April 2009 Archives

QuickBooks:

In my first six months of starting my business, I wrote all my expenses and money coming in on a legal pad. After I have filled couple of pages, I actually tried making a monthly statement on an 11 by 17 poster size paper. Then finally my CPA took pity on me and showed me how to use Quick Books and I have been hooked on this $99 lifesaver software ever since.

If you are doing more than one deal per year than you cannot live without QuickBooks. It is fast, cheap and extremely easy to use - no accounting knowledge or expertise needed. Turn on the Class function and you can actually see the Profit and Loss statements of each property.

Not only you will save money at year end by giving your CPA, a copy of your years' records on a zip drive instead of her charging you extra for trying to figure out your mess but you can also see where you are wasting money in a glance.

Aweber.com:

For $20 per month, it keeps tracks of all my contacts. I can email them with one click and never have to worry about blowing up my computer and losing my entire contact list. A big part of the people we do business with find us on the Internet and Aweber grabs their information and keeps it all neat and tidy.

YouTube:

It is free to use. Everybody knows how to use it. I can upload a video of a house and email it to 25 people privately and they get to see the house without being there.

Three months ago during my mentoring group monthly mastermind - I asked the question from all of my members, " What really frustrates you about dealing with REO brokers?" - everybody said, "how come they don't have videos of their houses? So instead of starting at a spreadsheet with addresses and then wasting all the time gong to the house and not liking it - give us a five minute video on YouTube and we can save valuable hours and just go to the house we want to buy?"

I asked several REO brokers I know about this. They all came back with really good excuses. Just remember this in your business. You don't need a reason to do things your clients will love. You just need a really good excuse on why you should not be doing it.

One contractor I know is even rehabbing houses for three CA investors right now and emailing them weekly updates shot with his $69 Flip camera, uploading them to YouTube (takes exactly one step) and emailing them the link. These videos are private, not for the whole world to see, just for his clients.

The slick thing he is doing is adding his phone number on the video (another very easy thing to do in one step) and now these investors who are giddily forwarding these videos to their personal network are basically creating a whole new list of clients for him without him doing any marketing. Think of this for a second about what you can do with this if you were interested in wholesaling houses to out of State investors or even locally.

Casio S-10 Exilim Camera:

I bought it from Costco for $170. It has since dropped to $129. I love this camera for shooting the inside of a foreclosure even in low light. I still have my Flip camera but this just blows the Flip out of the water. A suggestion: next time when you are driving and looking at 4-5 deals back to back, don't take pictures, shoot a short video of each foreclosure. When you play it back on your computer - it will play in Windows Media Player or QuickTime Player - both free - you will remember the house much better than 5-8 pictures.

As I was finishing my presentation for tomorrow's four hour Summer School 2009 I had the pleasure of thinking about when I started my business. It is a seminar geared toward folks just joining our tribe of Michigan real estate investors and I had to dig deep down memory lane to remember what it was back in the days when I started.

One big lesson was that it is very hard to get in front of the whole world. The folks who run Superbowl commercials even cant do it anymore for two million per minute.

But what you can do starting today is to become very visible, in a very good way, in your Michigan city as THAT REAL ESTATE INVESTOR with whom everybody wants to do business with by finding the right 10 people in your Michigan city and becoming friends with them.

Whether you live in Grand Rapids or Macomb Township - there are 10 people who can help you greatly if only you were found when they were looking online for you.

Truth be told, I never thought about it when I started out buying foreclosures.

Here I was sitting my apartment doing what I was doing then later in a very small office ($400 per month per room) in Southfield Road and Ten Mile road. I was obsessed in a very unhealthy way with running classified ads in Detroit News on Sunday.

Ever saw the late night infomercial on how you can get rich by running tiny little classified ads? Well I should have been invited to those infomercials as a guest because darn it, my ads were running there like they were going to stop making foreclosures in the City of Detroit.

As a historical note Detroit Foreclosures were THE ONLY houses I could afford to buy in and they were the ONLY foreclosures that banks would even consider discounting. Those days I don't miss at all. Those drives to East Side were killer plus pre-GPS, I embarrassingly got lost every day much to the amusement to whoever was sitting right next to me.

One phone line. One old fax bought for $150 from Nora's old employer. One old computer. Two old tables and chairs bought from a mortgage company closing down. Not very impressive.

But brother if you saw my ads in Detroit News and how many of them I was running, in every section, you would think that I was Web 2.0 outfit being financed by venture capital.

One of my current coaching group members, Norma, one day reminded me that she met me long time ago in my little Southfield office to buy some Detroit foreclosures with other investors. I think we had to borrow chairs from the office across the hall because all we had was four chairs.

This was before Craig's List, before I had a website for my business, before Michigan Foreclosure Report, before FaceBook, before Twitter, before MySpace, before LinkedIn.

Ran ads in Detroit News, met new folks almost every week from Monday to Thursday. Friday's were dead days. At that time my ad and the newspaper was in the trash. The ads ran again on Sunday and we were on the ride again.

Did everybody who came through these ads was a good lead or even a good person to do business with? No. Not at all. But enough were.

And it was great to talk to so many new people on a weekly basis. Some of them are still around doing business with me. I got educated on how to talk to people I can wholesale houses to, private investors, deal partners, rich folks, broke dudes, scammers and older much wiser local real estate investors who were kind and generous in patting the head of the new kid on the block.

I met once an electrician working for Detroit Edison full time who also owned over 100 homes in Detroit. He told me sometimes he forgets to go and collect rent. All the houses were free and clear. His two ex-wives got him started in real estate investing. I met Fortune 100 executives who were smart enough to see what was coming in the auto sector in metro Detroit and were looking for some backup. I met younger investors who were two years behind me in doing deals and wanted to know what not to do which some times is more important than knowing what to do in a business.

It was the education of a clueless entrepreneur.

Done one handshake at a time.

The first 10 led me to the next 10 and next 10 and the next 10.

This business is and always will be about knowing the right people. Most real estate investors get the first part done: they get to know what to do. They just never learn how to get to the more profitable part of knowing the right 10 people who can help them take their business to the next level.

No matter where you live in Michigan, there are 10 absolutely wonderful, generous, remarkable real estate investors who live in your Michigan City and would not mind having a cup of coffee with you. In search of those 10 handshakes to me is a very good investment of your time. There is lots of profit in those names, phone numbers and email addresses. It is worth the search.

1. Most real estate investors have 2-3 good private investors sitting right next to them everyday, all the time. The dots just never connect for them that this guy, this woman might be THE perfect person to talk about partnering up in their next deal.

One student's wife works at a surgical center: never thought about talking to the doctors and surgeons who work with his wife every day. Yet another student's co-workers would make perfect partners for him to go and buy a really small apartment building by next month. Just never occurred to him to bring the topic up effectively not casually and do a deal with them.

This 'so much in the forest that can't see the trees' situation happens to everybody, including me. A good exercise would be to sit down with a piece of paper and think who do I know and my significant other know who might be in interested in partnering up with do some deals in the next few months? And then working that list.

2. The biggest reason that stops most real estate investors in Michigan for getting good private investors to work with them is they over think till they are blue in the face instead of actually talking to two dozens folks who might play. Instead of playing 12 Ways They Are Going To Laugh At Me game in your head, talk to me and 11 other people and see for yourself what the world thinks about your idea of flipping foreclosures.

Be prepared (I showed them a detailed outline to run a talk like this) by all means, this is not a casual conversation but don't over think it either. You don't need to learn every single way a self directed IRA could be used to buy a Westland foreclosure. You just need to learn the one way it could be done and then other strategies will fall into place when the deals requiring them come into your lap.

3. If you are so excited about sharing your misery ("Oh me tell you about this contractor and how he played with my emotions for two months") well then your should also be excited about sharing your triumphs ("I just closed on deal #3 and made $20,000"). Why look so embarrassed about getting a big check and keeping quite about it but cant shut up talking about all the screwups that you have done in the last 40 years? Your triumphs should get equal billing with your mistakes.

4. Thankfully at least my students are over open and excited about using online strategies to grow their businesses. It makes me very happy when folks are asking questions about how to use Facebook or Twitter to network and become visible to sell more houses or make the right kind of contacts. The ones who are already using it are amazed at the people they are meeting everyday.

5. A friend of mine who is a very successful mortgage broker out of Farmington Hills came out for 40 minutes and updated everybody about what is new in the world of flipping houses to first time home buyers etc. I am getting the video and by Tuesday I will have it up here. Must see to get an update on selling houses in Michigan.

The death of down payment assistance programs, chances in down payment and closing cost concessions guidelines, the higher LTV restrictions for buying investment properties using mortgages and very wired requirements for cashing out properties by refinancing that you bought recently are extremely important updates that you should know as a real estate investor in Michigan. Video of this talks up shortly here.

6. He also made an interesting point about how bulk of his first time home purchases is coming from handful of cities in the metro Detroit area. The CITY thing is more important than ever right now in Michigan. The right city can move a house faster than just buying a foreclosure anyplace. Blue-collar neighborhoods and good schools matter even more today than ever.

7. Recessions are not necessarily bad for everybody. His office is swamped with business. They are moving from a small 2100 sq.feet office to 8,000 sq feet office shortly. They mostly do purchases and his challenge was very good actually.

He said that if anybody thinks that nobody is buying homes right now in metro Detroit, first time home buyers that is, then they need to come to his office and spend a day there and they would know that is simply not true. Cant fake busy and they are very very busy.

More about it in this week's Getting of Money Letter.

8 Smart Questions you must ask yourself before taking a partner

Top 10 Rules To Eliminate All Fixer Upper and Contractor Headaches

5 Reasons Why You Should NOT Buy Michigan Condos Ever

The 5 Point Checklist BEFORE you buy a Michigan Foreclosure

10 Rules For Writing Killer Offers For Michigan REO's and Short Sales

"Baby do you want to have sex or go to Home Depot?"

Thinking about putting a website for your Michigan real estate investing business?

Money Loves Speed

24 Months

How To Build A Michigan Foreclosure Black Book - Part 2 - How to build Become #1 on Top REO Realtors Speed Dial

Hustle

- to proceed or work rapidly or energetically.

-to be aggressive, esp. in business or other financial dealings.

Source

Conversion

a change of attitude, emotion, or viewpoint from one of indifference, disbelief, or antagonism to one of acceptance, faith, or enthusiastic support

Source

Every science fiction movie I have seen with a spaceship typically has a dramatic scene where the ship captain has to heroically decides to blow up the ship to save planet Earth or something like that. He or she initiates an auto-destruct sequence by telling the ship's mainframe computer.

And then the countdown begins with the stern warning,

"This ship will auto-destruct in four minutes and nineteen seconds..."

Every time I talk to a landlord investor in Michigan who is telling me about the junker they just bought for the purpose of rehabbing and turning into a cashflow property - I hear that computers voice in my head.

Unknowingly, they have just initiated an auto-destruct sequence on their cashflow property business.

Here is why this is a such a rotten start for your real investing business in Michigan:

1. If you want to be in the cashflow business then be in the cashflow business. Don't be in the "rehabbing the house till my hair turns white" business. How much cash are you putting in your pocket when you are spending weeks, month, then months rehabbing the house?

Let me tell you by using this extremely sophisticated software that took me two decades to build - NOTHING, ZERO, NADA, ZILCH. May be you think differently than me but I am all about the money when it comes to business. No money equals veddy veddy bad business (try saying this in a heavy Indian accent like me and it sounds even more scary)


2. Rehabbing is not a science. There is a reason your contractors give you a piece of paper called THE ESTIMATE. The more frakked up the foreclosure you bought; the more likely the chance that there are things that you, your property inspector, and your contractors are missing out on. Think carpet needs to be changed ONLY here but, but, but we ripped the carpet and there was a gaping black mold stain, happily living right underneath it. Your rehabbing went up by several thousand dollars.

How could you have missed such an obvious horror? Easy. You were too busy trying to figure out how to replace the roof, fix the foundation, change the electrical, replace the furnace, fix the porch, and lay a new driveway. So many big things to fix in the next 12 month you intend to work on this house that you miss THAT LITTLE THING that is about to turn your $250 net cashflow check into a $50 check.


3. You will get sick of rehabbing this house. It will be fun for the first three months and a gigantic pain in the ass kind of thing for the next three. This has nothing to do with business with everything to do with what is going on between your ears. It will suck out all your energy. It will drain you. It will make you hate real estate investing.

It will make you wonder if your loser cousin who is always trying to put you down with idiotic comments is actually a genius and it is you who is an out of control crazy real estate investing Donald Trump loving groupie who needs to go to real estate detox.

In 2009, there is no reason, not even one reason I can think of that can stop you from buying, amongst hundreds that are available in Michigan cities around you, a decent, rentable foreclosure, if that is the game you want to play, tomorrow that requires not even cleanup and have a line of renters fighting with bloody fists by next Monday, even before you close on the house, for the privilege of becoming your renter.

Not even one reason.

Don't turn the auto-destruct sequence on your Starship Cashflow.

We want you to stick around for years and make a Hummer full of money.

For some reason me thinks that it will make me veddy veddy happy.

My gift to NEW Real Estate Investors in Michigan

A completely FREE, new seminar for the readers of Michigan Foreclosure Report especially for the new folks just starting out in Michigan real estate investing.

20 Students. Five hours. Critical information that you need to know to kick-start your dream real estate investing business in your Michigan city in 2009. Bring your heart and head. Completely free to you.

Update 4:05pm, Friday: 11 spots are already gone. 9 remaining.
Update 10:14pm, Friday: 14 spots are already gone. 6 remaining.
Update 8:56am, Saturday: 17 spots are already gone. 3 remaining.
Update 10:49am, Monday: Thank you. We are SOLD OUT now. If you already enrolled then you should be getting an email later today (Monday) regarding location, timings etc.

Around six years ago I drove to Indiana in search of cubicles. I have just signed the lease to my dream 2400 sq.feet office. And I needed some cubicles. I was in for a rude shock when I found out that a new cubicle could cost as high as $6,000 each. I was making good money at that time but we were planning to fill this office with at least 15 cubicles and that just sounded crazy.

I started looking on the Internet and finally found a company in Indiana, which was going out of business and selling their cubicles cheap. Drove to their office and picked bunch of them for couple of hundred dollars. I was pretty happy with myself. Then I bought a copier. Then new computers. Then some shiny new furniture. Then new chairs. The crowning jewel was a gold logo that I installed at the front door.

There was no doubt in my mind that would convince anybody walking through that we are a "real company' open for business.

It took a good 12 months for the reality to sink in for me that all this means nothing. The cubicles, 20 line phone systems, logos on the wall, reception counters - they are there to stroke to my ego. They are all assets that depreciate every day and make no money for me. I was reminded of Rich Dad, Poor Dad definition of your primary residence being the biggest liability and not the biggest asset everybody has in their lives.

The real assets that were in my business were not bought - I created them from nothing. My website search engine rankings (where it showed up on all three major search engines when somebody was typing in something we can help him with) was a real asset. My list of bird-doggers hunting around Detroit for houses and the relationships we have built with them was a real asset. A meeting format I build to flip wholesale houses - that was an asset. A list of happy satisfied first time homebuyers who were sending us their referrals - that was an asset. My newly found obsession to learn everything I can get my hands on entrepreneurship, marketing, running a business, online marketing - they were all assets and every single singe day they made me money.

If you are thinking about starting a business Michigan or buying a foreclosure in your city to hold or flip: make a list of real assets that you would like to own as you launch and grow your business. Skip the logo on the wall.

I am at a very expensive, closed door meeting of minds with 100 other entrepreneurs who flew from all over this great country to knock heads together and come up with great ideas to make their business and their lives prosper.

I end up talking the guy who organized it all. He made an interesting observation to me after I asked him a question about if he is seeing more and more women entrepreneurs coming to these masterminds. He said that amongst all the thousands of entrepreneurs who purchase self-improvement and business growth products from him - the women entrepreneurs are the best implementers. They get stuff done. They know exactly what they want. They don't complain and whine all day. They get the job done and a large part of their top performers are now women.

Talking to Dennis this weekend as he was attending a seminar that I taught and he made an observation that the women students in his rental real estate class all want to buy rentals that require no rehab so they can start making money immediately. The guys all want to buy junkers so they spend months rehabbing them. Seems like making money in the real estate investing business is not their primary objective; fixing up houses is what on top of their minds. (Remember the old joke about a man thinking about sex every thirty seconds. I don't think it is sex that man think about all day. It is going to Home Depot)

So ladies if you are reading this and you cannot convince the man in your life: boyfriend, husband, brother, dad, kids - to listen to you about starting a business in Michigan or buy real estate for investment and that is the ONLY reason you are holding back on your ambition...

I want to tell you something.

THEY are the ones who don't get it.

You are smarter than them and if you learn, act and work hard then in some months they will be ones sitting in front of you, in your awe, asking you for business advice.

This video is one of my all time favs. Not only it is truly inspiring but it is also explains a technique that every real estate investor who is about to walk into a meeting with a private investor or negotiate a deal can use. I have lost count how many times I have sat in a business meeting and lost all interest in the person sitting across within the first five minutes just because the baggage they bought with them.

"This is so simple it sounds stupid, but is amazing how few oil people really understand that you only find oil if you drill wells. You may think you're finding it when you are drawing maps and studying logs, but you have to drill."

From The Hunters by John Masters.

I am teaching a seminar today. I almost thought about making a slide on all the mistakes I made during first 12 months when I launched my business but there was not enough room on the slide even when I shrunk the font size to 10 and made the text box 3 columns.

It was the same 12 months that I realized that as long as I am willing to try, make mistakes, and learn in my business, I would never have to go back to working for somebody again.

I never stopped drilling. The oil is still flowing today.

Drill, baby, drill!

For some time now, I have been obsessing, much to the delight of my son's nanny, who originally hails from Mexico City, to make a prefect taco.

Fresh corn tortillas, made from scratch pico de gallo, salsa verde, salsa roja, crema mexicana and queso fresco on top of grilled steak or fish.

I am talking Mexico City brother. The real thing. The way it is served from thousands of cantina's in Mexico. I have seen chef shows on TV and YouTube, called her people in Mexico and begged them for original recipes, drove to Mexican grocery stores in Detroit and Pontiac for authentic spices

I am not even close. Roy Choi of Kogi BBQ in LA understands my quest for a perfect taco and also how to turn an ordinary business into an extraordinary one.

Some time ago, Dennis told me that he couldn't sleep at nights. That is how excited he felt about starting a business, owning houses, buying an apartment building etc.

All this with a full time high pressure job, four kids, family responsibilities.

"Can't sleep at nights huh? That means you have finally found the business you were meant to do. Congratulations." I said. And we both burst out laughing.

What a great gift to get.

When you can't sleep at night because you are in love with the business you are building. When you have finally found what you love doing.

If you live in Michigan and tell somebody that you have your own thing going on, don't work for the Big 3 or for anybody else, inevitably you get a sigh back and something back, always, to the effect of, "I would love to own a business and do..."

You can fill in the blank.

What I don't understand is that why not do what you want to?

Live in the most resourceful country in the world and walk around with this much anguish?

But of course I understand. Got family. Got bills. Got obligations. Not too much time on hand.

But if you sit on the web for two hours tonight (don't check your email and tape American Idol) and search till you will find somebody either in your backyard in Michigan or some place far away, who is doing exactly what you want to do. Not even five percent off. She owns the business of your dreams. She is living your ambition.

Why not call her up tomorrow or email her and ask her how she did it? You might be surprised the cards she had in her hand when she started her business not too long ago.