Justin B. McClelland

Sooo, it’s Tuesday evening and I’ve been working hard the past week to meet my “guaranteed” goal of 40 offers from last weeks’ Accountability Monday.  Let’s just say, I won’t give any more “guarantees”.  That 40 offer business is kicking my ass, I’m not going to lie to you.  That’s a lot!  I don’t give excuses, however I will say that I had some hindrances outside of my control which held me back a bit.

These hindrances were primarily related to only making offers on MLS properties and using an agent.  The agent I was using became reluctant to represent me as a buyer due to my wholesale strategies, he feared that he would become stigmatized due to the low nature of my offers.  Honestly, I can’t blame him and if I was strictly a retail-Realtor, I’d probably feel the same way.  I’m sure black-balling occurs amongst Realtors when one goes against the grain. I actually heard that this happens to Realtors that offer flat-fee MLS listings in town.  But it looks like using an agent isn’t going to be the best route for me and what I’m doing, so from now on I’m going to make offers directly to the listing-Realtor.

I did get in 15 offers over the past week, so I wasn’t a complete failure.  However, I just couldn’t come up with another 35 worth offering on and I was sort of road-blocked by my Realtor.  Now that I’ve cleared that hurdle, this shouldn’t be an issue any longer.  And I literally just came-up with a new idea that will help me dramatically in my quantity of offers.  And that is….drum roll….the submission of offers on expired MLS listings.  I already have it figured out in my head, how I can make this happen with a MS-Word mail-merge and a MS-Excel spreadsheet.  Since the properties aren’t listed, no need for complete contracts, I’ll just send a detailed “Letter of Intent”.  This will save beaucoup time by allowing for some automization.  I’ll hand-address the envelopes, send them off, and it’s a done-deallie.  I should get some interesting results from this approach.  Just the other day I was scouring CraigsList for some old ads to make offers on.  I saw that another local investor picked up a property for 16K when it was listed and expired just a month earlier at 35K.  So the proof is in the puddin’.

So I say all of that to say, “I’m keeping the goal of 40 offers/week”.  No more guarantee’s, no more roadblocks that won’t get demolished in a matter of minutes.  I’m getting to that goal and once I do, I’m going to double it.

On another front, the wholesale deal is back in the ICU.  I informed the heirs that they’re not going to receive any proceeds from this house due to all of the liens that were on it, yesterday.  I have a feeling that they won’t want to sell it now, despite being contractually bound.  The phone conversation didn’t go so well.  However, since the property is in pre-probate and they’re not the owners on title, I’m not certain that they don’t have an “out” of this contract.  I’ve brainstormed for a while and put myself in their shoes, either way they look at it (sell to me, or keep it) there is absolutely no money in this house for them (I may go into details later when the deal is officially closed or dead).  I plan on having a meeting with them as soon as we can schedule one, at that time I’ll make the numbers really clear and at that time they better trash any slick ideas that they’re brewing.

On yet another front, I received a short-sale lead today.  An extremely hot one at that!  Long-story short, this guy is a retiree and is extremely frustrated with being a landlord.  He has a property that he initially put Section-8 tenants in and they “tore it up”.  He then put non-Section-8 tenants in it and they “tore it up” too.  But not only that, they also aren’t making their rent payments and instead of ‘eating’ the mortgage costs for the last 5 months, this landlord is now in pre-foreclosure.  Since he’s a landlord, he knows the rules of the short-sale game, so this should make things easier for me.  We meet this Saturday, I plan on getting the entire short-sale package completed on-the-spot, so hopefully John Michailidis and I can have a go at a JV again.

Damn, this was a long-ass post.

- Peace Out

Marketing, Real Estate CraigsList, John Michailidis, MLS, Short Sale

I’m still in ROBOT mode and plan on being there indefinitely. Since I’ve ramped up my offers, I’ve got 1 more potential deal in the works. Just to give a brief synopsis of it, it’s a property that’s literally 2 blocks from the wholesale deal that I’m currently working. This property is listed and has been for a long time and for a price that’s way too high. Way too high when you have the intel that I do. And that is, after some research, I know the property is just a few months away from tax foreclosure. It’s been tax delinquent for 3 years and in the state of Illinois the owner has a redemption period of 2.5 years from the date of the first tax sale. Translation: this owner’s redemption period runs out by April 2010. Once tax-foreclosed, it’s a wrap for them. I hope to get in and seal a deal that get’s them a few bucks for moving expenses and that’s it. I’m not the type to take advantage of people, but this property location and it’s condition won’t allow me to do more than that. Hopefully, I’ll have some good news about that one soon.

Also, the current wholesale deal is moving along…still on life-support however. One decision by one person can make or break this deal. That person is the head-honcho in the liens department of the Illinois Department of Health and Family Services (DHFS). He received my short-sale package earlier this week and we spoke about it. He wasn’t satisfied that I only had a Realtor-prepared Comparative Market Analysis done on the property, he wanted an official Appraisal. He claimed that the CMA wasn’t good enough because “the Realtor could be your friend”. He wanted a bona-fide appraisal by a licensed appraiser who would by default be “putting their license on the line”. So that’s what I did. The appraiser did his thing today and reported to me out of all his houses that he’s ever appraised, this was the lowest. Music to my ears! So now, I’ll just get the appraisal to the DHFS and it will be time to talk business. One good thing that I learned from my most recent conversation with the DHFS is that they’ll most likely reduce their lien to compensate for the liens held by other government entities (City of Champaign Neighborhood Services, Champaign-Urbana Sewage Department, etc). That means that I need only worry about the DHFS. Hopefully, we can begin negotiations as soon as tomorrow, if not early next week I should have a yea or nea to report. Once I get the nod, I just need to get the seller to an attorney (that I might end up paying for) so he can get the (heirship) docs he needs drafted for the title company to close.

On the short-sale front, the homeowner that John Michailidis and I are currently working isn’t looking so good. This lady keeps getting cold feet about committing to the short-sale process. I have a feeling that she is going to wait too long and end up getting foreclosed on. Oh well, we can’t say we didn’t try. Hopefully she makes the right (prompt) choice. There are many more people to help. And now that we have our team in place, it’s game on.

Real Estate DHFS, Foreclosure, John Michailidis

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

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