September 2006 Archives

Pick any business – mortgages, real estate, appraising, title insurance, dentist, restaurant owners – and that one number that never changes is that 5% of them make all the big bucks. 1% truly gets rich.

So in any given Michigan city of all the real estate agents vying for you attention and listings – there is a tiny number of real estate agents – 5% who are making all the money.

Since they make money, month after month – they can afford to advertise.

Actually they advertise a lot.

My local township newspaper has a full page color ad on the back page, every single week. Same real estate agent week after week. I called the newspaper just for the lark. The full page costs $1600 per week. That is $6,400 per month, $76,800 per year.

This guy has to be doing well in his business to be writing a check like that every month. Which also means since he is the “only” one running a full page color ad – the chances are that his listings / houses sell faster than his competition who are not running a full page color ads.

Who do you want to handle your listing?

A real estate agent who runs full page color ads every week or a real estate agent who will put a sign in front of the house and call it a day?

The top dogs make more money, which gives them the room to advertise more, which helps them sell more, which gives them more money to advertise ….

You get the picture???

If you are going to pay 6% anyway to sell your house why not hire the absolute best gun for hire out there?

One of the top real estate agents in the city of Detroit spends $10,000 per month on radio advertising. Another one has two different radio shows on two different radio stations in the city.

Yet nobody bothers to do this little piece of common sense research before listing his or her house with a real estate agent. Any body with a business card with a picture and the title of Real Estate Agent could be given a listing. Yet they are not created equal.

It is 6% either way – top dog or wet behind the ears? You can pick.

Even worse are the real estate investors who get a real estate license then try selling their own homes without having $1 for marketing because they have already blown all their money on rehab.

Reminds of the old joke – the guy who wants to defend himself in the court of law has a fool for a client.

Do these 4 point checklist before you sign on the dotted line on a listing agreement to sell one of your properties:

1. If you have access to MLS do a search on the houses sold in that particular city and see whose name pulls up all the time.

2. Go to the public library and pull up the local newspapers and see who are running big color full page ads.

3. Go to the local Kroger or Meijer and see whose mug shot is on all the shopping carts.

4. Go to Google, MSN, Yahoo and type in your city followed by the words “real estate agent” and then “Realtor” and check out two things:

*** Who is pulling up on the top 3 search results? If they are smart enough to invest in putting up a kick butt website probably they are investing in other forms of advertising too.

### Who is running these ads – these are little text ads that are on the top of the page and right hand side – blue links that say on top “Sponsored Links”. These ads are very expensive to run. Anybody who is spending money on running these ads must be doing something.

Build a list of Top Realtors in your target Michigan city. A great Black Book the kind that makes you money does not happens by accident. But once it is done; the transformation in everything you do is almost instantaneous.

Bernard Reed of Chesterfield Township, Michigan is a very different kind of Michigan real estate investor.

Sure he is doing it for the money just like the rest of us but he has added a twist to the whole foreclosure buying thing that I have never seen before in the world of Michigan foreclosures.

Call it real estate investing with compassion.

Listen to the MP3 and you will be happy that I just handed you a very good advantage over your local competition and a chance to actually help homeowners in Michigan who are in foreclosure.

Make money, help homeowners and build an incredible brand based on compassion.

You can reach Bernard at 1-866-312-4077. His company name is FIS Consultants based out of Sterling Heights, MI.

You can download the MP3 by clicking here:
MarkIjlal-September27-2006-Michigan-Real-Estate-Podcast6

I have always said that the best resource for new Michigan real estate investors who want to break into foreclosure investing is the network of existing real estate investors.

You know the people who are already doing it.

They are not that hard to find and most of them if they have been doing it for a while have an arsenal of good advice, contacts, deals etc that they will be sharing with you…

Only if you ask them nicely.

There are 2 way to run this business – one is to practice wholesale paranoia, practice a mentality off poverty which believes that there is ONLY SO MUCH to go around – money, deals, buyers etc.

Or you can run the other way and believe that there is more than enough for everybody to eat and live happily ever after.

If I was completely NEW to this business and lets say starting tomorrow in Sterling Heights – I would go and buy Detroit News, Oakland Press and Macomb Daily. I would also go to Borders and pick up a copy of the local Sterling Heights newspaper – you know the ones that get dropped at your house for FREE every Thursday – C&G Newspapers and Hometown Newspapers publish couple of dozen of these weekly local newspapers that get read simply because they get dropped at peoples houses.

So I would buy these newspapers and look at the Real Estate Miscellaneous / Real Estate Wanted / Flat for Income sections. These are the sections that most real estate investment ads traditionally run.

I would call every single one of them, introduce myself and ask them if they come across deals in Sterling Heights, if they know any good contractors, where they are looking to find deals just in case if I find any deals to send them there way.

Are you getting the point?

You cannot swim in the ocean and ignore the rest of the fishes. For every landlord trying to unload some property – he or she probably ahs another 3 that he will run an ad three weeks from today. They all have contacts, experience, and stories to share and tell.

All you got to do is call.

Flying to a bootcamp in Arizona and hanging out with bunch of investors from Colorado is not going to help you.

Adding 5 investors from Sterling Heights might help you a lot more.

Whether you live in Grand Rapids, Ann Arbor, Detroit, Sterling Heights, Lansing or Holt Michigan – you should know who the players are; you should talk to them and they should be talking to you. Not another group of newbies – because that is self defeating.

You need contacts who are playing the game already. In the trenches. Every city in Michigan typically has couple of these. You need to find out who they are.

Full Detroit News story here...

Here is the link to the website that Detroit News mentioned in their story. - Hudsons and Marshalls. If you do decide to buy something out of this auction - start with a bottom line number and dont get into an auction fever. I am a not big fan of auctions. You end up bidding against far too many rookies or homeowners who are looking to live in that house. End result your emotions take over and you end up buying stuff that you never wanted at a price you should have never paid.

Hat tip to Steve Shollack for sending this Detroit News story. The following is a small quote but read the whole story - the numbers are mind boggling.

Investors taking advantage

Some are trying to market the foreclosure glut as a golden investment opportunity.

More than 250 single-family homes, condominiums and duplexes will be auctioned off throughout Michigan from Sept. 25 to Oct. 1 by Dallas-based Hudson & Marshall Inc.

Several of the country's largest lending institution's hired Hudson & Marshall to auction the properties to recover unpaid loans. Sales are planned in Dearborn, Saginaw, Lansing, Battle Creek and Grand Rapids.

The properties, which range in price from $15,000 to $450,000, are a "win-win proposition" for investors and owner occupants, said Dave Webb, principal of Hudson & Marshall.

"Buyers get the opportunity to purchase great value properties at reduced prices without the hassles of the seller negotiation process," he said.

Why stress yourself out trying to think of running a killer promo to flip your house quickly when big burly builders have 30 employees sitting on a conference room figuring it all out for you?

I picked up this Sunday’s Detroit Free Press and I couldn’t help notice some of the very smart promotions being done by builders to sell expensive houses – imagine the same thing running for your $125,000 house!

My 5 favorite strategies are:

1. $2000 IKEA Gift Card – “Add some new furniture to your hip new place. Receive a $2000 IKEA Gift Card when you close on a select condo.” IKEA is HOT HOT HOT - you have to check their Canton store out just for fun. Their prices are very reasonable so $2,000 will go a long way to buying some really cool stuff. Plus it is a fun promo.

2. “NO PAYMENTS TILL 2007” – Straight out of Art Van playbook – first time home buyers would love to buy a new home; move in and skip some payments till new year. And if you know about something about his businesess and financing then you would immediately know that this is ONLY 2 months of payments that they are talking about.

3. “ No Down Payment; No Closing Costs” – Oldie still works. There is magic in getting something “a house” for nothing. When nothing else works - this wil always sell a house.

4. “I will make your house payments for 6 months” – This is a little more expensive option then “No Payments Till 2007” but man oh man does it sounds sweet or what? I cannot wait to use this one and just see the look on a first time home buyer especially when they have been out driving out all day looking at houses and they can stop by mine and hear this. Stop them dead on their tracks.

5. “One Stop Shop – Get your house and mortgage all done right here” – we are all busy and the days of hanging up on buyers in Michigan if they don’t have a pre-approval letter from a mortgage company are long gone. You have to make it super easy for people to buy your homes. Hook up with a local mortgage company to do that. One of my Inner Circle members is actually making his loan officer show his houses to the buyers that the loan officer finds. Talks about really using OPT – Other Peoples Time in your Michigan real estate investment business.

This is the “other” Wayne County foreclosure list that many Michigan real estate investors never take a look at.

Wayne county periodically siezes houses in drug raids, vacants etc. It used to be that these houses were in run down shape. Some of them still. Lot of them are not. If you want to buy cheap houses ( lot of California investors do) in Wayne county – this site is worth a look.

Hopefully y'all know who Robert Kiyosaki is and his best selling book Rich Dad, Poor Dad - here is Google Video of him presenting the big ideas out of his book. If you have not read this book then you definitely need to watch this.

Nothing to do with Michigan real estate directly but essential for people working for somebody who want to make a shift to becoming an entrepreneur.

Robert Kiyosaki Video (41 minutes)

Bigger question is why now? Everybody thinks that it is economy - the layoffs, Big 3 - etc. I dont think so. I have been saying it for two years now and finally someobdy from a major publication - Business Week (September 11, 2006) have written a great story about the "truth" about how lenders all across USA are shoving mortgages to anybody who will buy that are nothing but foreclosures waiting to happen.

People ask me how do I see the foreclosure business in the next five years? Read the following and you will know the answer. This is just the begginning. Thanks to Jaqui Shaffer for sending the link.

Staggering? Are they not? There is a typo in the last 2 colums - it is not 2005 but rather 2006 Quarter 1 and Quarter 2.

Hat tip to Jaqui Shaffer, Inner Circle Member for sending me this.

Paul Reinhold, Ijlal Inner Circle member, just bought his first deal in Canton. Beautiful house with no rehab except paint, carpet etc with around $35,000 to $40,000 equity.

Surprising thing is that he bought this house not from a homeowner in foreclosure or from a bank but from a relocation company in Canton.

Turns out that this little known niche in real estate businesses buys and sells houses typically under contract with big firms who have temporary executives coming in for short to medium term projects.

Got me thinking and I dug up my yellow pages (first time in my life I looked through one) from my garage and looked in it.

Well just in Oakland County – there are 20 listed under Relocation Companies – some of them are realtor divisions (no surprise) who just deal in this niche. Other ones are strictly relocation companies who do nothing but this.

I think it is a good idea to look in your local yellow pages either in your hometown or your target Michigan City and see what you find listed under Relocation Companies.

Contact them via phone or fax introduce your self and ask them if they have any houses that they are having problem selling or a house that they want out of their inventory quickly.

Might find something good like the way Pual did.

Alan Boike, Ijlal Inner Circle member and a very smart entrepreneur / Michigan real estate investor from St. Clair Shores said something in the last Inner Circle Mastermind that I have to share with you.

I don’t typically disclose what is said or taught in these meetings – it is not fair for my members to lose their competitive edge over other Michigan real estate investors.

But this is an exception.

Because what Alan said is so true and powerful that I believe that all Michigan real estate investors who have in interest in buying properties at a discount should immediately made this strategy a part of their overall game plan.

So whether you are new or old, green or grizzled – this applies to you. I will tell you that on a personal level – I immediately implemented what Alan said in my own businesses.

This is what Alan propped during our Inner Circle Mastermind:

“ Make a list of everybody you have ever contact with – friends, family, business associates – remind them on a consistent basis via a postcard of what you do; so when they hear of somebody in a rush to sell a house (foreclosure or a motivated seller) – your name will jump up in their mind and you will get the lead and subsequently the deal. Nobody remembers what you do or can do unless you make your business to remind them.”

So simple yet so powerful.

I emailed Alan Friday just before he left for vacation and I asked him what were the results of his first postcard to his “friends and family list” – that he just did 14 days ago.

He reported that once he comes back he already has a house to go look at that came from that postcard. Death in the family, the heirs just want to sell the house ASAP.

The absolute best thing about doing this is that you can run this entire thing on autopilot.

More on that later.

But you should start building your own list.

Right now.

Today is a NOT a good day to run classified ads for Michigan real estate investors.

Well no long weekend / holiday weekend is.

If you look at today’s Detroit News Real Estate section – it is exactly half the size. All the builders – who are smart – skip town on holidays.

Obvious the next thought that crosses my mind is that having less ads sounds good after all if nobody is running ads and I am the only one then running a ad on weekends then I would definitely get better results.

Turns out that is not the case. I have ran all kinds of ads in the last five years in classified sections – private money, to buy houses, to sell houses, for retail flips, for wholesale flips, for renting, for lease options, for flipping apartment complexes, for flipping duplexes – but results are all the same.

There are NO or very little calls.

Seems like nobody in Michigan reads the classified – at least the classifieds on holidays.

But after wasting couple of thousand dollars on testing – it makes sense.

All I have to do is look how I act on long weekends and you act.

We all go out, watch a game, hang out with family, people come over, we go over to somebody’s, go shopping, clean up the yard, go out of town.

Get the idea.

Lot of better things to do today then read the darn classifieds.

After all they are going to be back next Sunday’s.
So if you want to save some money when you are new and starting out in Michigan real estate – then don’t run ads on long weekends and holidays.

Tags: michigan, michigan real estate, michigan foreclosures, michigan foreclosure, short sale, short sale michigan, michigan hard money lender

Do you know what this picture is about?
If NOT then read the story that Detroit News printed this morning:

KALAMAZOO -- The yard signs are all over town this summer, planted in front of homes and on vacant lots up for sale.

At the top of each sign is the distinctive red, white and blue Kalamazoo Public Schools logo. Down below are three words of great importance to many prospective buyers:

"COLLEGE TUITION QUALIFIED."

The signs indicate that the properties lie within the Kalamazoo school district, where all high school graduates meeting certain residency and enrollment requirements are eligible to receive free tuition to any public university or community college in Michigan.

The Kalamazoo Promise, as the privately and anonymously funded tuition program is called, was announced in November. From Jan. 1 through July 31 of this year, the number of homes sold within the district jumped 6%, from 797 to 846, compared with the first seven months of 2005, according to the Greater Kalamazoo Association of Realtors.

The average residential selling price rose nearly 7%, from $114,812 to $122,612, and the number of homes for sale went up about14%, from 1,848 to 2,133.

"It's going to be a tremendous economic development tool and not just an educational opportunity, so it's going to take three, four, five years probably for it to really play itself out," said Matthew Maire, the association's executive vice president and chief executive officer.

Although the association doesn't keep such figures, it is believed that many single-family homes sold in the school district this year were bought by families whose children are new to Kalamazoo schools. When the school year begins Tuesday, the district expects about 450 more students than at the start of the last school year, when there were 10,223, Deputy Superintendent Gary Start said.

"The Promise has made a gigantic difference for us," he said.

Dave McKee put his three-bedroom Kalamazoo Township house on the market about two months ago. He's asking $144,900 for the home, which is in the Kalamazoo school district.

McKee said he thinks highly enough of its potential marketing power that the words "Kalamazoo Promise" lead off the classified advertisements that he runs.

He reports "a good deal of interest" in his home, which he's selling because he just got married.

It's too soon to tell what kind of a long-term effect the Promise will have on the housing market within the district.

In units sold, residential sales fell 1.6% from July 2002 to July 2003, rose 6.1% a year later, then fell 10.8% in July 2005 before rebounding this year.

"People may choose to move their children ... to Kalamazoo Public Schools to qualify for the Promise, but if their homes in Portage schools aren't selling, then they aren't going to be able to make the move," real estate agent Vicki Peck said.

The impact of the Promise would be greater if the local economic climate were better, Peck said, but the scholarship program is expected to trigger development.

"On the one hand, we think that the Promise is really going to help economic development," Start said. "But in order to have more students, we need more jobs."

Note to Inner Circle member Chris Kelheun and Dwayne Mann who are both from Kalamazoo and Portage area - opportunties like these dont come along every day. Use this positive press to your advantage - with private investors, with selling houses, with wholesaling houses - whatever you are doing in Michigan real estate.

A thing that everybody forgets initially is not tracking money in your Michigan real estate business – I was talking to my CPA this April as I was doing my personal taxes and he said that out of couple of hundred business owner clients he has – I am the MOST ORGANIZED he has ever seen.

Nora who was sitting next to me just burst out laughing.

Actually I am not organized at all. But I am smart enough to know that I am not.

So I use software like QuickBooks Simple Startto make sure that it keeps me organized. I don’t write hand written checks. They are the ones you forgot to keep track of. Everything is printed off the printer so it is already in there.

Even when I have cash on me – all my business expenses are put on my business credit card (NOT personal credit cards - I dont have any! Personal philosphy of No Personal Debt) so I once I put them in Quick Books – it can do the dirty work for you.

Cost of this incredible life saving software - $80 at Costco and Sam's Club; a completely insane $39.99 at Amazon.com. I can’t believe why anybody would not want to use it at that price. It is literally free. It comes in variety of versions. Dont waste your money buying the high end version. For you and me the $39.99 version just works fine. QuickBooks Simple Start is literally designed for people who have no knowledge of accounting. Which pretty much describes most of us.

One more thing that new real estate investors forget – I use Quick Books not just to do my taxes right and make my CPA and IRS happy in April but also for myself. I need to know if I am doing well or not.

Networking with other Michigan real estate investors without three essential things in place - business cards, voice mail, email address - is a mistake that most new to this make on a regular basis.

It is pretty common for people to come up to me after a seminar and ask for this or that. Almost 95% of them have no business cards / no email / no fax number set up. And yet they have been thinking about doing this for a while.

Look if you want anybody to take you seriously and help you then you have to meet him or her halfway. If you want somebody to fax you or email you a lead for preforeclosures - well make it easy for them as much as you can.

We are all busy - the successful ones are more busy then the ones who are not. The more you climb toward the top; your time becomes more valuable than anything else. To ask successful people to help you (HINT: they are the ONLY ones you should be asking to help anyway) is fine. But you should know the rules.

Good places to get it done: for business cards, faxes that come to your emails as PDF and virtual voice mail systems to capture incoming short sale leads.

Doing real estate deals in Michigan without incorporating your business – is crazy. Plain and simple.

If you want other people in Michigan – REO Realtors / Homeowners / Private Investors / other Michigan real estate investors or to sum it up pretty much anybody to take you seriously then you have to act like you are a business owner.

Being an entrepreneur is mindset plus knowledge plus business structure. It is hard for me to take anybody seriously or do business with anybody who is not investing a tiny little fee to incorporate his or her business.

Got to do it.

Separate your personal and business with fine line incorporation. IRS is happy. Banks who will give you money are happy and you and your CPA will have a better grasp of what is coming in or coming out.