Today I was reading advice about about how to purchase bank owned homes. It's interesting that as you read through various processes across the USA, you can note differences with how the banks work with foreclosures. I saw a few things of interests:
1. One writer spoke of the 'great' deals offered. He mentioned a home at that sold for $500,000 3 years ago being sold for $250,000 as a foreclosure. Great deal? Not at all. The owner could not sell the home for what they paid for it. They lost the home. That's no great deal. Its the tragedy of what is happening in America. The market ran up speculative prices with homes and the ordinary home owner got caught up in it. Some were speculating, but some truly needed a home to house their family - yet two years down the road they lost it. Homes are valued only at what the average family can afford within that neighborhood or zip code. I just read a brilliant numeric analysis of how to price a home, and I'll share that as soon as I have permission from the author. It is brilliant, and I will start using it on every time I look at a home for my investors.
2. The agents that sell foreclosures. They are a mixed bag to be sure. Take for instance the home I wrote about on Friday - the home which has the front door blocked from the inside making it impossible to get in the house. My partner put a call into the agent the same day - but received only voice mail. She left two more voice mails - but never had it returned. I called the agent on Saturday - and received the sweetest voice mail stating that she only worked Monday through Friday and did not work on weekends. In a working economy - one in which people work Monday through Friday and look for houses on the .... weekends....you'd think she would make herself available at least on Saturday. But unfortunately she did not - and my client, a cash investor, could not get into the house. In these situations, I always wonder if the bank understands the "dedication" of the agent they have designated to sell the house. Frankly, were I the asset manager, I would be monitoring closer - but I'm not the asset manager, and I'm beginning to feel that things are just done differently from how I do them!
3. Negotiation - actually pricing and negotiating bank foreclosures is tricky. Every one believes they are experts in pricing, and the bank tries to always get what they have into the house. They seem to get offended when the recieve a low offer - one the perspective buyer believes is the fair value for the house. Often they won't even answer. Often, the agent does not even submit! After all, they work on commission - and it's in the agents best interest to get as high a price as possible. Therefore, they often tell you about the 'value' of the home in their opinion, and as a buyer - you can only believe them. In this, I advise all buyers to become experts - understand what home values are - how to value them, and how to buy them. There are experts out there - and I'd like to meet more!
As I complete a couple of presentations for my institutional investors, I continue to be amazed at the great profits investors can make, if they are cautious and really know what they are doing!
Sunday, January 25, 2009
Friday, January 23, 2009
It's Friday
I'm new to blogging - I like writing but have not blogged before. I am working to commit myself to daily updates that will, I hope get more and more interesting as I understand what readers are looking for and the medium becomes familiar to me.
Who am I? I returned to the USA after 19 years living overseas. I'm still adjusting - its been a bit of a culture shock - but in a good way. I made a rash decision to check out some different markets in the US, and ended in Columbus Ohio. After cities such as Moscow, London, Cairo, Tokyo, Singapore etc, Columbus is an experience of its own - not all bad. I'm still adjusting.
As of now I am writing in first person - I'm trying to get out of the business mode that I live and breath every day. I'm sure I'll slip into business lingo from time to time - if so, just give me a heads up and I'll change my language!
Now, what do I do? I run RenuHomes. I created RenuHomes after I left my corporate position. I didn't expect the stock market to tank, to loose 75% of my IRA money, to see the value of my housing holdings dip to 2000 levels, or to commit to a nomadic lifestyle at the time. I only thought of taking my business model created in business school, and implementing it. It's been a wild roller coaster ride since then. About my organization. I work in real estate. I am NOT a real estate agent. I am NOT a house flipper. My organization is am umbrella organization which has 3 components - a consulting arm for investors, a renovation arm (known from now on as 'branding', and a placement service for 'buyer tenants'. Its product creation in an industry which has no defined 'product'. I daily get looks of questioning when I say 'my product'. "What is your product"? "A house?" (brow furrowed - the asker trying to clearly understand 'product' in real estate'). Yes, a 'product'. I am going out on a limb here and will say it's a great product by the way. It has significant returns - up to 15% on a monthly basis, and has a nice little cash annuity at the end of the 'term' after the buyer leasee purchases. Let me give you an example (these are live projects - you can buy them now - my email is posted - but please provide phone number so I can ring and discuss)
Project 1
Buyer tenant has 5000 deposit down
Buyer tenant will pay 850 per month
Buyer tenant can purchase up to 125,000 (meeting appraised value)
Term of project - 12-18 months.
Investor purchases unit for 100,000
Great return on investment and risk is low with this couple.
Project 2
Buyer tenant has 3000 deposit down
Buyer tenant will pay 1250 per month
Buyer tenant can purchase up to 145,000 (meeting appraised value)
Term of project - 12-18 months.
Investor purchases unit for 110,000
Great return on investment and risk is low with this couple.
Project 3
Buyer tenant has 3000 deposit down
Buyer tenant will pay 800 per month
Buyer tenant can purchase up to 110,000 (meeting appraised value)
Term of project - 24-30 months.
Investor purchases unit for 85,000
Great return on investment and risk is low with this couple.
This gives you an idea of the types of return - a calculator will compute the yields. What is my job and what do those projects have to do with me? I locate the 'Investor'. I place the 'Investor' with the Buyer Tenant. I 'Brand' the house the buyer tenant moves into. And my organization manages the process to funding - in tandem with my partner organization. I am creating financial independence for investors - using property as the vehicle. It's easy? Not so! Yesterday I previewed houses. Here's what I encountered:
House 1.
People were still living in the house. Picture smelly clothes all over - bathrooms that had not seen a sponge or cleanser in weeks (months?), carpet stained and dirty, kitchen sink full of rank dirty dishes....well I think the picture is clear on that property.
House 2.
Nice looking house on the outside. A HUD house. I have a key to HUD houses, which works on all houses posted by HUD. I tried to get into the front door - but the key did not work. Tried the back (tramping in the snow by the way - I was well dressed as I was going to an evening function after), key did not work. Called the agent - he know nothing, nor could he say why the key didn't work other then he thought someone else (mystery person) was changing locks and cutting deals. He told me to call the management company. I called. In the process - I fell (icy cold here, ice and snow everywhere). Dropped my iPhone in the snow and thought I lost it due to moisture, but it was saved! Management company confirmed a rogue agent (yes rogue!) was selecting the best HUD houses, changing the locks and trying to cut deals with them. He also confirmed agent is now in jail, and the locks would need to be changed again. He agreed to ring me after the new locks where on.
House 3.
Nice looking house from the outside. An empty house....I think. I retrieved the key from the lockbox and opened the door. It would open only an inch. Blocked from the inside. I pushed, leaned back and kicked, but the door would not budge. I house is impossible to enter. It's owned by a bank - but potential buyers can not get into the house to view it. It seems someone is squatting in the house. I'll not even go into the steps required to be able to view the house. I will try again this weekend, and if you are interested - I'll let you know the results.
Welcome to the world of bank foreclosures, REO's, HUDs and short sales. It's like the wild west, and its growing. But it's a business with its own rewards and I enjoy it.
This is day one. You are always welcome to contact me - but I have to go back to work now, and inform my clients of the results of my house search. More later!
Who am I? I returned to the USA after 19 years living overseas. I'm still adjusting - its been a bit of a culture shock - but in a good way. I made a rash decision to check out some different markets in the US, and ended in Columbus Ohio. After cities such as Moscow, London, Cairo, Tokyo, Singapore etc, Columbus is an experience of its own - not all bad. I'm still adjusting.
As of now I am writing in first person - I'm trying to get out of the business mode that I live and breath every day. I'm sure I'll slip into business lingo from time to time - if so, just give me a heads up and I'll change my language!
Now, what do I do? I run RenuHomes. I created RenuHomes after I left my corporate position. I didn't expect the stock market to tank, to loose 75% of my IRA money, to see the value of my housing holdings dip to 2000 levels, or to commit to a nomadic lifestyle at the time. I only thought of taking my business model created in business school, and implementing it. It's been a wild roller coaster ride since then. About my organization. I work in real estate. I am NOT a real estate agent. I am NOT a house flipper. My organization is am umbrella organization which has 3 components - a consulting arm for investors, a renovation arm (known from now on as 'branding', and a placement service for 'buyer tenants'. Its product creation in an industry which has no defined 'product'. I daily get looks of questioning when I say 'my product'. "What is your product"? "A house?" (brow furrowed - the asker trying to clearly understand 'product' in real estate'). Yes, a 'product'. I am going out on a limb here and will say it's a great product by the way. It has significant returns - up to 15% on a monthly basis, and has a nice little cash annuity at the end of the 'term' after the buyer leasee purchases. Let me give you an example (these are live projects - you can buy them now - my email is posted - but please provide phone number so I can ring and discuss)
Project 1
Buyer tenant has 5000 deposit down
Buyer tenant will pay 850 per month
Buyer tenant can purchase up to 125,000 (meeting appraised value)
Term of project - 12-18 months.
Investor purchases unit for 100,000
Great return on investment and risk is low with this couple.
Project 2
Buyer tenant has 3000 deposit down
Buyer tenant will pay 1250 per month
Buyer tenant can purchase up to 145,000 (meeting appraised value)
Term of project - 12-18 months.
Investor purchases unit for 110,000
Great return on investment and risk is low with this couple.
Project 3
Buyer tenant has 3000 deposit down
Buyer tenant will pay 800 per month
Buyer tenant can purchase up to 110,000 (meeting appraised value)
Term of project - 24-30 months.
Investor purchases unit for 85,000
Great return on investment and risk is low with this couple.
This gives you an idea of the types of return - a calculator will compute the yields. What is my job and what do those projects have to do with me? I locate the 'Investor'. I place the 'Investor' with the Buyer Tenant. I 'Brand' the house the buyer tenant moves into. And my organization manages the process to funding - in tandem with my partner organization. I am creating financial independence for investors - using property as the vehicle. It's easy? Not so! Yesterday I previewed houses. Here's what I encountered:
House 1.
People were still living in the house. Picture smelly clothes all over - bathrooms that had not seen a sponge or cleanser in weeks (months?), carpet stained and dirty, kitchen sink full of rank dirty dishes....well I think the picture is clear on that property.
House 2.
Nice looking house on the outside. A HUD house. I have a key to HUD houses, which works on all houses posted by HUD. I tried to get into the front door - but the key did not work. Tried the back (tramping in the snow by the way - I was well dressed as I was going to an evening function after), key did not work. Called the agent - he know nothing, nor could he say why the key didn't work other then he thought someone else (mystery person) was changing locks and cutting deals. He told me to call the management company. I called. In the process - I fell (icy cold here, ice and snow everywhere). Dropped my iPhone in the snow and thought I lost it due to moisture, but it was saved! Management company confirmed a rogue agent (yes rogue!) was selecting the best HUD houses, changing the locks and trying to cut deals with them. He also confirmed agent is now in jail, and the locks would need to be changed again. He agreed to ring me after the new locks where on.
House 3.
Nice looking house from the outside. An empty house....I think. I retrieved the key from the lockbox and opened the door. It would open only an inch. Blocked from the inside. I pushed, leaned back and kicked, but the door would not budge. I house is impossible to enter. It's owned by a bank - but potential buyers can not get into the house to view it. It seems someone is squatting in the house. I'll not even go into the steps required to be able to view the house. I will try again this weekend, and if you are interested - I'll let you know the results.
Welcome to the world of bank foreclosures, REO's, HUDs and short sales. It's like the wild west, and its growing. But it's a business with its own rewards and I enjoy it.
This is day one. You are always welcome to contact me - but I have to go back to work now, and inform my clients of the results of my house search. More later!
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