I have been active in real estate investing since July 2004. When you have a supportive wife it makes things much better. I say this because there can be down times and pitfalls. More than anything it has been the support of my wife that has kept me going.
I came into real estate as a finder. Now I know that in some states, such as my own, being paid, as a finder is illegal. But nonetheless I have found a good niche and the money is good. You have to find a great partner to work with and one you can trust.
I started out finding foreclosure properties. But my approach was a bit different than most. I worked a program we called the Second Chance Lease Purchase Option. Basically, the homeowner had to have at least 80% LTV and 35% DTI. If they qualified under these two guidelines then we would refer them to an investor. Using the investors credit score the investor would acquire a new mortgage and then do a Lease Purchase Option back to the homeowner. Within a three-year period we would use a Land Sale Contract to put the home back in the homeowner's name. Hopefully, by that time the homeowner has gotten his/her credit score to a position to refi the mortgage back in their name.
Granted, there are only about 25% of those in foreclosure who can qualify for the program. People are desperate to hang on to their home. Banks and Mortgage Companies are unwilling to talk with them. They are looking for hope. Most foreclosure sharks go in for the kill. Having gone through foreclosure myself, I have actually gone through the big three; foreclosure, bankruptcy, and divorce, I know what they are going through.
My first family lives on the Oregon coast, (Depot Bay). This home has a million dollar view. It was a home that they built. The wife had MS. They built the home for her since they knew that her MS would get worst. They built wider hallways, staircases and wired the house for equipment that they knew she would need. She was involved in a car accident that aggravated the MS to the point she could not work anymore. She made $60,000 a year as a Pharmacist. How many of you could take a $60,000 hit? She did have disability insurance but that did not kick in for six months. But in the mean time all the damage had been done.
We signed a bargain and sale agreement on August the 24th, the auction for the home would have taken place on September 16th. We celebrated with a dinner party on the 17th of September because they were so relieved that they were not going to lose their home. I watched as they signed the paperwork, you could see the stress roll off their shoulders. What a great feeling to help someone stay in their home. By the way I made $5,000 on this deal.
A couple of weeks ago I flipped a property for $4,000. Last week I signed an option for a piece of property for $124,000. I turned around the same day and listed it with an agent for $151,000. This week I picked up a property with the potential to make $50,000. The guy owed $118,000, the house was worth between $180 to $190,000. He wants $15,000 to walk away from it! We signed the purchase agreement yesterday. I have a partner and mentor who will cash it out and we will turn around and do a FSBO.
Has this happened overnight? NO! 25 years ago I read the book “How To Awaken The Financial Genius Inside You” Guess what? It took another 25 years for that to happen. The last year I have read some good books and a friend lent me a course from one of the big gurus. But the best advice I got from my mentor was to get out and start doing it. Right now, I have five properties that have the potential to make me about $80,000 in a very short time. Most of that has all happened in the last two weeks. I also have found six empty houses just by driving around and looking at the houses on the Notice of Default list. If I had just mailed a letter I would not have found out they were empty. There is nothing better than an empty house.
Why am I sharing my story? Because I know there are those of you out there who are afraid of taking that first step. My advice to you is to take it. Get out there. You can find people in these investor groups who will help walk you through the process. You don't need to buy into the gurus programs. Just get out and do it. If you are dealing with people in foreclosure, take a moment and put yourself in their shoes. Don't just go in for the kill. The two houses I picked up this week would not have qualified under the 2nd chance LPO program. By working with homeowner we have avoided foreclosure. That is a ten-year mistake on a persons credit report.
Mt. Angel, OR
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