South Austin Real Estate Investment Training

March 26, 2007                       Day One

I live 30 minutes north of them so it was very convenient for them.  We had initially visited the Thursday before to go over the week, game plan, and the required homework.  I was able to help them find a NOD list of 325 names that encompassed the surrounding three counties.  We discussed what their goal was with this list and who they needed to contact to work with them as their team. 

Day one started off with me meeting Ruben and Romelia Weaver at their home in south Austin at 8:30 am.  They were excited to get started and had worked to get out over 200 NOD letters in which they were using the “yellow letter” campaign that they had learned from John MacNeil during one of Ron LeGrand’s events.  They had also already received several phone calls from their letters and had scheduled one appointment for later in the day.  We immediately got to work to look over the previous notes from their earlier calls and role played on how to handle the calls.  We called these contacts back and were able to set up 3 more appointments later in the week.  By 10 am we, were back on schedule and discussed visiting the county clerk, zoning, and courthouse.  Ruben and Romelia were already used to using the online access to the clerk and county appraisal district to research probate, divorce, and foreclosure listings.  We decided as a group to forgo making the trip to the courthouse and zoning office as they had already visited these areas before and due to the fact that the foreclosure auction only takes place in Texas on the first Tuesday of each month. 

We continued to focus on Ruben’s goals of acting more as a deal broker and began to discuss how he could go about attracting buyers and wholesalers to him.  Ruben showed me his website that he had put to work after visiting Alan Cowgill’s private money seminar.  Ruben had already received several leads from his website, but did not know how to proceed or how to attract a greater amount of leads.  We talked about him possibly posting a few adds in the classifieds.  I informed him and Romelia about the real estate section of Craigslist.  They immediately jumped online and posted a “Handyman’s special” and a “No Bank Financing Needed” ad.  After posting the add, we discussed how they could put buyers and sellers together and the paperwork and diligence needed for them to repeat these on a regular basis.  After roll-playing for a few minutes, we prepared some information needed for our 1 pm appointment and headed to lunch. 

After getting a quick bite to eat, we met our appointment, James Hurt, at a local Dairy Queen in Dripping Springs (10 min east and growing rapidly).   We found out that Mr. Hurt had recently lost his 16 year restaurant and his 3/2 mobile home on 2.1 prime acres was going to foreclosure.  We found out that the 2^nd line holder was the one foreclosing at that he only owed about $36K ($7k first, $24K second, and $5K in taxes) on his property that he was only asking $65K for (appraised around $100K).  We also found out that he had originally signed a sales contract with another buyer, but that the deal had just fallen through.  It was an easy close, and he was willing to work with us on the same conditions.  We gave Mr. Hurt an authorization form and RE sales contract to have his wife signed and we agreed to start the process first thing Tuesday morning after we received his signed documents.  After Mr Hurt left, we discussed several options for Ruben to proceed with the equity deal.

After our meeting we drove back to their home, taking time to look at the area to uncover and find other vacant/ugly/fsbo properties.  We got back to the house around 3pm and were excited to find 10 emails from their Handyman and No Bank financing ads.  We immediately contacted the potential buyers and wholesalers and visited with them via conference call to find out exactly what each one was looking for, and the price range, payments, and opportunities that we might be able accomplish with each.  After about an hour of visiting with the leads, Ruben pulled out another couple of leads that he had received via his website and we looked through them to identify some opportunities.  One deal in particular was a 2/2 condo on the University of Texas bus route that the seller was willing to let go at 82% of the value.  She had been unlucky enough to have hired a horrible management company that was only able to lease the property 3 months out of 2006 and only collect 75% of the mortgage payment as rent.  While we were discussing marketing the deal to his new list of buyers/wholesalers, we received a couple phone calls from a realtor and hard-money lender that Ruben had contacted.  We schedule appointments with both the following day.

We also discussed options for Ruben to make more money taking down both deals (equity and condo) himself quickly with hard money, subject to, or with conventional financing and then either selling the properties to investors, or offering owner financing and then selling the first note (to SMI) and carrying the 2^nd for cash flow.  I went through the scenarios twice so that they could both completely understand the options that they had available.  We decided to let them think on it for a day and see if both potential sellers would provide us with the info that we requested from both of them. 

Around 5pm we discussed what we had accomplished for the day and discussed what we needed to get back on track with.  We called two more realtors and set up appointments with both for later in the week, along with scheduling a time to visit with Boyd Popps (mortgage broker) the following morning.  We contacted Boyd as a third contact for loans in case Bob or myself were not available to help him with his conventional financing due to travel conflicts.  We also received a phone call from Brandi Fleming at Gracy Title to let us know that she would not be able to meet this week due to it being the last week of the month.  We agreed to meet for lunch one day the following week, and she informed us that she would set Ruben and Romelia up with online access to request their preliminary title reports and Hud-1’s free of charge.  We ended the day with us roll-playing on some FSBO calls from the newspaper and planning out our day ahead.

March 27, 2007                       Day Two

Tuesday started off with me arriving at Ruben and Romi’s home at 9 am.  I found out that Ruben had made some phone calls to FSBO’s the night before and was able to touch base  with two of them who were interested in his ability to help them owner finance their properties.  They had also worked to get another 50 NOD letters out as well.  We immediately got to work on getting our paperwork together on two NOD appointments for the day.  Around 9:45 we left their home to meet with a mortgage broker, Boyd Popps.  Boyd contacted us on the way that he was running behind, so we stopped by Gracy Title company and visited a few minutes with Brandi Fleming.  Brandi was extremely busy with it being the last week of the month, but was gracious to take some time and introduce herself and made Ruben and Romi at home with calling her to request HUD’s, preliminary title reports, and anything else that she could do for them. 

After our short visit with Brani, we headed to a nearby Starbucks to visit with Boyd.  Boyd answered all the questions that we had for them, and he offered to send a prequal letter to them to help them out before we ever got the opportunity to ask for one.  Boyd also discussed some of the requirements that had changed along with the upheaval in the subprime market recently.   We ended our meeting with Boyd and were fortunate enough to run into Jayme Kahla as she was wrapping up a visit with a couple of her clients.  We visited for a few minutes with her and we were out the door again. 

While we were traveling back to Ruben’s home, we received a phone call from a wholesaler by the name of Clarence.  He was inquiring about our Handyman Special add.  After visiting for a few minutes, we found out that Clarence was also a mortgage broker and a part-time real estate investor.  We visited with him on what he was looking for and we discussed Mr. Hurt’s deal along with the 2/2 condo deal.  He asked us to send him some more info on both as he was interested in both.  After our conversation with Clarence, we headed to lunch. 

After lunch, we headed to meet one of our short sale appointments.  We met with Gloria Vasquez who is out of Manor.   Her home is worth about $130K, and she owes around $129K.  After visiting with her for a while, we were able to close her and we gave her the forms to have her and her husband sign and initial to allow us to start negotiating with Chase Bank.  We then headed to meet with a realtor with Keller Williams by the name of Jo Ann McFarland.   She showed up on time, but it was immediately apparent that she is not interested in working with REO’s, Hud’s, and short sales.  We talked briefly with her after uncovering this fact, but we she stated that she would pull some lists off of the MLS and send some listings to Ruben.  We were able to uncover that she had a few clients that could not qualify for traditional financing that she would send to Ruben.  We headed back home and we received a phone call from James Hurt letting us know that he had faxed back his authorization form.  We also received a phone call from another realtor interested in working with investors and were able to set up an afternoon appointment on Wednesday with her.  After visiting with her, we realized that we needed to head to North Austin in order to make it in time for our 4 pm appointment with Maria Palson.  

Ruben and I arrived at the location directly at 4 pm.  We waited around 15 minutes, to no avail.  We then called the number that we had written down which turned out to be disconnected.  We then decided to go ahead and swing by the house and see if anyone was at home.  We found the home and door knocked.  We were greeted by several woman and when we mentioned that we were looking for Maria, they looked confused.  When we mentioned who we were, Maria peeked her head around the corner and came to the door.  We visited with her briefly, and she eventually invited us in.  It turned out that she was running a Home Health care or Hospice in her home.  There were at least 10 elderly people in Beds, wheelchairs, or around tables.  We visited with Maria, and found out that she was in foreclosure, but that she had just filed bankruptcy a month ago.  She asked us what we did and through our conversation we found out that her mortgage company was still willing to accept a offer to avoid the upcoming (7 days) auction.  After discussing with her for a few minutes and easing her nervousness, she agreed to allow us to contact her attorney who had the name of the bank trustee.  Ruben did a great job building repoir with the client and we left with a signed authorization form.  I realized that I had visited a few weeks ago with her attorney, Bryant Berry.  We called his office immediately and left a message for him to call us back early the next day since it was already after 5 pm by the time we were headed back home. 

It took us over an hour to get back to Ruben’s home and during this time, Ruben and I discussed options for each of the deals that we had discovered, along with exit strategies and potential offers on each of the properties.  Ruben also brought up the fact that he wanted some insight on how he could market 3 vacant lot’s that he had purchased a few years ago in the Marble Falls area that were near Lake LBJ and the Marble Falls golf course.  We discussed several options during our stint weaving in and out of Austin’s rush hour traffic.  We arrived back home around 6:15 pm and began plotting the next day’s appointments and schedule.  We agreed to try and meet around 8 am to get a head start posting a few adds on the deals that we had found along with faxing over both authorization forms on Mr. Hurt and Gloria Vasquez’s potential deals.  I talked with them about what they needed to do for home work and left their home around 7:15 pm.

March 28, 2007                       Day Three

Day three started with me arriving at 8 am to get a head start on the short sale negotiations.  We started off by contacting the bankruptcy attorney (Bryant Berry) that was handling Marie Polson’s foreclosure/bankruptcy.  Mr. Berry gave us the information to reach the trustee with Chase who was in charge of her file.  We contacted them and immediately faxed in the authorization letter.  We also faxed in an authorization form to Chase that Gloria Vasquez had faxed us.  This brought us up to around 10 am.  We headed out the door to meet Paul Duhamel with Noble Lending.  Paul is a hard-money lender in the area who is also a wholesaler and commercial broker.  Paul outlined what Noble was good at and gave Ruben some information sheets and prequal forms.  Paul also mentioned the fact that they would pay a referral bonus for any deals that fit their 70-75% market for his own personal flips. 

After our meeting with Paul, we headed out the door to meet Margie and Cole Arnold.  Margie called us on Tuesday in regards to the yellow letter that they had received from Ruben.  They owned a 3/2 mobile home on a half-acre in Buda.  It was the land holder (Aus-Tex) who was actually foreclosing.  As it turned out, they were only behind by two payments and were planning on moving the mobile home to a different lot in a community.  Margie informed that they were planning on heading down to the office and paying what they were behind on.  Ruben handled the discussion for the most part, and quickly adjusted to the fact that they were not that motivated.  We ended the meeting by giving them our cards, and then we headed to lunch. 

After lunch, we got back to their home, and starting calling Chase to discuss both Gloria Vasquez and Marie Polson’s deals.  Chase had not updated their accounts to reflect the authorization notice on the Vasquez file, but they did reflect it on the Polson file.  We were transferred to the individual handling the Polson case, but were prompted to leave a message.  We then called Bank of America to work on the James Hurt file, but we were also forced to leave a message.  Almost as soon as we hung up, Ruben’s cell phone rang from the lady who had contacted us regarding the 2/2 condo in east Austin.  Ruben placed her on speaker and the three of us began to discuss options for her deal.  We discussed her offering owner financing and holding onto the property for a short time, which would allow her to have positive cash flow along with receiving a substantial payoff in 2-5 years.  She was extremely interested and wanted us to send what we discussed in an email so that she could discuss it with her husband.  Once we got off the phone with her, Ruben then received a phone call from Bank of America.  They were calling to notify us of the fact that they were delaying James Hurt’s foreclosure 30 days.  Ruben and Romi were excited and Ruben was even more excited after he called to give the good news to Mr. Hurt.  Ruben then arranged a time with him over the phone to swing by the next day and take a look at the 2 acre, 3/2 mobile home in Dripping Springs the next day at 8 am. 

We were then getting ready to leave around 2:30 for our 3 pm appointment with a realtor when she called us to inform us that she would not be able to meet us after all.  She requested an opportunity to meet us next week some time if allowed.  Ruben agreed to give her a call and schedule something on his day off on Tuesday.  She did agree on the phone though, that she would love the opportunity to work with investors and agreed to send a few short sales and Hud’s Ruben’s way for our review.   Around the same time, Ruben received two more phone calls from individuals inquiring about his letter.  It turned out that both of them were realtors looking to sell their clients property at full market price.  Ruben thanked them for their phone calls, but informed them that he was a real estate investor and not a normal buyer.  Ruben’s confidence on the phone has grown dramatically each day and with each phone call!  His comfort level and question asking skills have grown immensely and his ability to set an appointment or recognize an opportunity has started to grow as well.  During the rest of the afternoon, we spent deal structuring and focused on percentages, offers, and phone scripts.  Ruben and Romi were both tired and suggested that we head to dinner around 6 pm.  So, we piled into the car around 5:30 and spent a good 45-60 minutes battling traffic until we arrived at Mesa Ranch for dinner.

March 29, 2007                                   Day Four

Thursday started off with us meeting around 7:30 am to head out to James Hurt’s property.  We arrived at the property and Mr. Hurt gave us a tour of the acreage and the property.  We spent about 20 minutes going through the mobile home and inquiring on what repairs had been made and what he was planning on doing after moving off the property.  After we left, I had Ruben stop for a few minutes and we discussed what we had seen at the property.  It was obvious that the pool and hot tub were not functionable along with the home needing a new roof.  The property was also going to need an overhaul and updating of the bathrooms and kitchen areas.  Even with these improvements, we felt that offering $55-65K was still going to leave us room for Ruben to make a profit on the deal.  We headed back to Ruben’s and arrived their around 9:30 am.  We spent the next two hours calling Chase to discuss Gloria Vasquez’s deal along with Marie Polson.  Chase informed us that they would delay the Vasquez auction, and that they would delay Marie Polson’s auction if they received a signed sales contract.  As soon as we got off the phone with Chase, we received a phone call from a realtor that was helping Marie Polson with her sale.  We discussed with Molly Guthrie what we were trying to do.  Molly mentioned that we should disregard the $29K that was in the rears and focus on the principle amount and offer Chase an amount of 70-80%.  Ruben mentioned to Molly that 70% was where we usually began.  Molly asked if it would be alright if she put together a formal contract and we gave her some specifics of what we wanted to see, and off she went. 

We then received a phone call from Margie Arnold (day three) who asked us if we could still help her.  She went on to admit that she did not have the money to bring her payments current and wanted us to help her after all.  We informed her that we might be able to help her if she could get an authorization form signed immediately.  She mentioned that we could fax her one and that she would have it to us by Friday morning.  We responded with that would be to late and that we would need one no later than 2 pm to really have a chance to help her.  She stated that she would get us a signed one shortly.  With that we headed to lunch.

When we returned from lunch, Margie called us to fax the authorization form over to us.  We immediately called the lender (Aus-Tex).  As it turns out from a previous experience of mine with another client, Aus-Tex buys vacant land around Austin and creates chattel loans for manufactured home users.  They usually collect a substantial down payment from their clients and are very quick to file NOD and foreclosures as they and try to flip properties several times to maximize the properties income potential.  Ruben faxed in the authorization form and called Aus-Tex on speaker to try and stop the auction.  Aus-Tex informed us that the only way that we could stop the auction would be to pay the complete note off ($13K) or buy the property at the foreclosure auction.  Since the property was not in a desirable location in Buda, and the price was not very appealing, Ruben decided to kill the deal.  He called Margie and informed her of what Aus-Tex told us. 

At 2 pm, we received the fax containing the contract for Marie Polson reflecting an offer of $195K (70% of the value/amount due of $265K).  I went through the entire contract with Ruben and Romi, explaining what some items and clauses meant.  Ruben signed, initialed, and faxed them back to Molly Guthrie and I congratulated them on submitting their first offer.  We then spent some time structuring our offer to James Hurt and role playing how the conversation might go.  Ruben then called James and offered $55K for the property.  James came back with $60K, and Ruben countered with $58K.  James asked us to send him our offer and he would get back to us after he discussed the offer with his wife.  We spent the next hour helping list Ruben and Romi’s 3 vacant lots on Craigslist and how he could structure the lots with offering owner financing to help them sell faster.  We then spent the rest of the day focusing on Ruben’s marketing and action plan.  We outlined daily, weekly, and monthly activities to help him maintain momentum.  We also identified several networking events for him to attend.  We also focused on the time frame for his 3 short sale deals and what he should be working on Friday and the following week.  We agreed to touch base on Friday and Monday to make sure that he was doing the right things.  We also got Ruben signed up for a local networking club meeting on the 2^nd Tuesday and 3^rd Thursday of each month.  We also got Ruben signed up for the REIclub.com emails.  I also suggested that Ruben attend a local day long REI networking event this upcoming Saturday.  Ruben even decided that he would take Friday and Saturday off to attend the events.

To wrap up the day, we reviewed the goals that he had set for himself before my visit, and what he wanted to accomplish during the week.  I then had them fill out their daily journal and the mentor evaluation forms.  Overall, I believe the coaching went well and Ruben and Romi expressed that they were much more comfortable about their opportunities and real estate business.

Market Analysis

The real estate market in Austin and surrounding areas is growing rapidly.  There is a lot of opportunity for equity and short sales for investors as 1 in 51 homes are in default.  Unfortunately, most realtors in the area are not informed, comfortable, or knowledgeable of the short sale process.  This is a huge advantage for anyone marketing to the NOD lists available.  There are several areas around Austin (Dripping Springs, Leander, CedarPark) that are growing rapidly and other areas that are experiencing a high foreclosure rate (Round Rock, Pflugerville, Buda, and Kyle).  This presents a huge opportunity in the area for seasoned real estate investors.  With the median home price being $167,000 (below the national average by 25%), and a lack of inventory (7000 this year versus 12,000 homes last year) this is causing home sales to jump as many homes in areas are often scooped up within a week.  In other areas with high foreclosures, homes are lingering on the market on an average of 45 days.  In the downtown area, there are 30 pre-approved new condominium buildings ready to be built.  These pre-sales are being scooped up rapidly. 

Commercial growth in Austin is also rising dramatically.  Sales of office buildings have surged with over $1 billion in properties trading hands last year, up from 2005, and more than 10 times the volume in 2003. There is dramatic growth of commercial buildings with several large companies moving to the area.  While growth continues, there is still ample opportunity for commercial, along with development, for investors in the area.  This is a great market to be investing in!