The Urly Bird

There is so much fraud out there!

It might be you - it might not be you!

But there is so many fake deals being floated around on the internet. It seems real estate agents are the best at knowing their client because they are licensed - have to put the deal in the MLS and take drivers license to verify that they are.. ok.

It’s scary. And it can waste your time - years! Some people have wasted years - 7  years - on fake clients - buyers or sellers - whatever you want to call them that you are in the middle of putting together a deal on to make a lot of money - on the internet.

I think it’s tough and want to solve these problems - but you ultimately have to use your own discretion when determining whether a buyer or seller is real and right for you to represent and bring to a negotiation or to the marketplace.

When I say real I mean that they don’t forge documentation. It might look real, with the real names on it - but they might not be. It’s easy to get excited about a big commission or assignment fee if you are wholesaling.

In investments it’s good to interview your client to know what they are a good fit for before placing them with their investments.

In the marketplace, it’s good to know that the buyer or seller that you are bringing to meet other buyers and sellers or real estate agents and investors are real - with I.D., title or deed, and even possibly the much toughted bank statement proving funds in the bank that they are for real and serious. Otherwise, you can end up wasting a lot of time! - and everyone else’s. Not to mention committing a fraud and not get paid.

When I talked to a real estate agent this past week she said she does a lot a work verifying whether her clients are real and that not everybody does this - So you run into a lot of people on the other end of the deal that can’t prove that they are real when negotiating online wasting your time.

What have you done to know your client better?

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I think it’s fun playing Monopoly.

When I was a kid I played my first game of monopoly and was fascinated by trading money, getting the best property on the board and ensuring that the cash flowed or else you’d end up out of the game.

Access The Flock is a lot like playing Monopoly. When you use it regularly you end up with lots of trading partners - properties and cash buyers! 

You can see what everybody holds and make a deal.

I like to start out by searching the buyers or sellers list when I have a deal - or used to when I was researching how to setup the marketplace for everyone! That way you have a buyer or seller in the location where the person you are dealing with is looking and know there’s a deal. it’s a really exciting feeling when you feel like you can connect the people, the buyers with the sellers; It’s a lot like playing Monopoly!

But you know this - you do it all of the time!

There’s lots of buyers and sellers on Access The Flock.

I want you to make lots of money.

When you get a buyer or seller, bring them to the marketplace and see if they allow you to access the right buyer or seller in real time.

Then, you can close the deal - just like in Monopoly.

Have fun!

When was the last time that you played Monopoly?

Betas - in finance they are everything in the modern economy and trading - I think so anyways for investment making purposes and decisions.

So, why don’t more investors that invest in real estate use betas to size up their real estate investments?

I think that it’s because Rich Dad’s board game Cash Flow doesn’t include betas when making purchases and deal decisions. 

Cash flow is nice and all but is it worth the risk; The deal could blow up in your face - could you make more money elsewhere without the hassle?!

Only astute investors know the answers to those questions. And they use betas in finance to figure it out.

One paper argued the use of betas in real estate as real estate on a national level, in the US, is performing more similarly to stocks and bonds in that you can more use betas for calculating what rate of return you should be getting on your investments when purchasing and holding.

These are the real estate betas for different markets and asset types that can be used for calculating how much of a rate of return you should be getting on your cash when making an investment - otherwise invest in paper assets - or something else!

I encourage you to find your markets and assets and determine whether you are getting the right return for the beta of those assets!

"The paper concludes that the best way of estimating a private market risk premium for real estate in general within the overall capital markets is through the use of the NAREIT Equity Index.” 

This is the performance of property by asset type - like residential. With high end beta of about 1.5 for the riskiest of assets you should expect about a 10% rate of return on your cash.

Do you think that you can beat that rate of return on a consistent basis through investing in real estate or should you invest elsewhere? 

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Why do you look for discount value - how much a property or note is discounted from regular market value - and not the cash flow generated from the real estate via cap rate?

I don’t know - but I have a guess!

You are REITs and hedge funds and want to have enough spread to make money and provide yield to your shareholders when you flip your real estate to charities. That may be true - it may not be. But when I spoke and emailed one Acquisitions Manager for a REIT/hedge fund - that’s the impression he gave me when he was deciding whether he wanted to deal with me to do a deal and take the deal to due diligence after meeting the seller.

I just don’t know. I was taught in business school to look at cap rates and last night at the monthly Edmonton Real Estate Investors Association we were taught about investing in apartment buildings - it’s all about yield and cap rate - comparative to bonds.

Why do you look for discount value - like this deal is 70 cents on the dollar. No wait! This one is better it’s only 35 cents on the dollar. (I omitted discount value in the marketplace because it’s no longer a key metric used for matching.) I know wholesalers look for discounted property because they want to make a profit margin on their contracts - make a spread when they buy low from the seller and sell high to the buyer - but leave enough room that the end buyer can still make enough money rehabbing the property.

I think discount value is used for flipping real estate and cap rate is used for buy and hold situations.

Do you think that deals should have cap rate or discount value when first evaluating them?

Real estate agents are a dime a dozen. No offence to my email list - who are primarily composed of real estate agents and real estate investors. I mean that the market has low barriers to entry so there are a lot of them. They are still valuable - especially to me - and the general public!

Realtors have to find deals just like anyone else to make a living and a career out of real estate.

How Do Real Estate Agents Find Deals?

They:

• Focus on a smaller market to become the expert in the area
• Hang fliers on doors
• Send mailers or direct mail
• Tap their network/database of contacts/CRM or excel spreadsheet.

This is according to REALTORMag.

So what’s stopping real estate investors and wholesalers to find deals the same way that realtors do. Don’t they want to become the expert in the area and get access to below market value deals before anyone else so that they can make money?

I think that it boils down to professionalism. Let me explain. I read one post on how bad wholesalers are professionally relative to real estate agents. How come wholesalers get such a bad wrap? I met with a really professional wholesaler for lunch who is a coach he does so well. I do not think that all wholesalers are like him. I think that many wholesalers try to be gangster.. It’s all about the cash.. That’s cool but there is still professionalism: treating people with respect, building trust/rapport for deals etc. You know? 

I think that if you focus on your brand and reputation you could legitimately get better deals because you will be trusted in your target market. It takes consistency of message - but you can do it.

You Can Find Good Deals With Virtual Real Estate Investing Too

It takes time but:

• Set up a website capturing leads
• Turn your website into a hub
• Close the deals

With these tips, you can compete with any realtor in finding deals - and partner!

What do you think of my tips; Are they realistic?

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Many of you are real estate wholesalers and have buyers and sellers that you do deals with. You have databases of buyers and do direct mail to get sellers. One of the biggest challenges of a real estate wholesaler is marketing costs. Access The Flock Real Estate Marketplace can help subsidize your marketing efforts by allow you to access buyers and sellers in the marketplace when you are flipping contracts. 

For less experienced real estate wholesalers I’ve prepared a slide presentation on the steps; I find it’s good to have a visual reference to go back to when you are training someone or are in the middle of a deal and want to know what you should do next to get to closing and collecting all of your money. This can also be used if you are more experienced - so don’t worry!

Step By Step Wholesaling Real Estate Deals Presentation

I don’t know.

At first, many investors might not consider using hard money loans for their own investments. But as time goes on, many investors want to start using hard-money loans so that they can get property. They get rent from the property that has been mentioned - when they are profitable - and this cash could be lent - turning investors into lenders.

I think that it’s possible to acquire homes for below market value when homeowners default because the courts price it for a foreclosure price in some jurisdictions and, as a lender, you have first option to buy - I believe. 

Is it ethical for investors to lend on mortgages?

There is conflict of interest for an investor that wants to acquire property at or below market value when they are lending their money on mortgages which could default -  if the investors are predatory, targeting to make loans that could default.

However, on the other hand, if your clients are the same people it’s good to have multiple solutions available to offer them if you are good hearted. You could help keep defaulted borrowers in their home.

What do you think?

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Here is a list of the 20 hottest housing markets for May 2016.

There are deals in:

Dallas, Texas

• $21,600 - A Grade Properties in Texas

Los Angeles, California

• $20,000 - REO

Typically, in hot markets the prices have been pushed up by buyers competing for the deals and housing. But, real estate agents and investors have left a few hot deals for you in these markets that are easy to get into. Just access the seller on Access The Flock.

What has been your experience in these markets? 

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You’d think that your buyers could be locked out of buying good deals with prices appreciating 10% in some markets like Denver and Seattle. But the fact is, chances are, they probably already own the properties that have appreciated - and are benefiting from the price appreciation. A lot of investors got in after prices dropped in 2008 early. And own these properties.

There is less inventory on the market today according to Trulia’s Ralph McLaughlin and Access The Flock is seeing more buyers relative to sellers lately - making it harder for buyers to get into the market. Buyers are competing bidding the prices up. Over 5 years, home prices could appreciate further as employment rates stay strong at 5%. So, if you get in now you could benefit from further appreciation.

There are some markets that could be due for a price correction like San Francisco. But, then again, it could remain a hotbed for a few years.

Do you have repeat buyers that are benefiting from price appreciation?

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I don’t think that it’s a very good thing..

Foreclosures have increased in some states year over year in 2016

What can we do about this besides help people get their homes back and make lots of money doing it? Nothing. 

Let’s close some deals..

Where are the foreclosures? What states are the foreclosures in? Where do I need to get my clients - buyers and sellers - to close in these areas? How can I make lots of money buying well below market value deals for myself and my clients?

I think that you can find a few buyers and sellers in New York on Access The Flock Real Estate Marketplace.

The state of New York has rising foreclosures year over year

Bank owned and auction foreclosures are up year over year in NY.

I have well below market value properties on my sellers list:

Check these out:

NY

BUSHWICK RENTAL APTS !!!

4 Buildings in Crown Heights Bklyn

60 units -manhatten

Reo in New York

U.S. Headquarters for a Worldwide Bank

NYC Hotel Asking $240M

Now, I don’t know if these are all real.

You can access these sellers on Access The Flock.

Good luck.

Please let me know how your deal closings have gone in the comments below.

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