Travelling for Real Estate

Because I heavily invest, I travel all the time for real estate, and am very fortunate to see some pretty incredible homes. I have travelled all over the United States, and even abroad to either invest myself, or to help partners invest in real estate. One of the top things that always comes up when I travel is what I do with my time?

Example, I flew into Houston last week, and travelled up to the Woodlands to do some business. If you don’t know the Woodlands, it’s a very upscale city that has some incredible homes. While my limo driver was taking me out to see this home below, he was asking how I can travel so much and still get things done. My answer was that I do a ton of work on planes, in the back seat of cars that are transporting me to business meetings or closings, and I have a couple of assistants that help me at every turn. By the way, if you’re looking for a great transportation provider in the Woodlands contact these guys:

Here’s the home that we drove out to see:

Woodlands Texas Home

The home is absolutely miraculous, with an old english feeling to it, and walking through it gave me the motivation to work extra hard to be able to acquire something like that. It was a bit out of my price range, but not very far off.

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Preferred Partners

Partner up with someone who knows what they are doing!
Partner up with someone who knows what they are doing!

Yesterday, I posted about working with partners and how much of a hassle or a good thing it can be. When you are trying to acquire Real Estate Owned property for clients, there’s either good or bad, and no in between. Working with banks is almost an art, and there’s some people who are a bit intimidated by working with board members in banks, therefore they get a bit squeamish to do so.

I have a couple great partners that I work with all the time on REO property. One is Brad Sawatzky, owner and broker for Colorado Real Estate Pros in Fort Collins. Brad works all over the state of Colorado, and if you look at his realtor website, you can tell that he does quite a lot of business. The thing that has impressed me about Brad since the moment I met him was that he was so comfortable talking to executives in banks and negotiating prices with them. One thing about negotiations is that they have the ability to get very tense, but not with Brad. He truly leans on his people skills, and sees the factual side of every deal instead of getting upset when bank execs are trying to play hardball with him.

I did two deals with Brad last year on REO properties, and he didn’t flinch when I asked him to do another one just a couple months ago. The best part is that he always answers his phone, or gets back to you very quickly, so I don’t have to worry about waiting on an answer too long. With the delicate and sometimes very fluid nature of REO negotiations, this is very important.

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A great couple of weeks

It’s been a great couple of weeks in the REO property world, at least for me. After working with Brad on a deal, which I posted about previously, I took a class on turning REO properties into true assets. Basically the premise was to acquire property from a bank, fix and flip it for a large profit, all the while working with another real estate agent to get a buyer lined up right away for the sale after the property is completely gutted and re-finished. I actually told my neighbor about this, and he said that he is interested in doing this asap. It’s absolutely amazing how as a Real Estate agent, you can meet people who are very interested in investment properties when you thought that you would have to have the help of an outside agent to find the deal. The win of this for me is to avoid paying another real estate agent the fee that I would get if I flip the property to a buyer that I am working with. I still get the commission of the deal from the sale, and also reap the rewards of the upgraded sale price of the fix and flipped home.

Check out the new awning that my contractor just put on a home I recently bought and flipped. Pretty cool I’d say.

New Awning - REO property

Before this was done, the awning was not there, and the roof was in shambles. We put a brand new aluminum roof on the house as well, which added a ton of value, and it was what I wanted versus traditional shingling.

With the awning, we figured that a simple automatic retractable awning would be good because there are no posts or things in the way of walking around the deck. The sightlines are great, making for sitting or standing looking out the back deck on the backyard is a great way to enjoy the quiet afternoons and evenings without getting sun-drenched.

Next week, we have a couple meetings with contractors who say they can fix up houses and have them ready to flip in less than a month. Some jobs won’t take that long, and some will, but when we have a few contractors that we can call on to overhaul a home, it makes for the job to get done quickly if one of our contractors is too busy to take on the work, which happens a lot with contractors.

We’re all about progressing and giving homebuyers nice, inexpensive properties to buy, and it’s our goal to increase our inventory while the Real Estate market is hot.

Working with Partners on REO deals

I’ve always been a fan of working with partners on REO deals, because if you find someone that has been working on Foreclosures, Short Sales, or REO deals for a long time, they really know the ins and outs of the deals, and what to expect. I have found many partners that also don’t have very much knowledge about REO deals, and they are very difficult to work with.

Preferably, I like to work alone when it comes to deals on REO properties, but because I’ve been doing them for so long, I often get asked for assistance in working with banks, lenders, and the agencies you typically see that own the properties.

There are some Real Estate agents that typically will ask me to simply facilitate the deal with them, and I will charge them a flat fee to do so. Or ask me to be the communication barrier between them and the lender.

When I’m working with banks on these deals, I have a few questions that I like to ask.

  1. What is the typical process that the bank will need to go through to agree to sell the property?
  2. How many people or boards need to sign off on the deal?
  3. What is the typical closing time frame in processing a deal of this nature?
  4. Where is the closing held? At the bank, or another location agreed upon by all parties?
  5. If asking price is offered, can we expect a counter-offer.

Normally, banks are able to, or willing to answer these questions, but sometimes they will not answer anything at all. But the questions are always expected, and lenders know full well that some sort of these questions will be coming their way.

In the past, I’ve dealt with banks and partners that have been very difficult to work with, and those partners receive much more attention from a communication standpoint. I do this to build a relationship, because I am going to continue working with banks on REO properties for years to come. Some of the relationships that I’ve created started out very roughly, because people will negotiate very differently on a number of issues. I know what to expect when communication gets rough in these deals, but mostly it’s me who has to educate my partners when working on a REO deal.

I’ve met some very good Real Estate agents that are very smart when it comes to foreclosures, short sales, or REO deals. But they always have a ton of experience in the Real Estate field, and they typically are on the same page with me in terms of what to do in specific situations. I will ask any Real Estate agent if they are a rookie at REO properties when I first come into contact with them.

I’ve met some great Real Estate Agents that will not work at all on REO deals, and although I try to assure them that they can work through the rough parts of doing these deals, they say that they don’t want to waste the time it takes to close them. They are right in the regard that it can take a long time to work through these deals, although there are definitely times when that does not hold true.

In the end, like I said, I would love to work by myself on these deals, but there is almost always partners, whether they be other Real Estate agents, lenders, or outside entities that must be involved in the deal.

Bottom line, you can’t get away with doing REO property deals without any knowledge from someone that has done them in the past.

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The definition of Real Estate Owned Property

Real Estate Owned Property is defined as a piece of property that is owned by a lender, typically a bank, or a government entity, like an insurer of loans or outside agency. This specific entity has taken control of the property because of failed payments, or because the property has been in financial distress for some time.

You will typically see a lot of squatters sit on Real Estate Owned Property, forcing the government to get involved to try and get those people out of a location as soon as they can.

If you want to learn more about Real Estate Owned Property, Wikipedia is a great place to go, or search on Google for ‘REO Property definition’.

In the Denver area, there are many Real Estate Owned Properties, and you can always contact me to find out more about getting into a REO property of your own.

Why we got in this business

I like to share stories of why I got into business. One of the absolute best stories happened about 4 years ago, but I still remember it to this day.

I was helping a young couple named Chris & Lauren, who were searching for a home, and the top of their price range was about $200,000. Back in 2011 that was pretty doable in the market, especially for a couple seeking a house with less than 4 bedrooms.

Chris and Lauren were not looking for much. They wanted a house that they could grow with, and they planned on having a couple kids at least. They thought that even if they had 3 bedrooms, and if they had 3 kids total, they could put a couple kids in bunk beds in one room, and have another kid with their own bedroom. They also wanted a small yard for a dog. Pretty much the American Dream, or what they saw as the American Dream.

Lauren had a job at a bank in Westminster, and Chris was an assistant manager at a restaurant in Thornton, but was interviewing at Progressive Insurance at the time (he got the job two months after we started searching for a home). Lauren is from Glenwood Springs in the mountains of Colorado, and Chris is a native of Montana.

They wanted to stay in the Denver Metro area, and had some areas they really didn’t want to move to, but we had a massive area to search.

At the time, I was about 8 years into working in Real Estate, and had been working on getting families bank owned homes, short sales, and foreclosures for about 4 years. I was, at the time, proficient enough in the business side of things to be able to communicate well with the banks, lenders, title and insurance agents to make things as smooth as possible for every party involved.

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