All Star REIA of Macomb Member Making It Happen
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REIA of Macomb All-Star
This same gentleman, who’s name happens to be Jeff Maniaci shows up to the house and saves the day for me…here’s the short version of the story…the workshop took place sometime in April and it was still chilly outside , probably 45 degrees or so. Now 45 degrees is not dangerously cold but when the heat isn’t on in a vacant property it tends to trap that cold air and get colder. I arrived around an hour before our scheduled event to make sure everything in the property was in order. When I tried to turn on the furnace it was a no go. I ran to Rite Aid and bought some batteries for the thermostat as I though it would cure my problem (we jus finished a 25k rehab and I knew that the contractors had the heat on). New batteries, no good. Now I was stumped. It was around 45 degrees in the house and I had 20 people on their way there for a 90 minute get together in a pretty cold house.
At a recent REIA meeting I was talking with Judy, Jeff’s wife and she asked me if I had the time to stop by their rehab the following week. Notice the use of the word “their”? Judy and Jeff are a team, very important in your investing career to have an accountability partner. So I loosely told Judy I’d try to get by one day the following week.
Friday came around and I knew that I’d be able to spend some time in the trenches with Jeff at his project. I called and we agreed to meet around 4 p.m. I figured I’d be on my way home before 5. Boy was I wrong! We had such a fun time talking about houses, construction, and REIA that I was there till 6:20, and it was worth every minute.
Without getting into too much detail I’ll go over what Jeff’s got going on in this project. As I eluded to earlier he bought the house without an agent, utilized a private lender, and stands to profit $15,000-$20,000. Not bad for their first deal. The most important reason that I’m so excited about Jeff & Judy’s deal is that the are doing all of the rehab work the right way. As you can see from the picture they’ve installed cherry cabinets with granite on top. (See my earlier post on how important granite is to successfully selling retail) They’ve had Joey LaFata come in to consult with them on paint colors & layout-not just staging. They’ve installed all new interior doors, exterior doors, light fixtures (one a very special antique from Judy), new floor molding, new windows, new furnace & AC, plus tons more.
They’re doing an A+ job.
The moral of this story is to get out to the REIA of Macomb events. Jeff & Judy will both tell you that it’s made a tremendous impact on their fist deal. You’ll be able to meet them there and pick their brains about what they’ve done specifically to make this project .
*Congrats to Jeff & Judy and I hope for many more successful deals*
Will you be the next REIA of Macomb All-Star?
Dylan Tanaka-Founder
Are You Ready to be an Equity Bandit?
Real estate is cyclical. Which means different buying techniques are called for depending on what part of the economic cycle real estate is in at that particular time. 5 years ago, before the Michigan foreclosure boom, one of the best ways to buy a house was from a seller who had equity and needed to sell fast. There were many ways to find that particular buyer, direct mail, internet advertising, or most investor’s weapon of choice “We Buy Houses” signs.
As equity evaporated, less and less investors were going after private sellers and focusing on the brokers who controlled the foreclosures. It was the general belief of Michigan real estate investors (yours truly included)-that your chance of finding a seller who has enough equity for you to be able to offer them a fair price while leaving meat on the bone for yourself was 100 times more difficult than offering on a bank owned home and getting it accepted.
It seems that this spring’s buying season has seen a rash of investors both new and old going back to the “We Buy Houses All Cash, Any Condition, Any Situation” bandit signs. Sometimes you’ll see good signs and other times you’ll see something scribbled on the sign by some arrogant punk that gives all of us a bad name. I’ve personally been using bandit signs for close to a decade and I caution you that BEFORE YOU PUT SIGNS OUT ON THE ROAD FOLLOW THESE 3 STEPS
1. Make sure you find out what the local ordinance is for each city/township-you can and will get tickets and have to appear in court if you do things wrong (trust me!)
2. Your “message” -what you write on the sign is super important
•keep it short-passers by have 5 to 10 seconds to read it understand it <–most important & write down the number or website
•the phone number on the sign should be as easy to remember as possible-if you’re buying in 248 than use a 248 number, 313, 586,517 etc
•if you have a website make sure the domain name is as short and easy to remember
•write big and simple-here’s an example of what successful investors are using
1. the cities may be tougher on you if your message is too cocky
2. sellers will not respond favorably to what they perceive as unprofessional
3. Be ready to deal with people who may be in a tough situation or disgruntled sellers with a bad attitude
If you are not willing to speak directly with the general public I caution you again using bandit signs to buy houses. People in all situations will respond to your signs. Be prepared with some type of script. Don’t just wing it. That’s a recipe for disaster.
•You will get sellers calling you with NO equity in pre-foreclosure
•You will get sellers calling you with multiple homes in foreclosure
•You will get sellers calling you in estate situations
•You will get sellers calling you and asking you if you’re a scam or what’s the catch
•You will get sellers calling you with 40 or 50 k in equity that need to sell in a week (those are the one’s that you’re waiting for)
If you’re ready to jump into the world of buying houses directly from sellers and need the tools to do it, you can buy blank signs directly from the REIA.
$99 for 25 (24 x 18) blank signs including the heavy duty steel stakes.
Just call 586-275-7342 (supplies are extremely limited)
Are You Letting Thousands Fly Out The Roof?
After being involved in well over 100 bank foreclosure purchases there’s one rule that always seems to stand…
You will spend more money on your rehab than you anticipated.
There are deals out there, and I’ve been lucky to be in on a few, where everything was as expected after the home inspection-in fact the inspector said if you don’t buy this I will! Unfortunately that’s not normally the case. As Michigan real estate investors get excited at the thought of cashing in on the foreclosure boom we sometimes get a little blinded by the big picture and overlook a few items that will need attention after we purchase and close on the property.
There are 2 ways to make your initial offer to the bank concerning the home inspection;
1. Buyer requires the right to a home inspection
2. Buyer waves the right to a home inspection
I suggest you should almost always write in at least a 7 day home inspection when buying from the bank. The only time to wave in my opinion is if you are a very experienced investor who wouldn’t be phased if you found out the property requires $10,000-$20,000 in surprise repairs. In that case dive right in. However, if you do not like $10,000 negative surprises you should enlist the help of a professional home inspector. At the REIA of Macomb you’ll often find Matt Fletcher hosting a vendor table and offering advice, warnings, and special pricing to REIA of Macomb and Champions Club members.
Once you’ve decided to demand an inspection on your offer and the bank accepts your price there are 2 ways to go into the negotiations;
2. You initially make your offer and find out that here is a $4,000 roof repair needed and some scoundrels have made off with $1,500 worth of copper plumbing.
(here’s where the games begin)
You then arm your agent with the professional inspection who in turn gets it into the hands of the banks listing agent. At this point the banks agent may or may not actually need to send the report to the asset manager at the bank who makes the decisions-a lot of times they’ll simply call them and plead your case.
DONT FORGET-no one gets paid unless you close-not your agent, the bank’s agent, & the bankers files keep piling up.A scenario very close to this just happened to active REIA of Macomb member Jeff Maniaci. He hired Matt to do the home inspection which proved to be a genius investment. Matt was able to help Jeff get a $3,400 reduction due to a bad roof. That netted Jeff well over $3,000 in his pocket after paying for Matt’s important service. Again, how would having an extra $3,000 in your checking account feel?
WARNING-if you decide to re-offer at a lower price whether it be due to the property being in worse shape or not, you are breaking contract with the bank on your original accepted offer and they must re-accept.
That being said you need to put yourself in the bankers shoes, picture this…You have a property for sale for $50,000, a seller offers full price with an inspection clause, a few days go by and all you do is imagine having this file off your desk. The buyer comes back and says that they can only pay $47,000 because of the missing plumbing and terrible roof. Here’s the fun part-the $47,000 does not go to you neither does the $50,000. It’s simply one of hundreds of files on your desk that you are in charge of getting rid of. You tell your BOSS about the hard fought battle to get the buyer to the $47,000 price. The BOSS says “Okay, accept it!”
Dirty Trick ALERT-Some savvy investors will go into an offer situation fully knowing that they are going to go in for a big discount after their home inspection. Although this tactic is completely legal should you decide to go this route you should let your buyer’s agent know upfront that you plan on using this secret weapon. You will lose deals by doing this. Some bankers will tell you to pound sand-however as long as you and your agent are on the same page ad you are fairly compensating them for their time this tactic can and will save you many thousands if used the right way. You will have to be more patient as I said you will lose deals doing this, but if that’s your plan going in than you can prepare for it.
Last note-if you want to really be successful when buying Michigan foreclosures offer your buyer’s agent a little something extra on every closed deal. Even $500 can MOTIVATE your agent to work harder and smarter for you. It’s legal under Michigan real estate law and the Realtor code of ethics so long as it’s spelled out somewhere in your buyer’s contract with your agent and their corresponding brokerage. If you stand to make $20,000 or $30,000 on a project-DONT BE GREEDY-share a little with your team member (buyer’s agent) who was (& will be in the future) instrumental in getting you the deal.
Make money not excuses,
Dylan Tanaka-Founder
REIA of Macomb