September 2010 Archives

When I first started going to seminars - I measured how great the event was with the number of heads present in the room. If I went to Scottsdale to attend an event and they had 800 people there and then I went to Chicago and they had 1000 people sitting - in my mind the Chicago event was better because there were more people in the room.

Since high school we all have been trained well in chasing the biggest clique in the school. We all want to be part of the largest group NOT the smallest. It is like misery loves company in reverse.

It is always THE COUNT that matters. May be for guys it is their SIZE DOES MATTERS thing. How many people came to the conference call? How many business cards I collected at my last REIA meeting? How many people like me up on my Facebook Fan Page? It is easy to get sucked into this since we are all trained into this since childhood.

So wrong. Much better to go to a smaller room. Instead of 100 people, spend a day with 20 and walk out not with a casual, "Hey how are you? I am fine. Thank you. How are you?" conversation but with knowledge of each other business and a relationship which is not as shallow as a puddle after a Michigan afternoon rain.

I went to an event last night in Farmington Hills. There were may be 20 people there. I had an amazing time. Great conversation. Some business cards were tossed to me but over all when I walked out after 3 hours, I had made new friends and genuine, in depth knowledge was exchanged.

I had lunch with a fellow real estate investor yesterday. I have known this guy for almost 6 years now. Did deals. Went to his wedding. There is depth to this business relationship. I got him from a small room of around 30 people. The more I think about it, I can't think of anybody that I have built a relationship with that has passed the test of time (the biggest test of all) and who has came from big huge room. Lots of Hi-Hellos. Lots of business cards lying in a box in my basement. All from big rooms.

I like small rooms. And the people I meet there. They remind me of the kids I played with growing up. None of us knew hundreds of kids. We knew a few but there were our best friends and when we were around them, we just had a great time, always. Real estate investing is a sandbox also. Try to find small rooms and make good friends there to do business with because you and I both know sandbox love never dies.

1. Just because it is you shopping at Home Depot all by yourself does not means that you should not type up an estimate and follow the bloody thing. Showing up at Home Depot and not knowing what you are going to buy ahead of time and why you are buying it just means that you are going to go over your budget.

When a chef is planning a meal, the first they write down is an ingredient list and then they go shopping and they cook. Watch any season of Top Chef and you will see that the chefs who win again and again go to the supermarket, knowing what they are going to buy.

2. Make a checklist for every room of the house. What needs to be fixed here? What needs to be fixed there? And then follow the checklist. A friend of mine bought a house 8 years ago. To live in as in their primary residence. Then they proceeded to gut the whole house without have any plan on what and how they are going to fix it. It has been 8 years since they move in and they have not slept in the master bedroom YET.

So what? It is their primary residence and if this is what they want to do, who are we to argue about it? But this Michigan bank foreclosure that you are planning to fix and flip is an investment and needs to be treated as such. So checklist matters.

3. Give yourself some targets of time. What is the date today? When is the kitchen going to be completed? When is the basement going to be done? When are the tiles going to be laid in the bathrooms? Is your train running on time or is it 2 months late? Do you know? If you don't know than who knows?

4. Ask for help BEFORE you start painting or laying out tiles if you know beyond the shadow of doubt that you are color blind or you have lousy taste which in plain English means that if you are a man this advice applies to you. Find somebody in your life: mom, sister, girlfriend, mother-in-law - whose house has always impressed you and asked them nicely to help you pick out colors and tiles.

5. Have a budget. Typed up. And follow it. Just because you have a deal partner with ridiculous deep pockets does not means that this is your chance to compete with Extreme Makeover Michigan Edition. If your budget for tiles is $300 - then make it work.

Don't go to Home Depot and walk out with foolish grin and a $700 receipt. Every time you overspend on materials (since there is no labor as you are doing the grunt work) - you are giving away your profit away to Home Depot. Trust me they make enough money as it is. You don't need to help them. Help yourself.

6. When you are done with the house, hire somebody to clean up the house top to bottom. Don't do it yourself.

7. The flip side of spending too much is spending too much on things that even though are important BUT don't sell houses. They are two different checklists and are both important.

8. Have a sign in front of the house from Day 1 advertising the house. Since you are going to be inside the house all the time anyway, let the neighbors and street traffic come in and talk to you. Would be cool if you flip the house even before it gets done.

9. Pull permits and licenses which are required by law. I see investors in the City of Detroit sometime trying to cut corners. Look I understand the temptation but it is not simply worth it.

10. Have a start date. Have an end date. A project has both. Write these dates down. Better still buy a countdown clock and put it on your desk. Program the end date in it and now it is counting backward to it.

This is the countdown to you getting a big fat check with your LLC name on it. Be excited as it counts down and your house is coming along. Do not put this date in your head. You will add 3 months to your rehab project if you don't write it down.

It is impossible for me to have a boring conversation with anybody. I can walk into a party and within minutes have a very intense discussion going on with somebody I just met. When we part our ways, they want my phone number and email and wonder if I am on Facebook (I am not) so they can friend me up and most of the time, they want to hangout with me soon, have a cup of coffee or go out for a drink.

My secret is simple: I talk about Michigan real estate. It is one of those topics which are to good conversations what salt is to food. Everybody is in real estate one way or another. Even when you are renting, you have friends, co-workers, and family members who own a home or want to buy a home.

It is very rare for me to have a week go by where I don't get a phone call from somebody long lost in my memory lane where they ask my advice about something to do with Michigan real estate. May be they are thinking about getting a mortgage. May be they are looking for a rental. May be they are looking to buy their first home and want to know where they can go and buy a cheap foreclosure in their desired Michigan City.

There is so much going on in our heads. It is hard to remember what we ate yesterday for lunch let alone remember what anybody does or whom you met two weeks ago. But it is a good place to be thought of Mr. Real Estate in the circles you swim in. That is how you get leads or prospective deal partners with ease. People seek you out because they remember your name and Michigan real estate in the same breath.

If you are not telling anybody what you are doing in Michigan real estate or what you want to do - you are missing out on dozens of great opportunities in becoming that person in your world who gets asked every day about real estate. Try it for the next 2 weeks. Not only you will get business but you will never have a boring conversation with anybody ever. Being quite about it is costing you business, deals and contacts. There is no profit in this silence.

One of the biggest changes in Michigan real estate investing in the last two years: you cannot start driving and looking at foreclosures without KNOWING without a shadow of doubt on how are you going to fund the deal.

Two years ago, you could go look at bunch of deals and even the REO brokers sort of ignored the flimsy pre-approval letter that you got from your friendly loan officer. They figured that if you were determined to buy a foreclosure in Michigan and if you had a pulse, you would be able to get a mortgage (conventional or hard money) or even may be able to put together a pile of business credit cards to fund the deal.

That deal got killed back in June 2008.

And if you are seriously planning to go and find a good deal to buy... wait a second here.
Deals are plenty and not going anywhere.

You need to line up money first for two reasons:

1. The REO brokers are tired, repeat just tired of wasting time with investors who show up, put a deposit up on a REO in Michigan and then vanish. Believe me no REO broker despite what you have heard (incorrectly) wants your $500 EMD. They want the bloody deal closed. It is embarrassing for them go back to an asset manager and say, "Gee we have put the house back on the market because this investor never showed up for closing." They hate making that phone call because fair or not asset managers blame the realtors for not 'screening' this investor out before wasting their time.

Have you ever seen a file on a REO at a broker's office? It is thick. Full of paper. Lot of things happen behind the scenes that you never see (and you shouldn't) or hear about to make sure that all the legal and real estate regulations are met before a house goes from foreclosure to REO to being yours.

When investors don't show up at closings because they don't have the money to do so, they waste the hard work of many professionals involve in the process. From the asset managers to REO agent's staff to closers at the title company. And nobody is getting paid here till the deal closes. Do you want to take a REO broker to take you seriously? Show up with a solid proof of fund in your folder.

2. Almost every business book talks about failure as being a great teacher. It is utter bullshit and only people who have never tried anything and fall flat on their face can say that with a straight face.

I admit ... I have said it early on because it is conventional wisdom sort of and it sounds really macho to say it. You feel like a real man. And I was completely wrong in that.

Failure sucks. The bile is thick and stays at the back of your throat for days. I have a big round skull. Very thick too. I can take couple of bloody blows to my head and in couple of hours recover and be back on track but the bitter taste of failing stays in my mouth for days and days. I don't like to fail. Neither should you.

If you think that failing again and again by not being prepared will somehow 'make you a man' think again. It is self sabotage. Plain and simple.

Looking at houses, finding a killer deal that you love and then losing it to somebody more prepared (translation: they got the money before they start driving) is heart breaking.

Yeah I know all about 'it is just numbers' and 'there is always more' since it is the official condolences call of the real estate investor but hey it still hurts. I challenge anybody to go out, find 10 great deals without having any idea on where to fund the deals from, lose all of them to other investors and just feel nothing out it. It will crush you. Avoid planting that poison ivy in your business life.

The good thing about real estate investing in Michigan: you don't need too much money to buy deals (houses are cheap) and there is a whole lot of OPM floating around you.
You need to learn how to insert yourself in the flow and grab a handful. Spending 10 minutes on that are more important than rushing out the door unprepared, without knowing where you are going to fund this deal.

OPM first, deals second. You will make more money and have more fun running your business when you drill these 4 words in your mind.

I get this question frequently via email from folks starting out in real estate investing in Michigan.

The answer is: join the one that is closest to you. Attend all meetings. Shake as many hands as you can.

All groups are good because they are made up of your fellow investors. You are going to have a great time. But don't think just because you show up there and sit in a corner and sit quietly and then as soon as the meeting ends, you rush toward the door is the right way of getting the best value of your investment of time out of these groups.

A real estate investor group saves you the headache of going out on your own and trying to find one or 5 investors who are local, just like you. They bring all these great folks together for you in one room.

Now when you are going to a real estate investor association or club meeting, you might be thinking that the value is in the speaker they bought it but NO the real favor they are doing to you is introducing you to other investors in your Michigan county who might become your partners, buy homes from you, find homes for you, point you to the best contractors they have found and essentially save you some dough in the process.

And finally what if you live some place in Michigan where there is no group of like minded real estate investors?

Well what is stopping you from starting one?

What is the most important number on that quote you just got from your contractor?

For most real estate investors in Michigan (especially the ones just starting out) THE ONLY NUMBER that matters is the price the contractor is charging to fix what needs fixing.

There is also another number, equally important: how long will it take them to do (in days) what you are hiring them to do? After all you cannot sell the house (or at least close) on the house till it is fixed.

When you get the very very low bid from a contractor, chances are that they are saving money at least in their minds because they will be doing everything with a one person show - them and them alone.

Add 3 extra days to whatever they are promising you simply because that is how things work in real world. Cars break down, they get a nasty cold, family member is getting married out of town and they have this trip planned for months and so on..........

3 days extra does not sounds so bad if you can save some money but when you total all of them up (hopefully you are not using your brother-in-law to do EVERYTHING) before you know it, you are at 30 extra days. That is an extra 30 days you will not see a lovely check with the name of your LLC printed on it.

Look at the money but count the days also. They are both equally important.

I just finished reading Under The Dome, the new 1200 page novel by Stephen King. It is actually pretty good and surprisingly fast paced. It is a story about a small town in Maine, population three thousand, who wakes up one morning to find out that they have been cut off from the rest of the world by a mysterious invisible force field type dome that completely envelopes the town, five miles up, five miles down. Nothing comes in. Nothing goes out. Even a cruise missile strike from outside does nothing to the dome.

Most people in Michigan are walking around with invisible domes around them too, way too much gloom and a longing for good ol' days are trapped in, nothing new (knowledge, ambition, ideas) goes in. If you are under a dome yourself of your own making - here is the bad news: nobody from outside can break it. It has to be busted from inside. It is comforting to blame others (friends, family, spouse) for not giving enough support to your dreams yet most of the time it is our own hands blocking our eyes when it comes to starting something new like starting a business, investing in real estate, or quitting a bad habit.

What actually stayed with me once the book was over was the dedication SK wrote. He dedicated the book to his friend Surendra Patel, a friend for 30 years who had died recently of a heart attack. King wrote that when he got the news of his friend passing in June 2008, "I sat on the steps of my office and cried. When that part was over, I went back to work. It was what he would have expected." I remembered his book On Writingwhere he mentioned being interviewed once on his writing habits and he said that he writes every day except two - his birthday and Christmas. But he said, I lied at that time because it sounded like a much nicer sound bite but in reality, 'I actually write every day.'

Working 7 days may sound strange to people used to going to work 5-days and then yelling TGIF on Friday. But really if you love what you do, the name of the day really should not matter. After all, the sun comes out the same way on Monday as it does on Thursday.

Today is September 18. 105 days till the ball drops AGAIN at Times Square.

How is 2010 treating you so far?

Did you spend a day, half a day, one hour, even 15 minutes in the last 260 days thinking about what a day would like if you really did what you love doing?

Buying a home, fixing a home, selling, short sales, online marketing, meeting potential deal partners, getting a rent check in the mail, even going to Home Depot... heck there has to be something there on that list which makes your heart race a little bit faster and a little flush to your face.

There is a part of me that says: Frak the happiness thing and instead do the things that make the most money at any given moment in time and we will worry about happiness later. But I have tried that and it has FAIL written all over it.

You can force yourself to do things just to pay the bills and sometimes it is all you have and all you can do. Nothing wrong with that. I like my kids in private school as much as the next parent BUT and this is a BIG BUT the sooner you figure out what you like doing and really really want to do and start doing it a little bit of it, every single day, because with a full time job, family etc, right now, that is all you can do, even with that little drop will add up, the better off you will be, you will be excited getting up in the morning.

Every successful person I know likes what he or she does. May be not 100%. May be not every second of their waking hours but majority of the time, they are happy doing what they are doing.

When goals are being written for a New Year or a new month, the pursuit of something to do that will bring joy to you is rarely on the list, but it should be.

I am amazed at the list that people carry in their heads about the things they have always wanted to do but never did especially when it comes to real estate investing, starting a business, making more money or just being their own boss.

As the guy says, this is America, a'int it... what the #$%& are you waiting for?

The best habit to get, as quickly as possible, when you start buying and selling bank foreclosures in Michigan is never to do anything in your business without the presence of a checklist.

Take something as simple as buying a REO in your Michigan city. Let's say you have partnered up with me and I am funding the whole deal with my self directed Roth IRA. Pretty straight forward transaction.

If you have a checklist that tells you (so you don't have to remember it) that you need to get a property inspection, get insurance, make a list of things to cleanup and fix, get three contractors to come and give you bids on everything, check their references, call your contact at Equity Trust and make sure that they have all the documents to insure a smooth close and so on.....

See it is a simple transaction and yet there are lots of small things that need to be done to make sure that when you show up on the day of the closing to pick up keys - it takes you 15 minute tops, in and out.

Make a checklist in Microsoft Word. Use bullets with square boxes so you can check mark them off as they are done. And keep them in a folder.

Almost everybody has a checklist of rehabbing. That is something that just happens because you want to keep track of what needs to get done so most investors have to make one. But very rarely anybody uses a checklist for BUYING or SELLING foreclosures in Michigan.

Make a checklist before you buy your next foreclosure. Once the deal is done, pull the checklist out again and go through it. See what you forgot. What you can delete. Re-arrange the order. Do it one or two times and now you don't have to stress yourself to remember or call your significant other / business partner / realtor / title company closer while frantically hoping that something that was supposed to be done got done.

Not sexy. Not the most exciting thing to do. But it is the most overlooked friend a small business owner / Michigan real estate investor can get to help her run her business better almost instantly.

HBO has a new show coming this Sunday - Boardwalk Empire. Gangsters in the era of prohibition. Great cast. Soprano's writer. Scorcese producing.

Here is a line from the preview.

Guy is trying to get a job in the mob so he goes to the head honcho, grabs his arm and pleads,

"All I wanted is an opportunity."

And the boss yanks his arm away and angrily says,

"This is America. A'int it? Who the $#@! is stopping you?

(Video is NSFW)

The most overlooked place for finding your first deal partners is your own personal network.

Three biggest mistakes that everybody makes in the beginning:

1. Not telling anybody what you are trying to do in real estate investing.

2. Doing a lousy job of explaining what you are trying to do when somebody does shows an interest and asks you about what kind of foreclosures you are thinking about buying.

3. Being cheap and trying to negotiate a deal that is more favorable to you than it is for them. Hey they are giving you more than just money. They are showing enormous amount of trust in you. Show some love in return and give them a higher split. Without them, there is no deal. Here is an important number to remember: 100% of zero is zero 'cause that is exactly you are going to deposit in your bank account if they don't go partners with you.

Fixing all the above is easy:

1. Tell everybody you came across, casually what you are trying to do. Don't expect them to fall down on their knees and beg you to consider them as your future partner. That will happen later.

You are going to be disappointed if your expectations are whacky. So be casual about it. Mention it an email. Say it over a beer. Post it on your personal Facebook Wall. Plants the seed that you are doing something in real estate and buying foreclosures in your Michigan city of choice and see who raises their hands and say, "What did you just say about buying a foreclosure?" which brings us to...

2. I don't think I have ever met anybody who was as awkward as me in explaining to 'civilians' in the beginning of my entrepreneurial life about how we can do business together. I was terrible. 

Biggest reason: I was never prepared. When somebody says, " Hey I would like to do something with you in buying a foreclosure in Sterling Heights / Troy area." And then they pause and look at you... what they are expecting is a short solid answer as how it will happen. 

What most people get in return is "Well, ahh, heh heh I don't know what to say. You see I never thought anybody would ever do a deal partnership with me. I think.. No let me get back at you after the weekend. I will call couple of people and ask them if they have some ideas." 

Fix your answer. Know your answer on EXACTLY what you are going to say down to what you are going to offer. Can it change later depending upon the deal? Sure. But mucking it all up here is not what anybody wants to hear. My first time talking to a private investor was very short. She hung up on my face after 3 minutes. I learned my lesson well. 

3. Pay them more what you thought is a fair number. Old saying: most people step over dollars to pick up pennies. I am not telling you to be reckless with your money. I am telling you that if giving somebody $1000 more than what he or she are expecting will fall them in love with you instantly, it is worth the price tag. This is a business about relationships and people. Do whatever it takes when you are starting out to make your deal partners happy with you. 

Above all, if you have any thought in your mind and I mean even a glimpse of a thought that there is a shortage of money in Michigan - shoot that thought down. It is your thought. You own it. It does not own you. It is the most dangerous thing to plant in your own head because that bullshit more than anything will insure that you will never get any deal partner in Michigan. 

Replace your bad tactics with the ones I just gave you. Very shortly you will have more people fighting to do business with you than you ever thought possible. I see it happen all the time in my coaching group. 

Recession or recovery... money keeps moving in Michigan every single day. If it is not moving toward you right now it is because you have erected all three roadblocks. Clear the debris and see it come toward you like tidal wave.

3 years ago, new construction home sales in Metro Detroit, Grand Rapids and Lansing started to slow down. Building a sub-division is a long tedious process and typically takes 3-4 years from idea to first house being built and the builders were seeing a foreclosure tidal wave coming in Michigan and decided Michigan is going to have lots of foreclosures coming to the market and they will have a tough time getting a top of the line pricing so they wrapped up the sub-divisions that they were already building and stopped applying for new permits.

This immediately bought a rush of talented and very skilled electricians, plumbers, roofers, general contractors, painters and pretty much everybody involved in building a house in the market looking for work.

Yet I see till today, new real estate investors in Michigan paying way too much for basic rehab cost. Like, shaking-my-head-in-amazement type checks get written every day to people who are fixing their house up.

Why is so? If there are so many skilled contractors in every field looking for work in Michigan, why does new real estate investors in every major Metro area in Michigan pay more and cut in their profits?

The enemy is simple: ONE BID. Almost all the time when somebody is telling me that they went over in rehab costs - all they got before they decided to hire somebody was one bid. If the guy who is painting your house is your out of work first cousin and you want to help him by paying him a little more... that is fine but you cannot pay everybody whatever the heck they are asking without knowing what the market rate is.

Easiest way to finding out what is a 'good rate' for fixing anything? Ask 2-3 people to go through the house and get quotes from everybody. Throw the crazy high and insanely low and ask for references for the middle quotes. Call the references and ask them if these guys have kept their word - both on delivering on time and fixing what they are supposed to fix for the amount of money they said they would and then choose. Takes may be an hour to do the above but you will save thousands.

Don't let your personal likes and dislikes play here also. #1 reason investors pay more for simple things: "Well I kinda like the guy and we are both UofM fans." That is a good reason to go out with the guy and drink couple of beers next time a UofM game is on but not enough of a reason to pay him $1500 more to replace a furnace and some pipes in the basement.

Good rule of thumb to live by in Planet Ijlal: if you are not getting 3 bids for every major thing that you are getting fixed up in your flip: you are paying too much. Fix this hole in your foreclosure buying business and you will add more to your check without doing anything extra.

One of the best business books of all time. If my best friend was thinking about starting a business in Michigan tomorrow, this is THE BOOK I would buy for him today.

A long time ago, before Facebook, before Twitter, before YouTube, before Craig's List... I was running ads in Detroit News every Sunday.

I was new. I was green. I pretty much had no idea what I was doing in my business but I thought if I can put myself in front of enough right people... maybe, just maybe some door would open up. Detroit News was not exactly cheap in those days. A weekly little ad in the Real Estate Investing or Real Estate Miscellaneous section cost $90 each week.

The first deal I closed... I took some money from the top and started paying Detroit News every week for putting my name in front of the rest of the world especially folks who could buy houses from me (retail flips), other Michigan real estate investors living in Metro Detroit cities who would not mind paying couple of thousand dollars for bird-dogging for them and finding them good deals (wholesaling) and investors who would partner up with me on deals to split up profits.

Phone calls came in. Some people actually walked through the dimly lit corridors and showed up at my dinky 1.5 room little office on Southfield Road, unannounced, wondering if this guy was for real. I just shook hands, pulled out a chair and said, let me tell you all the things I have been trying to do in flipping Detroit foreclosures and see if you and I can help each other. There was no PowerPoint. There were no slick brochures. There was no business card. The office was small. The chairs were hard and uncomfortable. The coffee maker was really good at burning coffee. It pretty much all sucked. I did not exactly look like the next Trump but I just kept running ads every week anyway.

Then I did some more deals. Paid somebody to put up a website. Next deal check came in... paid somebody a little more to make it look nicer. Got a private investor there, a private investor here. One wholesaler called here. Another one called next week.

The best call ever came in one day from a doctor out of Oak Park. My phone rang. I answered and the voice on the other end said, "I would like to talk to Mark Ijlal,' I said that would be me and he just exploded," Who the hell are you? Six months ago I had never heard of you and now no matter where I look on the Internet or Detroit News... all I see is YOU." " I am nobody. Just a real estate investor trying to shake some trees and see what falls down but thanks for the compliment at least I know it is working." I said grinning ear to ear. We ended up talking for 30 minutes and did some business together later that year.

When you are starting out in real estate investing or starting a neighborhood grass cutting operation or starting a pizza shop. In any business, you are at Ground Zero. Nobody knows who you are. Nobody cares about you or about your business.

The idea of being quite and the world might discover me one day is foolish. Brad Pitt went to auditions. Steven Spielberg was sending copies of his film school project to anybody who might be able to give him a filmmaking job. Authors send copies of their manuscripts out to every publisher they can think of.

Nobody will discover you or your business unless you make sure that you are found. Everywhere, every time, when they are looking out for you. It used to be hard and expensive. Believe me I did not want to run those ads and pay $500 per month. That was my rent at that time. But I did. Now I can do ten times more damage without spending any more but investing a little time.

Facebook, Twitter, YouTube, Wordpress, Craig's List, all free, open to all. Yet very very few people ever think that visibility is worthy of their time. Other more important things like going to Home Depot three hundred and twenty five times to pick up 6 pair of screws and washers are considered more important & placed higher on their To-Do-List. That is important also. After all got to fix the house to flip and get that check.

But becoming somebody that shows up all the time on other people's radar... especially the right kind of people who will invest with you, do deals with you, help you grow your business: that is a worthy goal also that I very rarely see anybody pursuing.

In order for money to flow to you...it needs to know your name.

So you formed your LLC, ordered your business cards, and put couple of checkmarks on your calendar for the month to go and meet local real estate investors in your Michigan County. Here is the next item on your list as you build your real estate investing business in Michigan - build your team.

Contractors, loan officers, property inspectors, appraisers, and buying agents - you want them all.

Whether you are going to a seminar or a networking meeting - ask the folks sitting next to you if they have recently used a good person for a deal that they can recommend to you. Get their phone number and write it down. You are going to begin with an empty list like we all did and your mission is to complete this list as quickly as possible.

Here are your team members:

Buying agents
Property Inspectors
Electrician
Plumber
Painter
General Contractor
Cleanup / tear-out crew
Landscaper
Driveway installers
Heating and Cooling
Leaky basement fixers
Bathtubs and sinks reglazer
Loan officer

Your goal is to get at least 3 names in each category. Not because I want you to shop them all day against each other but somebody could be busy and not able to work on your flip deal or simply out of town for the next 2 weeks. So you will need backup and 2 extra names give you a strong backup. One is a terrible number when it comes to a list like this.

Most real estate investors can avoid all kind of headaches if they follow some simple rules when working with people. Here are my rules. I learned all of them the hard way, meaning I was sufficiently stupid when I started to break all of them and I paid a price. Sometime it was money but mostly it was time.

One day wasted is one day wasted and no amount of money can bring that day back. That is why good folks on this list can not only save you money but also save you from wasting valuable days. You cannot sell a house unless it is fixed. The faster your house is finished and you put it back on the market, the faster you can turn around and sell it.

Wednesday was a big day for my two daughters. They started a new school. From a little Montessori which started their education through pre-school and kindergarten, they went to a considerably larger private Catholic school.

You can imagine that they were little nervous as we took both of them to their respective classrooms. Hailey, my eldest said, "Hey I don't feel that excited right now."

But three hours later (half day school only that day) it was a different story altogether. When Nora picked them up, they were happy and chattering about all the new friends they have just made, how awesome their teachers were and how amazing it was to attend a Mass with all their classmates.

I don't know who exhaled more deeply at 3:30pm yesterday, them or us? Knowing that they have loved their new school and the new friends they have made.

It also reminded me of the first days when you start a business like the one (flipping foreclosures in Michigan) you are putting together. It is a crazy heady cocktail of nervousness ("Wow, so much to learn...") and excitement ("Wow, finally I am doing what I have been dreaming about for a long time...").

You can make your life a lot easy and the journey more fun if you ask some friends to come along instead of trying to walk the road all by yourself. You already have good friends that have been with you through college and life. You have co-workers that you get along fabulously well.

But they are not enough.

This is a 'new school' and you need new friends. People who are as excited about investing in real estate in Michigan as you are. People who are as serious about learning about investing in Michigan real estate as you are. People who are local. In your Michigan county. Some of them might be a mile ahead of you with couple of deals under their belt and some of them are going to be like you, just starting out. Either way you need both.

When corporate 9-5 types tell me that they want to start their own business, my first question to them always is: How many entrepreneurs and business owners do you know? Because if you don't know any right now - that should be #2 on your list immediately. #1 being to learn as much as you can about the business your are choosing to start.

So where can you go and find these 'new real estate investing' buddies?

1. Most big Michigan counties have a real estate investor association (REIA) which met once a month. Join the one closest to you AND attend every single meeting. Here is a list to help you find one nearest to you.

2. Go to Meetup.com which is a huge website for upcoming meetings. Search for real estate investing meetings around your zip code.

3. Check on Facebook. A lot of people use Facebook Events to promote their meetings. One of my Inner Circle coaching group members Tim O' Riley just did an awesome free event for Michigan Bloggers recently and had a great turnout just from Facebook and Meetup. There were bunch of real estate investors there also although the topic of the meetup was not about real estate investing but more about blogging, I still had some fun conversations with several real estate investors there. Check out Tim's Facebook Event Page. If you are in the area, RSVP, come and meet him. His next free event is coming up soon. Make sure to login to Facebook to RSVP.

4. If you cannot find something close to where you live or work... well start one. Nobody is stopping you. Use Meetup.com. Use Facebook. Meet in a coffee shop like Panera or a Koney Island. Tim saw a meetup like this in Chicago two months ago and really liked it but could not find one like it in Metro Detroit. So he just started one.

If you are serious about investing in Michigan real estate, then at least once a month, for 2-3 hours, you have to surround yourself with other people who share this same passion.

Being in that room is one of the fastest way you are going to turn your dream into a thriving and profitable business. Make it a goal. Make it an urgent goal for the next 30 days to at least have met and made new real estate investing buddies.

Don't feel nervous if you are new and they know more than you. One day, not so long ago, we were all standing at the same spot where you are standing right now. Get some friends to help you get started. Sooner the better.

When you walk out of your meetup the only thing you will be regretting is why you took so long to actually go to one.

A business card?

Sounds old school in the age of Facebook and Linked In? You are not alone yet if for a new investor, who knows nobody, and starting from scratch - it is a good arrow to have in your bow. Some pointers:

1. Please get an email address that uses your name: markijlal sounds better than soifndo8764.

2. Setup an email address dedicated to your real estate business so your business emails don't mix up with emails from Uncle Bob. Use a service like Gmail or Yahoo Mail that lets you sift and sort your email and has good SPAM filters.

3. Once you have setup your email - send yourself an email, either to your work or personal or to your significant other's email. I get a lot of emails where the email address shows in the FROM line. This was not a big deal in 1996. Now it just makes you look like clueless.

4. Setup a Facebook Page. It is free. Read this short guide to making a Facebook Page for real estate investors to understand why you need to do this. Get 25 people to LIKE your Page. Use friends and family for this. Get an easy to remember Facebook address like Facebook.com/MichiganRealEstate by logging into Facebook and going to www.Facebook.com/username. Use that address on your business card.

5. Get a Google Voice number for your real estate business. It is free. Lets you receive voice mails and if you choose to, will transcribe these voice mail messages and texts you. You can listen to your voice mails right on your computer.

6. Go to a UPS Store and get a PO Box to use for your business. It is a better substitute for a post office PO Box number as it actually gives you physical address. Not necessary right now though. Good to have but not necessary.

7. You can get a virtual fax number from eFax or dozen of other services for around $10 per month which will let you receive faxes just like a regular fax service BUT they will come to you as a PDF directly to your email. I have been using one for 5 years now.

8. It is nice to know what you do: "Help homeowners who are looking to sell their home fast." "Buy and sell foreclosures in South Oakland County." "Help homeowners in Sterling Heights and Troy who are in foreclosure and want to sell their home." Put that message on the business card.

9. Get some cards printed. Vista Print will print them for you super cheap.

10. Give these cards out. They are not meant for your pockets.

11. When you do give these cards out - ASK people to go check your Facebook Page out.

12. Most real estate investors distribute these cards ONLY to other real estate investors in their Michigan areas. So they give them out in a REIA meeting or at real estate investing seminar. O.K. nothing wrong with that BUT you do come across a whole lot of people in your daily life - give your cards out. Here is how:

13. When somebody asks you, 'So Mark what do you do?" say, "I am a real estate investor and I buy and sell bank foreclosures in Macomb County and here is my business card. Check my Facebook Page out for my company."

14. When other people give you a business card about their real estate investing business - send them a follow-up email, wishing them success in their business and asking them to check your Facebook Page out. If they sounded serious and like minded to you - setup a coffee with them right there.

This is the first in a series of Back to School posts I am writing specifically for folks who are thinking about starting in Michigan real estate investing with a 100% focus on buying and flipping foreclosures in their Michigan cities.

Start with forming a company to buy and sell foreclosures. Either a LLC or S-Corporation.

It cost $50 for a LLC, $60 for an S-Corp to be formed in less than 24 hours in Michigan. And if you are going to buy and sell foreclosures you need the legal and accounting shield that a LLC / S-Corp will provide you. The process is ridiculously simple and if filling out forms makes you nervous, any decent CPA will do the work for you around $250. You can also use cheap and good websites like LegalZoom.com to get it done for you really fast.

Which legal structure is best for you?

Can't tell you that since I am not licensed to give accounting advice in Michigan but I can tell you what I have seen inside my coaching group and my own businesses. Almost 75% of all folks I know use LLC's as their preferred structure nowadays. Most real estate investors who have partners (friends, family members or whoever) mostly go for LLC's.

A LLC is either formed as a single member (one owner who is running the whole thing) or multiple members (think of members a partners) or manager-managed LLC where one member (meaning you) acts as the decision maker / CEO while the rest of the members in most cases are silent partners meaning that they are not actively involved in what house to buy, how to fix it, how to sell it. You do all that and typically play the bank, funding the deals and rehabbing of these homes.

The LLC is a simple, beautiful thing to form in Michigan (the form asks for name, address, your name and a signature) and you are done. S-Corp requires filing one more form (2557) with IRS to complete the transformation of a regular corporation into an S-Corporation.

Thing to remember: if you are spending more than 1 hour researching this on the Internet - you are wasting time. Go see a CPA if you don't have one. Tell them what you are thinking about doing and with whom you are thinking about doing. Decide. Form it and be done with it. If you know what way you want to go already, go to State of Michigan Corporations website, download the form, complete them and fax it over to State of Michigan or go to Legal Zoom or 10 other companies like Legal Zoom but get it done.

If you have partners in your LLC - please go to a lawyer and get an Operating Agreement done, signed and in your drawer before you do anything in the business. That is the right thing to do. Most people forget about this part.

This is what I see - somebody who is well intentioned in starting a business and then gets sidetracked as he spends three months researching what is best: S-Corp vs. LLC vs. this or that. It is a waste of time. You have no idea who big or what your business is going to look like in five years. If four years down the road, you feel the need to ether change the structure of your business; well you form another LLC or S-Corp and move with it. Unless you are planning to take your company public (?) contemplating this decision for weeks is crazy.

If you are doing it yourself, get an Employee Identification Number also IRS website. Think of this EIN number as the social security number for your LLC / Scorp. Go to IRS.gov and you can get it online in less than five minutes.

Finally if you intend to have rentals in your life too - form another LLC or S-Corp to manage that business for you separately. It will be much cleaner for you track your profits and your expenses instead of mixing all of them in a big pile.

Way too many times, smart people give up on their dreams of investing in Michigan real estate or starting a business because they get massive resistance from their wife or husband.

In the last 10 years, I have seen this over and over again. Guy wants to flip houses, wife thinks that he has a mid-life crises or something and says, "What is wrong with you? Why can't you just shut up and go to work like your brother? I don't see him or his wife talking about buying and selling houses."

Or the husband tells the wife who is really excited about starting her own business, " Honey where you are going to find time for doing all this? Are you sure that you are not going to hurt our children's school grades by being distracted with this business. Why don't you just get a part time job or volunteer at the school to keep yourself busy?"

Most people don't want conflict at home so they agree, even in their hearts are not with it, and replace their ambition with resentment toward their wife or husband.

You need to stop it.

Most likely you are doing a lousy job of 'selling' your business to your spouse.

If you are going to your spouse and telling them that you want to start a business because you are 'bored' or 'feeling the urge to do something' - you might as well tell her that you are going to leave her and the kids, take a second mortgage on the house and be like Julia Roberts in Eat Pray Love and travel to Italy, India and Bali for one year.

They are not you. Your dreams are your dreams. Keep them to yourself.

If you want your spouse to sign up in this new adventure, you have to tell them how they benefit out of a new check coming to your home. "Hey I want to flip a foreclosure. I want to make $20,000 out of it so we can pay off your student loans off and go on a 7 day cruise that you always wanted to. Next flip, I am going to pay off all the credit cards off. Third flip and fourth flip - lets save the money and buy the cottage Up North that we always wanted but instead of getting a mortgage... lets pay cash."

What are the odds of them saying NO to this? Or not supporting you 110% because you are going to learn and do these deals so you can both live your dreams.

Guys (and yes this next line is more for husbands) don't take the ladies in your life for granted when it comes to money or business. They are smart and intuitive and they will pick better colors for your house when the time comes to paint your flip. You will just pick WHITE. And their support is not cheap. It should not be because it is a worth a lot to you and your LLC. So get their dreams ahead of you when you start getting the flip checks.

Love has nothing to do with it. The love you have given them has already been given back to you with what they do for you already. This is business and you are going to pay up for their support but take it from somebody who has been in business with his significant other for 11 years now... it is worth 100 times more than you will ever give back to them.

After all if you cannot convince the person your share a bed and life with to believe in you - what chances you have to convince the rest of the world to do business with you?

You are selling a flip you just fixed. Open House is going on and there are two families standing in the living room talking price with you. One of them needs to go and get a mortgage. Other one is a cash buyer. Why are both of them getting the same deal? The cash buyers can get the inspection done and close within 10 days. The FHA mortgage buyer is looking at 30 days minimum.

I am not saying that you should gift the house to the cash buyer but one price for two different buyers does not make any sense. When you are buying REO's - which offer do you think Asset Managers love the most? Cash or Mortgages?

Cash buyers are back in every Michigan City. Thanks to the low low prices in every city in Michigan and mom and dad helping the kiddies out start a new life (without debt) - whole lot of buyers are walking in to closings with cashier checks instead of a mortgage packet.

Show you cash buyers your appreciation by giving them a little extra something: a discount, a flat screen TV, an appliance warranty from Sears (only $400) - whatever that would make them know that you will be happy if they bought that cash over to your flip.

Cash buyers are here in Michigan. Buying homes everyday. Question is why are we treating them just like every other buyer? And what you are going to do to attract a horde of them to your own flip?

YouTube is almost 99% stupid videos. And somehow I end up on this video that makes me thank the three guys who build the service in my heart because well I don't have the words to tell you how this video cut through my heart. Watch it for yourself. Nora and me both cried for 10 minutes straight. You will too. Click here for the direct link just in case you are reading this website on your phone or email:

The cheapest guy that is willing to paint your house (or fix plumbing or do the roof) for almost nothing is cheap for 2 reasons.

1. He is dead broke, desperate, behind on his child support payments and may be about to go to jail. He has been fired or gotten into fights with the last 10 people that hired and trusted him and he has no chance in hell in ever getting hired by his previous clients. Heck he can't even give you two lousy references.

2. He is going to do everything himself. For what you are going to pay him, he cannot realistically hire anybody to help him during the project. It is going to be a one-person show.

Do you really want to bet your own $20,000 check on this guy? You can't sell the house till it is fixed, yet most real estate investors who are cautious enough to read every single line of a purchase agreement yet strangely feel compelled to act brave enough to trust THIS GUY to take them to end zone.

Remember what mom used to say when we were all young... when something sounds too good to be true, it usually is.

Turns out that mom knew more about running a business than a whole lot of folks running around with LLC's and PA's in their names right now.