Here’s a day I’ll never forget.
Nothing unusual to start. I had a consulting client I met with to help grow his business from 24 flips a year to 50. Fun stuff…really my favorite kind of client. We headed for a very late lunch at around 2:30 and while walking up to the restaurant we both looked west at the wildfire blaze that had been burning for 4 days.
It had been eerily close but by this time we could see the flames coming over and down Queens Canyon… A location way to close for comfort. (I live on the NW side of town that this fire was approaching). Lunch conversation slowly drifted away from the house flipping business to the fire. My wife Lori called early in our lunch conversation to relay what she had heard about the fires progress.
A second call and a much different tone from Lori meant this lunch meeting needed to come to a quick close. I headed home via Oak Hills Drive (perched on a nice ridge with unobstructed views of the front range and the approaching fire.
The smoke coming that way made it too hard to breathe or see anything, but the amount of smoke itself was no good sign. I headed home heading south on Centenial Blvd. and I noticed looking right the fire had jumped the ridge in Queens Canyon and was not only at the top of the ridge above Mountain Shadows neighborhood but had burned a significant way down the slope toward houses.
It was that moment this fire got very “real”.
The prior weekend we were encouraged to pack an evacuation “kit” with at least 3 days of clothes. We had done so but optimistically I felt there’s no way that things going to get that close to us. With high winds and record high temperatures we had the “perfect storm” for raging fire and when I saw it coming over the ridge into our city it hit me like a ton of bricks.
I got home as quick as possible and told Lori what was happening. Our casual 3 day “kit” started growing rapidly. We picked the smaller things we didn’t want to part with if the fire consumed our house. Busines Server, family pictures (including a few boxes of “old school” print pictures and picture albums, some items from our travels, a small collection of Josh’s toys, laptops with family pictures,…things that couldn’t be replaced.
Every few minutes I’d run up the stairs to a window to see how close it was getting. The neighborhood was filling with smoke, blocking any realistic view of what was going on, but I could see tail lights of cars stacked up, unable to get out of the neighborhood. What if we couldn’t even get out?
We packed as fast as possible while trying to stay semi-calm as not to freak out our son, Josh, who is only 7. We made sure neighbors were getting ready to get out.
Nothing can really describe everything going through your mind in a time like this. Something you never envision happening but here it is. We were lucky.
Amazing efforts and planning from our police department had 10’s of thousands of people evacuated from the area with amazing speed. Our neighbors parents were out of town for the week on vacation so we were able to share a house with them. Again, we were lucky. We had a place to go to. Many did not. Hotels were completely packed. Some families doubling up on rooms. Shelters were packed.
After dinner from our location we could see our part of town literally burning. Even from miles away it was evident it was families homes going up in the blaze. We were becoming strangely comfortable with the fact it’s just “stuff” left behind. Family was safe. All our friends we knew were safe. What I saw and experienced that day will never leave me.
Being there and seeing and experiencing the wind driving the fire our way and fueling it into what was referred to as a “Fire Storm”, I’m amazed anything made it.
We can thank the firefighters enough. How they were able to function in that environment and save as many houses as they did was nothing short of a miracle. If you saw what I saw, you would be surprised anything survived the “fire Storm” that decended on Colorado Springs.
Thank you to the Colorado Springs Police who have planned and trained for something like this got us and our friends and neighbors out swiftly, orderly and safely. We owe them a debt of gratitude. We even had the humane society braving the fire to go in and save pets from evacuated homes. Some people couldn’t even get in after work to save their pets. They have and are still housing hundreds of pets of owners who have no place to go or whose homes have been burned down.
Sorry for typo’s run on sentences, but I wanted to get this out to everyone quickly in a time when I’m still getting a little choked up reliving it.
People have really rallied together and have become even stronger in our community bonds. Seeing people hugging each other and offering support at the post office getting mail from a house that’s no longer there. Inviting strangers who no longer have homes into our houses, the deeds go on proving what a wonderful community of people we have.
It has nearly been impossible to get all the supplies needed to the people that lost their homes and the firefighters still fighting to control the blaze, but today you can help fill a need for a child, mom, dad that really needs it. You can be a blessing and I have made it extremely easy for you to contribute.
Go here to see how you can contribute to help the good people in Colorado that lost everything. It’s really simple.
Red Cross: Colorado Wildfires: How to Help:
Care And Share: Helping displaced families and providing food and water for firefighters
Colorado Springs Humane Society. Risked their own lives to get into evacuated areas and rescue pets that were left behind and have also been taking care of pets that have been displaced from homes:
http://www.wildfiretees.com/ 100% of proceeds going to benefit Colorado Wildfire Victims.
If you purchase ANY product at LocalMentor.com use the code “firesale” at check out and get 30% off and 100% of my proceeds will go to fire relief.
Send Physical donation goods to :
Help Colorado Wild Fire Victims
702 Desparado Road
Bailey, Colorado 80421
I would like to ask you one other favor too. Can you please write something below in a comment that might encourage others that read the blog post today to help with this cause?
Your words can literally cause someone to take action and help. I can’t thank you enough in advance for your time, generosity and above all your giving heart. I appreciate you. God Bless You!
My wife, Lori, and I are being featured on a brand new “reality show” on investing on MSN.com Money called “The Invested Life”.
In fact the New York Times just did an article about it here: http://nyti.ms/9LkKpA
You can see the live website on MSN.com here: http://theinvestedlife.msn.com
Facebook Fan Page: http://bit.ly/9ZH4fa
Check it out and let me know what you think….post a comment or send me an email on the contact us link above.
by Michael Jake
Remember, this works for any bank owned property (or short sales) listed on the MLS (Multiple Listing Service).
Again, We use the LLC method to AVOID double closing problems and to AVOID using flash cash lenders that eat up our profits.
I’m eliminating everything I’ve already covered up to this point, so I’m assuming you have REO leads (or MLS listed Short Sale Leads (cheap and ugly are best)), and you’re ready to put that offer on paper and you want to do it right.
1. First off, YOU don’t write offers. Your realtor does for you. You only need to talk the talk and direct them (if they need it) on what goes in the blanks.
2. These will all be CASH or Hard Money Offers with NO FINANCING CONTINGENCIES whatsoever. I prefer to write them all as cash offers…even if I know my buyer will likely be using hard money. (more on that later).
3. You tell the agent what ENTITY (your LLC you created to sell) and what price you want to offer based on the formula I gave you. Then only other important information is:
- How much for Earnest Money
- When is the Earnest Money Delivered
- Inspection Deadline (date)
- Closing Date
- Other Dates
Earnest Money: you have to at least put up the minimum but I usually offer more. It makes my offer stand out from some others if there’s multiple offers. It’s not uncommon for me to do $5,000 even if they are only asking for 500-1,000.
If you don’t have that much, that’s fine, use the minimum…you can even have the offer written to allow you to deliver earnest funds 1 or more days after the acceptance of the contract by the lender. I do this all the time. ESPECIALLY for short sales. It might be 30 days to several months later before a bank accepts your offer. No way I’m leaving thousands dollars laying around in escrow on a deal I might not even get.
You fill out your assignable contract with the seller. (example below of one of my offers)
4.1. Price and Terms. The Purchase Price set forth below shall be payable in U. S. Dollars by Buyer as follows
|5||4.7||Seller or Private Financing|
|8||4.3||Cash at Closing||$60,000.00|
Inspection Deadline: I use this as my way out if something goes wrong. 10 days is a standard inspection period. It’s even standard on the lead based paint disclosure required on any pre-1978 construction house purchases…this gives you 10 days to find a buyer with No Risk! No buyer? Ask anyone that looked at the deal what they would pay and counter your own offer on your “inspection findings”. Never back out directly on inspection…counter your own offer…it will save you some “face” if you made a mistake, both in your realtor’s eyes and the listing agent (who probably gets many other REO listings)
Closing Date: Keep it short but 2-3 weeks is about as fast as any lender can get to the closing table so that’s usually the time frame I give.
Other dates: See below as an example:
2.3. Dates and Deadlines.
|Item No.||Reference||Event||Date or Deadline|
|1||4.2.1||Alternative Earnest Money Deadline||3 Days After MEC|
|2||5.1||Loan Application Deadline|
|3||5.2||Loan Conditions Deadline|
|4||5.3||Buyer’s Credit Information Deadline|
|5||5.3||Disapproval of Buyer’s Credit Information Deadline|
|6||5.4||Existing Loan Documents Deadline|
|7||5.4||Existing Loan Documents Objection Deadline|
|8||5.4||Loan Transfer Approval Deadline|
|10||6.2.2||Appraisal Objection Deadline|
|12||7.2||Document Request Deadline|
|14||188.8.131.52||CIC Documents Deadline|
|15||7.4.5||CIC Documents Objection Deadline|
|16||8.1||Title Objection Deadline|
|17||8.2||Off-Record Matters Deadline|
|18||8.2||Off-Record Matters Objection Deadline|
|19||8.3.2||Survey Objection Deadline|
|20||8.6||Right of First Refusal Deadline|
|21||10.1||Seller’s Property Disclosure Deadline|
|22||10.2||Inspection Objection Deadline||7 Business Days After MEC|
|23||10.3||Inspection Resolution Deadline|
|24||10.5||Property Insurance Objection Deadline|
|25||12||Closing Date||9/10/2010 10 Days After MEC||Friday|
|26||17||Possession Date||At Closing|
|28||32||Acceptance Deadline Date||9/3/2010||Friday|
|29||32||Acceptance Deadline Time||COB|
Keep in mind, when I’m dealing face to face with a seller (or someone’s doing this for me), I’ve already given them a verbal or written letter of intent (often with 3 or more ways I can buy their property (complete multi-offer system is HERE!) ) and I’ve let them decide which one is best…so, I’m just filling out on paper (the contract) what we’ve already agreed on. This isn’t a “here’s my offer, take it or leave it” situation. You just need your contract to be assignable. You’ll also want some way out of the deal if something doesn’t go to plan. I usually use a simple inspection clause without a date limitation on it. This gives me up to the closing to exit safely.
4. When your offer is accepted, usually my agent calls me (or emails me) that we have a deal. It might be a day or more later before I actually see a signed copy of the contract, but I immediately upon a “verbal” acceptance start marketing the deal to my buyers list. I’m usually calling my “A” buyers as soon as I hang up the phone wth my realtor telling me I have the deal. I’ll also blast it out to my e-mail list with a picture and the specifics on the after repaired value, repairs and the total price of the house (purchase + my assignment fee)
5. Get buyers in to see it. Usually REO properties are on a combo box, not an electronic box requiring a realtor “key” to unlock…so they are easy to show or have your buyers go by and see.
6. Once your buyer says yes – you have them bring you a certified funds deposit (equal to or greater than your earnest deposit) and have them sign an agreement to purchase the LLC you have on the contract. You’ll need a legal document for this. I had my attorney draft one that covers all the important aspects of a real estate agreement, but as the purchase and sale of an an LLC. Mine cost $1250 but you can get it, and my entire seminar on wholesaling for a fraction of that price HERE!
7. You then coordinate with the title company who will be signing at the closing…it will be your buyer, because at closing they will be the owner of that LLC on the contract.
8. Make sure your buyers and any hard money lenders involved are CC’d on any title work emails and all are aware of the closing date. (if you wrote the deal as cash and your buyer is bringing in a hard money lender, you have to notify the title company and they may require you to sign an addendum to the contract.
9. Go to closing and get a big check – your final payment, and make sure everything goes smoothly, and focus on your relationship with the agent and your buyer.
10. Celebrate your victory. Take a little of your profit and treat yourself for you accomplishment. With the rest of it…what’s the best investment for your cash? Invest in more marketing? Invest in more real estate education to increase your cash getting skills? Pay off bad debt? A combination of a few of the above perhaps. Either way, congratulate yourself…you did something awesome!
To Your Success,
Your Local Mentor
“I just closed my first wholesale deal and made an assignment fee totaling $22,200! I’ve already received a check for $11,000 and will receive the other $11,200 soon . . .I couldn’t have done it without the help of Michael Jake’s guidance and expertise. Michael taught me everything I needed to know such as marketing for wholesale deals, talking and negotiating with sellers, making the right offers, and how to quickly find a buyer for my deals. Michael’s system has given me the confidence to repeat this process and make these big paychecks over and over again!” – – Kevin Kudrna, Retired Air Force
P.S. Find out what Kevin already knows HERE! It’s the most up to date content out there on Wholesaling Houses and Wholesaling REO’s.
Are you looking to network with other real estate investors? Join a local real estate investor club and surround yourself with other like-minded individuals.
It’s a great idea to bring plenty of business cards to network, but if you’re new…have a plan to maximize your time. I suggest you always ask someone checking people in at the door to introduce you to someone there that you think will have the biggest impact on taking you to the next level.
Just getting started? Ask to meet some of the ACTIVE buyers. If you want to wholesale deals or find partners, this is a great way to go about it.
Looking for more funding sources? Ask to see who the active lenders are for distressed properties.
Need a good contractor? Ask! I think you get the point…don’t go in without a plan. Know what you want to accomplish and ask.
Are you in Colorado? Check out the Colorado Springs Real Estate Investing Club
Here’s a wholesale deal I did this month. I did a walk through of the house on video (I’ll post that below) so you can see what the condition of the property can look like when dealing with “fixer-upper” houses.
The house is in a great area called Holland Park in Colorado Springs on the West Side of town. I love this area, and tried to buy a house in the neighborhood when I first moved to Colorado Springs. I got out bid on one house and ended up buying in another area, but I it’s a nice median priced area west of the interstate. The only problem is there aren’t many deals in this area. Most owners take very good care of the houses and the only “below market” houses are often on the busy streets on the edges of the neighborhood. To date I’ve only bought 2 houses in Holland Park. One we still own as a rental. It’s too nice of an area to focus on for wholesale deals and fix and flips. This was a mistake I made early on. It’s close to where I used to work and I’d drive around all the time looking for distressed deals, and there just weren’t many. Other areas have better ongoing opportunities if you are focusing on a specific area.
Here’s my video walk through:
Instead of fixing it up, I offered it (first) up to my wholesale buyers list and, sure enough, someone offered me $13,750 for the deal. A bird-dog brought me the deal. It was foreclosed on by a lender (I think this particular “lender” was more like an investor that bought bad debt, foreclosed and then sold inventory on terms) and they had been advertising it on craigslist and with a few bandit signs in the yard.
They wanted to use their contract (non-assignable) so I just created an LLC (could have done it with a trust too, but not all buyers understand trusts and not all hard money lenders lend on trusts in my area. It’s easier (in my area) to use an LLC), went to contract with the lender with my new LLC, then after my buyer liked the deal and we agreed on a price (I offered originally at 92k and we settled at $88,750. That was 13,750 to me and much better than what I’m making on MLS listed wholesale properties. After more careful inspection (by my buyer) we both agreed it needed more rehab cost than I originally thought, hence we agreed on a better price.
I filled out an agreement to convey membership interest in the LLC, and took a 3,000 deposit at the time we agreed and then the final sale of the LLC would take place on the same day as the closing with the balance of 11,750 to paid in certified funds. After a couple weeks, we closed and I showed up at the title company and collected a check…after drinking some free coffee.