Archive for September, 2008

Come on people now, smile on your brother …

Wednesday, September 24th, 2008

… everybody get together and try to love one another right now.

In case you didn’t notice, that’s the chorus from The Youngbloods’ classic hit, “Get Together”. You can listen to it at http://www.youtube.com/watch?v=PoXYBxprAIQ.

So why am I reminded of this song? Two words … Hurricane Ike.fishing.jpg

He was only here for about 12 hours, but boy, was it memorable. Such power and force as is rarely seen here in Houston. And things haven’t been nearly the same since he left. He changed everything, and not in such a good way either.

He caused billions of dollars in damage and left roughly five million people without electricity. Many of those people had no water either. And those who did have water saw more of a trickle than a flow. He ripped off roofs, whipped fencing around like it was a six foot tall ribbon, and left traffic signals out of commission with many signal lights dangling drunkenly from a wire over intersections they were meant to protect.

Closer to the Gulf Coast, it removed homes and beach houses from Galveston, Bolivar Peninsula, Surfside, Freeport and other coastal towns like they were little matchboxes. Gone. People’s homes were not just destroyed, they were obliterated. Removed from the land like they were never there.

Inside the city, people waited in long lines at places called PODs (points of distribution) for water and ice, and became familiar with strange things called MRE meals. We practiced an activity called gas-turbation; endlessly driving around looking for gasoline so we could drive around and look for ice, or food, or milk for the children.

We lived in homes lit by candles and sweltered in 80+ degree heat. The cityscape looked eerie without lights at night, and during the day driving became a challenge as everyone had to wait their turn and treat all corners as four way stops. Yards were filled with majestic old oak and pine trees laying on their sides or on people’s houses like gigantic mortally wounded creatures who had pulled up to die.

People lived in their homes for days on end like they were living in caves. No lights, no power, no A/C, no television, no refrigerator, no radio, no CD player, none of the things we have become accustomed to. People got cranky and they got over it. Neighbors came out to bar-b-cue the contents of the refrigerators and freezers that had grown warm. They met each other, talked to each other, helped each other and provided for each other as best they could. It was a shared experience of devastation, and it bonded people together. Neighbors who had never met were suddenly the best of friends.

There’s something about sharing a common experience with other people that makes both the experience and the bonding unique. Women who have had babies, men who have fought in combat together, law students who have completed the grind and passed the bar. Sharing uncommon experiences links us in a special way. But it doesn’t have to be a hurricane or a war. It doesn’t mean you have to have a baby or graduate law school to share this grounding experience.

Actually, we connect to each other in many ways in our day to day life. If you are on this website, you share an experience with many other people. They are all part of the myhousedeals.com community and the real estate community in general. And they’re in pursuit of the same thing, financial independence.

We benefit from this connection in that we can turn to each other for help when we are in a jamb. We don’t have to be brothers in arms slugging it out with the Hun in order to reap the benefits of shared resources. We can just help each other. We don’t need a hurricane to bring us together, we can just do it. By our networking and being in contact with other investors, we have the benefits of synergy. The whole is greater that the sum of the parts.

So don’t wait for devastation before you reach out to other investors in the community. Share what resources you have, like this website. Share Realtors, inspectors, contractors, attorneys, title companies, etc. Let them know what you are trying to do and ask what they are trying to do with their investments. There’s no sense standing alone when there’s so much help available. It doesn’t matter if you are a process engineer or a cotton farmer, you need a network to rely on. Like grandpa said; “No matter what business you’re in, the best tool you’ll ever have is a big fat Rolodex full of names and phone numbers”.

Until next time, happy (and profitable) investing!

Doug Smith
President
myHouseDeals.com

I survived Hurricane Ike!!!!!!!!!

Wednesday, September 17th, 2008

Hey everyone!

Yes, I’m alive and doing well! Thanks for all of your calls and emails during this crazy time.

As many of you know, I live in Houston, TX. And this weekend, Hurricane Ike blew in and proceeded to cause more destruction than a bull in a china shop! Fortunately the MyHouseDeals.com staff, my friends, my family and I came out unscathed. And I haven’t heard of any deaths in Houston, although I’m sure there are a few. But Galveston’s a different story. That city took a BIG hit. And so did the Bolivar Peninsula. Please keep the people in those areas in your thoughts and prayers.

The hurricane made landfall on Saturday morning. And as of Monday afternoon, 75% of people in the Houston area were still without power. By some stroke of good luck, the power came back on at my house on Sunday evening. And it came back on at the office on Monday afternoon. So yes, we’re back in business!

Although my house has electricity, it is by no means “up to speed”. The 110 mph winds ripped dozens of shingles off my roof and threw them across my backyard and my neighbors’ backyards. (I’m sure they just loved that.) Soon thereafter, water … buckets and buckets of water … started pouring through the ceiling onto the floor my master bedroom. I bet I caught about 50 gallons of water over a 7-hour period.

But I couldn’t catch it all, so I have a lot of damage to my hardwood floors. And sheet rock is hanging from my ceiling … only because my fan is holding it up. The total bill looks like it’ll be … roof ($3,000), hardwood floors ($2,000), fan ($250), sheet rock work ($500), painting ($500). Total = $6,250. And that number could rise because who knows where else they’ll find water damage. But I don’t expect to be footing that bill because I have homeowners insurance with Farmers. And hopefully they’ll step up to the plate!

I have a lot of catching up to do here at the office because I missed two days of work, so I better run. But before I go, I’ll leave you with some pictures from my master bedroom, my backyard, and my neighbors houses. Just click on the image to view a slideshow. In the pic below, my dog Rocky inspects the damage …

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(Click on the image above to view more pictures.)

Until next time, happy (and profitable) investing!

Doug Smith
President of MyHouseDeals.com and Hurricane Survivor!

Foreclosure Part III – From the Owners’ Perspective

Tuesday, September 16th, 2008

Two weeks ago I started an in-depth discussion of the three different types of foreclosure. Last week I discussed real estate owned (REO or OREO) foreclosure and the week before I talked about pre-foreclosure and foreclosure. Now, let’s take a look at foreclosure through the eyes of the property owner so you can fully understand the options they have when facing foreclosure. This will help you to show them the benefits of working with you in the pre-foreclosure stage rather than undergoing the difficulties of foreclosure.

Owner Options

In general, property owners have seven options available to them when they’re in danger of losing their home or other property to foreclosure.

  • Loan forbearance/modification – This can be a strategy worth pursuing for property owners. In this situation, the loss mitigation department of the mortgage company may make arrangements with the owner to pay some of the back payments now and the balance within a certain time period.Here’s a typical example: John and Janet Smith owe $9,000 in back payments, attorneys’ fees, etc. Since the mortgage company doesn’t want the trouble and expense of foreclosure, it may accept $4,500 now and $750 per month for the next six months. Of course, the Smiths would have to resume making their normal monthly payments. A loan modification is a permanent change to their mortgage that may lower their payments, and the delinquent payments may be added to the mortgage balance. A loan modification or forbearance is easier to arrange prior to the mortgage company filing a foreclosure lawsuit. Some lenders will not consider this after filing, but it’s worth trying. Loan modifications are more common in FHA loans.
  • Reinstatement of the mortgage – As you learned earlier in this series, owners have up to and including the morning of the auction to catch up on their payments. So, if the Smiths have the cash, this is obviously a good solution.
  • Refinancing of the mortgage - It’s usually very difficult to arrange new financing when owners are already in default on their existing mortgage. If you can find one, chances are it’s rare and they’ll only refinance up to 70% LTV*. That means the seller must have a lot of equity*Note: “LTV” is an acronym for “loan to value” ratio. It’s the percentage of the property’s value that’s mortgaged. To get the LTV, you divide the mortgage amount by the lesser of either the appraised value or the selling price. Different lenders use different standards to determine whether or not a loan will be granted with a certain LTV. Commonly, owner-occupied residences will get loans at an LTV of 80%. Investment properties are often required to have a higher LTV. Here’s an example of an LTV for a home: The home is appraised at $400,000, and there’s a $320,000 mortgage on the property. So, $320,000 / $400,000 = .80 or 80% LTV.
  • Chapter 13 bankruptcy – This can be a viable alternative for property owners if their financial situation has improved. Filing bankruptcy prior to the foreclosure auction will stop the sale. Unfortunately, for most people it only postpones the sale for one or two months. Let’s use the Smiths again to illustrate how the bankruptcy process works: Immediately after filing a Chapter 13 Bankruptcy, John and Janet will have to file a repayment plan with the courts. This plan has to show that they have sufficient monthly income to pay basic living expenses such as food and utilities and other monthly payments such as credit cards, car payments etc. In addition, their income must be sufficient to resume making their monthly mortgage payments. All past due amounts are usually spread out between 24 and 60 months. For example, we know they owe $9,000 in missed payments, attorneys’ fees, etc. Spread out over 48 months, this would result in an additional $187.50 due each month to the court appointed trustee. So, if they feel they have the income to immediately begin repayment of all their debts and the court agrees, this may be a good choice for them to save their home.
  • Sell the home on the open market – This is probably the most under-utilized option available to owners facing the possibility of foreclosure. The fact is, selling their home will give them the most money in their pocket. Did you know that on FHA loans, the lender will postpone the sale and give them 90 days to sell their house?
  • Sell the home to investors – If efforts to save their home have been unsuccessful and time doesn’t permit selling their home on the open market or they just don’t want to, but want a quick sale with no problems, they can sell it to an investor – you!
  • Let the home be sold on the courthouse steps – Most of the time this is the worst option available to property owners. To be honest, I’ve experienced times when a house sold at auction for more than what I could have offered the owners. However, this is not all that common. And, as mentioned previously, owners can also face several expensive and embarrassing actions as a result of the foreclosure process — deficiency judgments, evictions, etc.

Folks, from all this information, I hope you can see how targeting the pre-foreclosure market is an excellent method of earning a profit and helping out home owners at the same time. With knowledge and professionalism, you can create a “win-win” situation for everyone involved!

To Fun, Fortune, & Freedom!

Tim Mai
Lead Mentor
MyHouseDeals.com

What’s Your Excuse?

Wednesday, September 10th, 2008

I’ve been active full-time in the world of real estate investing for over five years now. And during that time, I’ve seen dozens of investors go from dirt poor to filthy rich. But I’ve also seen dozens of investors who, well, stayed dirt poor. And what I came to notice over time was that those who never accomplished their dream of financial independence had one thing in common…

EXCUSES … PLENTY OF THEM!

I’ve heard ‘em all. “I don’t have time.” “I don’t have money.” “I have lousy credit.” “The savvy investors pick up all the good deals before I can get to them.” “Everyone just wants to take my money.” “I can’t find a mentor.” “I don’t want to make a big mistake that will make me and my family even poorer than we already are.” “Now’s not a good time to invest.” I could go on, but those are the most common.

I want you to take a good look at the list of excuses I just mentioned above. Do any of them resonate with you? If so, now’s the time to admit to yourself that you’re letting an excuse hold you back. And now’s the time that you start working each day towards finding a solution or a work-a-round to that problem. Over time, you’ll come to realize, just like I have, that there really isn’t a problem that can’t be overcome. There is ALWAYS some sort of solution. It just may look different than you initially anticipated.

Successful people don’t make excuses. They find solutions.

This fact of life isn’t just true for real estate investors. It’s true for all people, regardless of what they do. I was reminded of this a couple of weeks ago when a few buddies and I went to see Ronnie Milsap in a live concert just outside of Houston. For those of you who don’t know, I’m a HUGE classic country music fan. And an even bigger Ronnie Milsap fan.

Did you know that Ronnie Milsap has had over 40 #1 hits in his career? Some were on the country charts, and a good chunk of them were on the pop charts. He’s known for is vibrant and powerful voice and his excellence on the piano. He’s truly one of the legendary performers of all time.

But did you also know this? … RONNIE MILSAP IS BLIND! And he’s been that way since birth. Yet, in spite of this, he accomplishes more in a year than most people do in their entire lives. So next time you encounter an obstacle in your real estate investing career, keep Ronnie in mind. If he can overcome blindness to become a country music legend, surly you can find a way to buy your next property.

I’ll leave you with some pictures from the concert. My friends and I bought our tickets early, so we ended up getting the best seats in the house … front row, right in the center. Best tickets ever! These pictures were taken with no zoom. It felt like we were actually on stage. Ronnie, you rock!…

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Click on the image above to veiw the pictures.

For all of you who want to read more about Ronnie Milsap, just go to http://en.wikipedia.org/wiki/Ronnie_Milsap.

Until next time, happy (and profitable) investing!

Doug Smith
President
myHouseDeals.com

P.S. Want to take a short cut to real estate riches? Then let us deliver the hot list of “under the radar” bargain-priced properties to your computer screen each day. Start your free trial today by going to www.myhousedeals.com/freetrial and get access to $1,253 in free bonuses.

The Basics of Foreclosure – Part II

Monday, September 8th, 2008

I hope you had a great weekend! Last week I started this series about foreclosure; if you missed it, you can go here and read about pre-foreclosure and foreclosure. This week, I want to share with you some information about real estate owned (REO or OREO) foreclosure.

The REO Stage

This stage takes place after the property has been foreclosed, and it’s been taken back by the lender. The term “REO” stands for “real estate owned.” It’s also commonly known as “OREO” (other real estate owned). Typically, there are many of these properties available on the market, and, on the face of it, they might look like bargains. But a closer look reveals some real roadblocks to making a profit:

Roadblock 1: Most are sold through real estate brokers. This means they’re sold at full market value, so there’s little incentive for you to purchase one because there’s no real profit in it.

Roadblock 2: There are many rules you have to follow. Many lender-owned properties are HUD (Department of Housing and Urban Development) or DVA (Department of Veterans Affairs) homes. This means you’ll need to follow a strict set of rules that are enforced by the federal government. Plus, on other non-HUD and non-VA properties, you’ll have to follow the rules set up by the lender. In short, you could be facing a lot of hassles that you won’t face in the pre-foreclosure market.

Roadblock 3: You’ll need verifiable proof of funds. As in the foreclosure stage, no one wants amateurs with no money slowing down the sale process, so you’ll need to have funds on hand to pay the down payment and closing costs. You’ll also need to prove that you’ve been pre-approved for a loan to finance the purchase.

Roadblock 4: You don’t have the opportunity to do an inspection of important home systems. Many REO properties are vacant, and all important systems — electrical, heating/cooling, plumbing, natural gas, water, etc. — are turned off. This means you can’t inspect these systems. Since they can be extremely expensive to repair, you definitely don’t want to invest in a property without knowing their condition.

Roadblock 5: REO sales are final! All these sales are “as-is,” so if there are problems with the property, you’re stuck with them. Problems can range from environmental concerns (mold, asbestos, lead-based paint, etc.) to hidden structural damage. They can all be expensive to correct, and, legally, you have no opportunity to seek compensation from the seller.

From the above information, you can see why I feel the pre-foreclosure stage is the best area to target. It offers the greatest profit potential, the fewest hassles, and the least amount of risk.

Next week, we’ll take a look at foreclosure through the eyes of the property owner so you can fully understand the options they have when facing foreclosure. This will help you to show them the benefits of working with you in the pre-foreclosure stage rather than undergoing the difficulties of foreclosure.

To Fun, Fortune, & Freedom!

Tim Mai
Lead Mentor
MyHouseDeals.com

News Flash: Money Won’t Make You Happy

Thursday, September 4th, 2008

Yep, that’s right. Money WILL NOT make you happy. No amount of money will. That’s what I’ve come to discover over the last few years as I’ve gone from nearly dead broke to earning and spending more than any reasonable person should.

It’s our family that makes us happy (sometimes!). Our friendships. The little things that make us smile or laugh each day. The excitement of watching our favorite sports team rally from behind. Or being totally immersed in a great live concert. It’s having meaning in our lives. It’s so many things. But simply having a lot of money is not one of them.

Here’s another secret. Even though money won’t make you happy, it will most likely make your life MUCH EASIER. So if you’re an unhappy person, it will make you an unhappy person with an easy life. And if you’re a happy person, you’ll smile and laugh your way all the way down easy street.

By “much easier”, I mean that you can choose to work less and play more. You can hire people to take care of your house, your business, and your kids (on occasion hopefully!). You can use this free time to do whatever you wish. You can give back, pursue your hobbies, spend time with family and friends, and so much more.

And THAT is why obtaining financial freedom is such a worthwhile goal, even when money itself won’t make you happy.

With that in mind, here is a glimpse into my world and how I spend some of my free time. The pics below were taken last week while I was in Seattle for seven days playing in a national softball tournament. If I were still working at ExxonMobil, this trip wouldn’t have even been possible.

There were 34 teams, and we finished in 5th place. Early on in the tournament, we beat the team from Boston that ended up winning the whole thing, so we think we can take first place next year. For now, we’re satisfied with our 5th place finish. Click on the image below, and enjoy the pics!…

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Clicking on the image above will take you to the pictures on Shutterfuly’s website.  Once you are there, click to “View Album” and then click to “View Slideshow”. Once the slideshow starts, click on “Options” in the top-right corner, and select to view Titles and Captions. Enjoy!

Until next time, happy (and profitable) investing!

Doug Smith
President
myHouseDeals.com

P.S. Kick start your journey to financial freedom with a free trial to myhousedeals.com. Get access to hundreds of wholesale deals and motivated seller leads in your area, plus $1,253 in free bonuses by going to www.myhousedeals.com/freetrial now. See you there!