Michael Vazquez has been acquiring and selling investment properties since 2004. For years he provided investors with amazing wholesale deals that made them loyal investors. Eventually, Michael began investing in those same deals and partnered with his long time investors. In 2012, Michael founded Venture Realty, a real estate brokerage that caters to everyone, especially investors, builders and developers. He now mentors, consults and joint ventures with fellow real estate investors, leads a knowledgeable and talented acquisitions team that provides him and his investors with great deals month after month, and teaches every day people how to invest their 401K, self-directed IRA, CD, etc. in real estate without lifting a finger. When it comes to investing in real estate he has done much more than many twice his age.
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If you are a smart investor you read and stay up to date with the market. But as you read, you find that different people have different opinions as to why the real estate market has shifted, which range from the presidential election, the stock market, the price of a barrel of oil, employment reports, changing interest rates, etc. The fact is, all these are intertwined and they all have a chain reaction effect on real estate. While you cannot make a huge immediate impact on the direction of any of these factors, you can make changes in your game plan for investing in real estate in the New Year.
As we all know, the real estate market is cyclical. The majority of last year the market was at the height of its cycle. At the end of the year to present the market has begun to cool down or at least level off. Investors are no longer purchasing houses expecting one sales price and selling it for a much higher price because it “appreciated” while it was being renovated. Today investors are selling their investment properties for the original after repair value they had projected or a bit less if the renovation was not up to par. This has become the new norm. With that said, there are still a few sub markets in each of our markets that continue to sell fast and for record prices. However, those too will eventually cool down. I have mentioned many times that it is best to purchase investment real estate based on today’s values not anticipated appreciation one cannot control.
Here are a few items I would recommend when investing in real estate in today’s market. Read More >>
The number one question that new investors and/or wholesalers ask is, “How do you find your real estate deals?” Many times I think they are searching for some sort of magic secret that leads to an unlimited supply of investment deals, but we all know there is no such thing. However, they are surprised to know that there are many ways to find deals that take little to no money but does take time and discipline.
If you have ever been in a sales position the first thing trainers ask you to do is write down everyone you know that can help you. The great thing is that you already have multiple lists in the palm of your hand, literally. Everyone in your phone contact list can be a potential seller or know someone that is selling their home. In addition, you may have social media outlets such as Facebook, twitter, google+, LinkedIn, etc. that each has more and more people that can assist you in finding deals. By only reaching out to these lists you may come across a few real estate investment opportunities that you like. All these leads at your disposal and it did not cost you a dollar. You might think that there will not be a distressed seller in your network, and while that may be true they might know someone who is. Simply telling everyone you know you are looking for investment real estate will lead to finding a deal. Read More >>
Entrepreneur’s minds go a hundred miles an hour in many directions. This can be great at times and at other times not so great. In the case of real estate investors, it tends to be the latter. Real estate investors have a habit of learning how to make money in one aspect of real estate investing and then another and then another etc.
Before the investor realizes it, he/she is just doing what comes easiest and not considering the most profitable exit strategy. Or worst, the investor has not fully learned one strategy and is not maximizing profit. How can you solve this issue? FOCUS!
Investors usually progress in the following order: bird dog, wholesaler, flipper, landlord, and lender. This is not mandatory but it tends to be a natural progression for many. At the beginning bird dog will usually only bird dog because it is all they know how to do. Naturally, by being in the real estate investing community, they begin to learn how to wholesale.
At this point, the wholesaler will still be pretty focused but then he/she begins to buy-fix-sell properties. This is where it gets tricky. Should the investor wholesale a property he/she finds or invest in the property himself/herself. This question comes up every time the investor puts a property under contract.
Then after a few homerun deals the investor decides it is time to begin keeping a few homes as rentals. A few months go by and now the question to wholesale, fix-sell, or fix-rent begins soon after placing a property under contract. Read More >>
In many past articles I have stressed the importance of knowing the current real estate market. You should take note when property prices are rising, falling or plateauing. If you are a flipper, is your inventory selling faster or sitting on the market longer? If you are a wholesaler, are you having to work harder to find deals or have you suddenly found an abundance of deals? Are the deals you are finding getting easier or harder to sell? If you are a real estate agent or work closely with one, is his/her listing receiving multiple offers and flying off the board? Or are they sitting on the MLS with a few showings here and there? These are questions you should always be asking as a real estate investor.
One can always pick up an article or see a news report about what is going on in real estate but it is usually a report of real estate as a nation not just your market place. Most realtor associations have monthly reports that are helpful but they are not out until the middle of the following month. As an investor, even these reports may be too late in providing the information. If you are in real estate or plan on being in real estate you must keep your finger on the pulse. If you are doing plenty of business you will feel the change in the market and can begin to prepare for it immediately. However, if you only dabble in real estate, you might not know what is coming around the bend. If you dabble or are just getting started make sure to network with people that are full-timers. If you find a deal you plan on flipping or holding on to for a rental, discuss it with a veteran investor. They can mentor you on the best option and possibly keep you from making a mistake. Read More >>
As a real estate investor you must always adjust to new market trends, rules and regulations. Recently, as any good investor should know, the industry has been having to make some changes due to the TILA-RESPA Integrated Disclosure rule. These changes have and will continue to affect any person closing a property involving an owner occupant loan.
Investors that renovate properties to sell will need to add at least an extra month or two of carrying costs. Why? Well, while not going into too much detail, all HUDs will need to be approved by the buyer and underwriter at least 3 days before closing. In reality, this will mean that the delay may be as many as 6 days because we all know how long underwriting can take. Some investors may not know this, because it is normally not enforced, but currently buyers are supposed to receive a HUD 2 days prior to closing. However, the norm for most closings is having a HUD prepared the day or evening before or the morning of the closing. I have even witnessed some buyers and sellers not receive a HUD until minutes before closing. This way of doing business will soon be gone and I for one like this part of the change. Originally the changes were to be enforced in August but the enforcement date was changed to October 3rd. Therefore, make sure your lenders and title companies are ready for these changes and do not delay your closing any more than needed. Read More >>
Wholesalers send me deals daily but I have started to notice that many of these wholesalers are wholesaling another wholesaler’s property. Before proceeding, I want to be clear that I have no issue with this but there is a right way and a wrong way to go about it. Also, understand that if a buyer/investor receives the same property from multiple sellers he/she will contact the seller with the best price. Wouldn’t you? Keep in mind that you did nothing to acquire this property. You merely sent it out to a buyers list you put together, which with today’s technology takes only a few minutes. So what should you avoid and what should you do when wholesaling a wholesale?
Let’s list a few of the major DON’TS:
Anytime real estate investors get together the question immediately asked is, “How is your buying/contracting going?” What they are asking is do you have a good amount of leads coming in, where are those leads coming from and are those leads any good. Of course, mostly everyone says they are doing great. Personally, I like to “keep it real.” If leads are low I admit it because I know that they will eventually come in. Meanwhile, I continue working and following up with all the leads in the pipeline. The follow up is what keeps a real estate business, or any business, consistently profitable.
In real estate, you are not going to crush it week after week, month after month. Real estate fluctuates and what works one day may not work the next. The key is consistency. If zero seller leads are generated one month from mailers, it does not mean I stop sending letters, it just means mailers did not generate leads this month. The same can be said for internet marketing, bandit signs, networking, flyers, etc. As a real estate investor you must always market through as many avenues that provide the greatest returns. In some markets bandit signs may generate lead after lead while in other markets you get zero calls. I usually test out new marketing strategies for about six months. During those six months I keep records of the cost, leads coming in, appointments set, contracts signed, number of closings, and of course profit. This lets me know if the marketing is working or not. It also lets me know if the lack of closings is due to the marketing or the people receiving the leads. If people are clogging the deal pipeline it may mean they need more training. In other words, make the adjustments where they are needed to convert more leads. Marketing will always require tweaking and more tweaking just when you think it is “perfect.” While all this is helpful and profitable the number one cause of profit is in the FOLLOW UP. Read More >>
Many people get into real estate, a few succeed, and others decide real estate is not for them. There are many roles a person can take on in real estate but being an investor requires the thickest skin. An investor faces rejection daily, is essentially profiting from other’s misfortune, and depending on the level of the investor, can be risking thousands of dollars.
As an investor, rejection sometimes comes as a simple NO and other times it comes with plenty of four letter words. Why does this happen? Well, you are or should be attempting to negotiate a purchase price low enough to make a profit. At the same time you must make sure you can validate the offer and can explain it to the seller. When you just give a seller an offer that investors give, the seller is usually quick to say NO. Many sellers do not look at their properties from an investment stand point but are emotionally tied to the property. This causes them to take an investor’s offer as an insult. When the seller takes an offer as a huge insult, the seller may do a number of things from hanging up to lecturing you about how the offer was so insulting, to yelling. This is where negotiation skills come in to play. You must have thick enough skin to let all this go and, if given the opportunity, explain the reasoning behind the offer. I have seen newbies and veteran investors both lose it, get into an argument, and as a result lose the deal. I have always said, “Lose your composure, lose the deal.” Read More >>
In many markets, properties are receiving multiple offers within days of being listed. This includes retail listings, foreclosures, short sales, etc. As long as the list price is remotely reasonable the properties are going into highest and best. This is not an ideal situation for investors because it means they may need to pay a higher price to be competitive. This can also be true for unlisted properties because all buyers, including retail buyers, are looking everywhere for their next purchase.
A solution to this problem can be solved by using wholetailing. What is wholetailing? It is selling a home for a price above the wholesale price but below the market retail price, maybe even at the market retail price in some cases. Typically these properties need mostly cosmetic or smaller, less serious repairs and/or updating. For this reason the seller is not willing to sell it at a wholesale price. As an investor you can close on the property at a discount, but not as low as a wholesale, and rehab it relatively fast. Once the property is ready you can advertise it at a profitable price below market retail value and get it sold fast if priced right. Some properties may need nothing more than just a deep cleaning. The targeted buyers are investors that may be looking for a rental property with minimal to no repairs and/or owner occupant buyers that are looking for a deal and not afraid of doing some sweat equity. This allows the investors to rent the property immediately to begin cash flowing ASAP. Owner occupant buyers already save thousands buying a wholetail property but they can also increase their equity if they decide to update or remodel the home to the property’s full potential. All these situations create a win-win all around. Read More >>
Like most investors, I too send out yellow letters to distressed homeowners. Obviously, the intention is to find a property that can be acquired below market in order to make a profit. In most cases the properties that are contracted are either sold as a wholesale deal or are purchased to be renovated and sold. In a few instances the opportunity to contract a property subject-to presents itself but this situation is not usually what you expect it to be. Let me describe my most recent experience with a potential subject-to situation.
Most investors already know what a subject-to is but for those that do not let me give you a simple explanation. A subject-to is when a homeowner deeds the property to the buyer but the mortgage that the homeowner has remains in place. When the buyer is deeded the property he/she now owns the home “subject-to” the existing mortgage. In other words, the buyer will begin to make the mortgage payment or find a renter or new homeowner to do so in order for the buyer to one day own the home free and clear. Read More >>