Interesting call yesterday on The Real Estate Warrior Show – caller has done couple of deals – last pay day was around $45,000 but he is losing out on good deals every day because all his money is tied up. We roughly calculated that if he had “access” to one million dollars he could probably clear around $600,000 in 2006.

One of the most common things that happens to all real estate investors – Michigan or otherwise is they realize as soon as they become active investors is that their own money is not enough.

Too many opportunities to those who are looking? Now obviously if you are watching 57 hours of television every week and complaining that there are no good deals to be found then the blame lies on ………

So you start in Michigan real estate – you think that the biggest challenge you are going to have is finding a good deal. You learn to launch some marketing systems in your city and then the deals start coming to you.

Then you do some deals, get some checks, you are happy and then just like that all of your own money is tied up on deals but your systems are still up and running and the leads keep coming in.

You can stop your ads but what about the flyers you mailed a month ago? You can stop the postcards going out but what about your website which is up and running? What about the Realtor you just closed a deal with and he is excited about sending you another 2 good deals?

You can say No; that is true but every No will probably cost you $20,000 in your bank account. That is not such good thing – is it?

So even though you might have your own money when you start out – I would suggest to you that you need to take a serious look at getting private money at your beck and call all the time.

There is no expense in it besides some advertising cost. So you don’t sit and wonder if you could have made an extra $100,000 in the next 3 months and you didn’t because you had no private money to pull it off.

Some people have emailed me asking me for a list of private investors. The same caller told me that he is having a hard time getting private money. I pressed him to whom he has asked so far – the answer was friends and relatives.

Here is my take on this – friends and relatives are probably the worst people to ask for money. Because the only reason almost everybody would turn to friends and relatives for getting private money is we feel comfortable with them.

There is no fear of rejection. But instead of asking friends and relatives for money lets pause for a second and ask us if they have money to give you in the first place.

It does not matter how good your credibility kit is or how well spoken you are? Because if you are asking friends, mom and dad, relatives and co-workers and they have no money to spare – then you are just wasting time barking up the wrong tree.

Real Estate Warrior Way says that you ask for private money only from those who have money to give and no one else.

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Posted by Mark Ijlal at 03:35 PM | Permalink | Comments (0)

When you get 9 emails and 12 faxes in a row that ask the same question – you know that there is a problem.

All of them are from my fellow Michigan residents, people whom to learn and do real estate investment – mostly buying and selling of foreclosures for a profit. They all want to know what are the most important things that should be doing first?

Pretty legitimate question, I would say and I can rattle off a list of important things that I would do if I was starting out – such as incorporating my real estate investment business, getting a website, finding out who the players are in my REO market, running ads to attract motivated sellers, get the financing lined up – all the things that I teach and you should be doing anyway.

But that is the easy part – and I have been actually referring listeners for The Real Estate Warrior Show (in its 8th week now and kicking strong) to go back and listen to past shows because I have answered these several times and frankly speaking I don’t see the value in repeating them one more time.

But it is the next paragraphs that are truly disturbing – where they are all asking the same question – will they lose all their money, go bankrupt, ruin their credit, what if the houses don’t sell, what if the Michigan economy goes south more than it is already, what if contractors are bad, what if private lenders don’t give them any money.

First – have some faith in yourself and in God. I have always believed that God wants what is best for me and if I am willing to walk toward my goals and not harm anybody in the process, God will help me and guide me. Having faith in yourself and your ability to pull it off is the FIRST thing you need to do.

Forget everything because if you don’t have faith in yourself then nothing else is going to work for your. Period. All the other things came after that. But first you need to have the right mindset to be successful.

Next, who wants to deal with this kind of negativity anyway? I don’t and I refuse to deal with people who are down on themselves every day. I don’t want them as my private investors or my bird doggers or my network to find buyers. They bring me down.

This is a choice – nobody put a gun to our head and told us to invest in Michigan real estate. We are doing it because we want to. If doing it is scaring you that much that you cannot sleep at night then just don’t do it. What is big deal?

Whether you agree with me or not, whether you think this is a good business or not, whether you that there is money to be made or not here in Michigan bank foreclosures or not?

I really don’t care! I know what I need to do, so do several of my students and they are doing it and making money. Listen to the last three weeks of the Real Estate Warrior Show – you have several calls from fellow Michigan real estate investors who are making it really big.

Whether you agree with it or not does not makes me lose sleep.
There is a difference in being cautious and being fearful. I don’t let fear dictate my business decisions and neither should you.

If you don’t know much about real estate investing and are nervous about making a mistake, invest in yourself, educate yourself, network with other Michigan real estate investors who are actually doing it instead of just talking about it and even after that if you cannot make yourself do it then don’t do it.

So instead of writing about losing all your money and going bankrupt –which seems to be very Hollywood to me – why not write about what have you learned so far in real estate investing and let see if that is enough for you to do your first deal.

Instead of moaning about Michigan real estate lets write about how many people you have in your Black Book so far.

Instead of crying over what if the house does not sell – lets talk about what kind of financing you have arranged to buy the house in the first place.

Instead of worrying about ruining your credit – lets talk about the 9 different things you will do the deal your house at a rapid pace.

Instead of worrying about the best corporate structure for your Michigan real estate investment business – have some faith in yourself, in your real estate investment business and in God to guide you.




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Posted by Mark Ijlal at 01:29 PM | Permalink | Comments (0)

Auditor General for City of Detroit talking about inevitable bankruptcy of City of Detroit. (You can read the orginal Detroit News story here!)He said it is not a question of if it will happen or not but rather when it will happen. I wonder if anybody who is drinking the Kool-Aid of Downtown revival is reading this newspaper story. Speculation is rampant that the story is politically motivated because of its timing so close to the elections in the city.

Well may be it is – may be it is not – but here is the cold hard fact about it – the City of Detroit is in the hole for around $336 Million.

On one hand you can buy ridiculous amount of real estate in Detroit, dollar by dollar – smart money does says that Detroit is one of the few remaining major metropolitan Downtowns left not touched by fairy tale of Downtown Revival Fairy.

They quote similar stories of downtowns in Atlanta, San Diego, Cleveland and Baltimore as rust and gloom giving away to glitter of the green kind.

The nays Sayers say Ha! Nothing is going to change because the powers that be don’t want anything to change. It is all smoke and mirrors. What side are you on? Should you buy Detroit as a whole or not? Is there a Downtown revival in play or not?

What will happen to the city property values if a bankruptcy is declared? I think the play could be made for Detroit properties but you have to be cautious on where are you buying the houses at? It is a big city and roads can change on your running 1-mile in either direction.

So what a real estate investor could do should do if they are looking to buy foreclosures in City of Detroit? My advice is this:

1. If you don’t know your way around the city – I recently talked to somebody who is buying a 50 unit building in Detroit. onversationally I asked them if the building was in East Side or West Side of Detroit? They had no idea what I was talking about. If you don’t know your way then don’t do it or partner up with someone who does.

2. Don’t buy 5 properties at once, which seems to be the case for almost everybody doing business there. It is easy to be seduced by the equity part since the properties are so cheap and God help anybody who does not want to become Trump by next Monday.

Buy one, fix it, deal it and then do another one. A $20,000 check that has your name on it is better than a $100,000 paper profit which is not in your bank. The situation in the city is in flux at least till the Mayoral election and even after that watch and sees what happens. One deal is manageable and could always be soldout to somebody. 5 Houses require a good marketing system.

3. Don’t take major rehab projects especially if you are weekend warrior. Fire damaged, extensive mold, roof caved in – you should not be doing these anyway but right now, when a project like this will take you five months to finish it is really a bad idea. You want in and out.

4. Avoid expensive areas in Detroit like Palmer Wood, Rosedale Park, Sherwood Forest, and Indian Village – where house prices are above $300,000 and property taxes are in the sky. It will be harder to deal houses when property taxes are $15,000 per year.

You have to find somebody who not any qualifies to pay the mortgage but has no problem paying $1200 / month property taxes in a city whose schooling system would probably force them to send their kids to private school

In a nutshell – play in cautious if you want to. The money is good enough to take on some risk but you want calculated risk and not heads on foolishness, which seems to be the operating mission of many.

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Posted by Mark Ijlal at 10:30 PM | Permalink | Comments (0)

This is a story by Bill Fleckstein, in MSN today. I have been saying it for quite some time now that the obvious reasons for foreclosure - divorce, substance abuse, loss of jobs, death in the family - are nothing compared to the contribution of people buying houses using interest only loans with absolutely no equity. Unless you live in a certified HOT market like Vegas, Arizona or Florida where prices have decided to take an upward swing for quite some time now - these loans have to affect the number of foreclosures coming into the market. It is greed by banks to lend money at insane programs that is pushing these foreclosures high. This is just the beginning. Smart real estate investors are all watching and negotiating harder than ever and getting good deals. The deal is a plenty, now and in the coming years.

Do I feel extremely sorry for these folks - yes I do! Do I feel sorry for these banks who are losing money on these homes? Not at all - the REO market continues to grow. I told somebody that I never thought that I would the see the number of suburban foreclosures this high five years even three years ago. Astonishing how fast thing is spiraling out of control. There is money to be made, right now.

Empty houses, falling prices: A boom dies

You can see how the housing bubble is bursting in places like Columbus, Ohio, where builders and lenders threw common sense away and enticed people to buy homes they couldn't afford.

Regular readers know that since early 2004, I have described the housing ATM as what's allowed the economy to move forward. In June, I suggested that Time magazine's cover story, "Home Sweet Home: Why We're Going Gaga Over Real Estate," might be signaling the peak.

It's looking more and more like June was the peak (witness last week's disappointing new-home sales, pre-Katrina), as various problems begin to surface around the country.

To some degree, the housing market is a compendium of local markets, unlike the "centrally located" though all-encompassing stock market bubble. There is no Nasdaq or Dow Jones housing index. For that reason, as the housing bubble unwinds, it won't be quite so obvious to folks around the country unless it's happening in their community.

Home-style seduction
Turning to one such place, I am indebted to a reader of my daily column, who forwarded a copy of the Sept. 19 Columbus Dispatch. It ran a thorough article on the plight of a couple in the Galloway Ridge subdivision in suburban Columbus and also shed light on some financing techniques that get folks into trouble.

The article, "Suburban Blight," singled out Dominion Homes (DHOM, news, msgs) for enticing people to reach too far. Allow me to share a few quotes:Start investing with $100.
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"Big dreams filled Rick and Christy Alonso when they bought their new house from Dominion Homes. Start a family. Build equity. Move to a larger house. But six months later, their suburban neighborhood on the Far West Side began to deteriorate. New houses suddenly emptied. Thistles and dandelions overran lawns. Neon orange labels appeared in windows, signaling foreclosures."

Buy now, foreclose later
It's worth making a point here: On average, people across the country have a good deal of equity in their houses. But I think that average is misleading. There are people with huge amounts of equity, and there are people with virtually no equity. It's the people with no equity (otherwise known as "marginal buyers") who find themselves in trouble, wind up "upside-down," and are forced to sell.

It's those marginal sellers who start the price dislocation (after the supply of marginal buyers has been exhausted). The story Ohio describes this process: "Foreclosures damage entire neighborhoods. They affect families such as the Alonsos, homeowners who pay their mortgages on time, yet find themselves stuck with houses losing value."

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Posted by Mark Ijlal at 10:46 AM | Permalink | Comments (0)