Category "Property Evaluation"

Are Flipped Houses Bad for the Housing Market?

Do Flipped Homes Dramatically Change the Housing Market?

When it comes to investing in distressed homes, I’ve heard it all.

You probably have, too, especially if you’ve been in the industry long enough and have explained what you do to enough of your friends and family.

Most recently, I had the opportunity to tackle a concern from an upset buyer who claimed that the rise in renovated houses was ruining the housing market. Coming to Spokane, Washington from a larger market where home prices had risen steadily over recent years, he noticed a correlation between the higher number of area investors and associated the two. According to him, flipped properties forced surrounding housing prices up so high that he could no longer afford to live in his desired neighborhood.

But does his concern hold water?

Do increased home values affect the economy?

Or is this a chicken vs. egg argument?

The economy is cyclical, with natural periods of expansion and recession. As such, one can assume the housing market is, too, and that anything that drives up the housing market—such as increasing home values—affects the economy. But does it?

In this business, we work off percentages and margins. In a volatile economy, those margins shrink, and when the economy is good, we have more opportunity to profit.

If the economy is doing well and unemployment is low, the demand for housing increases, and in turn, so does the cost of housing. Conversely, when the economy drops, and budgets tighten, the money allocated by the average American family for general upkeep on a property is shortened to cover the basics, like the mortgage, and housing values decline. Stretch this out long enough and extreme enough, and neighborhoods values reflect the dropping home values.

It is fair to say that the economy influences the housing market more than the housing market influences the economy.

Regardless of how simplified we’ve made the economic cycle here or how many details we’ve left out, the real issue is why anyone would believe flipped houses in any neighborhood would affect their buying power. It sounds to me like we’re dealing with a potential homeowner who would rather avoid bringing value and motivation to his market rather than live among distressed homes.

Instead, flipping breathes new life into communities by giving qualified buyers a chance to live in their dream home and adds value to the hardworking homeowners in the area who don’t want to live among run-down properties.

For investor lending, Cogo Capital offers quick turnaround, excellent terms, and millions to lend. Cogo Capital serves both local and national real estate investors, real estate agents, and private money lenders in quality, multiple loans.

Let’s make our communities stronger, increase values, and make real change in this oscillating world.

If you want to make a difference in your area’s communities, join us at the Lee Arnold System of Real Estate’s Master Lien Abatement specialty lab. To learn more about acquiring houses for pennies on the dollar, becoming the go-to investor in your town for nuisance properties, and flipping for huge profit, <CLICK HERE> or call NOW at (800) 473-6051. 

Your Neighbor;

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!

Determining Your Property Values

Determining Your Property Values

Before you place a bid at a foreclosure auction, you need to understand what a home’s value is. You should also know the property’s lien position, do a title search, understand your exit strategy, and get your financial ducks in a row.


To read more about the other steps <CLICK HERE>


1) Drive by the Property

We need to drive by the property. Do not buy a property if you or someone you trust and are working with drives by it.

If you buy a property at an auction, you own it. You can’t give it back; there are no representations or warranties made at the time of the sale. Auctions are buyer-beware, with zero liability to the auction house. And if you drive out to the property and the house has burned to the ground, then guess what? You just bought a pile of ashes.

Driving by the property also helps you to understand the your market.

When you see For Sale signs in these areas, pull the fliers. Look at the square footage, the year built, the quality of construction, the asking price, and the days on market. Get more familiar with the values of real estate in your market.

Then, as you get better, you don’t have to drive all these properties. You can then just pull up a property on Google Maps, check out a 360-degree view of the street, and you’ll have what you need.

But if you’ve never purchased a property at auction, you need to drive out to the properties.

2) BPO

BPO, or Broker Price Opinion, comes from the multiple listing agent. In other words, “A broker’s price opinion is the process used by a hired sales agent to determine the potential selling price or estimated value of a real estate property. A BPO is popularly used in situations where a financial institution believes the expense and delay of an appraisal is unnecessary.”*

This tool is used by brokers and agents, lenders and mortgage companies, and loss mitigation companies. Each state has different rules and regulations for these services, such as providing the service if the the property is occupied at the time of sale. So do your research and  get acquainted with how it will work for you.

3) MLS

Here’s one piece of advice that I give all my private clients: If real estate is going to be your career path, I highly recommend that you get your real estate license. What it does is give you instant access to pull value on a property yourself.

I’ve been a licensed agent for over 15 years, and I’ve never not been able to participate in a deal because of my licence, so don’t believe the excuse that having this license limits you in term of investing.

I will often use an agent to get an opinion on value, but I will always pull my own comps to determine the value of a property.

4) Zillow

Zillow is also a great tool.

I use it because it has the most information in the shortest period of time. I will use it to sneak a peak at a property and increase my interest, but I would never use it alone to buy, acquire, or bid on a property.

The only tool I’m going to use to support or substantiate money is the MLS. It’s real-time value, days on market, comps, and more. You can gather information from all the sites (Realtor.com, Trulia, Zillow, etc.), but it isn’t going to be real-time and will cost you hours.

Bottom line, if you’re going to turn this passion of real estate into your profitable and long-term career, you should have access into the MLS at a click of your mouse. It’s the best data you can get.

5) Tax Assessed Value

The TAV is defined as the most amount of money the associated municipality can tax you on the value of the real property without you challenging them about the real value. In some states, it’s 80-90% of the FMV (Fair Market Value), but in states like California, it is 100% of the FMV.

In today’s market, most municipalities have over assessed property values in their district so that they can keep their tax base high.

(If you have a property that you know is valued at
$120,00 and the TAV is $180,000, challenge it!
Get your taxes down so you can save more money annually.)

What we’re looking for by pulling the TAV is the year built, the size of the lot, who has owned the property in the past, and who currently owns the property. We want to determine if there are any tax liens on the property and what the bed and bath count is. Often times, the floor plan will be included with the TAV, especially on newer construction because they have to present the floor plan to the building commission to get building permits in order to get a certificate of occupancy.

If this is included, take full advantage and look at the floor plan configuration. The floor plan is a big deal when selling a house quickly. If you walk in the door and WHAM! There’s a bathroom wall that hits you in the face and separates you from the openness of the living area, you’re not going to have a quick or easy time selling that property.

Remember, people buy property based on feeling. The price is secondary. If the potential buyer doesn’t get an immediate rush when walking in the house of “Wow! I like this place,” then you’re not going to sell it. That’s the real value of looking at a floor plan before buying a house at auction.

6) Comps

Get at least 1 listed comp within one mile of the subject property and the remainder within 5 miles.

The smaller radius you can get to the property in question, the closer you can determine the value.

Why do we want the comps to be as close to the property as possible?

Neighborhoods are fickle. We’ve all driven through neighborhoods that are just beautiful, and then a few blocks later, you’re wondering where you put your concealed weapon to ensure your safety. So the further out your comps reach, the more risk you inherit with those numbers.

Do your evaluation as close to the property in question as you can to assure you’re maximizing your understanding of the property value.

Look for at least:
3 Recently Sold
3 Currently listed


When you understand the property’s value to the best of your ability, you can maximize your foreclosure auction profits by determining your maximum bid.

But this isn’t just for auctions. Before you make offers on a property, you need to have all the numbers on paper for yourself to determine your maximum offer, your rehab costs, what you would wholesale the property for, and what the ARV (After Repair Value) is on the home.

Part of understanding a home’s value is understanding the value of your time. By doing a bit of due diligence on the front end, you can avoid getting into a project that won’t yield you the income you desire and are worth.

Thankfully, if you go through Cogo for you private money loan, we won’t let you get into a property that we know will lose you money. Our application process includes items for this reason; to assure that we are only loaning out on properties that won’t get you into trouble.

You’re in good hands with Cogo.

Have a deal under contract that you would like a quote on? Let us know. You can fill out a quick questionnaire at CogoCapital.com to receive a rate quote via email or you can call us anytime at (800) 747-1104 to talk to a loan officer. With millions deployed and millions to deploy, we want you to get the capital you need for your real estate investing.

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!

*definition provided by our friendly and comprehensive friends at Wikipedia

 

To learn more about attending a Funding Tour near you, visit FundingTour.com

10 Questions Your Potential Buyers Are Asking

Do you know what potential buyers are asking themselves when they look at your property?

We can anticipate the basics: Will they like the kitchen? Are there enough bathrooms? But what about the underlying questions every homeowner wants to know?

By now, we know that you make money when you buy and you realize that money when you sell. Easy. If you want to fully actualize all the money you can, consider some of the questions your potential buyers will have in mind when touring all the hard work you’ve made happen.

The more you can anticipate a buyer’s needs, the better you can work those into your repair plans.

But with so many various needs and demographics to consider, how do you cater to the desires of others in a way that helps you sell a house faster without going over budget and cutting into profit margin?

Can you have your cake and eat it too?

There are a handful of questions that most buyers will consider regardless of the neighborhood, ideal buyer, and price point.

Let’s count them down!


10. What about the seller’s disclosure?

Despite how a house looks, many buyers will want to know if there’s anything they need to watch out for. An inspection will show off all the properties flaws, but you may run into a buyer who wants to know what you know as soon as you know it. For instance, if there was an old septic system buried in the backyard that doesn’t affect the house’s current operation but may impact the buyer’s decision on putting in a pool someday, they may want to know.

9.What inspections do we need?

Speaking of inspections, many buyers will do multiple checks on a property; anything that the original inspector recommends. If there’s an issue in the fireplace, an inspector will recommend a professional opinion. Any problems could result in a delayed closing and further inspections. Though these things happen, and you can’t anticipate every problem, it’s worth considering what could result in future repairs for the home buyer before you put the property on the market.

This is especially true if your home buyers are using a picky lender (such as a VA loan) who requires certain items to be fixed before securing the mortgage. Have a basic understanding of codes–what height should porch steps be? Where do you need handrails? Does the bathroom vent go through the roof or stop in the attic creating possible mold problems in the future? It never hurts to know.

8. Has the home ever had mold?

There are some states where the question won’t even cross the home buyer’s mind. But in areas of heavy moisture or storm history, people will want to know. It’s assumed that a real estate investor who has flipped a property will know better than anyone whether there is mold or not. After all, very few people see behind the drywall. But what if the job requires only a few lipstick patches like new carpet and fresh paint? You may not know if there’s a problem.

It is also assumed–because there’s a rotten apple in every bunch–that some investors cut corners. Though you and I would never dream of doing unsafe, less-than-quality work, some people have been burned and word gets around. If a potential buyer asks for an inspection or the home’s history, be prepared. Buyers may also ask about radon, so be prepared if with any applicable reports you may have.

7. Why is this house for sale?

There are so many ways a potential buyer will know the house they’re viewing looked different before. It’s possible they know the neighborhood and saw the house in its distressed condition, or perhaps they’ve pulled buyer history. And usually, the beautifully staged home gives away that the property isn’t lived in at the time of sale. But buyers often want to know a little about the house’s history and why it’s for sale. This will often work in your favor as the desire for fresh upgrades is always on the rise.

6. Have all the safety features been installed?

With new builds and gutted properties, you or the contractor could overlook small details like working smoke and carbon monoxide detectors in all recommended places. Though this should never make or break a sale, you should catch the missing devices in the BLUE TAPE INSPECTION.


https://cogocapital.com/blog/blue-tape-inspections/

 

Want a checklist of all the Blue Tape Inspection points to look for before paying your contractor’s final bill?

CLICK HERE for a detailed list!

 


5. What are the zoning guidelines?

Although this may be more clear in some neighborhoods than others, buyers will often want to know if it’s possible to split the property into a multi-family home in the future or whether other houses down the street have been turned into insurance offices. Although this won’t be as important to some as to others, it could be a factor in the purchasing decisions of others. Because this effects other aspects–such as the home value and comps–you should already know the zoning and be prepared to answer any questions that arise.

4. Who are the neighbors?

This is one of the most important non-home related questions a potential buyer will ask. It’s also a question they won’t likely ask YOU directly (or the real estate agent); they’ll observe. Although you can’t control who lives next door or behind your investment property, you can make improvements to the property to compensate. If the neighbors breed dogs that are thought to be aggressive, you may consider putting in a privacy fence.

3. Does this house have everything I need?

It’s true that you can’t anticipate the needs of every buyer; that’s why houses vary so vastly. What a young couple just starting out in life needs is different than what a large family with an aging parent to care for does. You don’t have a magic ball, but you can look at trending desires; wider hallways to support both strollers and wheelchairs, a master suite on the same level as the living space on to avoid regular stair use, outdoor space in warm areas and additional parking for boats in lake towns. But how do you know what demographic will purchase your property?…

2. What neighborhood factors should we consider before making an offer?

If the neighborhood is nice but has mediocre schools, you can assume the street draws an older demographic and can plan your design and features accordingly. If the community has a plethora of trendy shops and startup tech companies, you’ll likely be selling to millennials buying their first or second home. There isn’t much you can do about the whole area, but you can make the property work for those who are most likely to purchase the property.

Understanding factors such as where the nearest stores are, if there’s public transportation or highways nearby, and what the local parks are like can help you understand what your ideal buyers look like. Though we live in blended societies, buyers will want to know what the area has to offer, who lives down the street, what the noise levels will be, and most importantly…

1. What’s the crime level?

Safety is vital! An interested buyer will look this up online or have their agent pull reports. Finding out the crime rate, area registered offenders, and more is just a click away. Although you can’t control these factors at the time of sale, you can consider them at the time of purchase and decide if the current quality of the area crime rate will affect your selling potential.

Remember the cliche that “crime has no zip code.” Anything can happen anywhere. Fortunately, most buyers won’t look at a house in a neighborhood they wouldn’t want to live in, so it’s safe to assume most of the leads you have touring the home will already be okay with the community in which it resides, but it’s always a factor to consider.


When you can anticipate the needs of the buyer and work any plans you have for the house around the most important ones, you have a better chance of selling a property fast.

However, none of these factors will matter as much as doing a quality job without cutting corners, hitting all the safety requirements, and pricing the property right. When you do your best to create a house that anyone could call home and provide a neutral slate upon which anyone could build their life, you’ll sell as well as the market allows.

Want to increase your odds of selling faster? We can help! Call us at (800) 473-6051 to learn what program will best fit your needs. Not everyone is ready for a coach or one-on-one training, but with events, home study courses, and certifications at your finger tips, why struggle along on your own?

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!

For our latest success stories, click HERE to read how others are finding, funding, and making money on their deals.


 

Attend a FUNDING TOUR to receive a $250,000 pre-approval letter for your next property. To learn more and claim your seat today, visit FundingTour.com or call us at (800) 473-6051.

A Better Auction Experience

- - Property Evaluation

You’ve done your research (you’ve read THIS article), prepared for an auction, and maybe even attended a few to get a feel of the process and the competition. How can you set up for success when it comes time to put your money where your mouth is?

Let’s talk debt stack, bid strategy, and bidding with other people’s money…


Debt Stack

What is it and how do I use this information to my benefit?

Separate your leads from you we call a “Full Debt Bid” and a “Specified Bid.” When an auction starts, the opening bid is one of the other. But what are they and how to do you determine which one you’re facing?

A “Full Debt Bid” is the same as and “Equity Deal.” The homeowner had equity in the house at the time of the foreclosure, so the opening bid covers the full debt. If the opening bid is $100,000, and you get it for $100,001, you own the property for $100,001.

A “Specified Bid” is an opening bid that does not met the reserve of the debt owed. If the opening bid is $100,000 but the reserve bid is $140,000, and you’re the only bidder at $100,001, you’re NOT going to own the property for $100,001.

How do you know if the opening bid is a “Full Debt Bid” or a “Specified Bid?” You pull out your property information and refer to the debt stack; the unpaid fees, interests, liens, etc. that are lingering with the house. If you’d like to see what a debt stack looks like on any given property, we will go in and pull that for you. They’re $2.50 a piece, which is a no-brainer option when we give you information about a property that could mean the difference between you finding a good deal or not.

Let’s take Auction.com for example. Their low opening bids advertised online are bogus. They entice you to come to the auction with a super low opening bid but have what’s called a “reserve credit bid.” The amount that the bank has to get. The underlying liens on the house will determine the real opening bid. These bids start low with the hope that the low bid will attract investors to come down and bid it up higher (which usually happens). But if there is underlying debt on a house, the property will go for a lot more than that low bid that enticed you to the sale.

Remember! Full Debt Bid means there is equity in the property, Specified Bid means there are hidden costs that will drive the purchase price higher.

Know the Living Situation Before You Bid

Know if the property is occupied or not.

We always bid higher and more aggressively on an empty property because I buy it, I own it. If a tenant is in the home, there could be a 30 day, 90 day, or even a 180 day eviction period before you can even access the property, not to mention the headaches and legal fees associated with assuring an empty property. Drive by the property before the auction to be sure.

Bid Strategy

“I thought I just placed a bid for the house I wanted until I win? You mean there’s more?”

Let’s say there’s a property I’m willing to bid aggressively on and everyone someone bids up a thousand, I increase the bid by 5k. This is called “Shocking the Bid.”

Let’s say it starts at 100,000 and I open the bid. Someone bids 101,000, so I then bid 105,000. Someone else bids 106,000, so I bump it to 110,000. Then 111,000 is the next bid, and I increase to 115,000. Now, why would I do that? Doesn’t it seem risky, like I would end up paying more than needed?

There are two ways to bid; spiking the bid and chilling the bid. When I bid in chunks of five-thousand dollars, I’m “spiking” the bid with the intention of shock anyone else who is bidding because they might not be ready for it and could back off their own bid.

Why is this an advantage? You are bidding against people who have the same set of numbers that you do (year build, current value, maintenance cost, repair/rehab cost, sales cost, and ARV). This is especially helpful when you know the bid will go a lot higher than the opening anyway (for our example of opening at 100k, let’s say you know it will go for at least 140k because it’s in good shape).

Then, there’s “chilling” the bid, where you bid in smaller increments of around $100.

Why chill the bid? You want to make sure you don’t pay more than you have to (you’re not aggressive, there are tenants, no one else seems particularly interested.)

No matter your strategy—whether spiking the bid or chilling it, you should still always stay within your maximum allowed offer (MAO), or max allowed bid in this case. When you win an auction, you are the person who was willing to work for the least because you can’t sell it for anymore than the person next to you and you can’t get the labor any cheaper than anyone else. So it boils down to who is willing to do the same amount of work for the least payoff, and you don’t want to bid so high that you don’t make a profit at all.

Bidding with My Money

How would you bid if the money wasn’t yours?

Most people just starting out at auction make decisions based on fear. Of course you do, it’s scary to spend so much money when you’ve never done it before. But what if you could bid with someone else’s money? How would that change the way you view the bidding process?

I believe it would, and I’m willing to bed my money on it…


Takeaway

The best advice I could give you about auctions is to not buy houses at them.

“Wait, Lee! You just taught us all about auctions and now you don’t want us to shop them?”

If I can avoid picking up a house at auction, I will and here’s why; if the owner has any equity in the property (Pop quiz! What’s this called when the house goes to auction?…a “Full Debt Bid”), then I will try to purchase that house direct from the owner.

If the opening bid is a full debt bid, then it’s an equity deal and I can go knock on their door before the auction and buy the property straight from the owner at that opening bid, making us both money. (For more on equity bids, CLICK HERE!)

Why? If I want to be the best person in the room, the easiest way to achieve that is by being the ONLY person in the room. If I can make the homeowner an offer before the property goes to auction, I can get the house without being bid up and the homeowner can make a profit they wouldn’t otherwise make by losing the house to foreclosure.

To learn more about Equity deals, CLICK HERE.


“But wait, Lee!” you say. “You didn’t say enough about bidding at auction with money that isn’t mine! How does that work?”

The last Lee’s Inner Circle is in September. The last one. If you want in, this is your last chance. As a bonus, at this event, we are going to set aside funds to help you buy at foreclosure auction. We’ve never done this for a group before, so why are we doing it now? Well, we want to test to see how successful you can be in your own market at auction when you aren’t concerned with the cash. If you’d like auction money to buy properties in your market, contact us to find out how you can have access to that privileged training. This is the first time we are doing this, but like I said, this is the LAST time I’m doing Lee’s Inner Circle and it’s filling up quick. If you’ve been considering it for a while, you’re down to your last opportunity, so don’t make the decision lightly. If you want to attend, I want to get you there. Call us to discuss your options (800) 747-1104.

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!

Guessing Game

- - Flipping, Property Evaluation

It may not occur often, but if a home auction is happening with auction.com, Marshall & Swift, or another auction group, you may be allowed access to the property before the auction takes place. This can be a true advantage, especially since most trustee sale and sheriff’s auctions will not let you into the house unless you have a realtor key–or if the house just happens to be left unlocked. (Even if that is the case, if someone is living there, do not go on the property!)

If you get to see inside, you can better judge the ballpark rehab costs, watch for red flags, and better estimate your time and investment for that property. But it’s more likely that you won’t get to see inside.

So what do you do if you’re interested in purchasing a property at auction, but you have no idea what you’re getting into?

You can try to look through the windows from the sidewalk, sure, but the easier and more efficient strategy is to understand the type of people who occupy the home.

Go across the street, knock on the neighbor’s door, and say, “Hey, what can you tell me about the people who currently live there?”

Chances are they will unload on you! They’ll tell you everything you never wanted to know, and you’ll have a good idea what condition the home is in.

If you can’t get a neighbor to answer the door, the next best way to estimate the house’s condition is by analyzing the exterior. Generally, the inside will match the outside. So, if you’re staring down a forest of weeds with a cracked walkway and a car without tires in the drive, you can estimate your rehab costs on the high end. If the grass is trimmed and the paint is a little worn, but things seem alright, you’re probably looking at less work inside.

Houses can be like the prize in a cracker jack box–hard to tell from a little shaking. But, even though there is no true science to predicting the interior of auction homes, you will find that you develop a keen, instinctual eye the more you view, bid on, and purchase. Some may surprise you, but understanding the signs of neglect from the outside and knowing who occupies the property can save you a lot of guess work.

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!

A Guide on Where to Meet Homeowners

When working with distressed homeowners, there are several key traits to working out a respectful deal that profits both sides and keeps the transaction professional.

I’ve discussed helping distressed homeowners before, and if you need a refresher course on the basics of putting together a deal with tact, please CLICK HERE to get your tips.

Now, let’s talk about where to meet a distressed homeowner to discuss terms and sign the purchase and sale agreement. Because the sale in question is their property, a homeowner may expect that the meeting will take place in their home. For reasons we’ll discuss, this isn’t a great idea.

I recommend meeting them in a professional office setting.

By signing in a professional office setting, you can maintain control over the situation. When you sign in their home, you convey that you are available to them on their schedule, giving them control.

You also convey the importance of them coming to you, securing the fact that although you may have reached out to them in the first place to offer on the property, you aren’t going to chase them down to get it.

When you meet at their home, you are also giving them more time to “think” about it because they don’t have to physically do anything or go anywhere to have this meeting. By removing them from their home, you give them an actionable step to show commitment–both to you and subconsciously to themselves. Additionally, if you meet them at their home and they decide to do business with you, they will expect you to come back.

By meeting in a professional office setting, you are setting the standard that you are a professional and giving the homeowner peace of mind.

If you don’t have the option of a professional office setting, you can use the middle ground of a location such as a coffee shop. Don’t let this be your first option, but if it helps you avoid meeting at their home, it’s a better way to go.

What is the purpose of this meeting?

First, you need to introduce yourself; who you are and what real estate services you provide. Then, listen to their story and find out their needs. Educate them on what you do and how. This is your opportunity to align their needs with your services and make the option of having them sell you their house a no-brainer. Most importantly, your goal for this meeting is to get the purchase and sale agreements signed!

When you meet at your office, stress how important it is to have the paperwork signed in order to get the ball rolling. They’re likely going to be hesitant, but if you let them bring the paperwork home, chances are you’ll never hear from them again. Remember to assure the homeowner that they are not signing their life away, and should be comfortable with the process. They may not be as motivated to work toward a solution for losing their home as you’d think, so it is your job to explain to them why they should be.

Before you leave the meeting, be sure also to ask these key questions:

– What condition is the house in?

– Is there anything else I should know about the property?

– Do you have any contact information for your lender?

– Are there any other questions I can answer for you before I leave?


When in doubt, put yourself in their shoes. Remember that many owners who are on the brink of losing their homes are emotional, desperate, and/or in denial. You must be aware of their position and ready to step forward with confidence.

Choose a professional office setting to meet, make sure they understand the benefits of working with you, and get them to sign the paperwork. From there, they can move forward with one less trouble and you can work toward a profitable deal.

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!

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.

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!