Becoming a Real Estate Rehabber by Alexis McGee

I’ve been talking a lot lately about the “Investors Flip Feast” going on right now. With an Investor’s Flip Feast you contract a great deal with a homeowner and then assign your contract to another investor for a quick finder’s fee. It’s a great way to get started in foreclosure investing without needing any of your own cash or credit.

Once you’ve mastered “assigning deals” to investors for quick paydays, you are ready to make some serious money in real estate by buying a property at a discount, fixing it up, and selling it on the retail market. This is also known as “rehabbing” or “retailing.” This is a great way to see the results of your work immediately and build wealth quickly. It works in any market, any time. And it is working especially well right now with all the great fixer foreclosure opportunities everywhere around us.

Our many foreclosures.com successful rehabber clients focus on fixing up “entry level” family properties and make $30,000-$60,000 or more on every deal. Doing two or three houses like this a year can provide great extra income for college and retirement expenses, while doing six or more deals a year can provide you with a great living and be your ticket to firing your boss.

Cosmetic vs. Structural Repairs

When looking for a great property to rehab, keep your eyes open for fixes that will make a big difference, but not necessarily cost a lot. Less really is better in the retailing business. Look for houses that need cosmetic changes such as:

· New paint

· New carpet

· New fixtures

· New landscaping

· Minor clear termite repairs

Until you become an expert at rehabbing, avoid properties with structural problems such as foundation issues or severe dry rot. Major rehabs can be extremely profitable, but you must refine your job-costing skills first or you can get stuck in a money pit.

Buy It Right and Everything Else Falls in Place

It’s often said that real estate investors make their money when they buy, not when they sell. This simply means that when you get in for the right price, you are guaranteed to profit when you get out.

So what is a good deal? You want to have at least a 30% margin PLUS repairs to ensure that you make enough profit. For example, if a house in perfect condition will be worth $200,000 fixed up, you must get it for $140,000 LESS the cost of repairs. If repairs are minimal and only $20,000 then you need to buy it for $120,000. In this scenario, when including repairs, you are actually buying the house at 40% off.

Out of that 30% margin, 15% goes to buying, holding, and selling expenses and 15% goes to your profit. In the same example, your 15% profit on a $200,000 retailed house will net you $30,000. The higher the resale, the more money you make. If the house is smaller than $200,000, I pencil in a minimum of $30,000 flat (rather than 15% percent) to make sure I get my minimum payday for my time, effort, and risk.

Also remember that the bigger the repairs, the bigger the discount (I’ve been known to buy at more than 50% discount on bigger projects). Remember, you’re dealing with motivated sellers–typically fixer uppers–which means the houses you buy will NEVER be in perfect condition.

Make Sure You Get it Right

To make every deal as profitable as possible, you must prepare in advance and estimate all your costs properly. The biggest risks in rehabbing property are:

While you can make a great deal of money in rehabbing, it can be frustrating and time-consuming if you don’t do it right. On the other hand, you don’t have to deal with tenants, you can see the progress being made every day, and you’re updating housing and improving a neighborhood. It’s rewarding to drive by houses you’ve bought, rehabbed, and sold. And your new neighbors love you.

If rehabbing houses interests you, try doing one or two while maintaining your current job. If you enjoy it, and it makes you enough money, perhaps you might try going full time as an investor. Fixing up houses for new buyers is one of the most satisfying things you can do in real estate, and the most profitable.

John Assaraf the Spiritual Entrepreneur

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House Flipping

Sooooo … this may sound a little far fetched, but a buddy of mine has just invented what he refers to as a “House Flipping Robot”.

It basically buys and sells houses FOR you.

He’s making a hundred of them available to the public.

You’ll just have to see for yourself. Check it out …

The Real Estate Matchmaker software

This is the future.

Welcome.

Hans Anderson

p.s. if the site is down when you get there, it means he’s sold out already. I’d check now if I were you …

The Real Estate Matchmaker software

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On January 7, 2011, the Massachusetts Supreme Court, in U.S. Bank National Association v. Ibanez, held that a foreclosure sale was void if the lender could not prove that it had the power to foreclose at the time of the foreclosure. In Ibanez, the court held that the lender failed to prove that it had the right to foreclose at the time of the sale and it questioned whether it ever obtained the right to foreclose.

Like California, Massachusetts has a foreclosure statute that allows lenders to foreclose without court approval. In the Ibanez case, the bank foreclosed on the property and a year later, sued to clear title and validate the foreclosure sale. During that suit, which the homeowner did not contest, the lender was unable to demonstrate that it had received an assignment of the deed of trust prior to the foreclosure, or in fact, that it ever received a valid assignment. While this case is a big win for debtors in Massachusetts, its impact in California is likely to be minimal.

First, as a matter of law in Massachusetts, the controlling document as to ownership of the loan is the deed of trust. The opposite is true in California, where the promissory note is the controlling document. In Ibanez, the Court noted that the lenders were able to show that they held the promissory note. As such, if the same facts occurred in California, the Court would likely have upheld the foreclosure.

Second, the Massachusetts Court set an incredibly low standard for lenders. It stated that it was only seeking some document that showed an assignment of the Deed of Trust by the original lender and that the assignment did not even need to be recorded. Any showing by a lender that it was the owner of the note should be sufficient, even if the Ibanez holding is adopted in California. It seems unlikely that lenders will continue to make the same mistakes that they have in the past with the sloppy recordkeeping.

It will be interesting to watch whether California follows Massachusetts’s lead in this area. If California does rule that the foreclosures are void, it would make it substantially easier for Plaintiff’s to overcome the Tender Offer rule. (See Julia Wei’s Article on Foreclosure Litigation for a thorough analysis of the issues)

Practice Notes
• If you are a bank, this ruling should not have a substantial impact as it merely requires some documentation that the foreclosure was proper. If you are a homeowner, while this may lead to setting aside the foreclosure, it will not grant you the home free and clear of the loan. The lender would merely have to foreclose again.

Henry Chuang is an attorney with The Law Office of Peter N. Brewer. The firm serves the legal needs of homeowners, real estate and mortgage brokers, agents, brokerages, title companies, developers, investors, other real estate professionals and their clients. Mr. Brewer and his firm also represent clients in debt collection, breach of contract matters, and other litigation and transactional work. The firm’s client range from homeowners, brokers and lenders based in Santa Clara County, San Mateo County, San Francisco County, as well as throughout other counties in California. You can contact us at: 350 Cambridge Avenue, Palo Alto, CA 94306, Ph: 650/327-2900, Fax: 650/327-5959, or on the web at: http://www.brewerfirm.com

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Marketing

Watch the Anik Singal webinar and discover EXACTLY how you can get a guy who’s earned over $41Million Dollars online… To hold your hand and walk you STEP BY STEP through the process of profiting online And if that’s not enough, he’s also going to throw in $5000dollars worth of his BEST training. So there are NO MORE EXCUSES – and this new year- it’s time to TAKE ACTION.

Hans Anderson

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Bird Dog

When I first got started in real estate, I was literally broke.

I had no money to market to sellers or buyers …

… no money to put up deposits

… no money to do any of the other things that pop up now & again for the average real estate investor

So here’s what I did … I became a BIRD DOG.

I started matching buyers up with sellers and charging a fee as a middle man. It was great! And it’s exactly what you should be doing if YOU happen to be “monetarily challenged” at the moment.

The only thing that sucked was that it was a lot of leg work. I wish The Real Estate Matchmaker software system had been around back then. I could have done it all from home.

What is the Real Estate Matchmaker? See for yourself.

You can download it here now …

The Real Estate Matchmaker software

It’s a web based platform that provides the buyers, the sellers, and everything you need to match them up and get paid for it. It’s pretty much the coolest thing I’ve ever seen.

If you need cash fast, you need to check this out. I don’t know a quicker way to make money. Seriously.

The Real Estate Matchmaker software

Let me know how it works out for you.

Hans Anderson

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