Justin B. McClelland

So I’ve been working a lot on getting my wholesale deal straightened out lately.  I haven’t been giving a lot of detail about it because I don’t want to speak to soon about a deal that’s not completely wrapped up.  But just to give a little info, I found a buyer for the house, have accepted a deposit, and have completed the assignment agreement.  The only things that worry me is that there are about 5 title issues that the seller will need to clear before we can close.  The buyer is ready to go, he wants to close in two weeks, which will be about three weeks earlier than the contract states.  I’ve been assisting the seller in getting to the bottom of his title issues, on one hand I don’t have the obligation to do so, but on the other hand if this deal doesn’t close I’m back to square one.  Nooooooooobody wants to go back to square one, especially me.

I spent about 3 hours in the county recorder’s office today, just looking at the liens that are tied to the property.  I even found one error that is on the title, which is a good thing.  There is a lien attached to the wholesale property that really belongs to another house.  Someone who wrote the note for a different property, put the correct address and wrong PIN.  The PIN which belongs to the wholesale house.  To be honest, I was proud of myself when I found that.  Sherlock Holmes is my kinfolk.  But anyway, I printed out all of the liens on the property (at the very low price of $1 per page!) and made copies and gave them to the seller.  I explained all of the liens and told him where to call for more information.  My worst fears are that since some of the liens were a surprise to the seller, the ones that aren’t errors will of course come out of his sale price, then at closing when he see’s what I’m making on the deal, he may refuse to close unless I fork over some dough.  This happens sometimes, surprised?  Me too.  I first heard of this two days ago as it came straight from the mouth of my lawyer.  I don’t want no parts of that.  That’s why I have new customized, titanium contract and addendum’s for all of my deals going forward.

Anyway, I’m praying that this deal will close.  Because I have have WHOLE LOTTA marketing to do with the proceeds.  You’ll see!  Then when it closes, I’ll give an in-depth analysis of what I did right, what I did wrong and I’ll do for next time.

- Peace Out

P.S.
I need to be in NYC next year to watch the ball drop in person.  Enough of this watching-it-on-TV stuff.  Happy New Year!

Real Estate New Years Eve, New York City, Real Estate

All this week I have been on furlough from my 9-5.  It’s been quite the preview of how a week will be like once I go full-time in real estate.  I’ve been taking advantage by setting various appointments and running a lot of errands that I would usually have to fight hard to squeeze in around my 9-5.

Yesterday, I met with my lawyer and went over a heap of issues.  Since, I’ve been working towards getting this latest wholesale deal closed, I’ve discovered new things that I needed to run by him.  The first thing we discussed was the Assignment Contract that I was using.  We revamped it so that it is now customized exactly how I want it.  Most importantly, the Assignment Contract demands my assignment fee be wired to my bank account within 2 hours of closing and I’ll eventually grant my lawyer Power of Attorney for closings.  This way, I can be in my drawers at the crib watching Judge Mathis, eating Cheetos, while drinking a quarter water instead of having to get in my car and drive to the closing to sign a few docs and receive my check only to have to go all the way to the bank to deposit it.  I know…I know…this sounds like a small task to collect pay, but efficiency is the name of the game.  Time is your greatest asset, why spend it wasting time doing something that can be automated?  Plus, I don’t plan on living in Champaign for too much longer.  I’m putting my virtual-business measures in place, little by little.

We also went over the standard Real Estate contract for Champaign County.  I had a good understanding of it before meeting with him.  Now, I have a GREAT understanding.  And, he crafted an addendum for me so that my contract is customized for me too.  The addendum makes the standard contract, which is already written in a buyer’s favor, a contract that is hugely written in a buyer’s favor.  The best part about it is that the contract, with new addendum, is now filled with “non-essential contingencies” (who says you can’t learn from Carlton Sheets).  So if the seller has no problem with some of my items in the contract addendum, great!  But if the seller has a problem with some of the items in the contract addendum, I will have no problem striking through some lines and sacrificing some things that are non-essential anyway.  This should play in my favor when it comes down to negotiating…Psychology 101.

On the short-sale front, I have a meeting set-up tomorrow to meet with the homeowner and complete all of the paper work needed to send to the bank.  John Michailidis and I, had a lengthy chat today and we went over the details of the contract and other docs.  So now, I have a complete understanding of everything and shouldn’t have a problem conveying all of the meanings in the docs to the homeowner.

On the REO front, I went by and visited the top REO agent in town.  Not one of the top agents, ‘the’ top agent.  This agent moves beaucoup properties annually.  Back in June, I had emailed her and introduced myself and what my investment objectives were.  I didn’t receive a response until about a month later and that was from one of her subordinate agents.  So, that let me know that this lady probably receives a ton of email daily and stays very busy.  In effort to differentiate myself from the pack (of other investors), I made an impromptu visit to her office.  To be completely honest, I was nervous as ****.  This lady has a reputation for being the man-eating type, so it was do-or-die.  I practiced in my head how the meeting would go repeatedly for preparation.  Then shot up a quick prayer.  I walked in and asked for her, I introduced myself and told her I just wanted to a moment of her time.  We sat down and chatted for a few minutes.  I told her what I was all about (wholesaling properties).  I asked about one property in particular that had just came back on the market from being pending for 4 months (unusual), she filled me in on the details of that property.  I also asked what her biggest pet-peeve was about the other Real Estate Investors in town.  She told me that they don’t listen to her, they often times make offers to the bank that have no chance of acceptance.  The end-result is senseless busy work for her as she has to input and submit all of those offers to the bank (I bet those offers really go to her paper shredder…LOL).  I think she was surprised that I asked her about her pet-peeves (in a good way).  I told her that I was serious about doing business with her and plan on being one of her biggest customers.  Hopefully, I was able to successfully convey how serious I am and now at least she’ll be able to put a face with my name.

That’s all for now.

- Peace Out

Real Estate furlough, John Michailidis, Lawyer, REO

Last Weeks’ goals:

1. Submit a total of 20 offers on MLS properties FAIL
2. Submit an offer on at least one REO property FAIL
3. Make at least one offer on a FSBO FAIL

Okay, so I failed all of the tasks again.  I’m going to keep these goals again for next week, just as I did last week.  However, this week I should be able to focus a lot of time on getting this done.  I’ve got the week off from the 9-5, so I can dedicate a lot more time to these goals.

And also, I think I have the wholesale property sold, so then I can get that burden off of my back and focus on getting some more deals closed.  I met with a buyer today, that I met with before Christmas.  He wanted to take a second look and we are to meet up tomorrow to complete the paper work.  So we’ll see about this, hopefully it’s a done-deal.  But in the back of my mind, I’m prepared to keep looking for another buyer if this guy flakes out.

I meet tomorrow with a lender that my Realtor referred me to for a discussion regarding the 203K HUD rehab loan and also the loans available that don’t require seasoning like FHA.  I need to learn more about loans that don’t require seasoning for my short-sale efforts to sell to an end-buyer with financing.

Also, despite the fact that I haven’t submitted the REO offer that I had planned on.  I went through all of my REO Rockstar material again during the past week.  I think I’m going to stop-in and speak with one of the top REO agents in town and just make an impromptu introduction.  I think I have the REO game down, now it’s just time to put knowledge into action and close some deals.

Lastly, I am going to get a bit more aggressive regarding my cash-buyer search.  I’m going to perform two additional tasks to get more buyers.  One, I’m going to direct-mail all of the investor owned condo units at a new condominium complex that was built close to campus.  Many of these investors are located on the west-coast and east-coast, with the higher cost-of-living on either coast, I know I shouldn’t have a problem adding some cash buyers to my list.  As 100K in cash to someone in LA or NYC is a lot less than to someone who lives in Kentucky.  Two, I found that there is one landlord in town who is one of the largest, if not the largest.  I posted on Facebook and Twitter that I was looking for someone to assist me with a skip-trace.  I needed a skip-trace done, because this guy has like 20 different LLC’s and I didn’t want to mail to his LLC PO Boxes (as I have before with no result), I wanted his home address.  Steven Washington, an investor out of Philadelphia helped me out and hooked me up with the address/phone number information that I was looking for.  This investor purchases like 2-3 houses CASH monthly!  One of the very few in this small town that do so. I definitely NEED to make his acquaintance. I am thinking of doing something ‘extremely’ creative to provoke a response.  Something like a FedEx Next-Day envelope with an introduction letter and a high-value gift-card maybe?  I don’t know…I’m taking all ideas…let me hear them in the comments…

- Peace Out

Marketing, Real Estate Cash Buyer, FHA, REO

I still haven’t found a buyer for the wholesale property yet.  I’ve had about 5 buyers over there so far to take a look and I have two confirmed no’s.  The other three say that they’re going to get back to me.  They expressed some interest, but have to evaluate taking on this project amongst the others that they have going.

Yesterday, I cold-called about 10 different local Handymen after a Google search, to inquire if they also invested in Real Estate.  I was surprised at how effective this was, it was a complete impulse action.  Out of the 10 I found 3 new buyers that I added to my list.  2 said they would drive-by first and let me know if they were interested. And 1 said that he wanted to take a look inside either tomorrow or at the top of next week.

I have until 1/9 to back out of the contract via inspection contingency.  However, I don’t plan on doing that at all.   Once 1/9 passes, I’m locked in and will have until 2/9 to close.

My “plan B” was to close on it and still attempt to sell the thing wholesale if I couldn’t find a buyer before 2/9.  But now, I’m reconsidering making “plan C” my “plan B”.  The new “plan B” would be to close on the property and use the 203(k) HUD loan to close on the property and cover the rehab costs.  With that loan all rehab and property costs can be rolled into the mortgage.

With the new “plan B”, I would have the rehab team that I’ve already selected perform the work.  After two-months of work, the project will be complete.  I’d move into the property.  As, believe it or not, the mortgage payment all-inclusive of PITI would be less expensive than what I’m paying now for rent.  I’d live in the property for a few months, then either Section-8 it or sell it.  If I sell it, I would 1031 exchange it for something else so I’m not slaughtered by the capital-gains taxes (I’m not going to stay there for 2 years).  Also, with the new “plan-B”, I stand to gain a bit extra via the new-homebuyer tax credit.  The only thing is that it may take longer than the time I have to get that loan approved.  That’s the main drawback.  Other than that, I can’t see myself losing with this regardless of “plan-A” or “plan-B”.

I swear this has got to be the worst time to try and flip a property, especially your first.  Nobody can compete with Jesus’ birthday…nobody.

- Peace Out

Real Estate, Rehab 1031 Exchange, 203K, Handyman, Rehab

Last weeks’ goals:

1. Submit a total of 20 offers on MLS properties FAIL
2. Submit an offer on at least one REO property FAIL
3. Make at least one offer on a FSBO FAIL

I have flunked all of my tasks that I gave myself from last week.  However, I have been SOOO busy with trying to find a cash buyer for my wholesale deal and also the short-sale house, I haven’t given much time more offers.  I did put in one MLS offer though, far from 20 but at least I got that done.  It got rejected so oh well.

But excuses are tools of incompetence, so I don’t give them. I’m going to keep the same goals for next week and do what I can to get them accomplished, by all means.

Right now I’ve got three buyers that have expressed some interest in the wholesale deal.  But I’m so discontent right now, I need a buyer to sign on the dotted line and deposit some funds into escrow.  I’ll be able to chill out at that point (for about 5 minutes that is). So I’m still on a rampage to get this wrapped up.

On Sunday I was supposed to have a meeting with two prospective buyers.  One guy called and canceled his appointment after he drove by the property, the property needed more work than he desired.  The girl that I ranted about last post…..drum roll…..stood me up.  Big surprise!  Oh well, I spent some time after that scheduled appointment driving the neighborhood and looking for “For Rent” signs.  I got this idea from a recent post by Steph.  Due to the fact that the property is in a less desirable area, it made alot of sense to call those who were already renting in that area.  I made about 4 calls, and 2 of the landlords said that they would take a drive-by and let me know if they were further interested.

*Tangent* I don’t know why everyone in Champaign, IL acts like this property is in the hood, or that there really is a hood in Champaign.  Don’t get me wrong, I didn’t grow up in a rough neighborhood, I grew up in the suburbs of Saint Louis, MO.  And bad things happen everywhere, but there isn’t any area of Champaign that is just that bad.  So many potential buyers are like “Oh my God, that area is sooooo bad”.  And I’m like…we can take a trip to Chicago or Saint Louis and I’ll show you some rough neighborhoods. But I digress

For next week, I am going to meet those goals.  That makes a total of 22 offers.  Hopefully, I’ll have another deal (or more) under contract.  One for twenty-two isn’t a bad average is it?  I don’t think so.

- Peace Out

Real Estate Monday

It’s only been two days since my last post and alot has gone down.  Still ain’t got no money but…I’ve been busy.

On Friday, I met with some contractors at the wholesale property.  I wanted them to give me an accurate synopsis of repairs and such, basically I needed some realistic numbers (not just my unqualified estimate) to better market the property.  They pretty much said that the house could be done for 30K and they will give me an itemized estimate.  It was good news to hear their estimate because that further cemented the profit-potential that I originally thought would be in the deal for a rehabber.

Today, I met with the lady who called on my Yellow Page ad who is facing foreclosure.  The plan is still to partner with John Michailidis on this deal, we spoke on Friday and composed a rough game-plan for what’s to come.  We still have to secure a Realtor to add to our team that has some flexibility to work “outside the box” a bit.  Hopefully, we’ll be able to use the same Realtor that I’ve been working with for the past few months.  I jumped the gun in meeting with the lady so early, but I could tell from the distress in her voice while on the initial phone call that she wanted to start working towards a solution ASAP.  I got over there today, because I felt like if I didn’t she’d call up someone else.

I was very nervous going over there mainly because I feared that she was going to bombard me with a bunch of questions that I didn’t have the answer to and be able to smell how green I am.  But I had a game plan.  She lives in Rantoul, IL which is about 25 minutes away from Champaign.  During the drive, the radio stayed off and I practiced my speil.  I had studied on Friday night a little bit, so I pretty much just rehearsed that material.  Stuff about how foreclosure works, the alternatives such as bankruptcy, selling the house, those pros and cons, etc.  I was praying hard that I didn’t sound like a big fat newbie.

I got over to the house and we sat at the kitchen table (cliche right?) and I pretty much went through things just as I had practiced.  And I also took time to learn about her and how she got in the situation and what her plans were to get back on her feet, toured the house, etc.  I must say, I did pretty good.  The crazy thing is, once you meet someone in a situation like foreclosure and learn about them, it tugs at your heart a bit.  This lady is a divorced mother of three, had an abusive husband, just lost her job due to layoffs, and is a part-time college student.  She’ll finish school in a year and a half and then she’ll have her RN (registered nurse) and will be back on her feet.  But right now, she can’t find work anywhere and is still unemployed.  Her story is definitely a tough one.  I hope John and I can get the bank to cooperate and help her avoid foreclosure.  She seems like a good person that is just going through some tough times.  I gave her some homework to do before our next meeting.  I also told her to email me her job history and I’d help her create a new resume.  Maybe I can help her find something.

Also today I met with some prospective buyers at the wholesale house.  These guys were much younger than me, maybe 22 and 23, which is refreshing.  I like diversity.  I get tired of dealing with people that are all cut from the same cloth, especially when they suck as human beings.  They showed interest in the property, I mentioned the contractors that gave me the estimate and they’re interested in taking a look at their numbers and perhaps using them for some of the work.  Sounds like an ultimate win-win-win.  So we’ll see how that goes.

I’ve got two buyer appointments at the wholesale house tomorrow.  One which is from a girl who plans to be an owner-occupant.  I don’t know why I even setup an appointment for this girl, I think she’s going to waste my time.  She almost got hung-up on when we spoke over the phone.  After we setup the appointment for 2pm on Sunday, she says, “Ok, give me a call tomorrow and I’ll let you know if 2pm still works”.  In my mind I was like “CLICK!!!!!”, I mean WTF, you want me to call your lame-ass tomorrow to double-check to see if you can keep our appointment!  GET THE F*** OUT OF HERE WITH THAT BULLSH*T!!!!  That’s what I felt like saying.  But I just told her, “how about you just call me if you can’t keep our appointment”.  And she agreed.  I should still stand her ass up…just cuz.  But who knows she may just be the one who actually buys, you never know.

That’s all for now.

- Dueces

Real Estate John Michailidis, Rantoul, Short Sale

As of late last week, I secured a 5/2 property that’s in serious disrepair.  I got it at a steal and hope to wholesale it to a cash buyer.  I would discuss numbers, but the potential buyer could be reading this right now.  You never know who finds what you do online after a good ole’ Google search.  I only have until January 9th before my inspection contingency expires and I have to close on the property.  If I have to close on the property I could continue my efforst to wholesale, or complete the rehab myself.  There is about 30k in rehab profit potential on this house, so the flip seems tempting.  But then again, I’ve never done a flip and am not a flipper.  We can just consider flipping the house myself as plan C.  But with the wholesale option still as plan A, I am going to really ramp-up marketing on this thing and see what I can come up with.

Speaking of buyers-list, my mass mailing has only generated in 5 responses so far.  That’s five responses out of 162 outgoing letters.  I guess it’s still early yet, the quickest a recipient would’ve received my mailing was on Tuesday.

But right now I have a property under contract, and two other possible deals on the table.  One is a lead where a lady wants to sell her late mothers’ house, the other lead is where a lady is being foreclosed-on her house and just received a 30-day notice for sherrif’s sale.  These other two leads seem like they may turn out to be solid deals, we’ll see.  I actually contacted John Michailidis about the short-sale lead.  Since short-sales aren’t my thing, hopefully we can work together on it.  If you haven’t heard of him, check out his site.  He’s been doing video updates on a frequent basis chronicling his short-sale experiences.   I initially planned to birddog those leads, but I got a gut feeling that I should get my feet wet and learn about this short-sale stuff too.  We shall see.  And this lead came from my yellow-page ad too.  Well, what do you know…people still use the Yellow Pages.  My hunch has been proven true.

Lastly, I got a call from a guy from REIwired.com, this call was in addition to two emails sent yesterday.  Apparently he saw my YouTube videos and thinks that I’d be good to be a guest-speaker on the REIwired site.  I explained to him that I’m merely a poser in this real estate game and that I had a ways to go before I became Carlton Sheets of the game.  The commission break down applies to the sales of your course that you’re peddling.  Basically, you place videos on their site with an affiliate link to your course or mentorship program (I have neither).  They get half of that course profit because you’re hosted on their site.  I told the guy I’d call him back in a few months.  I wonder who else received a call from this guy…

- Justin

Real Estate

Another Monday is here and I’m just going to make a brief check-in. My targets set on last Monday was to:

1. Make at least 10 offers on properties listed on MLS FAIL
2. Distribute my new door hangers with brochures to select Urbana neighborhoods PASS
3. Put something together for a CraigsList nationwide cash-buyer campaign PASS

I’m actually in the process of choosing the MLS properties as I type.  The door-hangers where put out and out of 200, I haven’t received a lead yet, which is surprising.  And for CraigsList, I’m changing my approach a bit.  It seems that my commercial looking ads and even some of my more aggressively worded ads get flagged almost immediately.  I’m going to try out a text-only ad that specifies that I’m looking for cash-buyers in the area, plain and simple, short and to the point.  We’ll see how this does locally and then I’ll have to go national with CraigsList.  I would still love to invest in an Auto-Poster software for CraigsList, any suggestions?

So goals for next week:
1. Submit a total of 20 offers on MLS properties
2. Submit an offer on at least one REO property
3. Make at least one offer on a FSBO

I’m going into hyper offer-making mode.  I need to secure beaucoup properties in the upcoming weeks.  Because I want many closings in the first quarter of the new year.  I’m to the point now where I feel I have pretty much everything in place that I need.  I have effective advertising methods, I get plenty leads, and I’m acquiring more buyers daily.  So once I have mo properties and mo buyers, I’ll have mo money and I could do without the mo problems.

- Peace Out

Real Estate accountability monday, Multiple Listing Service

This weekend I feel like I got alot done, but as always there is so much left to accomplish.  I tracked down 162 landlords and mailed them the letter that I mentioned a couple of days ago.  Hand-addressing all of those letters was not the best use of my time, but I am so strapped for cash right now, I had no choice.  I think all of those letters took about a combined 6 hours to complete.  I got those dropped those letters in the mail today, so I figure that I should get some calls beginning Tuesday or Wednesday.  I project that I’ll get about 10 serious cash-buyers from the deal.  That would make the effort worth it, at the least.

I also spent today posting some brochures to houses via door-hanger sleeves.  I put out 200 brochures and it didn’t take me as long as I had thought it would.  I spent about 3 hours on the job.  It wasn’t that bad.  I took my IPOD with me and kept a fairly brisk pace, wasn’t as torturous as I had presumed.  I only canvased one street in Urbana, IL and I found a few things interesting.  One was that there seemed to be many home owners that have “save my pets in case of emergency” stickers on their doors. I found this strange for some reason.    The other interesting observation was that many houses had “No Soliciting” stickers on their doors also.  I guess Urbana gets hit hard with soliciting, I’ve never noticed “No Soliciting” notices on Champaign houses.  And by the way, I should mention that the only reason I focused on Urbana, IL houses is because door-to-door advertising is legal there and not in Champaign.  Strange…I know.  But, I’m staying within the lines on this although I get many advertisements on my door in Champaign.  I’m not saying any names….Domino’s….Chinese Restaurants….AT&T….okay so I did.

As far as flyers go, I had 40 printed out and ready to post.  But of the places that I was planning to post, they didn’t have bulletin boards! WTF! I was only able to get 2 flyers posted.  One to a coffee shop and the other to a sandwich shop.  Walmart and the local grocery stores had no bulletin boards.  I need some ideas on this one.  Where do yall think I can post some flyers…I have 38 more of these things I need to get out.

- Justin

Marketing, Real Estate Advertising, brochures, buyers-list, flyers

I know I’m not moving at a slow pace, but things are taking WAY too long for me to accomplish.  Part of this is due to the fact that I don’t have an assistant.  I can’t afford the competent ones at the moment and am done dealing with the cheap talent (you get what you pay for, DUH).  I wish I could find someone to work for me that would take a promissory note.  Like take 10% of each deal I complete, that sounds like a more than fair offer to me.  I’m not sure if I’d have any takers though.  And to be honest, the next assistant I hire would have to be through a temp agency.  I would love to outsource the screening of applicants, because that secretarial stuff is a waste of my time.

I finally have my 404 page ready to go for my buyer-list campaign.  At first I was having issues getting all of the graphical content to appear and the form to submit correctly on my HTML page.  I had Google’d and Google’d and couldn’t find what the issue might have been.  It then dawned on me to contact a fellow RE Investor that I know also has an IT background, so I reached out to Scott Costello on Facebook.  He mentioned that I would need the full URL’s in my HTML, so once I converted all of my file paths that were specific to my site’s domain (/Graphics/buy.jpg) to the full URL (http://www.schwaps.com/Graphics/buy.jpg), I was good.  Apparently, you have to treat 404 pages a bit differently.  This is why I’m not in love with programming.  Had it not been for Scott, I probably would’ve spent another 3 hours or more trying to figure that out.  Thanks again, if you’re reading this!  You can’t deny the power of Social Networking!  So check  it out, if you go to www.schwaps.com/TypeWhateverYouWantHere you get my wholesale buyer page.  So the letters sent will include the names of Landlords:

www.schwaps.com/BillGates
www.schwaps.com/DonaldTrump

you get the idea.

I’m about half way done with the manual process of gathering my Section-8 landlord contact info.  Once I’m done with that, I’ll gather some cash buyer info from the MLS, and I already have the information from the Central Illinois Apartment Association members from their website.

*Tangent* If you are a member of any type of club or association, please beware that your contact information is most likely readily available on the web.  After a simple Google search, I can get beaucoup contact info and so can everyone else.  Good for me, sucks for you!  Just an advisory if you’re an extremely private person.*End Tangent*

I’ll shoot to have the buyer-list campaign complete by Saturday.  I still haven’t gone through all of the leads that I received from last weekend.  I pulled 2 extremely hot ones out from the 20 and made offers, but there are some others still in there worth pursuing and others that aren’t and definitely want retail (I have a Realtor that will love those).

So much to do.  But I guess like they say, just eat an elephant one bite at a time.

- Peace Out

Marketing, Real Estate 404, Facebook, Scott Costello