There are lots of foreclosures in Michigan right now. Banks are literally giving them away. I am going to make a prediction, based on my conversations with several REO brokers and active mortgage lenders who are doing decent to very big numbers (closings) in Michigan right now.

My prediction:

You have maybe 2 years to make as much money as possible in Michigan real estate, build a massive black book of contacts, lined up money – after that the game will change considerably and it will be “tougher” for new real estate investors to break into the business. The countdown starts now, in 2009.

Why is it so easy to get a foreclosure in the cheap even for a new Michigan real estate investor in 2009?

The reasons are obvious:
-Too many sub-prime loans, which went bad.
- A horde of homeowners who owe more than what that their house is worth.
- Adjustable rate mortgages that were more like traps with their promises of low rates, flexible payments to folks.

But that is the past. Done and over with.

Here is the present:

All mortgage companies that were putting out these bad credit adjustable mortgages are out of business. Done. Closed shop. Went home. If you cannot document your income by means of current W2 or 2 year tax returns, you cannot get a mortgage in 2009. Period.

The Foreclosure Boom In Michigan Suburbs Will End In 24 Months

Right now the easiest financing still open to a regular income, middle class home buyer are loans guaranteed by FHA, who don’t mind helping even new first time home buyers, even with bruised credit as long as they have stable jobs and documented income (24 month history).

These are couples that are buying houses to live in and raise families. They are buying starter homes ($125,000 range) not some crazy $300,000 homes that they cannot afford once the interest rate changes.

Right now there is a “cleanup” going on in the banking industry where banks are washing away their hands from the bad credit loans and mortgages they have in their inventory because Wall Street and the credit markets will not give them any more money till they clean up this mess that they created.

This INVENTORY CLEANUP from banks will take 2 years till all their dirty bad credit adjustable rate loans are gone. These loans are typically 2 year or 3 year ARMS and till 2006 banks were cheerfully giving these loans out.

Five years from today the ONLY mortgages banks will be left with – FHA loans and conforming / good credit loans. More importantly there will be no adjustable rate or sub-prime mortgages. Almost 99% of FHA loans are good ol’ fashioned 30 year fixed rate mortgages given to folks who have documented income and can actually afford them in most cases.

This foreclosure boom in the suburbs in Michigan where you can buy a house for fifty cents, forty cents on the dollar that requires paint, cleanup, new kitchen cabinets and a new toilet and vanity set will END. And banks will go back to discounting those houses that require more rehab than that.

Will there be foreclosures coming from job losses, divorces, deaths, moving out of State etc? Sure that will never ever go away. That is just part of life and the economic system we live in. But the ease at which you can ask and get big discounts, MLS flush with REO’s in cities around you, Loss Mitigation officers eager to dump houses, is a temporary situation that you should work very hard to profit from during the next 24 months.

For 2009, set yourself up at the expense of banks. Make money in Michigan foreclosures. Build relationships with private investors. Find people who matter in your Michigan city in real estate investing world and let them know you. Learn how to put together LLC's to buy big properties (apartments, storage units, mobile home parks, whatever) that will help you become financially free.

This recession will not last.

This 24 month opportunity will not last either.

Time to start is now.

Do you ever regret meeting somebody really great and not following up on them after the first meeting? And now the awkwardness sets in. What am I going to say? It has been so long. Where do I start the conversation?

Every real estate investor in Michigan has a drawer full of business cards somewhere in their home. People they came across in seminars, foreclosure auctions, REIA meetings, chance encounters. All of us have that box full of business cards in our homes. Open that box today. Grab a stack of cards and call them, one by one, to wish them Happy New Year.

You never know which one of them is THE ONE that might just changed 2009 for you.

2. Dress up. Yeah I know all about the shallowness of this suggestion but have you ever seen Trump in jeans and a t-shirt? Ever seen Buffet walking around in khaki shorts? Guys for some reason have an attitude against looking good in when they are meeting new people. Most of them are trying to compete to look who can look more frazzled. It takes exactly 10 minutes to dress nice. First impression matters.

3. At seminars – sit at the top corner or at the bottom corner. When you have a question to ask – stand up, introduce your self and then ask a question. Do it two or three times: ask question, start by introducing yourself – and the speaker and the audience will know who you are. Since you are sitting in a corner – most people will turn around and look at you. So they will know not just your voice but also your face. That alone will get people coming to you at breaks, lunch sessions and at the end of the day. Just sitting and asking a question where nobody can see you is a waste.

4. Smile. Smile. Smile. People are attracted to it. Gloominess might be the national pastime in Michigan but in business settings, it just turns people off.

5. Energy is everything. There is a reason why planets revolve around the sun and not vice versa. I love hanging out with real estate investors because they are so full of life and energy in one on one conversations once you get to know them but in front of people they don’t know – most investors just buttoned up. Why so serious and defensive? Do you really think that crossing your hands on your chest and looking down makes anybody come and talk to you?

6. Business cards – make some kick ass business cards. Avoid putting your pictures and silly graphics of houses on it. Avoid the virus of naming your LLC and using the words foreclosure, save houses, investment, property, global, universal etc in it. That is what everybody else is doing it. Why would you want to be like somebody else? Moo.com makes really beautiful looking cards. They are not as cheap as VistaPrint but they do leave a more lasting impression.

7. Good networking is not about meeting somebody and then dumping your wish-list on them. It is about finding out who the other person is and letting them know you first. Build a bridge. Build a relationship first. The business will just happen automatically. Most private money and wholesaling networking opportunities should never start with, “Well let me tell you what I have been about recently…” .

The biggest reason for this is that none of us are trained to network in a business setting. We mistakenly think that this thing is just supposed to happen magically or worse we start to believe that some people are “born” with it and some are not.

That is the slack I get all the time when I am talking networking with the members of mentoring group.

“Well Mark it is easy for you to do. You are a natural at this.”

Actually that is not true. I was probably the most shy kid growing up you have ever seen. I was a total nerd, comfortable in reading books in a corner then playing with the rest of the crowd. It took me a while to figure out once I enter the real world and then ended up as a real estate investor that nobody can help me if they don’t know who I am and what I am looking for.

So I started learning about business networking and much to my surprise it turns out to be like any other skill you can learn. There are rules to it. There are strategies that you can use to make yourself a better networker.

The biggest thing to remember: Easy to be selfish and just think about what you want. Good networkers always think about what they can do for the other person first.

Do you ask,

“Is there anyway I can help you? Anything you need right now in any of the deals you are working on?”

What would you remember? What kind of person would you want to hang out with? The one who is showing interest in helping you or the selfish one?

2. The most active FHA lender in your area. There is always ONE in each county. In that office, there is one loan officer who is just killing them. She is the one who can tell you precisely what kind of houses first time home buyers are buying in your county.

3. A really good company to fix bad credit. Lots of folks have bad credit right now. Some of them intentional. Some of them just by a stroke of bad circumstances. It would not hurt that when you come across potential buyers who have bad credit but want to buy your homes or may be you even have renters in your houses that you might want to help to get their credit fixed so they buy these homes from you. Lots of scammers out there in the credit fix up industry so try to find a local company who can give you good references and check on those references.

4. A great Property Inspector who knows his business. I know a great one in metro Detroit – send me an email to mark@markijlal.com if you need his phone number.

5. A fast appraiser. Refinances are dead. So when an appraiser wants five days to get me back a report – my blood pressure starts to go up. That is just laziness. Work with a local guy in your city and not some faceless corporation located 400 miles away.

6. Me.

7. The top commercial real estate broker who can find you good apartment deals in your Michigan County. This is for future for most but nothing wrong in going in checking out what is going on the other side of fence in commercial deals.

Here it is. The biggest reason why private investors are much more open to hearing a real estate investor out in Michigan than ever before. Their stock portfolios are bleeding red ink. No other place to put their money to work. Money market accounts are paying peanuts.

Even sending an email out to everybody on your email list with this image above and asking them to call you if their own stock portfolio has taken a hit will probably get you 1-2 serious private investors. But nobody can partner up with you unless you let them know that you are looking for one. So if you are waiting for private investors to “discover” you.... THAT is not going to happen.

Talk to lots of people. Tell everybody what you intend to do in 2009. Few would snicker. That is fine. But you will get private investors out of these casual conversations. Most real estate investors in Michigan need 1 to 4 good private investors to meet all of their private funds needs. This is a good start.

1. Get a size #10 envelope.

2. Get a piece of paper and write down four things that you would love to do in your Michigan real estate investing business. It could be something you want to learn. It could be a person you want to meet. It could be a place you want to visit, like a foreclosure auction. Somebody you wanted to talk to about private money. To put up a website for your business. Start a blog. Visit REO’s Checkout an apartment building. Whatever it is you have been thinking about for a while but never got around doing it.

3. Put the paper in the envelope. Seal the envelope and put it somewhere on your desk where it stares back at your every day.

4. Call three of your real estate investing friends and tell them your list. Ask them to call you every Friday and check on the progress with you. Now you have accountability partners.

5. Do something. Do anything. Everyday. Even little things add up. The strategy is to get into the habit of moving your real estate investing business forward every day.

6. On January 31, 2009 – open the envelope up. How did you do? Finished three out of four. Good. Make another envelope for February 28, 2009 – transfer the one unfinished item to February and call your three friends again and let them know what you are up to for February 2009.

Writing goals for the whole year is a good exercise but it rarely inspires urgency in any of us yet we all know that 365 days just come and go.

This way you have 31 days to get your list of things done. Four things done every month. At the end of 12 months. 48 things done. It is impossible for your real estate investing business in Michigan to stand still if you follow this strategy.

When you grow up in your real estate investing – what you learn to stop doing matters most. After doing five deals, you know what kind of house to pass on and which one to jump on right away. You build a team of good contractors so you don’t have to take bids on everything you do in your foreclosure buys. You figure you how much rehab (or none) you want to do on your deals. You develop a liking for doing something more than the other (REO’s or Short Sales; Rentals or flips; single family houses or apartments). You still have the same time in your hands that you had last year but now you are spending the same minutes more wisely, doing things where you know that the return on your money (private, own, lines of credit) and your time (minus job, family, hobbies) is the highest.

When you finally decide to turn this real estate investing hobby into a full time roaring business. The only thing that matters most at that time are the people you have met in your journey and the relationships that you have painstakingly built with them.

Of course the last thing is the hardest and most time consuming but it is also the most rewarding.

Who have you met today? Who do you intend to meet today? Who did you met last week? Who is on your sheet for next week?

This would matter if you ever want to get to Act III of this adventure.

It was 16 pages. Times New Roman, size 10, single-spaced.

Could anything be more boring than editing a transcription of an audio CD?

There is lots of “fun stuff” we get to do in our industry.

- Get to look at foreclosures.
- Go to lunches with other real estate investors in your Michigan City.
- Run ads in Craig’s List and see the responses pour in.

I like going to seminars and mastermind meetings and hang out with other Michigan real estate entrepreneurs to get new ideas to implement.

Then there is the “plumbing” things that I have to do – where I get to play plumber, on hands and knees, fixing broken pipes, under the sink, which nobody ever gets to see, like building a Private Money PowerPoint or editing a transcription of an audio CD to wholesale houses which explains the program and on what exactly is required of people interested so whey they meet my member – they are already ready to go and do business, hunkering down and writing 7 emails in a follow-up sequence that goes out a list of people who have responded to a Craig’s List ad.

The fun stuff makes the business interesting.

Becoming a good plumber, if you choose to become good at it, can make you rich.

A friend of mine is launching a nationwide franchise type business. He explained the whole thing to me two weeks ago. I loved the concept. My friend is a genuinely good guy, is making tons of money and it is all good but after he was done with his PowerPoint, I told him that he just had to fix one thing – he has to figure out a easier faster way – in less than a minute or so to explain his business to his possible clients. Right now it takes him 10 minutes. I got it. But I doubt a lot of people will have the other 9 minutes of patience.

When you are talking to people who might be interested in doing deals with you – deal partners or private lending – you have to sit and think how to explain all the complicated things that you know in very easy terms.

Obvious? Every sat through a presentation on how to use self directed IRA’s to buy real estate? Guaranteed to put you to sleep in less than five minutes. I find the topic fascinating. You probably do so. But you and I belong to a very small minority of real estate entrepreneurs who get all excited about doing a deal out of your self directed ROTH IRA and not needing to pay any taxes on the profits when we take the money out in our golden years.

We get excited. Most people we talk to get confused.

Problem is that it is the most people that we talk to are the ones we want to do business with.

Faces with things that they don’t understand – most people are too embarrassed to admit so. They take the easy way out. They say no.

You think that they are not interested in real estate investing or may be they don’t like you.

When you talk to people who might end up in business with you, work really hard to make it simplicious for them. Big words, complicated spreadsheets and your industry jargon (most people think rehabbing is for drug treatment and NOT for fixing houses) can come later.

Paul was telling me about his upcoming meeting with 10 potential self-directed IRA investors who could fund his future deals. We talked for a while - multiply 10 investors with low six figures each and you can understand the stakes that these sixty minutes carry. Some tips:

1. Make your slides about what is happening now. We have a Wall Street meltdown going on with all major newspapers headlining it. Take a snapshot of their website and use it as an opener. Its sends a message out that you are in the loop of things now.

2. What do you want? Tell them flat out in the beginning. They are there because they are losing money in the stock market and you have an alternative real estate investing partnership strategy for them. Why be coy about it? I always liked having a slide with a title ‘ What do YOU want? What do I want?”

3. Before your build your presentation – ask yourself the five reasons why they would not do this. I am positive that you have some really good answers to all of them. Instead of praying that they would not raise any objections – raise them your self and answer them. Get them out of the way so you and them can get to bigger things.

4. You have a really clever LLC name. You spent some coin to make a nifty website. Great. What these 10 folks really want is to know about you more. They want to know who you are, why do invest in real estate, how did you get here, who influences the way you think about investing, where do you want to go with all this?

5. Take questions. When you don’t know something, tell them you don’t but you will find out and let them know later. The ones that are negative are the best ones to answer in your next presentation. Think of your first talk as market research.

6. Tape your talk. Buy a cheap digital recorder from Best Buy and tape your talk. Not to sell or put it on the web. But for yourself to listen later. You will be shocked on how you sound. Fix the holes.

7. The way you dress matters. First impressions matter. Your enthusiasm about your real estate investing business matters most.

8. Don’t end your talk with, “If you are not going to this today, I want to know what did I do wrong?” OR “ You have fifteen minutes to decide if you are going to move forward.” The first one sounds needy. The second one sounds like an infomercial. I have done both to regrets.

9. Who do you want to do business with if you had a choice to pick from anybody in the world? Who is that perfect person? Do you know? Or is it anybody who is breathing and living on this planet. Build your private money PowerPoint for your perfect investor. You are going to lose the ones who don’t fit that mold but you will attract the ones who do.

10. Use pictures. Lots of them to tell the story of your real estate investing business.

11. Learn to say the word NO when they ask you to do something that you cannot. They are grownups. Their feelings don’t get hurt that easy. Do follow-up (thank you note, email) after the meeting. You will rock.

99% of all the marketing pieces I see in real estate investing:

- Don’t use any pictures.

- Use boring stock images.

Pictures are powerful. Sometimes more powerful than words. You have lot more pictures hiding in your MY PICTURES folder on your computer than you know. You already took the pictures (of yourself, of your deals, of the people who help you get it all done) so why not use them?

Just in case if you don’t have any pictures – here is a great source to get more.