I made a Ton of Money Flipping House’s – Oh Yeah?

” Gold I tell you there’s Gold in them thar Hills!” Yes there is excitement in the air and much like the days of the Hollywood westerns a call to action. Gold? Well, maybe and maybe not. Certainly there is a profit to be made for the well prepared Real Estate Fixer Buyer. Is this You? Or will you just be one of the countless stories of failure.

Real estate investments in Fixer’s Flips and Rehabs be it Short Sales and or Foreclosures or in the Derelict/Abandoned homes  market can be very lucrative, If you know what you are doing.

It is that IF that separates the Men from the Boys so to speak. Even with the most experienced of us all there are mistakes made and money lost. But there are many things you can do to help eliminate those losses are at least lessen there effects on your bottom line.

Taking a seminar and listening to the rags to riches stories is one of the sure fire ways to quickly lose your shirt. They may be very motivating and fun to listen to but they are no recipe for success. While education is all good and well you can be over educated as well.

One simple plan that can set you on the right path is to look at investing in Real Estate as a Team Sport. Who would you pick to be on your team, assuming that you have done all of the preliminary work such as financing etc.

The Workers :

1. You ( will or can you do the work)
2. Contractor ( Save your self some headache early on a hire a Licensed Contractor for those jobs that you yourself are not capable of doing )
3. Special Contractors ( Roofer, Electrician, Plumber, HVAC, etc.) You do not have to have these people on the pay roll or at your beck and call but you should at least have done the leg work to check out the quality of work they can do and to compare their prices.
4. Real Estate Agent. ( Did you know that a good real estate agent can make you or break you in the Fixer and Flips market?)

Choosing the right Contractors and Real Estate Agent have many parallels. Your entire team should understand your goals. No member of the team including you should put their needs ahead of the others. A good team understands their place and the places of the other members.

So you have assembled your team and you’re ready to go! What then is a 365 Real Estate Investor? Given that there are only 365 days ( more or less ) in a year a budget needs to be set to meet your goals.

• How much money do you want to make per year after all expenses are paid?
• How much profit is there per project?
• How many projects will it take to reach my goal?

Experience is of course the best teacher. Start small and do not get carried away on that first project. Take on one that even if you fail will not take you down don’t let Greed get in front of the learning curve or your common sense. Build upon your successes for they are the foundation for a bright and profitable future in the world of Fixers and Flips.

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Let Your Next Home find You !   Portland Oregon Info

” A Real Estate Transaction with Herb is one YOU will Profit from “

Short Sales and Foreclosures

Short sales and foreclosures in Portland Oregon are a fact of life. There are many factors that can lead you down the path towards a short sale or foreclosure. Some paths are created by others. Some may be of your own doing. Joe and Rita not only created that path they made sure the path was full of bumps and pit-falls along the way! Today on THE PICKLE ! Who_Loves_Short_Shorts

The Short Sale Nightmare Pt. 2 Dan Wins

Staying focused on the prize is the key to working foreclosed properties and or short sales. Never let your emotions rule the day. Lenders are normally heavily bureaucratically laden and have a myriad of details to follow through. Hence the reason why Lender’s will go out of there way to work with a Homeowner rather than to foreclose and take the property back

In the case of the Victorian home in Mt. Tabor Portland Oregon for Dan, the Seller had chosen not to work it out with the Lender. They just wanted out and did not care what the consequences might be.

I was very fortunated in this case to be working with a Lender who’s department head was not on vacation or dashing out to some conference in Brazil. This individual was on top of her game. She was attentive and often new the current status of the inventory that she had to work with.

In the case of the Victorian home the seller had recently refinanced the home taking some of the equity out only 90 days previously to our offer. With out going into the gory details, suffice it to say he had spent all of the money ( can you say party on man ).

Armed with the knowledge of what the Lender would be interested in looking for should they decide to work with my buyer Dan, I set about by providing it.

• Dan hired a company to do a Full Home Inspection, We gave a copy to the Lender.
• From the Inspection Dan’s construction company gave a bid for the work.
• I also provided detailed bids from the sub-contractors that would be doing work.
• I created an accurate Market Analysis for the property, and sent it to the Lender.
• Provided open lines of communication between the Lender and my self always answering the phone when they called with questions.

The Lender reviewed all of the documentation given and requested an extension of time to do an appraisal review of the previous appraisal and to schedule to new appraisals.

The end results were that the Market analysis that I prepared were almost exactly the same conclussion drawn by the two independent appraisals done by the Lender.

The Lender subsequently accepted Dan’s offer some $60,000 below what they were owed. Closing took place only 45 days longer than anticipated.

Yes Short Sale’s and Foreclosures can be a Nightmare, but if you keep your head in the game and can work through the bureaucracy without becoming frustrated, there are opportunities to be had.

The Short Sale Nightmare Caught by Suprise

Just about the time that Dan my Investor was trying to figure out how he was going to manage all of the repairs that had shown up in the Home Inspection report for the Older Victorian home on Mt. Tabor in Portland Oregon the Title report arrived with some alarming news. It seems as if the Seller of this fixer upper had created several liens against the property in excess of the amount of the property’s equity.

As a real estate Broker with 19 years of expierience in selling  portland oregon real estate to investors, I know that often times liens that are on a title report are not always relevant. A further search of the liens status and amounts owed would tell the tale. Meanwhile I put a call into the listing agent to see what they knew of the property.

Nothing was the response that I got back. Nothing accept a letter the Seller had recieved from the Lender this morning in regards to default and foreclosure.  I told Dan not to stress that I would call him as soon as the clarification came from the title report. The following morning the title company called and sent me the lien search with amounts owed. The total amount was $60,000 more than the accepted offer of the home. The Lender had issued the pre-foreclosure letter just three days earlier. This is good news as we are in the early stages.

So this leaves us with basically 3 choices. :

1. The Buyer could choose to pay the additional $60,000. (not realistic but an option)
2. The Seller could pay the default amount at closing. ( could but had no money to do so)
3. The lender could be involved and reduce there amount they are owed.

This is what is known as a short sale. Certainly the listing agent should have done his due diligence and known of this potential problem before listing the home for sale. Obviously he did not and we were left to solve the problem now at hand if it could be solved rather than just to point the finger in a blame game.

Solving the short sale problem is different from lender to lender. Reason and rationality are not always part of the equation. Typically the solution will be written down in the lender’s own guidelines and they will often adhere to those policies even if it is to their detriment.

Some of the keys to working with short sales :

• Maintain a positive productive attitude.
• Do not show frustration or try to lecture the Lender as to how you think it should work.
• Suggest solutions and then wait for approval from the Lender before implementing them.
• Find out what the Lender’s policy for short sales is and follow them.
• Make sure you are in direct communication with those that make the decisions. Not just someone who answers the phone.
• Provide all pertinent information about your buyer that will help the Lender view you as credible.
• Make sure you have the complete understanding and approval from your buyer as to the length of time and complexity of this sale.

Next time in Part 2 Dan works towards the prize.

Let’s Set the Record Straight

Savvy Investor picks up on an Alberta Arts District fixer in Portland Oregon. As told in a recent blog right here Fixer_Buyers_and_the_Rookie_Mistake . The post tells the story of three buyers looking at the same property. All three eventually made offers. The story was factual. Yet today I recieved a comment from  a reader suggesting the entire story was  made up! In fact this is their quote ” Comment:
I think that the information in this blog is false! The stories are fake and the real world would never see anything like these stories. Thank you ” Now I for one don’t necessarily like overt frontal attacks. And I especially do not care for attacks that are based on no facts and are simply mean spirited and incorrect. I do though recognize the rights of people to have their oppinions.

Hence I did not choose to berate this attacker and make the comment open for others to respond. Instead I chose to give a response to that individual directly to their email.

Here is my response.

An Interesting comment that you left me on my post at www.portlandflips.wordpress.com  and my Posting on Fixer Buyers and the Rookies Mistake. What makes this comment interesting to me is this :

• You do Not know Me
• You have made a unilateral decision on your own that you believe the information and the story was untrue
• You have not presented any evidence to support you allegation
• You have just chosen to lash out

I do not know why you would presume that I would waste my time creating a fabrication. To what end would that serve any ones purpose? I do not lie. I do not make up stories. I may embellish parts of a story to make it somewhat more interesting. But the basic tenants of the stories are Factual and Verifiable.

In regards to the posting the Property I was talking about is at 429 NE Webster in Portland Oregon 97211 and is a Fixer as you can see by the Picture. I have also provided here from the local multiple listing service RMLS the transaction history.

MLS #

Hist

Status

Price

Date

Agent

Office

DOM/CDOM

7028327

SLD

SLD

$269,000

4/22/2007

HAMILTHE

RMXR01

13

/

13

7028327

PEN

PEN

$259,000

4/9/2007

HAMILTHE

RMXR01

13

/

13

7028327

DAT

ACT

$259,000

4/7/2007

HAMILTHE

RMXR01

11

/

7028327

DAT

ACT

$259,000

4/7/2007

HAMILTHE

RMXR01

11

/

7028327

NEW

ACT

$259,000

3/27/2007

HAMILTHE

RMXR01

0

/

7027459

SLD

SLD

$269,000

4/20/2007

HAMILTHE

RMXR01

13

/

13

7027459

PEN

PEN

$259,000

4/9/2007

HAMILTHE

RMXR01

13

/

13

7027459

DAT

ACT

$259,000

4/7/2007

HAMILTHE

RMXR01

11

/

7027459

DAT

ACT

$259,000

3/30/2007

HAMILTHE

RMXR01

3

/

7027459

NEW

ACT

$259,000

3/27/2007

HAMILTHE

RMXR01

0

/

© RMLS™ 2007. ALL RIGHTS RESERVED. – INFORMATION NOT GUARANTEED AND SHOULD BE VERIFIED. SQUARE FOOTAGE IS APPROXIMATE & MAY INCLUDE BOTH FINISHED & UNFINISHED AREAS – CONSULT BROKER FOR INFO. SCHOOL AVAILABILITY SUBJECT TO CHANGE. I have been actively working with Investors of distressed properties for a little over 18 years. It is quite common place to pay greater than full price for a property that promises future rewards. If you would like more examples or would like additional information, I invite you to call me or email me if you choose. I would be more than happy to engage you or anyone in a dialogue concerning FIXERS FLIPS AND REHABS in Portland Oregon. If however you choose only to lash out. Then please choose to do that with someone else.

Go=true;

Herb Hamilton
Broker Associate

Servicing the Greater Portland Metro Area

RE/MAX Preferred Inc. Realtors

office 503 659 1550
cell    503 515 8889
h.hamilton@remax.net
www.portlandflips.wordpress.com  ( Herb’s Blog )
www.adtiverain.com/blogs/herb
www.hotpdxhome.com ( Sellers and Info )
www.househuntportland.com ( Buyers )
www.portlandflips.com ( Investors )

” A Real Estate transaction with Herb is one You will Profit from “

Hot Fixer Market in Portland are You Ready

A little less than a month ago I was sitting in front of an Investor who had called me about putting his Rental Property on the Market. I had done all my homework and felt that the property a 1907 Fixer located in the Alberta Arts District of Portland Oregon should sell fairly quickly at the listed price of $259,000.

The prior three weeks leading up to this point in time had been spent in research for value. The property is somewhat nonconforming in a good way. Providing comps was the tough part. The Seller was to give notice to the tenants so that we could begin with a vacant property.

The key to selling Fixers is accessibility for Buyers. They frequently have very tight schedules and will like to see on the spur of the moment.

So as I sat there in front of the Seller I was totally surprised by the fact that no one in the last three weeks had begun the process of giving notice to the tenants. On top of it the Seller was now leaving to go out of town and would be gone for four or five days.

Setbacks like this are an inconvenience, and unfortunately just part of the business. I began the marketing by putting into the MLS and an add on Craig’s list. Within a few hours the phone began to ring from prospective buyers and real estate agents.

I set up the first showings for eight days later. It was all complicated as the tenants did not speak English and I was left to wait until the Seller returned home.

The first showings did not go all that well. I arrived about 15 minutes early to discover the tenants who were supposedly going to open the doors, were not at home. A quick call to the Seller and the twenty some buyers and agents were all left to wait as the Seller made his way to the property from a small community near by.

When he arrived finally he discovered that the tenants had changed the lock and he was not able to provide access. Disappointed several of the buyers and agents began to leave when the tenant showed up and gave access.

A rocky start to say the least. As the buyers began to filter through I had that one on one heart to heart talk with the seller about access. He quickly said that he would produce a set of keys for me as I had previously asked for admitting that he had thought that it would not be necessary even though I had previously warned him.

The first round produced nothing. Over the next few days I began to field calls and set another showing appointment for 4 days later. This time armed with the keys the showings went off without a hitch.

Some two hours later the call came in from a Buyers agent and her client. They had written an offer of approximately $20,000 shy of full price. I gathered up the paper work and made my way towards the office. I had just barely left her side when the phone rang again. It was another Buyers agent and there Buyer had written a full price offer. All cash to close in 15 days after inspections.

Feeling much better now and armed with two offers I made my way towards the office. Once again the phone began to ring. It was Chris one of my long term clients who I had told about the property right after I had listed it. Chris had been busy but wondered if I could meet him at the property within the hour to show him. I told him that I had 2 offers in hand all ready. He said that he still wanted to see the house. I called my sellers and they said that they would not be available until the following morning.

Chris loved the property and after walking outside asked how much it was listed for. I told him the listing price was $259,000. You have 2 offers in hand already he asked. Yes I do.

I will offer $269,000 cash a 10 day closing no inspections no contingencies. Fine I said and began the paperwork. The following morning the Sellers reviewed all of the offers and quickly accepted Chris’s offer.

The Property Closed 3 days ago. I asked Chris what compelled him to write an offer $10,000 above full price. He said that he new there were other offers and that in five years he probably would not remember the difference between $259,000 and $269,000. But he would instantly be angry if he lost a great property over a lousy $10,000 bucks.

When the Fixer Market Heats Up Will You be Ready ?

Herb Hamilton is a Real Estate Broker with RE/MAX Preferred Inc. Realtors working in Portland Oregon

                               ” A Real Estate Transaction with Herb is one YOU will Profit from “

http://www.hot-portland-oregon-real-estate.com/ or http://www.hotpdxhome.com/  A Web Site full of local Portland Oregon information and real estate searches for homes.

http://www.househuntportland.com/  A Web Site for the home buyer. Receive updated real estate listings daily or hourly 24/7. Sent by email on a street map with a Photo a Description and an Address.

http://www.portlandflips.com/ An Investors Web Site. Spend your time analyzing the results that will be sped your way within minutes of becoming active in the local RMLS.

Fixer Buyers and the Rookies Mistake

One of the hardest things to convey to the rookie fixer buyer is that the Seller is not stupid. Assuming the Seller and or the Agent is Stupid is one of the most common rookie mistakes there is.

Here is what I mean. I will use an example of a property I currently have on the market. The Seller called me knowing that I specialize in selling Fixers and Flips. He knew that his property needed a great deal of repair and could be easily classified as a Fixer property. The property that he owns was in poor condition when he bought it. The price was so right that in this up and coming neighborhood he new that all he had to do is just hang in there for a few years.

Those few years have passed and it is time to cash in on his investment. Not wanting to jump to quickly and leave money on the table, he asked that I do an analysis of the property. A quick walk through was all I needed to give him what he needed to know.

There would not be much to gain by doing a modest fix up if anything. He was not interested in spending the type of money that a full blown rehab would cost. The Decision to sell as a fixer was made and the price was set. A sales Price of about $250,000 was chosen allowing the Seller to maximize his position and yet allowthe full blown rehabber an opportunity to make some money as well.

The Property was put on the market and appointments were made. Several Rehabbers went through and strong interest was shown by three parties. Two well seasoned professionals and a pair of Rookie Buyers.

The Seasoned professionals asked if there had been any offers submitted. Having none at the time they excused themselves to meet with there individual Agents. After a short conversation both agents approached and let me know that they would be writing offers later that evening.

The Rookie Buyers  after doing an abreviated walk through of the property, and not really spending any time looking at the positive aspects or the property made a rush to judgement. Before you know it out of their mouths came the words ” Wow this place needs at least a $100,000 of work, is the seller willing to negotiate on their price?”

Having over 18 years of expierience in working with Fixer Buyers and having done several Fixers myself, it never ceases to amaze me what will come out of peoples mouths. The only thing that this accomplishes is that it notifies me how little you know. Yes I had done the analysis and I know that if I was doing the project the price tag would be close to $40,000. I also know that most Rehabbers would budget $60,000 to $65,000 . A  $100,000 estimate on this project is just a typical Rookie mistake and will not gain you favor or credibility.

None the less later that evening I recieved 3 offers. First from one of the Seasoned pros. for a little above full price, the second from the other Seasoned Pro at substantially above full price. The Rookies offer was more than $50,000 below full price.

If you truly want to work on Fixers, then align your self with a professional and learn the ropes. The Seasoned Pros are making money and you can to if you learn to stop making Rookie mistakes.

Fixers, Anonymity and the Internet Buyer

Over the weekend I held an Open House for 2 Fixers that I have on the market in Portland. I had been having a difficult time scheduling showings. The Seller made the two properties ( both Tenant Occupied ) available On Sunday from 12 -3. Now in Portland the Fixer market is very competitive and as a consequence I had more people in that 3 hr time period than I could keep up with.

As I greeted people at the Front Door of the first house I started to think about how this type of meet and greet was a lot like the Internet in many ways.

Follow for the rest of the story ….. Anonymity_And_The_Internet_Buyer

“Fixers, Flips, and Rehabs” Part 3a Doing the Project the Begining

In last weeks post we covered Finding the Right Project https://portlandflips.wordpress.com/2007/02/19/fixers-flips-and-rehabs-part-2-finding-the-right-project/ . This week we will cover the beginning steps necessary in Doing the Project.

Over the years I have personaly worked on many Projects of my own. I have also worked with a great number of rehabbers as a consultant to thier projects like Gary’s 1950’s_RANCH located in the Fabulous OVERLOOK  neighborhood of Portland Oregon. Or Isa’s SWEET_VICTORIAN close to Historic PENINSULA_PARK in North Portland with it’s award winning Rose Gardens and Community Swimming Pool. The one thing that has remained consistent with these great Rehabbers is that they have a game plan for Doing the Project.

One of the most successful strategies for doing your project starts before you take possession of the home. It starts with an analysis of the Home inspection Report that you should have done during the purchase phase. You may have had ( if not you should have given strong consideration to ) additional inspections such as :

• Full Home Inspection by a Licensed Home Inspector ( license required in Oregon )
• A Sewer Line Scope
• An Oil Tank discovery and DEQ test if one was found
• Roof, Electrical, Plumbing, Foundation or Structural inspections if needed

After a full review of all of your inspections you should immediately begin to call all of the Professional Contractors and or Sub-Contractors you may need to do the work you are not qualified to do. Make sure they are Licensed and Bonded and have good references or are in good standing with the OREGON_STATE_CONTRACTORS_BOARD  . Be sure to check out all the great information the board has on their site covering Permits and rehabbing homes etc. Now that you have identified the work that you don’t want to do yourself, it is time to ask for bids and availability of those workers ( contractors etc. ) who you have chosen to do the work.

Once the Closing has taken place it is now time to do your first in earnest walk through. Be sure to take along your Realtor. The Realtor who helped you purchase or you intend to work with on the resale of the project will be invaluable to you. Realtor’s have Great insight as to what the Buyer’s are looking for in today’s market. It will help you so as not to make a mistake ( usually caused by Ego -or I can do it myself attitude ) that you may be sorry for later. I have seen so many of these type of mistakes. I do get tired of hearing “Where were you when I needed you ? ”  I was right here all the time.

Back to the walk through. Be sure to take a flashlight, Measuring tape, Tape Recorder if it helps you remember, Digital camera and the trusty yellow note pad with plenty of pencils. The walk through not only reinforces what you had seen before when you were in the purchase phase. But it also is a chance to look at some of the solutions to those existing problems that your mind may have been working on while waiting to close. In any room that you intend to modify ( add a bathroom or staircase etc. etc. ) you will want to measure and draw a diagram of that room and any adjacent rooms that it may effect. In other rooms where you might just be doing cosmetic work like Patching walls and or painting etc. identify those rooms with a name. Like the Front bedroom or bedroom number 1, anything that will help you and your crew to stay on track. Heaven forbid your workers begin putting in a staircase to a room that only needed painting.

After you have completed the walk through and have created the drawings with the long list of work to be done. It is time to go back home and work out a scheduled work list. It is best not to take on to many areas at one time. Be sure to schedule work around any Contractors so as not to step on each others toes. It is important to remain consistent in your work. Do not finish one room at a time ! It is better to tackle all of the major work, wall moving, bathroom building, structural work, sheet-rock work etc. before you move on to the next level. It is just to easy to damage a finished room while walking through it with tools and or materials. Be sure your schedule has a time to start  and finish work and an expected date of completion for individual projects as well as the entire project.

The final portion is to double check prices on materials and or fixtures. You should have a partial list made up from the intial walk through made in the purchase phase that helped you calculate the cost of rehab to the project. List all cost of materials etc project by project. Example, kitchen would include any cabinets, fixtures, flooring, etc etc. 

Next week in  Fixers Flips and Rehabs Part 3b Doing the Project the Begining, we will cover the actual construction work.

” A real estate transaction with Herb is one You will Profit from ! “

Townhomes are not my Beef but Poor Quality is !!!

What a beautiful day. The tunes are playing and I am driving through a neighborhood that I had not been through in a while.  As I came around the corner my eyes began to focus on what appeared to be a new Town-home development. Now don’t get ahead of me. I don’t dislike town-homes or row-houses. In fact as a Real Estate Broker working in the Portland Oregon metro area I know their value. They can be the perfect answer for the first time Buyer looking to get into something they can afford or a great alternative for those who may not want to chase a lawnmower around any longer.

But here is my Beef. Over the years I have made an effort to affiliate myself with people who have high quality building standards. Most of my clients are Rehabbers and Builders. For those not in the know a rehabber is someone who buys homes, usually fixers, to Remodel, Renovate, or Rehab. In the early days of my career when their seemed to be an unending supply of cheap fixers and rehab buyers were around every corner. I decided tomake some choices about who I would work with. The following guidelines have served me and my clients well. I chose to work with people who create beauty and value. By doing so they create the future Comps that they will need to support future sales. If they were to do poorer quality work they would be working against themselves by creating a group of Comps of lower sales prices .

This brings us back to the topic at hand and my beef. Town-homes of questionable taste. You can spot them even from a distance. The poorer quality really shows up though once your’e inside. It truly is a shame. Working with builders and rehabbers I know what the bottom line costs are on these projects. I also know the costs associated with doing enough to get by or going the extra mile. It is just not that much difference in money.

So why not go the extra mile ? Well it might be the builder or rehabber just doesn’t have the skills to create better quality. Or it might be that they don’t really believe in themselves or the market. I believe however that it might be something else. Two of the builders I work with, Peter and Richard although competitors, they both share a common philosiphy. They both want to be proud of their legacy . The other day Richard shared with me his vision and hope for his future. Well into his retirement years and sitting in front of a Cozy Fireplace he envisions his grandson rushing into the room full of excitement. His grandson bursting with enthusiasm had seen an older but beautifull home that day. After enjoying this future conversation with his grandson Richard would lean back in his Rocker in front of the fireplace and say ” Yep I built that one in 07 “. 

It is all of our responsibilities to create and insist on homes of lasting value and greater standards of quality construction. Homes that can stand up as a testament to who we are  as a people.