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Wondering why most investors are having trouble finding properties to fix and flip?
Competition? Sure.
But look a little closer.
Look a little closer still.
We are both competing against the banks/hedge funds and private companies.
But the banks are selling properties. How are we competing against them?
Because they are not leaving anything on the table for us as rehabbers to make money when we renovate and flip a property.
Let me explain. It might help to take a quick peek at the foreclosure page we have posted on our WREIA site.
The numbers don’t lie – but they will creep up on you.
The abundance of distressed properties in some form of foreclosure are in the low to middle price range. 100-200k is common across the country. In our area it skews slightly higher.
But here is something interesting. Retail home prices across the country are dropping – slightly. But the prices the banks are getting from distressed sales are steady.
So – who is getting squeezed here? You the investor!
When you have a tighter margin to deal with, combined with falling prices – watch out – someone is about to get burned. Don’t let it be you.
History tells me the banks will make out fine. Especially if we let them get away with this nonsense of pricing the distressed homes too high, especially with their marginal renovations.
It’s especially tempting for us here in the DC area. MD is near the top of the nationwide leader-board when it comes to foreclosures.
So what can you do to protect yourself?
1. Don’t think it’s a deal just because it’s a foreclosure. Most of the margin has been squeezed out for investors. (Your mileage may vary.)
2. Be careful if you are investing in these heavy foreclosure areas. Know the inventory. When banks dump these properties on the retail market, prices drop. Economics 101.
3. Be smart and don’t over-renovate. I see new investors putting tons of upgrades into homes in neighborhoods where the bank inventory is their competition. For the first time home buyer if they can save 50k and buy a bank renovated property with new paint and carpet only – they will be happy.
Lastly – put a good team together. People that know the local markets. Odds are pretty good that a “mentor” from a high priced coaching system sitting at a desk in Ohio or Utah doesn’t know the difference between Capitol Heights and Capitol Hill. They certainly are going to have a hard time helping you on a street level basis.
Our guest speaker at WREIA this Monday night knows the local market. She is a mortgage pro at a local bank and has been an investor as well for a number of years.
Some of us think of business as going into war. Every day you face an enemy. As Sun Tzu points out – you need to know your enemy and know yourself.
If you need help understanding the money end of this business, and how specific mortgages can help sell your properties faster – join us Monday at WREIA. Your going to learn or be reminded of a few things.
It’s not 2007 any more and some of us need a refresher to fully understand the 2017 market. Knowledge is power in this business. Sun Tzu would agree.
It helps tremendously to have a local mortgage pro on your team who understands mortgages but also knows what it’s like to be an investor in the DC area.
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In 2016 we saw an increase in “Sale Fails” here in the DC area.
In other words, “Back on the market we go!” And nobody likes that.
It’s hard to explain, but it feels like you are quietly telling that world “The last buyer thought my baby was ugly.”
It wasn’t too bad here locally. Be glad you don’t live in Ventura, CA. They led the country with close to 12% of their sales failing.
Imagine, 12% of the market in Ventura is suffering from “Ugly Baby” drama.
Here in DC we had about 4% of our properties go back on the market.
The next logical question – Why do they fail?
Mortgages, Appraisals and Inspections are responsible for the vast majority.
So this month at WREIA we are going to focus on Mortgages.
Specifically, lets bring in a mortgage pro who understands the DC area. She works for a local bank.
When you are dealing with banks local and regional banks are the best – in my opinion. They are big enough to have a team of people that are able to close, but still small enough that your contacts are local. Their knowledge of the area runs deep.
How do you know they buyer who just signed off to buy your property is qualified? What steps have you taken that will help you sleep better at night?
96 out of the top 100 metro areas across the country had an increase in failed sales. Nationally, we nearly doubled the rate of 2015. Locally, we just had a slight uptick.
Unlike the problems of 2007-2008 our mortgage market is actually performing pretty well. This is good news. No one wants to live through that drama again.
Don’t panic. An uptick in relistings is just a sign of a balancing market. If you renovate a home correctly, price the home well and have a well qualified buyer under contract – it should be smooth “sailing” to the close.
Putting a good team together – so that everyone gets to the closing table – should be a high priority as an investor. Maybe the highest.
It helps tremendously to have a local mortgage pro on your team who understands what it’s like to be an investor in the DC area.
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Re: Market Update & The WREIA Weather Reset – Meeting Monday, March 20th
Shorts and t-shirts just a couple weeks ago, now we are back to the heavy winter coats.
Welcome to spring weather in Washington DC!
What does this crazy weather mean for our real estate market here in DC?
We definitely took a pause for a couple of days, but here is the thing: When you trap people inside for a few days, we all know they turn to the internet and start catching up on their web browsing.
There was a major uptick in home searches over the last week.
“Annual growth was slowest in January in Virginia Beach (+3.2 percent); Washington, D.C. (+3.6 percent); and Indianapolis (+3.7 percent).”
3.6% is great – but of the top 40 cities nationwide, it make you wonder what is going on that our back yard market can’t keep pace with Indianapolis?
You will get a chance to ask our WREIA member panel on Monday what they think is going on here in our local DC markets.
The panel lineup has not changed. Each of our guests has agreed to stick with us even though we had to reschedule from this past Monday.
We will be talking about the THREE PHASES OF RENOVATION. Each of our guests will bring their area of expertise to the panel and share their DECADES of experience.
Remember to update your calendar and be with us this Monday the 20th for our March WREIA meeting.
Also, keep an eye out for an email next week with details about our quarterly “WREIA Members Only” event. We will announce the details for you on Monday evening as well.
Do you have recent experience with Metro DC renovations? If you want to share your story about your business – can you get in touch with me? I would like to hear your story and perhaps we can share your lessons learned with our WREIA members at the March WREIA meeting.
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Interested in a seat or a WREIA Membership?
Join us on the new meeting date – March 20th – and expand your belief that other people are out in the DC area making money in Real Estate.
FOCUS and make 2017 a great year for your business!
Let me know how I can help you make it happen,
John Peterson
301-881-5541
Washington REIA Network, President
Profitable Property, Founder
Hello WREIA MEMBERS!
Despite the chilly but sunny Sunday we are having here in DC we are in for a potential record setting storm starting tomorrow evening on through Tuesday.
That said – we just checked with the talented people at the WREIA Weather Headquarters and after a lengthy discussion they have advised us to
RESCHEDULE THE MARCH MEETING TO MARCH 20TH.
So, if it’s ok with you, lets get bundled up at home tomorrow evening and stay off the roads. We all know what happens to DC traffic during this type of weather event.
Stay home and stay safe!
We will see you NEXT Monday – March 20th!
John Peterson
Founder, Washington REIA Network
Profitable Property
Rockville, MD
301-881-5541
ProfitableProperty@gmail.com
P.S. All pre-purchased tickets have already been credited to the new date. If your schedule will not allow you to attend, we would be happy to work with you to credit for the April Meeting or refund your purchase. Just let us know.
http://www.washingtonreianetwork.com/ John Peterson, the founder of Washington REIA, will be the moderator at the March 13, 2017 WREIA meeting. Our topic will be “Panel of Professionals” where we will have DC area investors talk about the THREE PHASES OF RENOVATION. We encourage you to attend WREIA this month at The Bethesda Womans Club – March 13th. Doors will open and registration will begin at 6:30.
“I hope to see you Monday Night!”
John Peterson
Founder, Washington REIA Network
Profitable Property
Rockville, MD
301-881-5541
ProfitableProperty@gmail.com
With over 800 renovations, John Peterson understands how to navigate the complex world of real estate investing. Submit a funding request or joint venture proposal on your project at http://www.DCHardMoneyLender.com
Re: The Key To Selling Fast
I was thinking about what to share with you today and a text came in a few moments ago from a friend.
“Have you seen The Deed on CNBC?”
“No. I saw a few ads for it. How is it?”
“You’ll like it. It’s good.”
I’m going to be honest. Another flipping show? If you’ve seen the show, let me know how it is?
Time is precious and nobody I know wants to give an hour to another drama filled flipping show where the “characters” freak out at the first sign of a dead mouse.
That said, I did find a quick article from one of the episodes where a person that looks like the “coach” or “advisor” talks about the list price being so important. You can catch the CNBC article with some video clips posted at http://www.cnbc.com/2017/03/08/sidney-torres-says-this-factor-makes-a-property-sell-the-fastest.html
True. If you make a mistake on the listing price, it can be a disaster.
If you price it too low – you may be leaving money on the table.
Too high – the property could get stale while you wait for traffic to even preview the property.
I’ve made errors on both sides of that coin. Everyone has.
If you want some tips or have some questions about how to come up with the right listing price join us at WREIA on Monday night.
We are going to have a “Panel of Pro’s” joining us to give their perspective on the three phases of renovating in the DC market. Our panel will share their experiences and it’s a chance for you to ask some questions and get some live “real world” feedback.
Learn to make small corrections in your renovation process. That my WREIA friends is what our panel is going to be focused on at WREIA – Monday the 13th.
Come out and join us. Network with real people operating in this business in our DC back yard.
It’s going to be a great night. No promises, but one tip could be so good, it might make you want to get up and dance.
Do you have recent experience with Metro DC renovations? If you want to share your story about your business – can you get in touch with me? I would like to hear your story and perhaps we can share your lessons learned with our WREIA members at the March WREIA meeting.
*********
Interested in a seat or a WREIA Membership?
Save a few dollars and reserve your seat early.
Tremendous Savings and Additional
“Members Only” Perks for WREIA Members
*********
Join us on March 13th and expand your belief that other people are out with me right here in the DC area making money in Real Estate.
Let’s FOCUS and make 2017 a great year for your business!
Let me know how I can help you,
John Peterson
301-881-5541
Washington REIA Network, President
Profitable Property, Founder
Re: Drone Imaging For Real Estate
Like many parts of the renovation process, staging and getting the property to market is full of places some people make BIG mistakes.
Imaging can play a huge part in the success of your project. And today, there are more options than ever.
Drones, those little toys that everyone was asking about over the holidays are actually being put to use by some cutting edge agents. Of course, the professionals are using $2,000 versions of these flying video and photo machines.
We will have a panel of professional renovators with us on Monday night at our WREIA meeting talking about the three phases of renovation.
Of the three phases, staging and prepping the property to go to market is probably the least expensive. Unfortunately, by the time most renovators reach this phase, they have run over their budgets so bad that they try to “save” money right at the finish line.
There was an interesting article on CBS a few days ago that talked about how drones are changing real estate sales and marketing.
You can find the article and some nice overhead images posted at http://www.cbsnews.com/media/9-ways-drones-are-changing-real-estate/
I can save you the 9 frustrating clicks from one page to another (Why do they do that?) and point out a key take-a-way:
“People buy on emotion, and these videos really pull them in.”
Aerial photos and videos work great on the right property. If you have a small estate in Montgomery County or over in Falls Church, or a farm on the Eastern Shore it could be very appropriate to hire an aerial videographer to amp up your marketing.
The image at the top of the article is by a professional in the real estate photography business and can be viewed below.
It’s not too expensive, and can sometimes increase the number of views of your listings online. People like to share pretty things online and beautiful homes are no exception.
On a recent project we had a number of quotes in the $250-$300 range. Most companies will do internal photos as well as part of a package deal.
So there you have it. Spend a few extra dollars on your marketing expenses and perhaps you will sell a property a little faster.
Learn to make small corrections in your renovation process. That my WREIA friends is what I am going to be talking about at WREIA on Monday the 13th.
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Re: Things that make me cringe….. Daisy Chain Deals.
I feel it’s my responsibility to keep our WREIA members informed on the current trends in our industry.
Buckle up. I’m fired up about this topic.
I’m going on a bit of a rant here because I HATE seeing so-called “investors” taking advantage of other people.
One of the biggest trends right now is shaking up the world of WHOLESALING.
In short, wholesaling is defined as getting a property under contract and assigning or selling the contract for a fee.
There are dozens of ways to control a property using various types of contracts.
The biggest shake-up in our industry is happening because seasoned or “mature” investors are going back to the wholesaling model.
Some of them tell me the biggest reason they are doing this is related to RISK.
Risk of money.
Risk of time.
Risk of liability.
I’m sure you have noticed the atmosphere in our country at the moment. People are angry about a lot of things.
So, some seasoned investors are fleeing to safety. Wholesaling a property is much less risky than performing an entire renovation and then trying to sell the property.
Regulations among the mortgage industry are clamping down on loans. Perhaps rightly so, perhaps not.
Regulations in the building industry have created a wide ranging number of inspectors for everything from electrical, structural and plumbing codes to chimney and mold inspections. Perhaps rightly so, perhaps not. We aren’t going into that debate here.
Wholesaling AVOIDS most of those regulation issues.
Wholesaling a property quickly passes on the risks associated with purchasing, renovating and selling or renting a property.
Perhaps I am a dying breed. I like to renovate homes and have enjoyed it for the better part of two decades.
I enjoy fixing up old houses and get satisfaction from “doing it right” and making them safe for a new family to enjoy.
We buy plenty of homes every year from wholesalers – but something is starting to bother me in the world of wholesaling, and you need to be warned about it.
The dreaded DAISY CHAIN DEAL.
They were really big a few years ago in Atlanta. So big that they got to be a problem for a lot of investors. No one in the community knows who to trust in these deals after a while. Lots of things can go wrong when so many people are involved.
Whether I get this deal “notice” buy phone, text or email the conversation goes something like this:
“Hi John, I have a deal for you. You have to act fast because it is going to be gone today.”
I’ve heard this before, of course, but my reply is usually – “Tell me about the deal.”
At this point they begin to tell me about a deal that I also got in my email two days ago, with an additional $2,000 tacked onto it. That’s a “finders fee” they explain to me.
Ok, great. This probably means that over the next few days half a dozen other “wholesalers” are going to tell me about this great deal using email, text and maybe even a few phone calls.
It’s become absolutely terrible….
BECAUSE NOW IT’S GOING NATIONWIDE.
We are starting to hear about “deals” in Texas, Arizona, Colorado, Michigan and half a dozen other states.
A few well known “real estate teachers” are talking about software that let’s you do all this in your pajamas.
Let me tell you – on a couple of occasions I might have taken a call from home. But I have never done a deal without someone from my office laying my eyes on the property. Never.
Do your due diligence people. Check those comps. Make sure you are looking at recent sales, not sales from 3 years ago and 9 miles away.
You don’t have to go far to find horror stories of over excited people who paid cash for contracts on homes – only to find them demolished with an additional enormous city tax bill.
My point is this – Be careful and know who you are dealing with in 2017. There are lots of shady people running around “daisy-chaining” trying to act like big wigs with lots of deals.
Now, why are the seasoned people starting to wholesale again? Because some of them are good marketers.
There is no harm in being a good marketer. My hats off to them.
The seasoned investors also see a national market. If they can get a property under contract and sell it to a list of national buyers, why not go nationwide and start looking for deals?
Better yet – if they can “partner” with other wholesalers and promote the property to their list – everyone wins – right?
Maybe.
Then again, maybe not.
When the deals are spread so thin, and every nickel is taken out of a wholesale deal before it hits the renovator – then we are no longer talking about a deal. It’s just another property for sale.
I think this trend of “master wholesalers” daisy chaining deals is going to be a disaster – with lots of carnage along the way. The little guy trying to do a couple deals a year is going to get taken advantage of – and lots of people are going to be confused at closing tables when they find out 6 other people are getting paid a couple grand for “marketing” a property to their email and text lists.
Ugh…..
Be careful.
As someone who wants to either become a wholesaler, a true wholesaler, you need to learn to market for properties – not buyers – as so many GURUS are starting to teach.
If you are someone who wants to flip properties, LISTEN UP. If you learn to market for properties you can save yourself thousands of dollars – sometimes 10’s of thousands of dollars. More importantly you can finally ignore all those daisy chain wholesalers.
Learn to find good deals. That my WREIA friends is what I am going to be talking about at WREIA this Monday night.
Come out and join us. Network with real people doing this business who aren’t hiding behind emails and daisy chain “deals”.
I’m fired up about this topic.
It’s going to be a good night.
Do you have recent experience with a “Daisy Chain” and want to share your story about your business – can you get in touch with me? I would like to hear your story and maybe we can share your lessons learned with our WREIA members next Monday?
*********
Interested in a seat or a WREIA Membership?
Save a few dollars and reserve your seat early.
Tremendous Savings and Additional
“Members Only” Perks for WREIA Members
*********
Join us on Feb 13th and expand your belief that other people are out with me right here in the DC area making money in Real Estate.
Let’s FOCUS and make 2017 a great year for your business!
Let me know how I can help you,
John Peterson
301-881-5541
Washington REIA Network, President
Profitable Property, Founder
P.S. Interested in a lender or construction partner for your pending project? Yes, we do that. We lend to and partner with people all over the DC area. Call the office and lets set up a time to talk through or walk through your project.