Good thing about surrounding yourself with really smart people who are actively buying and selling bank foreclosures in Michigan is that you get great ideas and breakthroughs that most people will never think about.

So I had couple of my Inner Circle members talking about some of the recent deals two weeks ago and one of them Rodney, talked about some of his recently done Short Sale deals.

Two of them were duplexes. One of my members asked him how was he planning to sell these duplexes and to whom? Mom and pop or investors like us in Michigan?

His answer, “ I have no intention of selling these duplexes – I am going to keep them, rent them out and since I am getting them 50 cents on the dollar – the cash flow will be tremendous.”

That ladies and gentleman is what I call some serious out of the box thinking and here is why:

1. If you have ever wanted to own cash flow properties in Michigan – this is probably the best time to go and get duplexes which cash flow better (two checks instead of one) with some crazy discounts. I mean if a duplex gives you good cash flow when you buy it for $100,000 – imagine buying the same puppy at $50,000!

You still rent it out at the same rent but your mortgage payment which will typically eat out a good 70% of your cash flow just got cut in half – you will make more money just by buying smart with a short sale. B/y the way these duplexes need no rehab except paint, carpet and cleanup.

2. Banks loathe to own duplexes. Regular real estate buyers don’t buy duplexes – real estate investors do. So no matter what banks know that they are going to take a hit with some smart Michigan real estate investor down the road anyway so why not do a short sale now, take the loss and move on?

3. The other side of the foreclosure game in Michigan is that there is a strong rental market at least in the $650 to $750 per month range. Heck you can even get Section 8 tenants in most cities in Michigan if you wanted to go that route and let the State of Michigan send you a check.

Point is that there is more than one way to make money. Rodney does very well for himself buying and selling bank foreclosures but he also wants to add the cash flow part to his business by getting these duplexes not to mention some great tax deductions to offset his capital gains next year.

Sweet thing is that with a Short Sale now you have enough equity to even wholesale flip these babies to some other Michigan real estate investor if you don’t personally don’t want to play landlord now.

Just another strategy to add to your weapons belt.

Posted by Mark Ijlal at 03:29 PM | Permalink

All guns blazing….

Last Thursday was the second last Inner Circle Mastertemind of 2006. Can’t believe that the year is almost over??? Me neither. By the way we broke the record this month – left the hotel at 11:53pm, seven minutes before midnight. The previous record was 11:40pm in October 2006.

Here is one email that Mike Hale, Inner Circle member from Trenton, MI sent me very late that night:

Here are some of the highlights:

1. Banks are giving bigger discounts on Short Sales provided you can “close fast”. One of the common phrases being used by Loss Mitigation Officers over and over again is – “how soon can you close” and NOT “ how can you ask for a big discount like that when there is nothing wrong with the house.”

I had Inner Circle Member Rodney Townsend describe several of eight ongoing deals in the tri-county area and he reports that with the exception of two homes that require renovation (paint, carpet, cleanup, kitchen updates) the rest are all cleanup only – no rehab needed yet he is still asking and getting big discounts – based on “how soon can you close.” That is why it is so important to have quick financing lined up to close as quick as possible once the Short Sale is approved.

Even when you are buying REO’s – it always works as a great “price reducer” to go in and offer less but offer to close faster. There are enough resources available in Michigan right now as far as financing foreclosure deals goes especially some of them that work exclusively with Michigan real estate investors that you should not have any reason not to use the above to whack some big discounts.

2. He is also doing something very smart – clipping all the “negative articles” that appear in the newspapers about Michigan and sending copies of these articles to the Loss Mitigation officers with his Short Sale package for houses that are in excellent shape. Talk about turning sour into sweet.

3. Inner Circle member Dwayne Toler who is 19 years old along with his partner Marcus Thompson who is also 19 shared on how he is using the Internet particularly one free website to get foreclosure leads in Oakland county for no cost.

I don’t know about you but I do wish I knew about all this when I was 19. These guys literally drain me. They call in regularly on every coaching call, ask a bucket full of questions, get strategies and then implement like crazy. It is a “closed loop” . Learn, act, learn, act – that is is how bank accounts get bigger. b

4. I had Inner Circle member Paul Mueller who just finished his first flip – described step by step on how he bought, fixed and sold his first house. It is fun to see new members do their first deal and get a real check with their name on it. Paul made some very good points in his presentation on what new investors in Michigan need to do in their first deal and I will write more about his points later this week.

He also put together a great Investor Credibility Kit for his future private investors in Powerpoint with something that very few Michigan real estate investors ever bother doing – getting a great warm testimonial from the hoemwner who just bought their house.

You can leverage this 3 minute video to sell the next three dozen houses. I wish I knew about this strategy when I first started.

Tony Grix talking about the heartaches that one bank gave him and one did'nt in Michigan. Cool thing about having members like Tony is that you always know that is happening right now in the real world of Michigan foreclosures. Not just one opinion but facts.

That is me, doing a show and tell on a new direct mail package for getting preforeclosure leads. Look closely and you might recognize the package. :o)

At Ijlal Inner Circle I do things differently – no pitches, no courses to buy, no other expensive bootcamp to pay for that will have the “all the answers”. I could do it I guess if I wanted to – majority of real estate investors have been brainwashed into thinking that more information is a better.

Actually good information about buying and selling bank foreclosures is only half of the game. The other half is a plan – action steps – to do one after one that turn one deal into 8 as one of my members described only three days ago.

Posted by Mark Ijlal at 11:43 AM | Permalink

One of my coaching group members Steve Shollack who is an Attorney and works for Wayne County Property Forfeiture department (they grab drug houses etc and sell them via auction on their website) send me the link to today’s Detroit News article:

It talks about how rising mortgage payments are putting thousands of homeowners in extreme financial difficulties.

It is pretty disturbing yet very familiar to me.

See, most people think that majority of bank foreclosures in Michigan are happening because of layoffs in the automotive industry.

I have been saying for two years that that is NOT the whole story.

I know personally at least 8 people whose mortgages have jumped through the roof in the last six months and all of a sudden they are finding that making this mortgage payment is playing havoc with their money.

And YES they still have their jobs. But a $1000 per month payment becomes $1400 per month payment…

That is a shock to your bank account.

So how come all of these homeowners are not calling their local mortgage companies in droves to refinance and get rid of their high payments?

Well they are and they are not hearing anything good coming out of other end of that phone call either;

Either their credit is bruised to the point where they cannot get the best rate OR the value of their home has not appreciated enough in the last 2 or 3 years to justify doing a refinance.

Remember most of these folks bought these houses either No Money Down only two or three dozen months ago.

I know so far Michigan has seen staggering number of bank foreclosures in 2006.

I think 2007 will break all records.

What do you think???

Posted by Mark Ijlal at 05:07 PM | Permalink

Lately I have been getting tons of emails from blog readers about the great deals they have been finding recently in Michigan condos.

My advice is to stay away from condos in Michigan. Even though you can find some killer deals in them, because:

1. It is a known fact in the real estate community that condos are the last one to go up in a boom; the first ones to down in a bust. They are not a good long term investment by any stretch and in case you do want to buy one and keep it as a rental or lease option – you should consider that possibility that their value will go down more in 2007.

2. Most Michigan condos that have killer price reductions on them – whether with a Short Sale or a REO – are two bedrooms. It is extremely hard in the best of time to sell two bedroom houses in Michigan let alone a condo.

Forget about the price you can buy the condo for and think for a second who are the potential buyers for your foreclosure flip?

Most likely they are first time homebuyers with a family or thinking about starting one.

They want space and rooms. Two bedrooms houses are hard sell let alone a condo with two bedrooms and no backyard. If you have access to MLS then do a search on condos that have been sitting on the market for a while.

Then do a Search on houses that have been sitting on the market in your area. You will see a larger number of 2 bedroom houses and condos in that list more then anything else.

That is not a coincidence.

3. There are areas in Michigan where people want to buy a condo and live there. Most likely they are NOT buying the condo but something else that comes with the area – closeness to downtowns in Birmingham, Ann Arbor or Royal Oak, lake front in Keego Harbor or Sagitawc, extraordinary public schooling system like Birmingham.

In either case it is NOT the condo that is being bought but something else that is making the condo flip. Does your potential condo deals has that kind of “hook” in it?

If not then you would be sitting on that property for a while.

4. Condos are expensive – they have Condo Association dues which by the way if you read #3 then all the good areas where condos do get sold because people want to live there traditionally come with a higher Condo Association dues.

For example I saw a condo in Royal Oak, which was selling like hot cakes where the association dues for a 1 bedroom condo were $225 per month; taxes another $250 per month. That is $500 per month that your buyer has to qualify and pay and we are not even talking mortgage payment here.

5. Appraisals for condos in Michigan get “cut” by lenders. If I know about their bad points so does the lending industry. Apples to apples – an appraisal for a house is most likely to pass through for a flip. An underwriter might hammer a condo’s appraisal.

Bottom line is this; in November 2006 there are enough good deals in every single county in Michigan that there is no need to stress yourself out and buy condos that you will have a harder time sell them when the time comes to flip them out.

Look for 3-4 spacious bedroom houses, brick, with basements and decent backyards.

You know the kind of house you would want to buy for yourself.

Posted by Mark Ijlal at 01:18 PM | Permalink

Hat tip to Steve Shollack, Ijlal Inner Circle member for sending this in.

Posted by Mark Ijlal at 01:38 PM | Permalink

Here is something new – high end home buyers getting wise to the foreclosure boom in the Michigan, especially in Oakland and Western Wayne counties and looking for deals to buy and live in.

I saw two of these deals last week – first home in Bloomfield Hills, bought for $700,000 – appraised value around $1.2million dollars. Second home in West Bloomfield, bought for $1,000,000, appraised value $1.4million dollars.

In both instances there was no repairs or rehab needed – houses are in great shape although I was told by a reliable source that both of these families did ended up spending around $40,000 to $50,000 “cleanup and paint” on these two homes.

Nora was contacted yesterday by a family who are looking for a $800,000 home in West Bloomfield – their criteria is walking in with at least $400,000 in equity. They want her to find them something in that price range.

If you don’t know both Oakland County – Farmington Hills, West Bloomfield, Bloomfield Hills, Oakland Township – and Western Wayne – Northville especially – are flushed with million dollar foreclosures in the last two years

These towering mansions sit on the market for years sometimes with no buyers. But I am happy to see that finally somebody got wise up to that and instead of buying a brand new home or build a new two million dollar home – they are just whacking the bank on the head and walking in with $300,000 to $500,000 in equity.

I was talking to my Inner Circle member Paul Mueller yesterday and we both agreed that if were buying a new home right now to move my family there is no way we will build a new home or buy a regular mom and pop listing.

Instead we would go out and buy a nice bank foreclosure and walk in with couple of hundred thousand dollars in equity. Five years ago there was no way in hell that a bank would have discounted a high end home in Northville or Bloomfield Hills. And now it looks like business as usual.

So if you are looking to buy a 5000 square feet, indoor swimming pool, media room and climate controlled wine cellar in the basement, 5 bedroom, 5 bathroom, 4 car garage home in Michigan……

You should be looking for a REO and not calling your local real estate agent.

Posted by Mark Ijlal at 10:43 AM | Permalink