Minnesota Real Estate Investors Association, Inc.

Something peeked your interest in real estate. Maybe it was the Flip this house, or Flipping Vegas or any other the other 100 reality TV shows that have nothing to do with reality but makes for entertaining TV.  Maybe it was a radio ad from some national guru looking to build their business in your market and they want you to join their team.  Maybe it was an ad on Facebook telling you that it is so simple to make $30k a month without even getting out of bed.  Maybe it was a friend that really did flip properties or a relative that owned several rental properties.

Whatever the reason is that you decided to give real estate investing a try, you soon realized that there is a lot to know and the real estate business can seem overwhelming when you are first starting out.  I know because I felt that way in the beginning and now I mentor students through the minutia all the time.

In one of my early mentoring sessions with my mentor, he said something to me that I just laughed at, at the time but later realized how profound that statement was that he repeated to me over and over until I finally got it.

He said; if you want to get to where I am, you need to KISS your way to Riches.  Keep It Simple Stupid.
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When it comes to making offers, most investors only know how to make one offer at a time.  They usually make an all cash offer, also known as the MAO (Maximum Allowable Offer) or they get a loan from a bank, hard money lender or a private investor.  This strategy has worked fine for investors and if you are only making offers on bank REOs on through the MLS, then a cash/MAO offer is really all you will be able to make.

The average number offers to get one accepted with this approach is 20-40 offers to get one accepted in today’s market for most of the country.  Some more experienced investors have been able to reduce that number down to about 5-10 offers to one acceptance by being very selective on what properties to make offers on.  In other words, they know from experience that certain properties from certain banks or listing agents simply will not accept their offers so they don’t even make the offers. 

The secret to success in the real estate business is making offers.  The problem is that most investors use the same offer process when dealing with sellers directly and they are missing some huge opportunities if they just knew how to create alternative offers that don’t require cashing out the seller.

Ask yourself these two questions:
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Over the past, the most common question I have heard is “what are you going to do about the Dodd-Frank Act”?  And my common responses have been, “not worry about it” or “understand it and work around it”.  So what is your response, and will you survive not that the dastardly bill that is now in full affect?

Many people are worried that this new law that has been in effect since January 10, 2014 will put them out of business.  There are many new regulations pertaining to lending and one segment in particular that affects investors the most, especially in the coming years with our current economic situation and that is seller financing.  People are worried that these new regulations will have a dramatic impact on our business, and I have heard several people predict that parts or all of the Dodd-Frank law will be repealed.

I don’t put a lot of faith in congress repealing anything these days.  Look at Affordable Health Care for instance; does it look like that will be repealed?  No, so why would you expect the Dodd-Frank Act to be any different?  The Dodd-Frank Act was a response to the sub-prime mortgage meltdown crisis to put the blame on a segment of the economy that was politically acceptable and to repeal it now would be an admission to that fact.  In an attempt not to offend certain political ideologies here, I will not get into the cause of the sub-prime mortgage meltdown crisis, or the political reasons for appealing the Dodd-Frank Act, but I will explain what it means to us as investors.

Here is the simple break down, as I understand it.
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Only mere hours ago we all saw live the Dow drop near 1,000 points in a startling amount of time. As I’m writing this the market has “recovered” but such volatility will not leave the minds of those who have their savings and IRAs in a stock portfolio that is certainly showing more red than they are accustomed to. To think that such a small country like Greece can trigger such waves because of the liquidity has compromised the integrity of the stock market and the following stories, finger pointing and possible domino effect that may be looming will leave these investors looking for a safe haven.

Suddenly the idea of investing into private money secured by real estate is looking a lot better
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Obviously it is, but how is it changing and what direction are we headed is the question most people are asking themselves these days. Some of the old school investors/realtors will relate to this article, but for most of you, this will seem like a radical new approach to real estate. You see, the changes I am going to be talking about or nothing more that real estate cycles coming back around full swing.

Over the last ten years or so, all you needed was a pulse and a few months to build appreciation in order to make money in real estate. That has changed drastically, today not only do you need a pulse, you also need a creative thinking brain. However, just having a pulse will not get you a mortgage anymore. In fact, I think the only way to get a mortgage today is to prove that you absolutely don’t need it, and then you have at least a fighting chance to get past underwriting.

Over the past two years, the real estate market has been going through a market correction, because of the over inflation of housing prices. Most of these properties have been either short sales or foreclosed upon by the banks and put back on the market at reduced prices. In many areas, prices have begun to stabilize and the new market values have been established. The first time home buyers tax credit helped boast these sales and stabilize prices. However, access to financing is getting harder and interest rates are expected to increase over the next few years. This will help to bring down prices of the surrounding properties over the next few years. 
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I do a live weekly webinar training for real estate investors from all over the country. The weekly training is designed to help you either get started or get back on track. We have a vast verity of investors on the weekly training call from beginners to seasoned investors and one thing that I have been trying to emphasis on the training calls is that there is no one magical technique for success.

There are common traits and behaviors of successful investors, but they all have their own (sometimes unique) business models and they stick to it. However, in today’s rapidly changing market and economy, even those seasoned investors have been forced to change their strategies recently, myself included. That is why we have been seeing so many seasoned investors looking for answers.

I have been working with everyone to help them understand that one key fundamental to long term success in real estate, or any other business for that matter is the ability to change with the market. The market has changed and so must we.

So I am reaching out to all my fellow investors, new and old to find out what is working for you in your market? In the comments section below, tell us what is working for you, or what you have been doing lately. Then join us on the weekly training calls to continue this discussion on a weekly basis.
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Last night we covered an old seller financing Strategy that is making a comeback in a big way. Contract for Deeds / seller financing used to be very popular back in the 1980’s and 1990’s. They went away in the early 2000’s when it became easier and cheaper to get a loan to buy a house than it was to rent a place. So seller financing wasn’t necessary over the last several years. But that is changing.

With the credit requirements and down payments needed to buy in today’s market, seller financing will become the most popular choice of buyers and real estate investors in the near future. Another industry that went by the wayside in the early 2000’s is the Note Buying industry. A lot of Note Buyers were buying Contract for Deeds and other seller financing instruments (Paper). I believe that this business will make a comeback as well over the next few years.

REP Premium Members can watch the replay of last night’s training call at: https://www.realestatepromo.com/MyAccount/WeeklyTraining/2009-11-30/Default.aspx

On tonight’s Training, we will be covering Contract for Deeds (Land Contracts & Agreement for Deeds). This was a very popular tool used during the 1980’s and 1990’s but fell out of favor in the 2000’s when it become so easy to get a mortgage, that no one needed to buy or sell using contract for deeds. This is no longer the case.

So join me tonight, you can even ask your question, live on the Webinar. Register at: https://www2.gotomeeting.com/register/939331179