready to kick it up a notch, join us for a FUNDING TOUR and we’ll provide you with a $250,000 pre-approval letter to support your next transaction. (A pre-approval letter provides documentation of exactly how much you have been approved to borrow.) For more information on what a FUNDING TOUR is and why I believe so strongly that you should attend that I’ll pay for your $497 seat, visit fundingtour.com or call 800-533-1622.

To Your Success;

Lee A. Arnold

CEO

The Lee Arnold System of Real Estate Investing

Follow me on Twitter: @CogoCapital  and @LeeArnoldSystem 

Have a deal? Visit us at www.cogocapital.com to fill out your fast and easy quote. Want to learn more about COGO first? CLICK HERE to get to know all the ins and out.

Finding Owners of Vacant Houses

An investor recently asked me on Twitter, “I see vacant houses down the street. How do I find the owner? #asklee”

Whenever you’re driving or riding in a car, bus, uber, or taxi, you should be looking for vacant, boarded up, distressed properties, FSBO (“for sale by owner”) properties, and houses for rent. When you see these house, especially when you target specific areas to know when people are moving in and out, you can capitalize on the potential purchase of a property, but only if you can find who owns it.

Sometimes, it can take some time and effort to find these owners, but once you do, you have a chance that they will be motivated to sell. And that’s great news for you!

Here are a few ways you can uncover the owner of that vacant, distressed house, ready for the real estate pickin’.

ONLINE

Often, you can find this information directly on the internet.

Go to http://www.netronline.com/ Click on “public records,” then your city and state.

COURTHOUSE

Once you have the address, you can physically go down to the courthouse to find the owner’s name in the public records.

THE NEIGHBORHOOD

Stop by and knock on some doors. Talk to the neighbors on both sides, in front, and behind until you find someone who knew them. If you can get a name, you can look them up in tax rolls, appraisal districts, in the phone book, or online. Sometimes, they may know where the owner moved or have their phone number.

This can be one of your most beneficial resources because a vacant or distressed home can bring down the value of a neighborhood. When you introduce yourself as an investor looking to fix up and resell the property, you’re more likely to garner cooperation.

MAIL

Send out two letters, one to the address of the vacant home with the intention that the post office forwards it to the new address. The other, send to the address with the words “Address Service Requested; Do Not Forward” on the envelope.

UTILITIES

Check with the utility company to see if the owners set up a new account under the same name. They are not required to give you the address, and often won’t, but you might learn whether they are still in the area or not.

REVERSE DIRECTORY

If you have an address but not the name, try using a reverse directory to look up the owner. You can find one quickly online (try reverseaddress.com) or in the reference section at your local library.

FLYERS

Sometimes, the owners or family members of the owner will come back to the property to retrieve something, check on the house, or get the mail they forgot to forward. Leave your information on a flyer, business card, or letter for them to find. If they’re motivated to sell, they’ll reach out.

You see these homes everywhere. Now that you know how to find the owners, there’s no excuse not to reach out. The more you find, the more you contact, the more offers you make, and the closer you are to grabbing that next great deal before someone else does!

I can’t share my best secrets on here, but if you’d like to know more about what to do next, join me for an upcoming FUNDING TOUR or one of our specialty labs. For more, call us at 800-533-1622.

Have a question? Hop over to my Twitter at  @LeeArnoldSystem , follow me, and use the hashtag #asklee, and then check back here often to see if I’ve answered your real estate question.

To Your Success;

Lee A. Arnold

CEO

The Lee Arnold System of Real Estate Investing

 

Follow me on Twitter: @CogoCapital  and @LeeArnoldSystem 

Have a deal? Visit us at www.cogocapital.com to fill out your fast and easy quote. Want to learn more about COGO first? CLICK HERE to get to know all the ins and out!

Don’t Look Without Offering

There are few similarities between purchasing your home (your primary residence) and buying a distressed house with the intent of fixing it and retailing it back into the market.

For instance, when purchasing your own home, you will look at the house before deciding to make an offer. You’re going to make sure it’s a layout you like, and the quality is what you expect.

That isn’t the case when looking at an investment property.

You don’t always get the opportunity to look at a distressed home before buying it. At auction, for example, you may have driven by the property before putting in a bid. But if you find a property on the MLS or made an appointment with the owners, if you have the option to view it, you better be ready to make an offer.

 

WHY LOOK AT IT, THEN?

 

Contrary to popular belief, you don’t get in your car, drive across town to look at a property to determine IF you’re going to buy it or not.

You look at a property to determine the price you’re going to offer! You need to already have numbers on paper of what the property is selling for, what it’s worth after it’s fixed up (the ARV, or After Repair Value), and what the comps in the area are.

“But what if it has mold?” 

Then the price goes down.

“But what if it has fire damage?” 

Then the price goes WAY down.

 

WHY ELSE?

 

Sure, if you’re a newcomer and you see a house that you know is way over your head, I’m not saying that you’re locked in just by looking at it. As long as you have leads flowing and more houses lined up, pursue the next one. But you better have an offer ready, even if it’s a low-ball one.

 

But why?

 

Looking at a house without the intent to make an offer can kill your productivity.

 

  1. It’s a waste of your time. Looking at a property without intended commitment isn’t income producing. I can’t tell you how many people are afraid to make an offer because they think their MAO (maximum allowed offer) is too low and they figure the process will be a waste of time. Then, someone else comes along and gets that property for the same amount or less! It doesn’t happen every time, but you don’t know unless you try, and you’re not trying out of fear.

 

  1. You haven’t given feedback to the owner about what the price should be. If you’re looking at a FSBO (for sale by owner) property and they’re asking too much, your first inclination might be to let someone else burst their bubble. Many homeowners, regardless of whether or not they’re in distress, put an unrealistic price tag on a house from sentimental value alone. If you don’t give them an appropriately priced offer, they may never get any offers, and then they may end up TRULY distressed.

 

  1. It creates a false sense of accomplishment. If you have to make an appointment, get in the car, drive across town, put on your professional slacks and smiles, and take the time to view a property, you’re going to wipe your brow when it’s over and feel accomplished that you took a step.

 

I’m all for taking one step after the other, but the work has barely begun. Don’t pat yourself on the back just yet! Take the next step and write the offer!

At first, it can be tricky knowing what to do and what not to do, what to look for, how to write up an offer, how to communicate with a homeowner, etc. You may feel like you need to ease in, like inching forward in the icy water, acclimating with each step.

 

Jump in!

 

Not only will you acclimate faster, you’ll make all your mistakes right away (because you WILL make mistakes), and then you can move on to success.

If you want to make less of those mistakes, know what to do, what to say, and how to offer, might I suggest some assistance? If you can’t catch one of our upcoming FUNDING TOURS (ask us how you can get your $497 ticket paid for and a $250,000 pre-approval letter just for attending), try jumping in full force by getting a coach. For more information on what will help launch you forward into making offers faster, call us at 800-533-1622, and we’ll help you figure it out.

Don’t view a property just to see it. See it with the intention of making an offer.

Otherwise, spend your time on things that are income producing.

 

To Your Success;

Lee A. Arnold

CEO

The Lee Arnold System of Real Estate Investing

Follow me on Twitter: @CogoCapital  and @LeeArnoldSystem 

Have a deal? Visit us at www.cogocapital.com to fill out your fast and easy quote. Want to learn more about COGO first? CLICK HERE to get to know all the ins and out!

Don’t Look Without Offering

There are few similarities between purchasing your home (your primary residence) and buying a distressed house with the intent of fixing it and retailing it back into the market.

For instance, when purchasing your own home, you will look at the house before deciding to make an offer. You’re going to make sure it’s a layout you like, and the quality is what you expect.

That isn’t the case when looking at an investment property.

You don’t always get the opportunity to look at a distressed home before buying it. At auction, for example, you may have driven by the property before putting in a bid. But if you find a property on the MLS or made an appointment with the owners, if you have the option to view it, you better be ready to make an offer.

WHY LOOK AT IT, THEN?

Contrary to popular belief, you don’t get in your car, drive across town to look at a property to determine IF you’re going to buy it or not.

You look at a property to determine the price you’re going to offer! You need to already have numbers on paper of what the property is selling for, what it’s worth after it’s fixed up (the ARV, or After Repair Value), and what the comps in the area are.

 

“But what if it has mold?” 

Then the price goes down.

“But what if it has fire damage?” 

Then the price goes WAY down.

 

WHY ELSE?

Sure, if you’re a newcomer and you see a house that you know is way over your head, I’m not saying that you’re locked in just by looking at it. As long as you have leads flowing and more houses lined up, pursue the next one. But you better have an offer ready, even if it’s a low-ball one.

But why?

Looking at a house without the intent to make an offer can kill your productivity.

 

  1. It’s a waste of your time. Looking at a property without intended commitment isn’t income producing. I can’t tell you how many people are afraid to make an offer because they think their MAO (maximum allowed offer) is too low and they figure the process will be a waste of time. Then, someone else comes along and gets that property for the same amount or less! It doesn’t happen every time, but you don’t know unless you try, and you’re not trying out of fear.

 

  1. You haven’t given feedback to the owner about what the price should be. If you’re looking at a FSBO (for sale by owner) property and they’re asking too much, your first inclination might be to let someone else burst their bubble. Many homeowners, regardless of whether or not they’re in distress, put an unrealistic price tag on a house from sentimental value alone. If you don’t give them an appropriately priced offer, they may never get any offers, and then they may end up TRULY distressed.

 

  1. It creates a false sense of accomplishment. If you have to make an appointment, get in the car, drive across town, put on your professional slacks and smiles, and take the time to view a property, you’re going to wipe your brow when it’s over and feel accomplished that you took a step.

 

I’m all for taking one step after the other, but the work has barely begun. Don’t pat yourself on the back just yet! Take the next step and write the offer!

At first, it can be tricky knowing what to do and what not to do, what to look for, how to write up an offer, how to communicate with a homeowner, etc. You may feel like you need to ease in, like inching forward in the icy water, acclimating with each step.

Jump in!

Not only will you acclimate faster, you’ll make all your mistakes right away (because you WILL make mistakes), and then you can move on to success.

If you want to make less of those mistakes, know what to do, what to say, and how to offer, might I suggest some assistance? If you can’t catch one of our upcoming FUNDING TOURS, try jumping in full force by getting a coach. For more information on what will help launch you forward into making offers faster, call us at 800-533-1622, and we’ll help you figure it out.

 

Don’t view a property just to see it. See it with the intention of making an offer.

Otherwise, spend your time on things that are income producing.

To Your Success;

Lee A. Arnold

CEO

The Lee Arnold System of Real Estate Investing

Follow me on Twitter: @CogoCapital  and @LeeArnoldSystem 

Have a deal? Visit us at www.cogocapital.com to fill out your fast and easy quote. Want to learn more about COGO first? CLICK HERE to get to know all the ins and out!

S.W.O.T. Analysis

Last week over on my Lee Arnold Blog, I wrote about 5 of the best qualities of a CEO. Today, I’d like to do a deep dive into what it takes to get you there.

There are so many traits a good CEO must have. But, how can you understand and pile on a bunch of positive attributes if you don’t know where you currently are and how you can improve?

You need to start with the basics; a baseline of self-discovery to build upon or trying to stack traits could feel like throwing wet noodles against the wall. Some might stick, but most will fall behind the stove.

Grab a sheet of paper and set it up like the photo below (or print this PDF here: S.W.O.T)

Print me!

Strengths:

 

First, list all your strengths.

 

– What do you do really well?

– Who do you have on your team?

– What do you offer that is different/better than your competitors?

– What parts of your business are you passionate about?

(Without passion, you won’t make much money, but without money, you’ll lose your passion!)

– What are your business strengths? Are you detail oriented, outgoing, analytical?

– What are the assets you can contribute?

 

Weaknesses:

 

 Next, catalog your weaknesses.

 

– What parts of business are you weak at?

– What are the weaknesses in you that others are likely to see?

– What do you despise doing?

– What can you delegate/avoid?

– What weaknesses can you work to improve or manage around?

– What factors are costing you money and need to be addressed ASAP?

 

Understanding your weaknesses is vital to your success. It shows you where you need to navigate, what you can delegate for the best results, and hints at what you can automate for optimal time management. No two businesses are alike, as everyone has different strengths and weaknesses.

 

Opportunities:

 

It’s important to know what you have going for you. List your opportunities.

 

– What opportunities exist for you? Time, marriage/partnerships, being close to retirement, having money to invest, skills, education?

– Look at the people you can get to know, the events you can attend, the connections you can make.

 

Threats:

 

Don’t be shy. What is threatening your business?

 

– What obstacles are you facing? Cash flow problems? Time constraints?

– What are your competitors doing?

– Is your spouse not on board? (Convincing your spouse may be your biggest sale, but I highly recommend you get on the same page before moving forward.)

 

Like knowing your weaknesses, understanding your threats is essential for the prosperity of your business. Though it isn’t fun to dive into the aspects that are potentially menacing, it’s much more threatening not to.

 

Take the time to analyze yourself and your business, then press forward. Attend conferences, hire out your weaknesses, and focus on building and USING your strengths. Take advantage of your opportunities and decide how to handle your threats. In this, you’ll propel your work forward.

To Your Success;

Lee A. Arnold

CEO

The Lee Arnold System of Real Estate Investing

Follow me on Twitter: @CogoCapital  and @LeeArnoldSystem 

Have a deal? Visit us at www.cogocapital.com to fill out your fast and easy quote. Want to learn more about COGO first? CLICK HERE to get to know all the ins and out!